S-1

As filed with the Securities and Exchange Commission on January 30, 2012

SEC File No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

______________________

Empire Resources, Inc.
(Exact name of registrant as specified in its charter)
Delaware	5051	22-3136782
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)
One Parker Plaza Fort Lee, New Jersey 07024 (201) 944-2200
(Address, including zip code, and telephone number,  including area code, of registrant’s principal executive offices)
Nathan Kahn President and Chief Executive Officer One Parker Plaza Fort Lee, New Jersey 07024 (201) 944-2200
(Name, address, including zip code, and telephone number,  including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Rick A. Werner, Esq. Haynes and Boone, LLP 30 Rockefeller Plaza, 26th Floor New York, New York 10112 Tel. (212) 659-4974 Fax (212) 884-8234

Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Calculation of Registration Fee

Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price per Share	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Common Stock, $0.01 par value per share issuable upon exercise of 10% Convertible Senior Subordinated Notes Due June 1, 2016	3,100,384	$2.60(2)	$8,060,998.40	$923.79

(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the shares of common stock offered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions.

(2) Estimated at $2.60 per share, the average of the high and low prices of the registrant’s Common Stock quoted on the OTCQX on January 27, 2012, for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JANUARY 30, 2012

PRELIMINARY PROSPECTUS

Empire Resources, Inc.

3,100,384 Shares of Common Stock Underlying 10% Convertible Senior Subordinated Notes Due June 1, 2016

_________________

This prospectus relates to the resale of up to 3,100,384 shares of our common stock to be offered by the selling stockholders upon the conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016 with an aggregate face value of $12,000,000, at a conversion price adjusted to give effect to anticipated quarterly dividend payments through June 1, 2016.  The 10% Convertible Senior Subordinated Notes Due June 1, 2016 were issued pursuant to a Convertible Notes Purchase Agreement we entered into on June 3, 2011 with selected accredited investors.

The selling stockholders may sell shares of common stock from time to time in the principal market on which our common stock is traded at the prevailing market price or in privately negotiated transactions. See “Plan of Distribution,” which begins on page 37.

We will not receive any of the proceeds from the sale of common stock by the selling stockholders.  All expenses of registration incurred in connection with this offering are being borne by us, but all selling and other expenses incurred by the selling stockholders will be borne by the selling stockholders.

Our common stock is quoted on the OTCQX under the symbol “ERSO.PK” On January 27, 2012, the last reported sale price of our common stock as reported on the OTCQX was $2.60 per share.

Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties in the section entitled “Risk Factors” beginning on page 3 of this prospectus before making a decision to purchase our stock.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is           , 2012

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	3
Special Note Regarding Forward-Looking Statements	11
Use of Proceeds	11
Market for Our Common Stock and Related Stockholder Matters	11
Dividend Policy	12
Management’s Discussion and Analysis of Financial Condition and Results of Operation	12
Business	18
Executive Officers and Directors	22
Executive Compensation	25
Security Ownership of Certain Beneficial Owners and Management	30
Selling Stockholders	31
Certain Relationships and Related Party Transactions	34
Description of Securities	34
Plan of Distribution	37
Legal Matters	39
Experts	39
Where You Can Find Additional Information	39
Index to Financial Statements	F-1

You should rely only on the information contained in this prospectus.  We have not authorized any other person to provide you with different information.  If anyone provides you with different or inconsistent information, you should not rely on it.  We are not making an offer to sell these securities in any jurisdiction where offer or sale is not permitted.  You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus.  Our business, financial condition, results of operations and prospects may have changed since that date.

i

PROSPECTUS SUMMARY

The following summary highlights information contained elsewhere in this prospectus.  It may not contain all the information that may be important to you.  You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical financial statements and related notes included elsewhere in this prospectus or any accompanying prospectus supplement before making an investment decision.  In this prospectus, unless the context requires otherwise, all references to “we,” “our,” “us” and the “Company” refer to Empire Resources, Inc. and its consolidated subsidiaries.

Overview

We are principally engaged in the purchase, sale and distribution of semi-finished aluminum and steel products to a diverse customer base located throughout the Americas, Europe, Australia and New Zealand. We sell our products through our own marketing and sales personnel as well as through independent sales agents who are located in North America and Europe and who receive commissions on sales. We purchase products from suppliers located throughout the world. Our two largest suppliers furnished approximately 47% of our products during 2011 as compared to 39% of our products during 2010 and 50% of our products during 2009.  While in general we place orders with our suppliers based upon orders that we have received from our customers, we also purchase material for our own stock, which we typically use for shorter term deliveries to our customers.

Our principal executive offices are located at One Parker Plaza, Fort Lee, New Jersey 07024. Our telephone number is (201) 944-2200. Our website address is http://www.empireresources.com. Information on or accessed through our website is not incorporated into this prospectus and is not a part of this prospectus.

The Offering

Common stock offered by the selling stockholders:	Up to 3,100,384 shares of our common stock to be offered by the selling stockholders upon the conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016 with an aggregate face value of $12,000,000. (1)
Common stock outstanding prior to the offering:	9,233,806
Common stock outstanding after this offering:	12,334,190 (2)
Use of proceeds:	We will not receive any proceeds from the sale of the common stock offered by the selling stockholders.
Offering price:	All or part of the shares of common stock offered hereby may be sold from time to time in amounts and on terms to be determined by the selling stockholders at the time of sale.
OTCQX symbol:	ERSO.PK
Risk factors:	You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 3 of this prospectus before deciding whether or not to invest in shares of our common stock.

1

(1) The maximum number of shares of common stock that may be offered by the selling stockholders is based upon a conversion price adjusted to give effect to anticipated quarterly dividend payments through June 1, 2016.  In making this estimate, we have assumed quarterly dividend payments of $0.025 per share, which we have paid since March 2009.  However, our board of directors reviews our dividend policy on a quarterly basis and makes a determination with respect to a dividend distribution, subject to profitability, free cash flow and the other requirements of the business. There can be no assurance that dividends will continue to be paid in the current amount, or at all.

(2) The number of shares of common stock outstanding after the offering is based upon 9,233,806 shares outstanding as of January 27, 2012 and assumes the conversion of all 10% Convertible Senior Subordinated Notes Due June 1, 2016 with respect to those shares being registered for resale pursuant to the registration statement of which this prospectus forms a part, at a conversion price adjusted to give effect to anticipated quarterly dividend payments through June 1, 2016.

The number of shares of common stock outstanding after this offering excludes:

· 416,000 shares of common stock issuable upon the exercise of currently outstanding options at a weighted average exercise price of $1.54 per share; and

· 409,000 shares of common stock available for future issuance under our 2006 Stock Option Plan.

2

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following factors and other information in this prospectus or any accompanying prospectus supplement before making a decision to invest in our common stock. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties, not presently known to us or otherwise, may also impair our business.  If any of the risks actually occur, our business, financial conditions and operating results may be materially and adversely affected. In that event, the trading price of our common stock may decline, and you could lose all or part of your investment.

Risks Related to Our Business and Industry

We are highly dependent on a few suppliers.

We purchased approximately 39% and 47% of our products from our two largest suppliers during 2010 and 2011, respectively.  Accordingly, the termination or limitation by one or more of our largest suppliers of their relationships with us could limit our ability to fulfill customer orders or cause us to purchase products at a loss, which could have a material adverse effect on our business and results of operations. In addition, our loss of any one of our other suppliers (or material default by any supplier in its obligations to us) for any reason, including but not limited to bankruptcy, financial difficulties, expropriation, social unrest, destruction, sabotage, strikes, acquisition by a person or entity unwilling to provide products to us, or for any other reason, could limit our ability to fulfill customer orders or cause us to purchase products at a loss, which could have a material adverse effect on our business.

An interruption in the sources of our metal supply could have a material adverse effect on our results of operations.

We rely on our suppliers to fulfill contractual obligations.  The failure of any one of our suppliers to fulfill their obligations to us may expose us to serious losses by requiring us to purchase material at a loss in the open market and/or absorb losses for hedges applied to the defaulting supplier’s transaction.  Our primary suppliers could curtail or discontinue their delivery of metals to us in the quantities we need with little or no notice.  If our suppliers experience production problems, lack of capacity or transportation disruptions, we may be unable to obtain sufficient amounts of metal on a timely basis, or we may not be able to obtain metal from alternate sources at competitive prices to meet our delivery schedules.

In addition, in recent years, the metal producing supply base has experienced significant consolidation, with a few domestic producers accounting for a majority of the domestic metal market.  The number of available suppliers could be reduced in the future by factors such as further industry consolidation or bankruptcies affecting metal suppliers. Although we have in the past successfully replaced suppliers lost as a result of industry consolidations, there can be no assurance that we would be able to replace the volume of production or the type of products supplied by any of our current vendors if they were acquired or their operations terminated or were interrupted.

The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are highly dependent on a few significant customers.

Our sales are highly concentrated among a few customers. During 2010 and for the nine months ended September 30, 2011, 44% and 46%, respectively, of our revenues were derived from sales to ten customers. Two major customers accounted for approximately 21% and 21% of our consolidated net sales for 2010 and the nine months ended September 30, 2011, respectively. Over the last several years, there have been consolidations in the industries we serve that may increase our sales concentration and the related risks. Any material reduction in sales to any of these customers could have a material adverse effect on our business. Our sales contracts tend to be short term in nature. We typically sell our products on monthly or quarterly customer commitments.  As a result, the relationship, as well as particular orders, can generally be terminated with relatively little advance notice. The loss of any one of our major customers or decrease in demand by those customers or credit constraints placed on them could have a material adverse effect on our business, financial condition and results of operations.

3

The counterparties to our commodity derivative instruments may not be able to perform their obligations to us, which could materially affect our cash flows and results of operations.

In order to minimize risk associated with fluctuations in commodity prices and foreign currency, we use derivative instruments to hedge metal pricing and foreign currency risk as we deem appropriate for a majority of our purchase and sales contracts. We are exposed to the risk of a counterparty default in fulfilling these derivative instruments. Should there be a counterparty default, we could be exposed to losses on the original derivative instrument or be unable to recover anticipated gains from the transactions, which could result in decreased gross margins, profitability and/or outright losses.

Although we expect to finance our future and in-process growth initiatives through borrowings under our credit facility, we may have to find additional sources of funding, which could be difficult. Additionally, increased leverage could adversely impact our business and results of operations.

We expect to finance our future and in-process growth initiatives through borrowings under our $200 million secured, asset-based credit facility, which matures on June 30, 2014. However, our credit facility may not be sufficient or available to finance our growth initiatives, and we may have to find additional sources of financing. It may be difficult for us in the future to obtain the necessary funds and liquidity to run and expand our business.

Additionally, if we incur substantial additional debt, including under our credit facility, to finance future growth, our leverage could increase as could the risks associated with such leverage. A high degree of leverage could have important consequences to us. For example, it could:

· increase our vulnerability to adverse economic and industry conditions;

· require us to dedicate a substantial portion of cash from operations to the payment of debt service, thereby reducing the availability of cash to fund working capital, capital expenditures, dividends and other general corporate purposes;

· limit our ability to obtain additional financing for working capital, capital expenditures, general corporate purposes or acquisitions;

· place us at a disadvantage compared to our competitors that are less leveraged; and

· limit our flexibility in planning for, or reacting to, changes in our business.

We may not be able to generate sufficient cash flow to meet our existing debt service obligations.

Our annual debt service obligations until June 30, 2014, when our senior credit facility is scheduled to mature, will be primarily limited to interest and principal payments on our 10% Convertible Senior Subordinated Notes Due June 1, 2016, with an aggregate principal amount of $12 million, and borrowings under our $200 million credit facility with outstanding borrowings of $141 million as of September 30, 2011. Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt obligations will depend on our future financial performance, which will be affected by a range of economic, competitive and business factors, many of which are outside of our control.  If we do not generate sufficient cash flow from operations to satisfy our debt obligations, we may be required to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We may not be able to consummate any such transaction at all or on a timely basis or on terms, and for proceeds, that are acceptable to us, and these transactions may not be permitted under the terms of our various debt instruments then in effect.  Our inability to generate sufficient cash flow to satisfy our debt obligations or to timely refinance our obligations on acceptable terms could adversely affect our ability to serve our customers and could cause us to reduce or discontinue our planned operations.

4

We service industries that are highly cyclical, and any downturn in our customers’ demand could reduce our sales, margins and profitability.

Many of our products are sold to customers in industries that experience significant fluctuations in demand based on economic conditions, energy prices, consumer demand, availability of adequate credit and financing, customer inventory levels, changes in governmental policies (including those that would limit or reduce defense spending) and other factors beyond our control. When one or more of our customers’ industries experiences a decline, we may have difficulty increasing or maintaining our level of sales or profitability if we are not able to divert sales of our products to customers in other industries.

We are vulnerable to interest rate fluctuations on our indebtedness, which could hurt our operating results.

We are exposed to various interest rate risks as a result of our indebtedness under our credit facility. Market risk arises from changes in variable interest rates of our borrowings, which are primarily short-term LIBOR or money market based loans, which are subject to change. If interest rates significantly increase, we could be unable to service our debt which could have a material adverse effect on our operating results.

We are dependent on our executive officers and key employees.

We are highly dependent on the management and leadership skills of our executive officers and other key employees.  We have entered into employment agreements with Nathan Kahn, our chief executive officer, president and a director, Sandra Kahn, our vice president, chief financial officer and a director, and Harvey Wrubel, our vice president of sales/director of marketing and a director, which are subject to renewal every two years.  In addition, in accordance with the terms of his employment agreement, we have purchased and will maintain $10 million of key man life insurance on the life of Mr. Kahn during the term of the employment agreement.  Nevertheless, there can be no assurance that these individuals will continue to provide services to us, or that such life insurance would be sufficient to compensate us for the loss of Mr. Kahn. The loss of any of our executive officers or other key employees or the failure to attract and retain additional qualified personnel could prevent us from implementing our business strategy and continuing to grow our business at a rate necessary to maintain future profitability.

Failure of the supplier to honor the terms of our supply and pre-payment advance agreements could have a material adverse effect on us.

We are a party to a supply agreement and a pre-payment advance agreement with one of our largest suppliers, which provide for the sale to us of certain aluminum products and our advance of $10 million to finance the expansion of the supplier’s production capacity.  We are exposed to the risk of failure of our supplier to honor its obligations under these agreements.  The supplier’s failure to provide the supply of materials as contemplated could negatively impact our results of operations.  The supplier’s failure to repay any or all of the advance could result in a material loss to us.

Many of our suppliers and customers are located in international markets, which expose us to a number of risks.

We generally purchase metal products from foreign suppliers, and our customers are principally located throughout the Americas, Australia, New Zealand and Europe.  Thus, our operations could be materially and adversely affected by changes in economic, political and social conditions in the countries where we currently purchase or sell or may in the future purchase or sell such products, including the potential for adverse change in the local political or social climate or in government policies, laws and regulations, restrictions on imports and exports or sources of supply, and change in duties and taxes.

In addition, an act of war or terrorism or major pandemic event could disrupt international shipping schedules, cause additional delays in importing our products into the U.S. or increase the costs required to do so. Acts of crime or violence in these international markets could also adversely affect our operating results. Fluctuations in the value of the U.S. dollar versus foreign currencies could reduce the value of these assets as reported in our financial statements, which could reduce our stockholders’ equity. Our failure to adequately anticipate and respond to these risks and the other risks inherent in international operations could have a material adverse effect on our operating results.

5

Our future operating results could be impacted by the volatility of the prices of metals, which could cause our results to be adversely affected.

The metal industry is highly cyclical and pricing can be volatile. The prices we pay for metals and the prices we charge our customers may fluctuate depending on many factors, including general economic conditions (both domestic and international), competition, production levels, import duties and other trade restrictions and currency fluctuations. We rely on long-term relationships with our suppliers but generally have no long-term, fixed-price purchase contracts. Instead we purchase at prevailing market prices at the time orders are placed, typically with discounts for quantity purchases. To the extent metals prices decline, we would generally expect lower sales and possibly lower net income, depending on the timing of the price changes and the ability to pass price changes on to our customers. To the extent we are not able to pass on to our customers any increases in our raw materials prices, our operating results may be adversely affected. In addition, because we maintain substantial inventories of metals in order to meet short lead-times and the just-in-time delivery requirements of our customers, a reduction in our selling prices could result in lower profitability or, in some cases, losses, either of which could adversely impact our ability to remain in compliance with certain financial covenants in our loan facilities, as well as result in us incurring impairment charges.

If suppliers fail to provide products of sufficient quality, customer relationships and prices could be negatively affected.

Our relationships with our customers depend, in part, on our ability to deliver products of the quality specified by those customers. We rely on certifications from our suppliers that attest to the quality of the metals received from those suppliers for resale and generally, consistent with industry practice, do not undertake independent testing of such metals.  In the event that metal purchased from suppliers is deemed defective material or deemed to not meet quality specifications as set forth in the certifications or customer specifications, we may be forced to buy products of the specified quality from another source to fulfill the customer’s order.  While we would then be left with a claim against the supplier for any loss sustained by us, we may not be able to bring these claims successfully, particularly in foreign jurisdictions.  In addition, we could suffer damage to our reputation that may arise from sub-standard products and possible losses of customers.

We are exposed to credit risk from our customers.

We do not require collateral for customer receivables. We have significant balances owing from customers that operate in cyclical industries and under leveraged conditions, which may impair our collection of these receivables. We carry credit insurance with a 10% deductiblecovering the majority of our customers, and we have set specific limits on each customer’s receivables. However, we sometimes elect to exceed these specific credit limits, and in selected instances the co-pay may be increased.  Our failure to collect a significant portion of the amount due on our receivables directly from customers or through insurance claims (or other material default by customers) could have a material adverse effect on our financial condition and results of operations.

We are subject to the risk of default by our customers.

We rely on our customers to fulfill contractual obligations. The failure of any one of our customers to do so may expose us to serious losses and may force us to sell material at a loss in the open market and/or absorb losses for metal hedges applied to the defaulting customer’s transaction.

We could be held liable for any product failures related to the products we manufactured at our extrusion facility.

As a result of the production that took place at our extrusion facility prior to September 2009, when we ceased production at the facility, we may be exposed to potentially serious risks such as product failure following distribution in the market.  While we are not aware of any defects in our aluminum extrusion products, defects in the products that we manufactured may result in serious and potentially fatal accidents which may in turn result in substantial losses to us.

6

Significant changes to international trade regulations could adversely affect our results of operations.

For 2010 and the nine months ended September 30, 2011, approximately 42% and 34%, respectively, of our purchases of aluminum products were from countries that were considered developing countries whose exports were eligible for preferential tariff treatment for import into the U.S. under the generalized system of preferences or duty free. There can be no assurance that any of our suppliers will continue to be eligible for such preferential tariff treatment or that the generalized system of preference will be renewed after its expiration on June 30, 2013.  If the preferential tariff treatment of any of our suppliers that are currently eligible for such treatment becomes unavailable, then imports from such supplier may be subjected to a tariff, instead of the duty-free treatment those imports now enjoy. To the extent these increased costs could not be passed on to our customers, our profit margins could be negatively affected. This could result in higher costs to us and have a material adverse effect on our business, financial condition and results of operations.

Antidumping and other duties could be imposed on us, our suppliers and our products.

The imposition of an antidumping or other increased duty on any products that we import could have a material adverse effect on our financial condition. For example, under U.S. law, an antidumping duty may be imposed on any imports if two conditions are met. First, the Department of Commerce must decide that the imports are being sold in the U.S. at less than fair value. Second, the International Trade Commission must determine that the U.S. industry is materially injured or threatened with material injury by reason of the imports. The International Trade Commission’s determination of injury involves a two-prong inquiry: first, whether the industry is materially injured, and second, whether the dumping, not other factors, caused the injury.  The International Trade Commission is required to analyze the volume of imports, the effect of imports on U.S. prices for like merchandise, and the effects the imports have on U.S. producers of like products, taking into account many factors, including lost sales, market share, profits, productivity, return on investment, and utilization of production capacity.

General global economic, credit and capital market conditions have had and could continue to have an adverse impact on our business, operating results and financial condition.

We are susceptible to macroeconomic downturns in the U.S. and abroad which have had, and in the future may continue to have, an adverse effect on demand for our products and consequently our operating results, financial condition and cash flows. Future negative economic conditions, as well as a slow recovery period from the current economic downturn, could lead to reduced demand for our products, increased price competition, reduced gross margins, increased risk of obsolete inventories and higher operating costs as a percentage of revenue.

Disruption of the capital and credit markets may negatively impact our business, including our ability to access additional financing at a time when we would like, or need, to access those markets to run or expand our business. These events may also make it more costly for us to raise capital through the issuance of our equity securities and could reduce our net income by increasing our interest expense and other costs of capital. The diminished availability of credit and other capital could also affect the industries we serve and could result in reduction in sales volumes and increased credit and collection risks.

Our industry is highly competitive, which may force us to lower our prices and may have an adverse effect on our operating results.

The principal markets that we serve are highly competitive.  Competition is based principally on price, service, quality, processing capabilities, inventory availability and timely delivery.  Many of our competitors are significantly larger than us, and many have captive sources of supply and significantly greater access to capital and other resources. Increased competition could lower our margins or reduce our market share and have a material adverse effect on our financial performance. Additionally, if our sources of supply were interrupted, our competitors could be in a position to capture our customers.

7

Increases in energy prices would increase our operating costs, and we may be unable to pass all these increases on to our customers in the form of higher prices.

If our energy costs increase disproportionately to our revenues, our earnings could be reduced. We use energy to process and transport our products. Our operating costs increase if energy costs, including electricity, diesel fuel and natural gas, rise. During periods of higher energy costs, we may not be able to recover our operating cost increases through price increases without reducing demand for our products. In addition, we generally do not hedge our exposure to higher energy prices. Increases in energy prices will increase our operating costs and may reduce our profitability if we are unable to pass all of the increases on to our customers.

Rising freight rate costs and lack of adequate cargo space may affect our operations.

Substantially all of the products we distribute require transportation, either via ocean vessels, rail or trucks. Increasing freight rates may materially adversely affect our profit margin and lack of cargo space may affect our ability to deliver products in a timely manner.

 The failure of our key computer-based systems could have a material adverse effect on our business.

We currently maintain computer-based systems in the operation of our business and we depend on these systems to a significant degree for all areas of business operations. These systems are vulnerable to, among other things, damage or interruption from fire, flood, tornado, and other natural disasters, power loss, computer system and network failures, operator negligence, physical and electronic loss of data or security breaches and computer viruses. The destruction or failure of any one of our computer-based systems for any significant period of time could materially adversely affect our business, financial condition, results of operations and cash flows.

 We may face risks associated with current or future litigation and claims.

Although we do not believe that we currently face any material litigation or claims, there can be no guarantee that we will not, in the future, be involved in one or more lawsuits, claims or other proceedings. These suits could concern issues including contract disputes, employment actions, employee benefits, taxes, environmental, health and safety, personal injury and product liability matters. Due to the uncertainties of litigation, we can give no assurance that we will prevail on any claims made against us in any such lawsuit. While it is not feasible to predict the outcome of any pending lawsuits and claims, we do not believe that the disposition of any such pending matters is likely to have an adverse effect on our financial condition or liquidity, although the resolution in any reporting period of one of more of these matters could have an adverse effect on our operating results for that period. Also, we can give no assurance that any other lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

Risks Related to this Offering and our Common Stock

The interests of our controlling stockholders may not coincide with yours and such controlling stockholder may make decisions with which you may disagree.

As of January 27, 2012, Nathan Kahn, our chief executive officer, president and a director, and Sandra Kahn, our vice president, chief financial officer and a director, beneficially owned approximately 42.2% of our outstanding common stock (40.1% excluding the 10% Convertible Senior Subordinated Notes Due June 1, 2016, which only have voting rights once they are converted to common stock) and Harvey Wrubel, our vice president of sales/director of marketing and a director, beneficially owns approximately 5.8% (4.7% excluding the 10% Convertible Senior Subordinated Notes Due June 1, 2016). In addition, through ownership of our 10% Convertible Senior Subordinated Notes Due June 1, 2016, Leon G. Cooperman and his affiliates beneficially own (i.e., have the right acquire) 16.1% of our outstanding common stock.  As a result, our controlling stockholders control substantially all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change in control of our company and make some future transactions more difficult or impossible without the support of our controlling stockholders. The interests of our controlling stockholders may not coincide with our interests or the interests of other stockholders.

8

Our common stock may be affected by limited trading volume and price fluctuations, each of which could adversely impact the value of our common stock.

There is relatively limited trading in our common stock and there can be no assurance that an active trading market in our common stock will either develop or be maintained. In addition, our common stock currently trades on the OTCQX, which generally lacks the liquidity, research coverage and institutional investor following of a national stock exchange like the NYSE Amex Equities, the New York Stock Exchange or the Nasdaq Stock Market. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to enter the market from time to time in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our stock will be stable or appreciate over time.

Our stock price may be volatile, which could result in substantial losses for investors.

The market price of our common stock is highly volatile and could fluctuate widely in response to various factors, many of which are beyond our control, including the following:

· additions or departures of key personnel;

· sales of our common stock, including management shares;

· our ability to execute our business plan;

· operating results that fall below expectations;

· loss of any strategic relationship;

· industry developments; and

· general domestic or international economic, market and political conditions.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also significantly affect the market price of our common stock.

A significant number of our shares will be eligible for sale and their sale or potential sale may depress the market price of our common stock.

Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock. When this offering is completed, we will have a total of 12,334,190 shares of common stock outstanding. The up to 3,100,384 shares that may be offered by this prospectus will be freely tradeable unless they are purchased by our “affiliates,” as defined in Rule 144 under the Securities Act of 1933, as amended. All of our currently outstanding shares of common stock are freely tradeable unless they are purchased by our “affiliates,” as defined in Rule 144 under the Securities Act of 1933, as amended.

In addition, 416,000 shares are issuable upon exercise of options. If any options are exercised, the shares issued upon exercise will also be restricted, but may be sold under Rule 144 after the applicable holding period has been satisfied. Sales under Rule 144 may be subject to volume limitations and other conditions.

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In addition to the possibility that actual sales of significant amounts of our common stock in the public market could harm our common stock price, the fact that our stockholders have the ability to make such sales could create a circumstance commonly referred to as an “overhang,” in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, could also make it more difficult for us to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

Although we have paid dividends in prior periods, there can be no assurance that we will pay dividends in the future. As a result, any return on investment may be limited to the value of our common stock.

Although we have paid dividends in prior periods, there can be no assurance that we will pay dividends in the future. The payment of dividends on our common stock will depend on our earnings, financial condition and other business and economic factors as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have research coverage by securities and industry analysts and you should not invest in our common stock in anticipation that we will obtain such coverage. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

We will incur increased costs as a result of being a public reporting company.

We will face increased legal, accounting, administrative and other costs and expenses as a public reporting company that we do not incur as a private company. The Sarbanes-Oxley Act of 2002, including the requirements of Section 404, as well as new rules and regulations subsequently implemented by the Securities and Exchange Commission and the Public Company Accounting Oversight Board impose additional reporting and other obligations on public reporting companies. We expect that compliance with these public company requirements will increase our costs and make some activities more time-consuming. A number of those requirements will require us to carry out activities we have not done previously. For example, we will adopt new internal controls and disclosure controls and procedures. In addition, we will incur additional expenses associated with our Securities and Exchange Commission reporting requirements. For example, under Section 404 of the Sarbanes-Oxley Act, we will need to document and test our internal control procedures and our management will need to assess and report on our internal control over financial reporting. Furthermore, if we identify any issues in complying with those requirements (for example, if we or our accountants identify a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect us, our reputation or investor perceptions of us. It also could become more difficult and expensive to maintain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. We expect that the additional reporting and other obligations imposed on us by these rules and regulations will increase our legal and financial compliance costs and the costs of our related legal, accounting and administrative activities significantly. These increased costs will require us to divert money that we could otherwise use to expand our business and achieve our strategic objectives.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This prospectus contains “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,” “could,” “would,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.  Important factors that could cause such differences include, but are not limited to:

· loss or default of one or more suppliers;

· loss or default of one or more significant customers;

· default by the counterparties to our derivative financial instruments;

· changes in general, national or regional economic conditions;

· an act of war or terrorism that disrupts international shipping;

· changes in laws, regulations and tariffs;

· the imposition of anti-dumping duties on the products we import;

· changes in the size and nature of our competition;

· changes in interest rates, foreign currencies or spot prices of aluminum;

· loss of one or more key executives;

· increased credit risk from customers;

· our failure to grow internally or by acquisition; and

· failure to improve operating margins and efficiencies.

You should review carefully the section entitled “Risk Factors” beginning on page 3 of this prospectus for a discussion of these and other risks that relate to our business and investing in shares of our common stock.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

USE OF PROCEEDS

All shares of our common stock offered by this prospectus are being registered for the accounts of the selling stockholders and we will not receive any proceeds from the sale of these shares.

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the OTCQX under the trading symbol ERSO.PK. The following table sets forth the high and low bid prices for our common stock for the periods indicated, as reported by the OTCQX. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

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	High		Low
Fiscal Year 2012
First Quarter (through January 27, 2012)	$	2.80	$	2.25
Fiscal Year 2011
First Quarter	$	5.94	$	4.00
Second Quarter	$	4.91	$	3.35
Third Quarter	$	4.75	$	2.50
Fourth Quarter	$	4.50	$	1.25
Fiscal Year 2010
First Quarter	$	1.68	$	1.25
Second Quarter	$	3.48	$	1.41
Third Quarter	$	4.00	$	2.95
Fourth Quarter	$	5.45	$	3.45
Fiscal Year 2009
First Quarter	$	1.22	$	0.26
Second Quarter	$	1.82	$	0.75
Third Quarter	$	1.58	$	1.15
Fourth Quarter	$	1.75	$	1.10

The last reported sales price of our common stock on the OTCQX on January 27, 2012 was $2.60 per share. As of January 27, 2012, there were approximately 31 holders of record of our common stock.

DIVIDEND POLICY

During 2011, 2010 and 2009, our board of directors declared dividends on our common stock approximately on a quarterly basis.  The board of directors determined that we were able to return some of our cash to stockholders without impacting future revenue and earnings growth or restricting strategic opportunities. The board of directors declared a regular cash dividend of $0.025 per share on March 25, 2009, June 24, 2009, September 29, 2009, December 16, 2009, March 19, 2010, June 23, 2010, September 16, 2010, November 15, 2010, March 23, 2011, June 22, 2011, September 22, 2011 and December 15, 2011.  On November 15, 2010, the board of directors also declared a special dividend of $0.10. The board of directors intends to review our dividend policy on a quarterly basis and make a determination with respect to a dividend distribution, subject to profitability, free cash flow and the other requirements of the business. There can be no assurance that dividends will be paid in the future.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATION

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes thereto that are included in this prospectus. In addition to historical information, the following discussion and analysis includes forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in the section entitled “Risk Factors.” See “Special Note Regarding Forward-Looking Statements.”

Our Business

We are engaged in the purchase, sale and distribution of principally semi-finished aluminum and steel products to a diverse customer base located throughout the Americas, Europe, Australia and New Zealand. We sell our products through our own marketing and sales personnel as well as through independent sales agents who are located in North America and Europe and who receive commissions on sales. We purchase products from suppliers located throughout the world. Our two largest suppliers furnished approximately 47% of our products during 2011 as compared to 39% of our products during 2010 and 50% of our products during 2009. While in general we place orders with our suppliers based upon orders that we have received from our customers, we also purchase material for our own stock, which typically we use for shorter term deliveries to our customers.

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Critical Accounting Policies and Estimates

The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. The preparation of financial statements in accordance with generally accepted accounting principles in the U.S. requires us to make estimates and assumptions that affect the amounts reported in our financial statements. The financial statements include estimates based on currently available information and our judgment as to the outcome of future conditions and circumstances. Significant estimates in these financial statements include allowance for doubtful accounts and accruals for inventory claims. Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of the financial statements and actual results could differ from the estimates and assumptions.

Among the significant judgments made by management in the preparation of our financial statements are the following:

Allowance for Doubtful Accounts

As of September 30, 2011, we had $68,892,000 in trade receivables, including an allowance for doubtful accounts of $529,000. We report accounts receivable, net of an allowance for doubtful accounts, to represent our estimate of the amount that ultimately will be realized in cash. We review the adequacy of our allowance for doubtful accounts on an ongoing basis, using historical collection trends, aging of receivables, as well as review of specific accounts, and make adjustments in the allowance as we believe necessary. We maintain a credit insurance policy on the majority of our customers. In general, this policy has a 10% deductible; however there are some instances where the co-insurance may vary and instances where we may exceed the insured values. Changes in economic conditions could have an impact on the collection of existing receivable balances or future allowance considerations. In addition, changes in the credit insurance environment could affect the availability of credit insurance and our ability to secure it.

Accruals for Inventory Claims

Generally, our exposure on claims for defective material is relatively immaterial, as we generally refer all claims on defects back to our supplier. If we do not believe that a supplier will honor a claim for defective product in a material amount, we will record an allowance for inventory adjustments.

Results of Operations

Comparison of Nine Months Ended September 30, 2011 and 2010 (in thousands)

During the first nine months of 2011, net sales increased by $17,886, from $359,900 to $377,786, or an increase of 5% from the same period in 2010.  This increase was primarily due to higher metal prices.  Gross profit decreased by $7,163, from $24,365 to $17,202 for the period, or a 29% decline, as compared to the first nine months of 2010, as margins were under pressure from the highly competitive landscape in difficult economic conditions.  Our customers typically solicited many offers for a smaller volume of business, resulting in lower margins for successful bidders.

Selling, general and administrative expenses increased by $173, from $8,724 in the first nine months 2010 to $8,897 in first nine months of 2011 primarily as a result of increases in banking costs and legal expenses.

During the first nine months of 2011, interest expense declined by $1,029 to $2,518 from $3,547 for the same period in 2010.  This 29% reduction in interest expense resulted from the expiration of our interest rate swaps in August 2010.

Net income decreased from $7,893 in the first nine months of 2010 to $4,170 for first nine months of 2011, which was attributable to the competitive pressures of maintaining market share, leading to lower gross profit margins.  Net income for the first nine months of 2011 included a non-operating net gain of $485 resulting from the gain of $966 from the mark to market of the derivative element of our 10% Convertible Senior Subordinated Notes Due June 1, 2016, net of amortization of the related conversion feature discount of $189 and a provision for deferred income taxes of $292.

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Comparison of Fiscal Years Ended December 31, 2010 and 2009 (in thousands)

Our business in 2010 was characterized by a rebuilding of revenues following a significant decline due to the worldwide downturn in the global economy during 2009.  During 2010, our sales increased by $218,951, or 89%, from $246,062 to $465,013. Our increase in sales during 2010 was driven by increases in sales volume in all the geographic areas we serve. Our domestic sales during 2010 were $276,802, as compared to $166,665 in 2009, and international sales during 2010 were $188,211, as compared to $79,397 in 2009. Our top ten customers represented 44% of our sales in 2010 as compared to 39% in 2009. Our sales volume has been, and will continue to be, a function of our ongoing ability to secure quality products from our suppliers. Our two largest suppliers furnished approximately 39% of our products during 2010 as compared to 50% during 2009. Termination or limitation by one or more of our largest suppliers or customers could have a material adverse affect on our business and results of operations.

Our gross profit increased from $16,549 in 2009 to $30,228 in 2010, an 83% increase, as a result of the increase in sales. Our gross profit percentage remained relatively stable at around 7% in both 2010 and 2009.

Our selling, general and administrative expenses increased by 37% during 2010 as compared to 2009, from $8,770 to $12,031, primarily due to increased payroll and sales commissions.

Our interest expense declined by $1,625, or 29%, from $5,622 in 2009 to $3,997 in 2010 as a result of the expiration of unfavorable interest rate swaps which terminated in August 2010.

Net income for 2010 was $9,145, as compared to a net loss of $511 for 2009. The increase in sales in 2010 as well as the asset impairment of $2,966 in 2009 were the main components of the year on year change in our net income.  In September 2009, we ceased production at our extrusion manufacturing facility and incurred an asset impairment charge of $2,966; in 2010, we sold the equipment and had a recovery of $346.

Liquidity and Capital Resources

Overview (in thousands)

At September 30, 2011, we had cash of $2,206, accounts receivable of $68,892, total senior secured debt of $152,666 and subordinated debt of $12,000.   At December 31, 2010, we had cash of $1,270, accounts receivable of $41,174 and total senior secured debt of $102,219.

Management believes that cash from operations, together with funds available under our credit facility will be sufficient to fund the cash requirements relating to our existing operations for the next twelve months. However, we will require additional debt or equity financing in connection with the future expansion of our operations.

Comparison of Nine Months Ended September 30, 2011 and 2010 (in thousands)

Cash used in operations during the first nine months of 2011 was $54,778, as compared to $40,211 during the comparable period in 2010. Increases in accounts receivable of $27,944 and increases in inventory of $21,497 were the main contributors to the increase in cash used in operations.

Cash flows provided by financing activities during the first nine months of 2011 amounted to $60,762 as compared to $40,546 during the first nine months of 2010. Cash provided by financing activities during the first nine months of 2011 consisted primarily of bank notes payable of $50,802 and cash provided by the convertible subordinated debt of $12,000.  Cash provided by financing activities during the first nine months of 2010 consisted primarily of bank notes payable of $41,428.

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As of September 30, 2011 our committed line of credit totaled $200 million and our outstanding borrowings amounted to $181,878,000.  Our direct borrowings amounted to $141,100,000 and letters of credit amounted to $40,778,000, leaving an overall availability under this line of credit of approximately $18 million, or approximately 9%.  As of December 31, 2010 our committed line of credit totaled $175 million and our outstanding borrowings amounted to $137,331,000.  Our direct borrowings amounted to $95,400,000 and letters of credit amounted to $41,931,000, leaving an availability of approximately $38 million on our line of credit, or approximately 22%.

Comparison of Fiscal Years Ended December 31, 2010 and 2009 (in thousands)

Restricted cash decreased from $2,149 in 2009 to zero in 2010 as a result of repayment from brokers related to our hedging activities described under “Derivative Financial Instruments” below. Net cash of $44,579 was used in operating activities during 2010, as compared to $54,270 provided by operating activities during 2009.  The primary uses of cash in operating activities during 2010 were increases in inventory and accounts receivable to support higher sales volumes and payment of accrued expenses and derivative liabilities during 2010. During 2009, reduced trade accounts receivable and increased trade accounts payable contributed to increases in net cash provided from operating activities.

Cash flows provided by financing activities during 2010 amounted to $44,411 as compared to cash flows used in financing activities of $55,602 during 2009. Cash provided by financing activities during 2010 consisted primarily of proceeds from bank loans.  Cash used in financing activities during 2009 consisted primarily of repayment of bank loans.

Credit Agreements and Other Debt

We were a party to an amended and restated credit agreement with JPMorgan Chase Bank, N.A. for itself and as the agent for Rabobank International, New York branch, Citicorp USA, Inc., Brown Brothers Harriman & Co., and Fortis Capital Corp., which provided for a $175 million revolving line of credit, including a commitment to issue letters of credit and a swing-line loan sub facility, with a maturity date of June 30, 2011. The credit agreement provided that amounts under the facility could be borrowed and repaid, and re-borrowed, subject to a borrowing base test, until the maturity date of June 30, 2011.  Amounts borrowed by us bore interest of Eurodollar, money market, or base rates, at our option, plus an applicable margin. The applicable margin was determined by our leverage ratios. Borrowings under the credit agreement were collateralized by security interests in substantially all of our assets. The credit agreement contained financial and other covenants including but not limited to, covenants requiring maintenance of minimum tangible net worth and compliance with leverage ratios, as well as an ownership minimum and limitations on other indebtedness, liens, and investments and dispositions of assets.

On April 28, 2011 we entered into a new working capital credit agreement with Rabobank International, for itself and as lead arranger and agent, JPMorgan Chase, for itself and as syndication agent, and ABN AMRO, BNP Paribas, RBS Citizens, Société Générale, and Brown Brothers Harriman. The $200 million secured, asset-based credit facility matures on June 30, 2014 and refinanced our $175 million credit agreement. The Agreement also allows additional increases in the line of credit of up to $50 million, subject to certain restrictions. Amounts borrowed bear interest of Eurodollar, money market or base rates, at our option, plus an applicable margin. Our borrowings under this line of credit are secured by substantially all of our assets. The credit agreement contains financial and other covenants including but not limited to, covenants requiring maintenance of minimum tangible net worth of $25 million plus an aggregate amount equal to 25% of our positive net earnings and compliance with a leverage ratio of not more than 6.00 to 1, as well as an ownership minimum and limitations on other indebtedness, liens, and investments and dispositions of assets. The credit agreement provides that amounts under the facility may be borrowed and repaid, and re-borrowed, subject to a borrowing base test, until the maturity date of June 30, 2014.  As of September 30, 2011, we had borrowings of $141,100 outstanding under the credit agreement, bearing interest at 2.68%, and we were in compliance with all financial covenants.

Our wholly owned Belgian subsidiary, Imbali Metals BVBA, operates under a line of credit with ING Belgium S.A./N.V., with a EUR 8 million commitment for loans and documentary letters of credit. Loan advances are limited to a percentage of Imbali’s pledged accounts receivables and inventory. This secured credit arrangement is unconditionally guaranteed by us. As of September 30, 2011, we had borrowings of EUR7.4 million ($9,900) under this line of credit, bearing interest at EURIBOR plus 1.75%, and we were in compliance with all financial covenants. As of December 31, 2010, we had borrowings of EUR 3.8 million ($5,047) outstanding under this line of credit, and we were in compliance with all financial covenants.

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In addition, we are a party to a mortgage and an interest rate swap that we entered into in 2004 in connection with the purchase of our Baltimore warehouse. The mortgage loan, which had an outstanding balance of $1.8 million at December 31, 2010 and $1.9 million at December 31, 2009, requires monthly payments of approximately $21,600, including interest at LIBOR plus 1.75%, and matures in December 2014. Under the related interest rate swap, which has been designated as a cash flow hedge and remains effective through the maturity of the mortgage loan, we will pay a monthly fixed interest rate of 6.37% to the counterparty bank on a notional principal equal to the outstanding principal balance of the mortgage. In return, the bank will pay us a floating rate, namely, LIBOR, to reset monthly, plus 1.75% on the same notional principal amount.

We have commitments in the form of letters of credit to some of our suppliers.

On June 3, 2011, we sold $12,000,000 principal amount of 10% Convertible Senior Subordinated Notes Due June 1, 2016 in a private placement to selected accredited investors.  The notes are currently convertible at the option of the holders into shares of common stock at a conversion price of 220.83 shares of common stock per $1,000 principal amount of notes, subject to adjustment for cash and stock dividends, stock splits and similar transactions, at any time before maturity.  The current conversion price reflects three adjustments for dividends.  In addition, if the last reported sale price of the common stock for 30 consecutive trading days is equal to or greater than $7.00, and a registration statement is effective covering the resale of the shares of common stock issuable upon conversion of the notes, we have the right, in our sole discretion, to require the holders to convert all or part of their notes at the then applicable conversion rate.  Interest on the notes is payable in arrears on the first day of June and December every year the notes are outstanding.

Derivative Financial Instruments

Inherent in our business is the risk of matching the timing of our purchase and sales contracts. The prices of the aluminum products we buy and sell are based on a constantly moving terminal market price determined by the London Metal Exchange. Were we not to hedge such exposures, we could be exposed to significant losses due to the continually changing aluminum prices.

We use aluminum futures contracts to manage our exposure to this commodity price risk inherent in our activities. It is generally our policy to hedge such risks to the extent practicable. We enter into hedges to limit our exposure to volatile price fluctuations that we believe would impact our gross margins on firm purchase and sales commitments. As an example, if we enter into fixed price contracts with our suppliers and variable priced sales contracts with our customers, we will generally enter into a futures contract to sell the aluminum for future delivery in the month when the aluminum is to be priced and delivered to the customer and repurchase this position once the pricing has been fixed with our customer.  If the underlying metal price increases, we suffer a hedging loss and have a derivative liability, but the sales price to the customer is based on a higher market price and offsets the loss. Conversely, if the metal price decreases, we have a hedging gain and recognize a derivative asset, but the sales price to the customer is based on the lower market price and offsets the gain.

We also enter into foreign exchange forward contracts to hedge our exposure related to commitments to purchase or sell metals denominated in some international currencies. In such cases, we will purchase or sell the foreign currency through a bank for an approximate date when we anticipate making a payment to a supplier or receiving payment from the foreign customer.

In accordance with Generally Accepted Accounting Principles, we designate these derivative contracts as fair value hedges and recognize them on our balance sheet at fair value.  We also recognize offsetting changes in the fair value of the related firm purchase and sales commitment to which the hedge is attributable in earnings upon revenue recognition, which occurs at the time of delivery to our customers.

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As further described under “Risk Factors,” the potential for losses related to our hedging activities, given our hedging methodology, arises from counterparty defaults with banks for our foreign exchange hedging, the London Metal Exchange for our aluminum hedges, or customer defaults. In the event of a customer default, we might be forced to sell the material in the open market and absorb losses for metal or foreign exchange hedges that were applied to the defaulting customers’ transactions. Our results of operations could be materially impacted by any counterparty or customer default, as we might not be able to collect money owed to us and/or our hedge might effectively be cancelled.

We use hedges for no purpose other than to avoid exposure to changes in aluminum prices and foreign currency rates between when we buy a shipment of aluminum from a supplier and when we deliver it to a customer.  Our derivatives are not for purposes of trading in the futures market. We earn our gross profit margin through our business operations and not from the movement of aluminum prices.

As part of our business we also engage in the purchase, sale and distribution of steel products. If we do not have a matching sales contract related to such products, (for example, any steel products that are unsold in our inventory), we have price risk that we currently do not or are unable to hedge. As such, any decline in pricing for such products may adversely impact our profitability.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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BUSINESS

Overview

We are principally engaged in the purchase, sale and distribution of semi-finished aluminum and steel products to a diverse customer base located throughout the Americas, Europe, Australia and New Zealand. We sell our products through our own marketing and sales personnel as well as through independent sales agents who are located in North America and in Europe and who receive commissions on sales. We purchase products from suppliers located throughout the world. Our two largest suppliers furnished approximately 47% of our products during 2011 as compared to 39% of our products during 2010 and 50% of our products during 2009. While in general we place orders with our suppliers based upon orders that we have received from our customers, we also purchase material for our own stock, which typically we use for shorter term deliveries to our customers.

Our Products

We derive most of our revenues from the sale of semi-finished aluminum products, which are produced by processing primary aluminum and/or aluminum scrap. A product is considered “semi-finished” if it has not yet been converted into a final end-product. Semi-finished aluminum products include aluminum sheet, plate and foil, rod, bar and wire, extruded and cast products. We offer many of these forms of semi-finished aluminum products to our customers, for use as follows:

· Sheet/Coil.  Aluminum sheet/coil is used in many diverse industries, including transportation, construction and food service.  Common applications include road signs and gas tanks for trailers.

· Plate.  One of the primary industries for aluminum plate is transportation.  Common applications include ship building, automobiles and truck and dump bodies.

· Treadplate.  Aluminum treadplate with a bright finish, better known as “treadbright,” is used both for its cosmetic appearance and its durability.  Common uses are for industrial toolboxes, automotive runners and trimming.

· Foil.  Aluminum foil is used primarily in the packaging industry.  Common applications include candy/gum wrappers as well as decorative wrapping for gifts.

Demand for our products is not seasonal.

Suppliers

We maintain distribution arrangements and/or ongoing commitments with several foreign mills.  We act as bulk purchasers for these suppliers, which provides them with the following benefits:

· we serve as an integrated marketing, distribution, and service channel for volume that our suppliers wish to export;

· we purchase bulk capacity from suppliers;

· we typically assume responsibility for transporting the products that we purchase;

· we eliminate foreign currency risks for suppliers; and

· we ensure prompt payment to suppliers for materials purchased.

We strive to maintain long-term relationships with our suppliers and to be a significant distributor for them. As a result, we are often able to obtain competitive pricing and to influence quality standards and delivery practices.  We continuously work with our existing suppliers and explore other sources to strengthen our position in the market.  Our principal suppliers are P T Alumindo Light Metal Industries, Hulamin Ltd and Elval Hellenic Aluminium.

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Growth Strategy

We believe that our long-term growth will depend upon understanding our customers’ particular requirements and delivering a high-level of service and quality products that meet those requirements consistently. Our growth and profitability will also depend upon our ability to continue building our market knowledge and in particular our understanding of the production capabilities of our suppliers. We will also need to maintain, strengthen and expand our supplier relationships in light of continued pricing pressures. Finally, we will need to succeed in identifying and executing opportunities to provide our customers additional value added offerings, in both our existing markets and product offerings as well as in broader or new product groups and geographic areas.

Our strategy for growth consists of the following key elements:

Provide Customers with a High Level of Service and Cost Effective, Quality Products.  We work closely with our customers to understand their specific requirements. This enables us to provide each customer with cost-effective, quality materials matching that customer’s particular needs. We also provide various ancillary services to our customers, such as arranging for products to be stored in warehouse facilities for release to them on a just-in-time delivery basis, providing them with timely information about market trends and product development, arranging for subsequent metal processing or finishing services and making material available from our own stock to meet our customers’ short term requirements.  Our services are described more fully under “Sales, Marketing and Customer Service” below.

Expand Volumes and Product Breadth with Existing Suppliers and Customers. We continually seek to build on our market knowledge. We try to maintain a current understanding of our suppliers’ production capabilities and of our customers’ needs and markets. This enables us to recognize opportunities to introduce new product lines to our customers and to increase volume from our suppliers.

Strengthen and Expand Our Supplier Relationships. We endeavor to continue building our supply sources, both by expanding our relationships with existing suppliers and by adding new suppliers. In cultivating supplier relationships, we emphasize our combination of market knowledge and customer base, which we believe makes us an effective marketing and distribution channel for our suppliers. Conversely, we believe that our supplier relationships position us to offer our customers a wider range of products and services.

Provide Increasingly Efficient and Cost-Competitive Handling and Delivery Services. We utilize our own warehouse and distribution facility in Baltimore that serves the dual purpose of providing depot/warehousing capacity for just-in-time delivery and providing handling capability and inventory control at the Baltimore port of entry, our most active import location. This arrangement reduces freight and handling expenses while increasing efficiency. It also enables us to monitor deliveries and serve customers more effectively.

Provide Additional Products and Value Added Services. We may add capability to provide our customers with additional value-added services such as processing, financing, warehousing and distribution services.

The Industry

The industry in which we operate is the sale and distribution of semi-finished aluminum and steel products. These products are manufactured worldwide by rolling facilities, some of which are owned by large integrated companies and others by independent producers. The products we purchase are in turn sold to distributors as well as to varied metal working industries including the automotive, housing and packaging industries.

Although demand for aluminum products in the U.S., where we make the majority of our sales, has been cyclical, over the longer-term, demand has continued to increase. We believe that this growth reflects general population and economic growth, and the advantages of aluminum products, including light weight and a high degree of formability, recyclability and resistance to corrosion.

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Sales, Marketing and Customer Service

We sell our products primarily through our own marketing and sales personnel. In addition, we sell our products through independent sales agents located in North America and Europe who receive a commission on sales. Our inventory is comprised of material that has been ordered by customers and is in transit or is being held pending delivery to such customers and material that we stock to meet shorter delivery times to our customers.

We endeavor to support and grow our distribution capabilities by providing customers with quality products, access to alternative sources of supply, and customer service. We offer customers a range of services, including:

· sourcing products from the appropriate supplier in order to meet pricing and delivery requirements;

· handling foreign exchange transactions for purchases and sales in local currency;

· assuming responsibility for the shipment and timely delivery of the product to the customer;

· assisting customers in identifying materials and matching their particular needs;

· where necessary, arranging for subsequent metal processing and/or finishing services that may be required by the customer;

· arranging for materials that have been ordered by a customer (and are subject to a firm purchase commitment) to be stored at an appropriate warehouse for release to the customers on a just-in-time delivery basis;

· providing customers with information concerning market trends and product development; and

· making available material from our own local stocks to meet customers’ short term requirements.

We carefully monitor the timing and processing of orders to meet customers’ needs and commit to deliver orders within a time-period mutually agreed with the customer, generally within a 30-day window. We maintain constant and ongoing communication with our suppliers in order to ensure that these delivery dates are met and that customers are apprised of the delivery status of their orders.

Customers

We serve more than 300 customers in diverse industries, such as distribution, transportation, automobile, housing, appliances and packaging. In 2010, our top ten customers represented approximately 44% of our total revenues, with two customers, Samuel Son & Co. and Ryerson Inc., accounting for 10.7% and 10.4% of total revenues, respectively. These ten customers included nine full-service distribution centers (i.e., distributors that have the capacity to provide additional processing services), as well as a producer of various consumer and industrial products. Our customers are principally located throughout the Americas, Australia, New Zealand and Europe. Our U.S. customer base is not regional.

Transportation

We arrange for transportation and delivery of the products purchased by each customer.  When we purchase products from an overseas supplier, we accept delivery either at the port in the supplier’s home country or at the port of destination. If we take delivery at a foreign port, we will generally arrange for transportation to the port of destination on regularly scheduled port-to-port, sea-going transportation. Upon delivery of the products at the destination port, we use trucking and rail services to deliver the products to our customers.

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Competition

Our principal competitors are global aluminum producers and rolling mills.  Alcoa Inc., and Aleris Rolled Products, Inc. dominate the aluminum industry in North America.  Alcoa Inc. and Aleris Rolled Products, Inc. are significantly larger than us, have significantly greater financial resources, and are active in significantly more areas of the aluminum products business than we are, including mining, refining, smelting and recycling. These companies also have access to material produced and imported from their own subsidiaries, which compete with us. There are also independent importers of aluminum and steel products which serve the North American aluminum and steel distribution industry.We compete with these other importers, as well as agents that act for or purchase from foreign aluminum producers including one of our suppliers, Hulamin Ltd. Our principal means of competition is market knowledge, customer service, and the ability to offer competitive terms and product quality, including providing value-added services to our customers and providing a full range of product offerings. We also believe that agents of foreign mills are generally less capable of providing the same value-added services to our customers because these agents are generally captive to a single foreign source and often lack the flexibility and range of product offerings that we offer our customers. We further believe that by offering our customers a full range of products from independent sources, we enable our customers to avoid dependency in an increasingly concentrated domestic supply chain.

Government Regulation

As our products are typically imported, we are subject to governmental regulations governing imports, in particular regulations governing the imposition of tariffs and antidumping and other duties.  For 2010 and the nine months ended September 30, 2011, approximately 42% and 34%, respectively, of our purchases of aluminum products were from countries that were considered developing countries whose exports were eligible for preferential tariff treatment for import into the U.S. under the generalized system of preferences or duty free.  However, there can be no assurance that any of our suppliers will continue to be eligible for such preferential tariff treatment.  In addition, the generalized system of preference is scheduled to expire on June 30, 2013, and there is no guarantee that it will be renewed, or that it will not be amended.  If preferential tariff treatment of any of our suppliers that are currently eligible for such treatment becomes unavailable, then imports from such supplier may be subjected to a tariff instead of the duty-free treatment those imports now enjoy.  To the extent that these increased costs could not be passed on to our customers, our profit margins could suffer.

The products we import could also be subject to antidumping or other increased duties.  Under U.S. law, an antidumping duty may be imposed on any imports if two conditions are met. First, the Department of Commerce must decide that the imports are being sold in the U.S. at less than fair value. Second, the International Trade Commission must determine that the U.S. industry is materially injured or threatened with material injury by reason of the imports. The International Trade Commission’s determination of injury involves a two-prong inquiry: first, whether the industry is materially injured, and second, whether the dumping, not other factors, caused the injury.  The International Trade Commission is required to analyze the volume of imports, the effect of imports on U.S. prices for like merchandise, and the effects the imports have on U.S. producers of like products, taking into account many factors, including lost sales, market share, profits, productivity, return on investment, and utilization of production capacity.  Should such a determination be made, we could subject to additional costs imposed on the affected imports.

Employees

As of January 24, 2012, we had approximately 55 full time employees. We also have independent sales representatives located in the U.S. and in Europe. None of our employees are represented under a collective bargaining agreement.

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History

We were incorporated in the State of Delaware in 1990 under the name Integrated Technology USA, Inc. Until September 17, 1999, we were in the business of designing, developing and marketing products for emerging computer related markets.  On September 17, 1999, we merged with Empire Resources, Inc., a distributor of value added, semi-finished aluminum products. Since the merger, we have continued the business of Empire Resources, Inc.  In conjunction with the merger, Empire Resources Pacific Ltd., then an affiliate of Empire Resources. Inc. operating in Australia, became our wholly owned subsidiary. Empire Resources Pacific Ltd. acts as our sales agent in Australia and New Zealand.  Our Belgian subsidiary, Imbali Metals BVBA, was incorporated in 2005 and began operations in that year.  Our extrusion manufacturing business, Empire Resources Extrusions, LLC, commenced the manufacturing of aluminum extrusions in the third quarter of 2006. During the third quarter of 2009, the facility was permanently closed.

Properties

Our corporate headquarters are located in Fort Lee, New Jersey, where we lease office space pursuant to a lease expiring in March 2015. The lease provides for a minimum annual rental payment of $274,000, plus escalations.

We own a 120,000 square foot distribution and warehouse facility at 6900 Quad Avenue, Baltimore, Maryland.

We believe that our facilities are adequate to meet our current and proposed needs.

Legal Proceedings

From time to time, we may be involved in litigation that arises through the normal course of business.  As of the date of this filing, we are not a party to any material litigation nor are we aware of any such threatened or pending litigation.

EXECUTIVE OFFICERS AND DIRECTORS

Set forth below is certain information regarding our current executive officers and directors. All directors hold office for one-year terms until the election and qualification of their successors.  In accordance with the Convertible Notes Purchase Agreement entered into in connection with the issuance of our 10% Convertible Senior Subordinated Notes Due June 1, 2016, we were required to cause the election of a director designated by Leon G. Cooperman.  Mr. Cooperman’s current designee is Douglas Kass.  Absent a vote for such removal by the holders of our common stock, Mr. Cooperman’s designee may be removed only by our board of directors (A) for gross negligence or a material breach of his fiduciary or similar duties or (B) at any time after Mr. Cooperman and/or his affiliates cease to own notes convertible into at least 10% of our outstanding common stock, 10% of our outstanding common stock directly, or a combination thereof.  For as long as Mr. Cooperman or his affiliates hold such designation right, if the members of our board of directors are to be re-elected, the board of directors is required to nominate and recommend that our stockholders elect such designee.

Name	Age	Position with the Company
William Spier	76	Chairman of the Board of Directors
Nathan Kahn	57	Chief Executive Officer, President and Director
Sandra Kahn	54	Vice President, Chief Financial Officer and Director
Harvey Wrubel	57	Vice President of Sales/Director of Marketing and Director
Jack Bendheim	65	Director
Peter G. Howard	75	Director
Douglas Kass	62	Director
Nathan Mazurek	49	Director
L. Rick Milner	65	Director
Morris J. Smith	54	Director

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Biographical Information

William Spier.  Mr. Spier has been a director since October 1996 and was acting chief executive officer from November 1997 until September 1999. Mr. Spier presently is our non-executive chairman of the board. 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.  Mr. Spier brings to the board extensive experience with our company, our industry, manufacturing and distribution generally, and executive leadership.

Nathan Kahn.  Mr. Kahn has been our chief executive officer, president and a director since September 1999.  Prior to that time, Mr. Kahn was our president and a director from the time of our formation in 1984. Mr. Kahn has also been the president and a director of Empire Resources Pacific Ltd, the sales agent in Australia and New Zealand for Empire Resources, Inc. since its formation in 1996.  Mr. Kahn brings to the board extensive experience with our company and our industry. Since he is responsible for, and familiar with, our day-to-day operations and implementation of our strategy, his insights into our performance and into the current state of the industry are critical to board discussions and to our success.

Sandra Kahn.  Ms. Kahn has been the vice president, chief financial officer and a director since September 1999. Prior to that time, Ms. Kahn was our secretary and treasurer and a director from the time of our formation in 1984. Ms. Kahn has also been the secretary and treasurer and a director of Empire Resources Pacific Ltd since its formation in 1996.  Ms. Kahn brings to the board extensive experience with our company and our industry. Since she is responsible for, and familiar with, our financial position and strategy, her insights into our performance and operations are critical to board discussions and to our success.

Harvey Wrubel.  Mr. Wrubel has been vice president of sales/director of marketing since September 1999.  He has been with our company for more than 30 years.  Mr. Wrubel brings to the board extensive experience with our company and our industry. Since he is responsible for, and familiar with, our sales and marketing, he brings important insights into our performance and strategy to board discussions.

Jack Bendheim.  Mr. Bendheim has been a director since September 1999. He has been the chairman and president of Phibro Animal Health Corporation for more than twenty years.  Mr. Bendheim brings to the board extensive experience with our company, manufacturing and distribution generally, and executive leadership.

Peter G. Howard.  Mr. Howard has been a director since September 1999. He has been the managing director of Empire Resources Pacific Ltd since its inception in 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.  Mr. Howard brings to the board extensive experience with our company and our industry. Since he is responsible for, and familiar with, our Australian operations, he brings important insights into our performance and strategy to board discussions.

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Douglas Kass.  Mr. Kass has been a director since July 2011.  He is the president and founder of Seabreeze Partners Management, Inc., which is also the general partner of Seabreeze Partners Long/Short, L.P.  From January 2005 to August 2009, Mr. Kass managed a dedicated short fund, Seabreeze Partners Short L.P., and from 2001 to 2005, he was the general partner of Seabreeze Partners L.P.  From 2003 to 2004, he served as the portfolio manager of Demours Capital Management, LLC, which was the general partner and investment manager of Circle T. Market Neutral Fund, L.P. and Circle T. Market Neutral Offshore Fund, Ltd.  From 1997 to 2003, Mr. Kass was the general partner of Kass Partners, LLC, the predecessor firm to Kass Partners, Ltd., which was founded in 1997.  Mr. Kass has nearly 40 years of experience with these and several other investment firms.  Mr. Kass also currently serves as Vice Chairman of Alfred University’s Investment Committee and a member of its Board of Trustees.  Mr. Kass brings to the board extensive executive leadership, investment and financial expertise that is important to board discussions and oversight of our financial performance, position and strategy.  In accordance with the Convertible Notes Purchase Agreement entered into in connection with the issuance of our 10% Convertible Senior Subordinated Notes Due June 1, 2016, we were required to cause the election of a director designated by Leon G. Cooperman.  Mr. Kass is Mr. Cooperman’s current designee.

Nathan Mazurek.  Mr. Mazurek has been a director since 1999.  Mr. Mazurek has over 20 years of experience in the electrical equipment and components industry.  In December 2009, Mr. Mazurek became president and chief executive officer of Pioneer Power Solutions, Inc., a manufacturer of highly engineered liquid transformers.  From December 2009 through August 12, 2010, Mr. Mazurek also served as the chief financial officer, secretary and treasurer of Pioneer Power Solutions, Inc.  Mr. Mazurek has served as the chief executive officer, president, vice president, sales and marketing and chairman of the board of directors of Pioneer Transformers Ltd. since 1995. Mr. Mazurek has served as the president of American Circuit Breaker Corp., a manufacturer and distributor of circuit breakers, since 1988. Mr. Mazurek brings to the board extensive experience with our company, manufacturing and distribution generally, and executive leadership.

Morris J. Smith.  Mr. Smith has been a director since 1994.  Since 1993, Mr. Smith has been a private investor and investment consultant. Prior to that, Mr. Smith was a portfolio manager at Fidelity Investments for more than five years.  Mr. Smith brings to the board extensive experience with our company and executive leadership, and financial expertise that is important to board discussions and oversight of our financial performance and strategy.

L. Rick Milner.  Mr. Milner has been a director since 2005.  Mr. Milner is retired. He joined Alcoa, Inc. in 1968 and enjoyed a thirty-six year career with Alcoa before retiring in 2004.  He was named director of corporate development in 1987, elected a vice president in 1991. From 1999 until retirement he was the officer in charge of Alcoa’s automotive businesses.  Mr. Milner brings to the board executive leadership and extensive experience in manufacturing and distribution in our industry.

Family Relationships

Nathan Kahn and Sandra Kahn are husband and wife.

Independent Directors

Our board of directors has determined that each of Jack Bendheim, Douglas Kass, Nathan Mazurek, Rick Milner. Morris J. Smith and William Spier is independent within the meaning of applicable listing rules of the Section 803A(2) of the NYSE Amex Rules and the rules and regulations promulgated by the Securities and Exchange Commission.

Committees of the Board of Directors

We have three standing committees of the board of directors: the audit committee; the nominating and corporate governance committee; and the compensation committee.

Audit Committee. The audit committee consists of William Spier, Jack Bendheim, and Nathan Mazurek, each of whom our board has determined to be financially literate and qualify as an independent director under Section 803A(2) of the NYSE Amex Rules. In addition, Jack Bendheim qualifies as a financial expert, as defined in Item 407(d)(5)(ii) of Regulation S-K. The function of the audit committee is to assist the board of directors in its oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, and (3) the qualifications, independence and performance of our independent auditors.

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Compensation Committee. The compensation committee consists of William Spier and Jack Bendheim, each of whom our board has determined qualifies as an independent director under Section 803A(2) of the NYSE Amex Rules, as an “outside director” for purposes of Section 162(m) of the Internal Revenue Code and as a “non-employee director” for purposes of Section 16b-3 under the Exchange Act.   The function of the compensation committee is to discharge the board of directors’ responsibilities relating to compensation of our directors and executives and our overall compensation programs. The primary objective of the compensation committee is to develop and implement compensation policies and plans that are appropriate for us in light of all relevant circumstances and which provide incentives that further our long-term strategic plan and are consistent with our culture and the overall goal of enhancing enduring stockholder value.

Nominating and Corporate Governance Committee.  The nominating and corporate governance committee consists of William Spier and Nathan Mazurek, each of whom our board has determined qualifies as an independent director under Section 803A(2) of the NYSE Amex Rules.  The primary function of the nominating and corporate governance committee is to identify individuals qualified to become board members, consistent with criteria approved by the board, and select the director nominees for election at each annual meeting of stockholders.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and other employees, including our principal executive officer, principal financial officer and principal accounting officer. Copies of the code can be obtained free of charge from our web site, www.empireresources.com. We intend to post any amendments to, or waivers from, our code of ethics on our web site.

EXECUTIVE COMPENSATION

2011 and 2010 Summary Compensation Table

The table below sets forth, for our last two fiscal years, the compensation earned by our named executive officers: (i) Nathan Kahn, our chief executive officer, president and director; (ii) Sandra Kahn, our chief financial officer, vice president and director; and (iii) Harvey Wrubel, our vice president of sales and director.

Name and principal position	Year	Salary ($)		Bonus ($)		All other compensation ($)(1)		Total ($)
Nathan Kahn, Chief Executive Officer, President and Director	2011	528,000		-		6,000		534,000
	2010		528,000		400,000		3,000		931,000
Sandra Kahn, Chief Financial Officer, Vice President and Director	2011		225,000		-		6,000		231,000
	2010		225,000		-		3,000		228,000
Harvey Wrubel, Vice President of Sales and Director	2011		349,000		985,000		6,000		1,340,000
	2010		330,000		1,849,000		3,000		2,182,000

_______________________

(1) Represents board of director fees.

Employment Agreements

We entered into employment agreements with each of our named executive officers in 1999.  Under the terms of these agreements, the compensation committee has discretion to determine annually the percentage increase in base salary (no decrease is permissible), provided that such annual increase must be no less than the increase in the cost of living for the previous year, based upon a local consumer price index.  The employment agreements with Ms. Kahn and Mr. Wrubel are automatically renewed every two years unless either we or the executive officer gives notice of termination.  The current term of Ms. Kahn’s employment agreement will automatically renew and be subject to termination on September 17, 2012.  The current term of Mr. Wrubel’s employment agreement will automatically renew and be subject to termination on December 31, 2012.  Although Mr. Kahn’s employment agreement terminated in 2004, we have continued to provide Mr. Kahn a base salary calculated in accordance with its terms and to comply with many other terms of the agreement.

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The compensation committee generally determines the amount of any bonus to be awarded to Mr. and Ms. Kahn.  Mr. and Ms. Kahn have agreed to allow the compensation committee to determine their bonuses in whatever manner they deem appropriate.  Mr. Wrubel and the compensation committee have agreed that he will receive an annual bonus equal to 13% of earnings before tax.

We have purchased and maintain $10 million of key man life insurance on the life of Mr. Kahn.  Upon his death, we must repurchase, and Mr. Kahn’s estate, legal representatives and heirs must sell to us, all shares of our common stock then owned by Mr. Kahn, his spouse and any of his children.

Ms. Kahn and Mr. Wrubel are subject to non-competition and non-solicitation restrictions under their employment agreements.  Ms. Kahn’s employment agreement provides that she will not, among other things, (i) directly or indirectly be engaged as a principal in any other business activity or conduct that competes with our business or be an employee, consultant, director, principal, stockholder, advisor of, or otherwise be affiliated with, any such business, activity or conduct, or (ii) solicit our customers, clients, suppliers, middlemen, non-clerical employees, sales representatives, agents, or consultants, in each case during her period of employment and the four-year period thereafter, except that if her employment is terminated for disability, without cause, or by her following a breach by us, such period will terminate two years after the date of such termination of employment.  Mr. Wrubel’s employment agreement provides that, (i) during the employment term and for a period of 12 months thereafter, he will not, among other things, be engaged in, or be, an employee, director, partner, principal, stockholder or advisor of any business, activity or conduct that competes with our business and (ii) during the employment term and for a period of 18 months thereafter, he will not solicit our customers, clients, suppliers, middlemen, non-clerical employees, sales representatives, agents, or consultants.  Following termination of Mr. Wrubel’s employment, the foregoing will only apply to competition with regard to aluminum and such other commodities as were being sold by us within six months prior to such termination, except for solicitation regarding our non-clerical employees, sales representatives, agents, or consultants.

Compensation Philosophy and Process

Our executive compensation program is administered by our compensation committee.  As described above, the compensation committee determines annually the percentage increase in the base salary of Mr. and Ms. Kahn and Mr. Wrubel, subject to certain requirements set forth in our employment agreements, and determines the amount of any bonus to be awarded to Mr. and Ms. Kahn.  The compensation committee is responsible for approving any additional compensation paid to our named executive officers (e.g., any incentive awards).  Mr. and Ms. Kahn participate in decision-making regarding Mr. Wrubel’s compensation.

Our executive compensation program is administered with the aim of:

· motivating our executives to enhance stockholder value by tying compensation to company and individual performance; and

· ensuring our ability to retain and, if necessary in the future, attract superior executives.

Our named executive officers receive a base salary and an annual cash bonus as well as benefits that all of our employees receive.  We believe we must offer competitive salaries and other standard benefits to be able to attract, retain and motivate highly-qualified and experienced executives.  We believe that cash compensation for executives in excess of base salary should be tied to some combination of company and individual performance over the preceding fiscal year.

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In setting compensation, each year the compensation committee assesses the reasonableness of total compensation levels for our named executive officers.  This assessment is made in part by considering both objective (corporate) and subjective (individual) performance criteria, which are used in determining the amount of any cash bonus for Mr. and Ms. Kahn and increase in base salary.  Mr. Wrubel’s annual cash bonus is determined based on our earnings before tax.  We believe it is necessary to compensate Mr. Wrubel in this manner in order to retain his services.The compensation committee does not establish specific corporate and individual performance targets at the beginning of each fiscal year, but rather evaluates both corporate and individual performance at the end of the year in connection with determining the next year’s compensation and awarding any cash bonuses for the previous year.

In assessing individual and company performance, the compensation committee considers, among other things, the individual’s contributions to our growth, the attainment of strategic objectives (whether the objectives relate to our product, geographic or customer diversification, expense control, increasing inventory turn rates, increasing gross profit margins, increasing pre-tax income or other objectives determined by the compensation committee or the board of directors from time to time) and the management of our assets or personnel.

The compensation committee does not use any outside compensation consultant in setting the compensation of our named executive officers.  In evaluating the performance of the named executive officers, the compensation committee has access to, and in its discretion may meet with, any of our officers or other employees.  In addition, the compensation committee is cognizant of, and may review and take into account compensation levels at other public companies in our industry, for whom information about executive pay is publicly available.  However, there are differences between us and these public companies, many of which are larger in terms of market capitalization, share of the product and geographic markets, and other factors.  In addition, these companies generally use much more complex cash and non-cash compensation schemes than us, and use equity incentives, which do not play a significant role in the compensation of our named executive officers.  We do not issue equity compensation to our named executive officers because they are already substantial equity holders and we believe that their incentives and interests are generally aligned with those of our other stockholders.  For these reasons, the compensation committee does not engage in any formal benchmarking of our compensation against peer companies, and does not target our compensation at any set level with reference to peer companies.

We do we make available to our named executive officers any pension (defined benefit) plans, or deferred compensation arrangements or any perquisites.  These officers do participate on the same basis as all other employees (that is, on a non-discriminatory basis) in our 401(k) plan and are eligible for the same medical benefits, including health insurance, as all other employees.

At the request of Mr. Kahn, the compensation committee will not consider whether to award a bonus to Mr. Kahn for 2011.  The compensation committee met and awarded a bonus to Ms. Kahn for 2011, however, she declined it.

Potential Payments Upon Termination or Change In Control

Our employment agreements do not require us to make payments or provide other benefits to our named executive officers in the event of a change in control of us or a termination without cause, except that in the event of a termination without cause, Mr. Wrubel is entitled, generally, to all earned and accrued but unpaid benefits and other compensation, plus severance equal to his salary for the remaining contract term.

2011 Outstanding Equity Awards at Fiscal Year End

The following table provides information on the holdings of stock options of the named executive officers at December 31, 2011.

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	Option Awards
Name	Number of securities underlying unexercised options (#) exercisable	Number of securities underlying unexercised options (#) unexercisable	Option exercise price ($)	Option expiration date
Nathan Kahn	2,000	2,000(1)	$3.64	06/14/14
Sandra Kahn	2,000	2,000(2)	$3.64	06/14/14
Harvey Wrubel	200,000	200,000(3)	$1.625	09/17/19

___________________________

(1) These options are fully vested.

(2) These options are fully vested.

(3) These options are fully vested.

We have not made equity grants to executives (or directors) since 2004.  However, we could make such grants in the future if deemed necessary or appropriate by the compensation committee.  Stock options and/or restricted stock may be granted from time to time if necessary, for example, to encourage our named executive officers to continue in their positions or to better align their interests with those of our stockholders.  Such grants could also be made to non-employee directors, for example to provide additional compensation.  At such times as we have issued stock options to executives and directors under our stock option plan, all such grants were made with an exercise price equal to the closing market price of our common stock at the date of grant.

We maintain the 2006 Stock Option Plan, which provides for the granting of options to purchase not more than an aggregate of 559,000 shares of common stock. Under the 2006 Stock Option Plan, all canceled or terminated options are available for grants. All officers, directors and employees of the Company and other persons who perform services for the Company are eligible to participate in the 2006 Stock Option Plan.  Some or all of the options may be “incentive stock options” within the meaning of the Internal Revenue Code of 1986, as amended.

The 2006 Stock Option Plan provides that it is to be administered by the Board of Directors, or by a committee appointed by the Board, which will be responsible for determining, subject to the provisions of the 2006 Stock Option Plan, to whom the options are granted, the number of shares of common stock subject to an option, whether an option shall be incentive or non-qualified, the exercise price of each option (which, other than in the case of incentive stock options, may be less than the fair market value of the shares on the date of grant), the period during which each option may be exercised and the other terms and conditions of each option.  No options may be granted under the 2006 Stock Option Plan after June 26, 2016.

DIRECTOR COMPENSATION

The following table provides compensation information for the one year period ended December 31, 2011 for each non-employee member of our board of directors.

Name	Fees earned or paid in cash ($)	All other compensation ($)	Total ($)
Jack Bendheim	4,000		4,000
Peter Howard	6,000	190,000(1)	196,000
Douglas Kass	2,000		2,000
Nathan Mazurek	5,000		5,000
L Rick Milner	6,000		6,000
Morris Smith	5,000		5,000
William Spier	36,000	30,000(2)	66,000

___________________________

(1) Compensation for Mr. Howard's work as managing director of overseas operations.

(2) Compensation for Mr. Spier's assistance with the issuance of our 10% Convertible Senior Subordinated Notes Due June 1, 2016.

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Each director is paid $1,000 for attendance (in person or by telephone) at meetings of the board of directors.  In addition, for terms of office beginning in June 2011 through June 2012, each non-employee board member other than Mr. Spier will receive compensation of $10,000. These annual fees were paid in January 2012.   Mr. Spier receives an annual retainer of $30,000 for serving as our non-executive chairman.  In addition, all directors are reimbursed for out-of-pocket expenses incurred in connection with attendance at meetings.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to the beneficial ownership of our common stock as of January 27, 2012 by:

· each person known by us to beneficially own more than 5.0% of our common stock;

· each of our directors;

· each of the named executive officers; and

· all of our directors and executive officers as a group.

The percentages of common stock beneficially owned are reported on the basis of regulations of the Securities and Exchange Commission governing the determination of beneficial ownership of securities. Under the rules of the Securities and Exchange Commission, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. Except as indicated in the footnotes to this table, to our knowledge and subject to community property laws where applicable, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Empire Resources, Inc., One Parker Plaza, Fort Lee, New Jersey 07024. As of January 27, 2012, we had 9,233,806 shares outstanding.

Name of Beneficial Owner	Number of Shares Beneficially Owned(1)		Percentage of Common Stock Owned (1)(2)
William Spier	396,448	(3)	4.2%
Nathan Kahn	4,033,770	(4)	42.2%
Sandra Kahn	4,033,770	(4)	42.2%
Harvey Wrubel	550,342	(5)	5.8%
Jack Bendheim	220,831	(6)	2.3%
Peter G. Howard	6,000	(7)	*
Douglas Kass	-		-
Nathan Mazurek	4,000	(8)	*
L. Rick Milner	13,000		*
Morris J. Smith	39,060		*
Leon G. Cooperman	1,766,654	(9)	16.1%
All directors and executive officers as a group (10 persons)	5,263,451	(10)	50.9%

_______________________

* Less than 1%

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(1) Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assume the exercise of all options and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of January 27, 2012, except as otherwise noted. Shares issuable pursuant to the exercise of stock options and other securities convertible into common stock exercisable within 60 days are deemed outstanding and held by the holder of such options or other securities for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person.

(2) These percentages have been calculated based on 9,233,806 shares of common stock outstanding as of January 27, 2012.

(3) Includes (i) 2,000 shares underlying options held by Mr. Spier that are currently exercisable or that will become exercisable within 60 days and (ii) 220,831 shares that may be acquired by Mr. Spier upon conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016.

(4) Includes (i) 4,000 shares underlying options held by Nathan and Sandra Kahn that are currently exercisable or that will become exercisable within 60 days and (ii) 331,247 shares that may be acquired by Nathan Kahn upon conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016. Nathan and Sandra Kahn share voting and investment power with respect to all shares reported, except for the shares that may be acquired upon conversion of the 10% Convertible Senior Subordinated Notes Due June 1, 2016, of which Sandra Kahn disclaims beneficial ownership.

(5) Includes (i) 200,000 shares underlying options held by Mr. Wrubel that are currently exercisable or that will become exercisable within 60 days and (ii) 110,415 shares that may be acquired by Mr. Wrubel upon conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016.

(6) Consists of 220,831 shares that may be acquired by BFI Co., LLC upon conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016.  Mr. Bendheim, as Class A Manager of BFI Co., LLC, has voting and dispositive control over these shares.

(7) Consists of 6,000 shares underlying options held by Mr. Howard that are currently exercisable or that will become exercisable within 60 days.

(8) Consists of 4,000 shares underlying options held by Mr. Mazurek that are currently exercisable or that will become exercisable within 60 days.

(9) Consists of (i) 883,327 shares that may be acquired by Mr. Cooperman upon conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016 and (ii) 883,327 shares that may be acquired by The Leon and Toby Cooperman Family Foundation, for which Mr. Cooperman acts as trustee, upon conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016.  Mr. Cooperman’s address is St. Andrew’s Country Club, 17024 Brookwood Drive, Boca Raton, Florida 33496.

(10) Includes (i) 216,000 shares underlying options that are currently exercisable or that will become exercisable within 60 days and (ii) 883,324 shares that may be acquired upon conversion of 10% Convertible Senior Subordinated Notes Due June 1, 2016.

SELLING STOCKHOLDERS

Up to 2,649,984 shares of our common stock are currently being offered by the selling stockholders under this prospectus.  This reflects the number of shares of common stock into which the 10% Convertible Senior Subordinated Notes Due June 1, 2016 are currently convertible, at a conversion price of 220.83 shares of common stock per $1,000 principal amount of notes.  The conversion price is subject to adjustment for cash and stock dividends, stock splits and similar transactions.  The current conversion price reflects three adjustments for dividends.  A total of up to 3,100,384 shares of our common stock are being registered by the registration statement of which this prospectus forms a part.  This amount is based upon a conversion price adjusted to give effect to anticipated quarterly dividend payments through June 1, 2016.  In making this estimate, we have assumed quarterly dividend payments of $0.025 per share, which we have paid since March 2009.  However, our board of directors reviews our dividend policy on a quarterly basis and makes a determination with respect to a dividend distribution, subject to profitability, free cash flow and the other requirements of the business. There can be no assurance that dividends will continue to be paid in the current amount, or at all.

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The shares of common stock referred to above are being registered to permit public sales of the shares, and the selling stockholders may offer the shares for resale from time to time pursuant to this prospectus.  The selling stockholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, or pursuant to another effective registration statement covering those shares. We may from time to time include additional selling stockholders in supplements or amendments to this prospectus.

The table below sets forth certain information regarding the selling stockholders and the shares of our common stock offered by them in this prospectus. The selling stockholders have not had a material relationship with us within the past three years other than as described in the footnotes to the table below or as a result of their acquisition of our shares or other securities. To our knowledge, subject to community property laws where applicable, each person named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite such person’s name.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the percentage of our common stock beneficially owned by each selling stockholder after the offering, we have assumed that all shares offered by such selling stockholder have been sold, and therefore the calculation is based on a number of shares of common stock outstanding comprised of (i) 9,233,806 shares of common stock outstanding as of January 27, 2012 plus (ii) the number of shares offered by the selling stockholder in this offering.  The shares offered by one selling stockholder are not deemed outstanding for the purpose of computing the percentage ownership of any other selling stockholder.

	Ownership Before Offering		Ownership After Offering
Selling Stockholder	Number of shares of common stock beneficially owned (1)	Number of shares offered	Number of shares of common stock beneficially owned (1)	Percentage of common stock beneficially owned (1) (2)
BFI Co. LLC(3)	220,831	220,831	-	-
Leon G. Cooperman	883,327	883,327	-	-
The Leon and Toby Cooperman Family Foundation(4)	883,327	883,327	-	-
Nathan Kahn(5)	4,033,770	331,247	3,702,523	38.7%
William Spier(6)	396,448	220,831	175,617	1.9%
Harvey Wrubel(7)	550,342	110,415	439,927	4.6%

(1) Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assume the exercise of all options and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of January 27, 2012, except as otherwise noted. Shares issuable pursuant to the exercise of stock options and other securities convertible into common stock exercisable within 60 days are deemed outstanding and held by the holder of such options or other securities for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person.

(2) These percentages have been calculated based on 9,233,806 shares of common stock outstanding as of January 27, 2012.

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(3) Daniel Bendheim, Jonathan Bendheim and Yonina Bendheim Jacobson, as Class B Managers of BFI Co., LLC, and Jack Bendheim, as Class A Manager, all have voting and dispositive controls over such shares. Jack Bendheim serves as a member of our board of directors.  Jack Bendheim is the father of Daniel Bendheim, Jonathan Bendheim and Yonina Bendheim Jacobson.

(4) Leon G. Cooperman, as Trustee of The Leon and Toby Cooperman Family Foundation, has voting and dispositive controls over such shares.

(5) Nathan Kahn serves as our chief executive officer, president and a member of our board of directors.

(6) William Spier serves as the chairman of our board of directors.

(7) Mr. Wrubel serves as our vice president of sales/director of marketing and a member of our board of directors.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On June 3, 2011, we sold $12,000,000 principal amount of 10% Convertible Senior Subordinated Notes Due June 1, 2016 in a private placement to selected accredited investors.  Nathan Kahn, our chief executive officer and president, purchased $1,500,000 principal amount of notes; William Spier, the chairman of our board of directors, purchased $1,000,000 principal amount of notes; BFI Co. LLC, an entity managed by Jack Bendheim, a member of our board of directors, and members of his family, purchased $1,000,000 principal amount of notes; and Harvey Wrubel, our vice president of sales/director of marketing, purchased $500,000 principal amount of notes.

DESCRIPTION OF SECURITIES

We have authorized 20,000,000 shares of common stock, par value $0. 01 per share.  On January 27, 2012, there were 11,749,651shares issued and 9,233,806 shares outstanding.  We also have currently outstanding $12,000,000 principal amount of 10% Convertible Senior Subordinated Notes Due June 1, 2016, which are currently convertible into 2,649,984 shares of common stock.  We are registering 3,100,384 shares of our common stock under the registration statement of which this prospectus forms a part.  This amount is based upon a conversion price adjusted to give effect to anticipated quarterly dividend payments through June 1, 2016.  In making this estimate, we have assumed quarterly dividend payments of $0.025 per share, which we have paid since March 2009.   However, our board of directors reviews our dividend policy on a quarterly basis and makes a determination with respect to a dividend distribution, subject to profitability, free cash flow and the other requirements of the business. There can be no assurance that dividends will continue to be paid in the current amount, or at all.

Common Stock

The holders of common stock are entitled to one vote per share on all matters to be voted upon by stockholders.  Holders of our common stock are entitled to receive ratably dividends as may be declared by the board of directors out of funds legally available for that purpose. In the event of our liquidation, dissolution, or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities. The common stock has no preemptive or conversion rights, other subscription rights, or redemption or sinking fund provisions.

Notes

On June 3, 2011, we sold $12,000,000 principal amount of 10% Convertible Senior Subordinated Notes Due June 1, 2016 in a private placement to selected accredited investors.  The notes are currently convertible at the option of the holders into shares of common stock at a conversion price of 220.83 shares of common stock per $1,000 principal amount of notes, subject to adjustment for cash and stock dividends, stock splits and similar transactions at any time before maturity.  The current conversion price reflects three adjustments for dividends.  A total of up to 3,100,384 shares of our common stock are being registered by the registration statement of which this prospectus forms a part.  This amount is based upon a conversion price adjusted to give effect to anticipated quarterly dividend payments through June 1, 2016.  In addition, if the last reported sale price of the common stock for 30 consecutive trading days is equal to or greater than $7.00, and a registration statement is effective covering the resale of the shares of common stock issuable upon conversion of the notes, we have the right, in our sole discretion, to require the holders to convert all or part of their notes at the then applicable conversion rate.

Interest on the notes is payable in arrears on the first day of June and December every year the notes are outstanding.

In accordance with the Convertible Notes Purchase Agreement entered into in connection with the issuance of the notes, we were required to cause the election of a director designated by Leon G. Cooperman.  Mr. Cooperman’s current designee is Douglas Kass.  Absent a vote for such removal by the holders of our common stock, Mr. Cooperman’s designee may be removed only by our board of directors (A) for gross negligence or a material breach of his fiduciary or similar duties or (B) at any time after Mr. Cooperman and/or his affiliates cease to own notes convertible into at least 10% of our outstanding common stock, 10% of our outstanding common stock directly, or a combination thereof.  Mr. Cooperman and/or his affiliates shall not be deemed to drop below the 10% holdings requirement for any reason other than their sale or disposition of our securities.  For as long as Mr. Cooperman or his affiliates hold such designation right, if the members of our board of directors are to be re-elected, the board of directors is required to nominate and recommend that our stockholders elect such designee.  Upon the occurrence of certain events of default, Mr. Cooperman has the option to appoint a second director nominee in lieu of accelerating payment of unpaid principal and accrued interest.

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The Convertible Notes Purchase Agreement includes standard covenants, including a requirement to use our reasonable best efforts to maintain the availability of current public information and comply with the rules of the OTCQX, restrictions on our ability to incur certain indebtedness and create certain liens, and a requirement to register the common stock issuable upon conversion of the notes for resale under the Securities Act of 1933, as amended.  If we fail to comply with the registration requirements in a timely manner, then we may be required, at each holder’s option, to (i) repurchase (a) all of the common stock issued upon any prior exercise of such holder’s notes or (b) such holder’s notes, in each case for 110% of the principal amount of the notes repurchased, plus accrued and unpaid interest, or (ii) make an additional payment in an amount equal to 2% per annum of the principal amount of the notes.  As of the date of this prospectus, and upon its effectiveness, we are in compliance with all the covenants in the Convertible Notes Purchase Agreement.

Delaware Anti-Takeover Law and Provisions of our Certificate of Incorporation and Bylaws

Section 203 of the Delaware General Corporation Law, in general, prohibits a business combination between a corporation and an interested stockholder within three years of the time such stockholder became an interested stockholder, unless:

· prior to such time the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

· upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, exclusive of shares owned by directors who are also officers and by certain employee stock plans; or

· at or subsequent to such time, the business combination is approved by the board of directors and authorized by the affirmative vote at a stockholders’ meeting of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

The term “business combination” is defined to include, among other transactions between an interested stockholder and a corporation or any direct or indirect majority owned subsidiary thereof: a merger or consolidation; a sale, lease, exchange, mortgage, pledge, transfer or other disposition (including as part of a dissolution) of assets having an aggregate market value equal to 10% or more of either the aggregate market value of all assets of the corporation on a consolidated basis or the aggregate market value of all the outstanding stock of the corporation; certain transactions that would result in the issuance or transfer by the corporation of any of its stock to the interested stockholder; certain transactions that would increase the interested stockholder’s proportionate share ownership of the stock of any class or series of the corporation or such subsidiary; and any receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation or any such subsidiary. In general, and subject to certain exceptions, an “interested stockholder” is any person who is the owner of 15% or more of the outstanding voting stock of the corporation, an affiliate or associate of the corporation who was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date or the affiliates and associates of such person. The term “owner” is broadly defined to include any person that individually or with or through such person’s affiliates or associates, among other things, beneficially owns such stock, or has the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement or understanding or upon the exercise of warrants or options or otherwise or has the right to vote such stock pursuant to any agreement or understanding, or has an agreement or understanding with the beneficial owner of such stock for the purpose of acquiring, holding, voting or disposing of such stock.

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The restrictions described above do not apply to corporations that have elected, in the manner provided therein, not to be subject to Section 203 of the Delaware General Corporation Law or, with certain exceptions, which do not have a class of voting stock that is listed on a national securities exchange or held of record by more than 2,000 stockholders. We have not opted out of Section 203, but we are not currently subject to it because we are not listed on a national securities exchange and our securities are held of record by fewer than 2,000 stockholders.  However, we could become subject to it if we become so listed or so held.

If Section 203 becomes applicable to us, it could delay or prohibit mergers or other takeover or change in control attempts with respect to us and, accordingly, could discourage attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

Provisions of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests.  Therefore, these provisions could adversely affect the price of our common stock.  Among other things, our certificate of incorporation and bylaws:

· do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose);

· provide that special meetings of our stockholders may be called only by our board of directors, chairman, chief executive officer, president or secretary; and

· provide advance notice provisions with which a stockholder who wishes to nominate a director or propose other business to be considered at a stockholder meeting must comply.

Indemnification of Directors and Officers

Pursuant to Section 145 of the Delaware General Corporation Law, a corporation has the power to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a third-party action, other than a derivative action, and against expenses actually and reasonably incurred in the defense or settlement of a derivative action, provided that there is a determination that the individual acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe the individual’s conduct was unlawful. Such determination shall be made, in the case of an individual who is a director or officer at the time of such determination:

· by a majority of the disinterested directors, even though less than a quorum;

· by a committee of such directors designated by a majority vote of such directors, even though less than a quorum;

· if there are no disinterested directors, or if such directors so direct, by independent legal counsel; or

· by a majority vote of the stockholders, at a meeting at which a quorum is present.

Without court approval, however, no indemnification may be made in respect of any derivative action in which such individual is adjudged liable to the corporation.

The Delaware General Corporation Law requires indemnification of directors and officers for expenses relating to a successful defense on the merits or otherwise of a derivative or third-party action.

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The Delaware General Corporation Law permits a corporation to advance expenses relating to the defense of any proceeding to directors and officers contingent upon such individuals’ commitment to repay any advances unless it is determined ultimately that such individuals are entitled to be indemnified.

Under the Delaware General Corporation Law, the rights to indemnification and advancement of expenses provided in the law are non-exclusive, in that, subject to public policy issues, indemnification and advancement of expenses beyond that provided by statute may be provided by bylaw, agreement, vote of stockholders, disinterested directors or otherwise.

Limitation of Personal Liability of Directors

The Delaware General Corporation Law provides that a corporation’s certificate of incorporation may include a provision limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. However, no such provision can eliminate or limit the liability of a director for:

· any breach of the director’s duty of loyalty to the corporation or its stockholders;

· acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law;

· violation of certain provisions of the Delaware General Corporation Law;

· any transaction from which the director derived an improper personal benefit; or

· any act or omission prior to the adoption of such a provision in the certificate of incorporation.

Our certificate of incorporation provides that our directors shall not be personally liable to us or any of our stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by the Delaware General Corporation Law.

Disclosure of Commission Position on Indemnification for Securities Act Liabilities

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to our directors, officers and persons controlling us, we have been advised that it is the Securities and Exchange Commission’s opinion that such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.

PLAN OF DISTRIBUTION

As used in this prospectus, “selling stockholders” includes the successors-in-interest, donees, transferees, pledgees or others who may later hold the selling stockholders’ interests. In all cases, the selling stockholders will act independently of us in making decisions with respect to the timing, manner, size and price of each sale.

Each selling stockholder of the common stock may, from time to time, sell any or all of their shares of common stock on the OTCQX or any other stock exchange, market or trading facility on which the shares are listed or quoted at the time of sale or in private transactions. These sales may be at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or negotiated prices. A selling stockholder may use any one or more of the following methods when selling shares:

· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

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· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

· an exchange distribution in accordance with the rules of the applicable exchange;

· privately negotiated transactions;

· settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;

· broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

· through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

· loan or pledge the shares to a broker-dealer, who may sell the loaned shares or, in the event of default, sell the pledged shares;

· through underwriters or dealers;

· through agents;

· directly to purchasers, including institutional investors;

· a combination of any such methods of sale; or

· any other method permitted pursuant to applicable law.

In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act of 1933, as amended, may be sold under Rule 144 rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with NASD Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASD IM-2440.

In connection with the sale of the common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of the common stock short after the effective date of the registration statement of which this prospectus is a part and deliver common stock registered hereby to close out their short positions and to return borrowed shares in connection with such short sales, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933, as amended. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of the shares of common stock will be paid by the selling stockholder and/or the purchasers. Each selling stockholder has represented and warranted to us that it acquired the securities subject to this registration statement solely for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof.

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We are required to pay certain fees and expenses incurred by us incident to the registration of the shares, but we will not receive any proceeds from the sale of the common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act of 1933, as amended.

Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, they will be subject to the prospectus delivery requirements of the Securities Act of 1933, as amended, including Rule 172 thereunder. There is no underwriter or coordinating broker acting in connection with the proposed sale of the common stock by the selling stockholders.

We have agreed to keep this prospectus effective until the earlier of (i) one year after the maturity date of the notes or (ii) the date on which the shares registered have been sold.  The common stock will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended, any person engaged in the distribution of the common stock may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act of 1933, as amended).

LEGAL MATTERS

Haynes and Boone, LLP, New York, New York, will pass upon the validity of the shares of our common stock offered by the selling stockholders under this prospectus.

EXPERTS

Our financial statements as of December 31, 2009 and 2010 and for the years then ended included in this prospectus have been audited by EisnerAmper LLP, an independent registered public accounting firm, as stated in its report appearing in the registration statement, and are included in reliance upon the report of such firm given upon its authority as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-1, together with any amendments and related exhibits, under the Securities Act of 1933, as amended, with respect to our shares of common stock offered by this prospectus. The registration statement contains additional information about us and our shares of common stock that the selling stockholders are offering in this prospectus.

Following this offering, we will be required to file annual, quarterly and current reports and other information with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Our Securities and Exchange Commission filings are available to the public over the Internet at the Securities and Exchange Commission’s website at http://www.sec.gov. You may also read and copy any document we file at the Securities and Exchange Commission’s public reference room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. In addition, through our website, http://www.empireresources.com, you can access electronic copies of documents we file with the Securities and Exchange Commission. Information on our website is not incorporated by reference in this prospectus. Access to those electronic filings is available as soon as practicable after filing with the Securities and Exchange Commission. You may also request a copy of those filings, excluding exhibits, from us at no cost. Any such request should be addressed to us at: One Parker Plaza, Fort Lee, New Jersey 07024, Attention: Nathan Kahn, Chief Executive Officer and President.

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EMPIRE RESOURCES, INC.

CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2010 and 2009	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009	F-4
Consolidated Statements of Changes in Stockholder’s Equity for the Years Ended December 31, 2010 and 2009	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2010 and 2009	F-6
Notes to Consolidated Financial Statements	F-7
Condensed Consolidated Balance Sheet as of September 30, 2011 (Unaudited) and December 31, 2010	F-23
Condensed Consolidated Statements of Income (Unaudited) for the Nine Months Ended September 30, 2011 and 2010	F-24
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2011 and 2010	F-25
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) for the Nine Months Ended September 30, 2011	F-26
Notes to Condensed Consolidated Financial Statements (Unaudited)	F-27

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Empire Resources, Inc.

Fort Lee, New Jersey

We have audited the accompanying consolidated balance sheets of Empire Resources, Inc. (the "Company") and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Empire Resources, Inc. and subsidiaries as of December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Eisner Amper LLP

New York, New York

March 28, 2011

F-2

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands except share amounts)

	December 31,
	2010			2009
ASSETS
Current assets:
Cash	$	1,270		$	1,142
Restricted Cash		0			2,149
Trade accounts receivable (less allowance for doubtful accounts of         $331 and $331)		41,174			28,109
Inventories		132,196			115,067
Other current  assets		11,406			5,930
Total current assets		186,046			152,397
Property and equipment, net		4,078			4,191
Deferred financing costs, net of accumulated amortization of $292		0			234
Total Assets	$	190,124		$	156,822
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - banks	$	100,447		$	54,049
Current maturities of mortgage payable		151			141
Trade accounts payable		31,482			52,807
Income taxes payable		6,143			1,703
Accrued expenses and derivative liabilities		10,537			14,792
Dividends payable		0			233
Total current liabilities		148,760			123,725
Mortgage payable, net of current maturities		1,621			1,772
Commitments and Contingencies (Note P)
Stockholders' equity:
Common stock $.01 par value, 20,000,000 shares authorized and           11,749,651 shares issued at December 31, 2010 and  2009		117			117
Additional paid-in capital		11,937			11,919
Retained earnings		31,235			23,942
Accumulated other comprehensive loss		(96	)		(1,275	)
Treasury stock (2,490,745 shares and 2,447,201 shares          at December 31, 2010 and 2009, respectively)		(3,450	)		(3,378	)
Total stockholders' equity		39,743			31,325
Total Liabilities and Stockholders' Equity	$	190,124		$	156,822

See notes to consolidated financial statements

F-3

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands except per share amounts)

	Year Ended December 31,
	2010			2009
Net sales	$	465,013		$	246,062
Cost of goods sold		434,785			229,513
Gross profit		30,228			16,549
Selling, general and administrative expenses		12,031			8,770
Operating income before asset impairment		18,197			7,779
Asset (recovery)/impairment		(346	)		2,966
Operating income		18,543			4,813
Interest expense		3,997			5,622
Income before income taxes		14,546			(809	)
Income taxes		5,401			(298	)
Net income (loss)	$	9,145		$	(511	)
Weighted average shares outstanding:
Basic		9,260			9,437
Diluted		9,435			9,437
Earnings (loss) per share:
Basic	$	0.99		$	(0.05	)
Diluted	$	0.97		$	(0.05	)

See notes to consolidated financial statements

F-4

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

(In thousands except per share amounts)

	Common Stock Number of Shares		Common Stock Amount		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total Stockholders' Equity			Total Comprehensive Income
Balance at December 31, 2008		11,750	$	117	$	11,709	$	25,394		$	(2,896	)	$	(3,063	)	$	31,261
Treasury stock acquired														(315	)		(315	)
Stock options awarded						210											210
Net change in cumulative translation adjustment											(14	)					(14	)	$	(14	)
Increase in value of interest rate swap derivative    contract, net of deferred tax of $980											1,632						1,632			1,632
Increase in value of marketable securities net of   deferred tax											3						3			3
Dividends ($0.10 per share)								(941	)								(941	)
Net loss								(511	)								(511	)		(511	)
																				1,110
Balance at December 31, 2009		11,750		117		11,919		23,942			(1,275	)		(3,378	)		31,325
Treasury stock acquired														(83	)		(83	)
Stock options exercised						7								11			18
Tax benefit applicable to exercise of stock options						11											11
Net change in cumulative translation adjustment											(120	)					(120	)		(120	)
Decrease in value of interest rate swap liability,  net of deferred tax of $782											1,303						1,303			1,303
Decrease in value of marketable securities net of   deferred tax of ($2)											(4	)					(4	)		(4	)
Dividends ($0.20 per share)								(1,852	)								(1,852	)
Net income								9,145									9,145			9,145
																			$	10,324
Balance at December 31, 2010		11,750	$	117	$	11,937	$	31,235		$	(96	)	$	(3,450	)	$	39,743

See notes to consolidated financial statements

F-5

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2010			2009
Operating activities:
Net income/(loss)	$	9,145		$	(511	)
Adjustments to reconcile net income/(loss) to net cash (used in)/provided          by operating activities:
Depreciation and amortization		374			428
(Impairment recovery)/asset impairment		(346	)		2,966
Deferred income taxes		(32	)		(1,486	)
Non-cash compensation		0			210
Foreign exchange loss /(gain) and other		155			(74	)
Changes in:
Restricted cash		2,149			(2,149	)
Trade accounts receivable		(13,245	)		13,034
Inventories		(17,564	)		(7,865	)
Other current and derivative assets		(6,240	)		17,303
Trade accounts payable		(1,542	)		26,846
Income taxes payable		4,440			(645	)
Accrued expenses and derivative liabilities		(21,873	)		6,213
Net cash (used in)/provided by operating activities		(44,579	)		54,270
Investing activities:
Net proceeds from sale of property and equipment		346			0
Purchases of property and equipment		(27	)		(14	)
Net cash provided by/(used in) investing activities		319			(14	)
Financing activities:
Proceeds from/(repayments of) notes payable – banks		46,691			(53,920	)
Repayments - mortgage payable		(141	)		(133	)
Dividends paid		(2,085	)		(1,184	)
Treasury stock purchased		(83	)		(315	)
Deferred financing costs		-			(50	)
Stock options exercised		18			-
Tax benefit from stock options exercised		11			-
Net cash provided by/(used in) financing activities		44,411			(55,602	)
Net increase in cash		151			(1,346	)
Effect of exchange rate		(23	)		3
Cash at beginning of year		1,142			2,485
Cash at end of the year	$	1,270		$	1,142
Supplemental cash flow information:
Interest paid during the year	$	4,037		$	5,349
Income taxes paid during the year	$	5,718		$	642
Non Cash Financing Activities:
Dividend declared but not yet paid	$	0		$	233

See notes to consolidated financial statements

F-6

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Note A - BUSINESS

Empire Resources, Inc (“the Company”) is engaged principally in the purchase, sale and distribution of value added semi finished aluminum and steel products to a diverse customer base located throughout the Americas, Australia, Europe and New Zealand.  The Company also manufactured prime aluminum extruded products in its own facility located in Baltimore, Maryland. In January 2009, production at this facility was suspended due to decreased market demand and in September 2009 the facility was permanently closed.  The Company sells its products through its own marketing and sales personnel and through its independent sales agents located in the U.S. and Europe who receive commissions on sales.  The Company purchases from several suppliers located throughout the world (see Note B [14]).

Note B - Summary of Significant Accounting Policies

[1] Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.  All intercompany balances and transactions have been eliminated on consolidation.

[2] Revenue recognition:

Revenue on product sales is recognized at the point in time when the product has been shipped, title and risk of loss has been transferred to the customer, and the following conditions are met: persuasive evidence of an arrangement exists, the price is fixed and determinable, and collectability of the resulting receivable is reasonably assured.

[3] Accounts receivable and allowance policy:

Accounts receivable are stated as the outstanding balance due from customers, net of an allowance for doubtful accounts.  The Company maintains a credit insurance policy with a 10% co-pay provision for most accounts receivable.  The Company will provide an allowance for doubtful accounts in the event that it determines there may be potential losses beyond the credit insurance coverage.

[4] Inventories:

Inventories which consist of purchased semi-finished metal products are stated at the lower of cost or market.  Cost is determined by the specific-identification method. Inventory has generally been purchased for specific customer orders.  The carrying amount of inventory which is hedged by futures contracts designated as fair value hedges is adjusted to fair value.

[5] Property and equipment:

Property and equipment are stated at cost and depreciated by the straight-line method over their estimated useful lives.  Impaired assets are written down to their net realizable value.

F-7

[6] Derivatives:

The Company recognizes all derivatives in the balance sheet at fair value. Derivatives that are not hedges are adjusted to fair value through earnings. If the derivative is a hedge, depending upon the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings (fair value hedge), or recognized in other comprehensive income until the hedged item is recognized in earnings (cash flow hedge). The ineffective portion of a derivative’s change in fair value, if any, is immediately recognized in earnings. When a hedged item in a fair value hedge is sold, the adjustment in the carrying amount of the hedged item is recognized in earnings (see Note E).

[7] Foreign currency translation:

The functional currency of Empire Resources Pacific Ltd., a wholly-owned domestic subsidiary which acts as a sales agent in Australia and New Zealand, is the Australian dollar.  The Company also has a wholly owned foreign subsidiary incorporated in Belgium which sells semi finished aluminum products in Europe.  The functional currency of this subsidiary is the Euro. Cumulative translation adjustments, which are charged or credited to accumulated other comprehensive income, arise from translation of functional currency amounts into U.S. dollars.

[8] Income taxes:

The Company follows the asset and liability approach for deferred income taxes.  This method provides that deferred tax assets and liabilities are recorded, using currently enacted tax rates, based upon the difference between the tax bases of assets and liabilities and their carrying amounts for financial statement purposes.

Deferred tax asset valuation allowances are recorded when management does not believe that it is more likely than not that the related deferred tax assets will be realized.

[9] Per share data:

Basic earnings / (loss) per share is computed by dividing net income / (loss) by the weighted average number of common shares outstanding during the year.  Diluted earnings per share give effect to all dilutive outstanding stock options, using the treasury stock method.

[10] Stock - based compensation:

Stock-based compensation expense for an award of equity instruments, including stock options, is recognized over the vesting period based on the fair value of the award at the grant date.

F-8

[11] Newly Adopted Accounting Pronouncements

In February 2008, the Financial Accounting Standards Board (“FASB”) issued amended guidance to delay the fair value measurement and expanded disclosures about fair value measurements for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008. Effective January 1, 2009, the Company adopted the guidance related to fair value measurements for nonfinancial assets and nonfinancial liabilities and the adoption of such guidance did not have any effect on the Company’s consolidated financial statements.

In March 2008, the FASB issued authoritative guidance which requires entities that utilize derivative instruments to provide qualitative disclosures about their objectives and strategies for using such instruments, as well as any details of credit-risk-related contingent features contained within derivatives. The guidance also requires entities to disclose additional information about the amounts and location of derivatives located within the financial statements, how the guidance has been applied and the impact that hedges have on an entity’s financial position, financial performance, and cash flows. The guidance is effective for fiscal years and interim periods beginning after November 15, 2008. The Company adopted this guidance in the 2009 financial statements (see Note E)

In August 2009, the FASB issued amended guidance on the measurement of liabilities at fair value. The guidance provides clarification that in circumstances in which a quoted market price in an active market for an identical liability is not available, the fair value of a liability be measured using one or more of the valuation techniques that uses the quoted price of an identical liability when traded as an asset, or, if unavailable, quoted prices for similar liabilities or similar assets when traded as assets. If none of this information is available, the entity should use a valuation technique in accordance with existing fair valuation principles. This guidance is effective for the first reporting period (including interim periods) after issuance. The Company adopted this guidance in the quarter ended September 30, 2009. The adoption did not have any effect on the Company’s consolidated financial statements.

In January 2010, the FASB issued amended accounting guidance on the disclosure requirements for fair value measurements. Specifically, the changes require a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. The changes also clarify existing disclosure requirements related to how assets and liabilities should be grouped by class and valuation techniques used for recurring and nonrecurring fair value measurements. The Company adopted this guidance on January 1, 2010. The adoption did not have any effect on the Company’s consolidated financial statements.

[12] Fair Value

Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The fair value hierarchy consists of three broad levels, as described below:

F-9

The three levels of the fair value hierarchy are described below:

·   Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

·   Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

·   Level 3 - Inputs that are both significant to the fair value measurement and unobservable.  We do not hold any assets or liabilities that would be classified as Level 3.

Derivative contracts consisting of aluminum contracts, foreign currency contracts, and interest rates swaps are valued using quoted market prices and significant other observable inputs.  These financial instruments are typically exchange-traded and are generally classified within Level 1 or Level 2 of the fair value hierarchy depending on whether the exchange is deemed to be an active market or not.

Major categories of assets and liabilities measured at fair value at December 31, 2010 and 2009 are classified as follows (in thousands):

	December 31, 2010				December 31, 2009
	Level 1		Level 2		Level 1		Level 2
Assets:
Inventory	$	120,702			$	115,067
Aluminum futures contracts		40
Liabilities:
Foreign currency futures contracts		2,037				780
Interest rate swap contracts			$	176			$	2,260
Aluminum futures contracts		3,532				7,747

[13] Use of estimates:

The preparation of financial statements in accordance with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.   Actual results could differ from these estimates.

[14] Significant customers and concentration of suppliers:

During 2010 each of two customers accounted for sales slightly in excess of 10%, as  compared to no one customer in 2009.

The Company’s purchase of metal products is from a limited number of suppliers located throughout the world. Two suppliers, Elval Hellenic Aluminium and P.T. Alumindo Light Metal Industries accounted for 39% of total purchases during the year ended December 31, 2010 as compared to 50% of total purchases from Elval Hellenic Aluminium and Hulamin Ltd. in 2009. The Company’s loss of any of its largest suppliers or a material default by any such supplier in its obligations to the Company would have at least a short-term material adverse effect on the Company’s business.

F-10

[15] Reclassifications:

Certain prior year balances have been reclassified to conform to current year presentation.

Note C – Fair Value of Financial Instruments

The carrying amounts of variable rate notes payable to the banks and the variable rate mortgage payable approximate fair value as of December 31, 2010 and 2009 because these notes reflect market changes to interest rates. Derivative financial instruments are carried at fair value (see Note B [12]).

Note D – Property and Equipment

On September 30, 2009, the Company announced its plan to shutter its extrusion press at its Baltimore facility and, based on management’s estimate of net realizable value, recognized a pre-tax impairment charge of $2,966,000 representing the carrying value of the press and related equipment. In 2010, the Company sold the extrusion press for net proceeds of $346,000.

Depreciation expense was $140,000 and $268,000 for the years ended December 31, 2010 and 2009, respectively.

Property and equipment are summarized as follows: (in thousands)

	December 31,
	2010		2009		Estimated Useful Life
Cost:
Land	$	1,180	$	1,180
Buildings and improvements		3,165		3,165	40 and 10 years
Other equipment		1,212		1,185	3 to 5 years
		5,557		5,530
Less: Accumulated depreciation		1,479		1,339
Net Book Value	$	4,078	$	4,191

Note E – Derivative Financial Instruments and Risk Management

The Company uses derivative financial instruments designated as fair value hedges to manage its exposure to commodity price risk and foreign currency exchange risk inherent in its operations.  It is the Company’s policy to hedge such risks to the extent practicable.  The Company enters into high-grade aluminum futures contracts to limit its gross margin exposure by hedging the metal content element of firmly committed purchase and sales commitments. The Company also enters into foreign exchange forward contracts to hedge its exposure related to commitments to buy and sell non-ferrous metals denominated in international currencies.

F-11

The Company’s unrealized assets and liabilities in respect of its fair value hedges measured at fair value at December 31, 2010 and 2009 are as follows (in thousands):

Derivatives designated as    fair value hedges	Balance Sheet Location	December 31, 2010		December 31, 2009
Asset derivatives:
Aluminum futures     contracts	Other current assets		40		0
Total		$	40	$	-
Liability derivatives:
Foreign currency futures     contracts	Accrued expenses and derivative liabilities	$	2,037	$	780
Aluminum futures     contracts	Accrued expenses and derivative liabilities		3,532		7,747
Total		$	5,569	$	8,527

For the years ended December 31, 2010, and 2009, hedge ineffectiveness associated with derivatives designated as fair value hedges was insignificant, and no fair value hedges were derecognized.

As discussed in Notes G and H, the Company has entered into interest rate swaps to convert a mortgage and a portion of the revolving credit facility from a variable rate to a fixed rate obligation.  These swaps have been designated as cash flow hedges and the Company’s unrealized liabilities relating to them measured at fair value at December 31, 2010 and 2009 are as follows (in thousands):

Derivatives designated as    cash flow hedges	Balance Sheet Location	December 31, 2010		December 31, 2009
Liability derivatives:
Interest rate swap     contracts	Accrued expenses and derivative liabilities	$	176	$	2,260

A corresponding debit, net of deferred taxes, is reflected in accumulated other comprehensive loss in the accompanying balance sheet (see Note K).

The table below summarizes the realized gain or (loss) of the Company’s derivative instruments and their location in the income statement (in thousands):

Derivatives in hedging    relationships		Location of Gain or (Loss) Recognized	December 31,
			2010			2009
Foreign currency futures	(a)	Cost of Goods Sold	$	543		$	(604	)
Interest rate swaps	(b)	Interest Expense		(2,383	)		(3,457	)
Aluminum futures	(c)	Cost of Goods Sold		(4,304	)		20,165
Total			$	(6,144	)	$	16,104

(a) Fair value hedge: the related hedged item is accounts receivable and an offsetting loss in 2010 and gain in 2009 in the same respective amounts is included in cost of goods sold.

F-12

(b) Cash flow hedge: recognized loss reclassified from accumulated other comprehensive loss.

(c) Fair value hedge: the related hedged item is inventory and an offsetting gain in 2010 and loss in 2009 in the same respective amounts is included in cost of goods sold.

Restricted cash at December 31, 2009 in the accompanying consolidated balance sheet consists of cash held in margin accounts with the Company’s London Metal Exchange brokers. There was no cash held in margin accounts at December 31, 2010.

Note F – Accrued expenses and derivative liabilities

Accrued expenses and derivative liabilities consist of the following:

(in thousands)

	December 31,
	2010		2009
Derivative liabilities	$	5,745	$	10,787
Other accrued expenses		4,792		4,005
	$	10,537	$	14,792

Note G – Mortgage Payable

In December 2004, the Company entered into a mortgage in connection with the purchase of a warehouse. The mortgage, which requires monthly payments of approximately $21,600 including interest, bears interest at LIBOR + 1.75% and matures in December 2014.

In connection with the mortgage, the Company entered into an interest rate swap with a bank which has been designated as a cash flow hedge.  Effective 2004 through December 29, 2014, each month the Company will pay a fixed interest rate of 6.37% to the bank on a notional principal equal to the outstanding principal balance of the mortgage.  In return, the bank will pay to the Company a floating rate, namely, LIBOR, to reset monthly plus 1.75% on the same notional principal amount.

The following are the future maturities of the mortgage at December 31, 2010 (in thousands):

Year ending December 31,
2011	$151
2012	161
2013	171
2014	1,289
	$1,772

F-13

Note H - Notes Payable - Banks

On June 13, 2006, the Company entered into an amended and restated credit agreement with five commercial banks.   JPMorgan Chase Bank, N.A. acted as the agent for the lenders.

As amended in January 2008, the credit agreement provides for a $175 million revolving line of credit, including a commitment to issue letters of credit and a swing-line loan sub facility.  The credit agreement provides that amounts under the facility may be borrowed, repaid and re-borrowed, subject to a borrowing base test, until the maturity date of June 30, 2011.  As of December 31, 2010 and 2009, respectively, the credit utilized under this credit agreement amounted to $137,331,000 and $122,124,000 (including $41,931,000 and $72,124,000 of outstanding letters of credit). The Company is negotiating a new committed line of credit and anticipates that a new credit agreement will be in effect upon expiration of the current agreement; however there can be no assurance that it will be able to successfully conclude a new agreement.

Amounts borrowed by the Company bear interest at LIBOR, Eurodollar, money market or base rates, at the Company’s option, plus an applicable margin.  The applicable margin is determined by the Company’s leverage ratios.  Borrowings under the credit agreement are collateralized by security interests in substantially all of the Company’s assets. The credit agreement contains financial and other covenants including, but not limited to, covenants requiring maintenance of minimum tangible net worth and compliance with leverage ratios, as well as an ownership minimum and limitations on other indebtedness, liens, and investments and dispositions of assets.

In connection with the revolving line of credit, the Company entered into interest rate swaps with a total notional amount of $70 million which terminated in August 2010.  These swaps were designated as cash flow hedges of the variable interest on that portion of the credit agreement up to the notional amount.  During the term of the swaps, the Company paid a weighted average fixed rate of 5.14% plus a spread to the bank, and in return the bank paid the Company a floating LIBOR rate plus a spread.  This floating rate reset monthly.

On June 21, 2010, our wholly owned Belgian subsidiary, Imbali Metals BVBA ("Imbali"), replaced its credit line with Fortis Bank S.A./N.V., and entered into a new credit facility with ING Belgium S.A./N.V., (“ING”)with an uncommitted EUR 5 million line of credit for loans and documentary letters of credit.  Loan advances are limited to a percentage of Imbali’s pledged accounts receivables and inventory. This secured credit arrangement is unconditionally guaranteed by the Company. As of December 31, 2010 the outstanding loan balance amounted to EUR 3.8 million (US $5,047,000) as compared to EUR 2.8 million (US $4,049,000) on December 31, 2009.

Note I - Stock Options

The Company’s 2006 Stock Option Plan (the “2006 Plan”), as amended, provides for the granting of options to purchase not more than an aggregate of 559,000 shares of common stock. Under the 2006 Plan, all canceled or terminated options are available for grants. All officers, directors and employees of the Company and other persons who perform services for the Company are eligible to participate in the 2006 Plan.  Some or all of the options may be “incentive stock options” within the meaning of the Internal Revenue Code of 1986, as amended.

F-14

The 2006 Plan provides that it is to be administered by the Board of Directors, or by a committee appointed by the Board, which will be responsible for determining, subject to the provisions of the 2006 Plan, to whom the options are granted, the number of shares of common stock subject to an option, whether an option shall be incentive or non-qualified, the exercise price of each option (which, other than in the case of incentive stock options, may be less than the fair market value of the shares on the date of grant), the period during which each option may be exercised and the other terms and conditions of each option.  No options may be granted under the 2006 Plan after June 26, 2016.

The following is a summary of stock option activity for the years ended December 31, 2010 and 2009:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining contractual term (years)		Aggregate Intrinsic Value
Options outstanding and exercisable  at December 31, 2008		242,000		$	1.53		1.07	$	-
Options granted		210,000		$	1.35
Options exercised		-
Options canceled		(9,000	)	$	1.83
Options outstanding and exercisable  at December 31, 2009		443,000		$	1.54		9.23	$	25,470
Options granted		-
Options exercised		(10,000	)	$	1.76
Options canceled		(15,000	)	$	1.35
Options outstanding and exercisable  at December 31, 2010		418,000		$	1.54		8.48	$	1,530,500
Options available for grant under 2006 Plan at December 31, 2010		407,000

During 2010, there were no stock option grants.  The Company recorded share-based compensation expense of $209,900 relating to stock options granted and modified during 2009, based on the weighted average grant-date fair value ($.50) of the options.  As of December 31, 2010 and 2009, there was no unrecognized compensation expense as all options granted became vested during 2009. Treasury shares were issued for the 10,000 options exercised in 2010.  The intrinsic value of options exercised during the year ended December 31, 2010 was $29,764.

F-15

The fair value of each option granted during the year ended December 31, 2009 was estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Expected dividend yield	7%
Risk-free interest rate	3.39%
Expected volatility	72%
Expected term (in years)	5

The expected dividend yield is based on historical dividends. The risk free interest rate is based on the annual yield on the measurement date of a zero coupon U.S. Treasury Bond, the maturity of which equals the option’s expected term. The expected volatility is based on historical fluctuations in the Company’s stock price over a period commensurate with the option’s expected term. The expected term is based on the average of the contractual term of the option and the vesting period.

Note J - Treasury Stock

On July 22, 2008, the Board of Directors authorized the Company to repurchase up to 2,000,000 shares of its common stock.  As of December 31, 2010, the Company repurchased a total of 577,278 shares under the repurchase program for an aggregate cost of $1,221,576, of which 53,544 shares were purchased in 2010 and 223,734 shares were purchased in 2009.

Note K – accumulated other comprehensive loss

Components of accumulated other comprehensive loss included in the accompanying consolidated balance sheets are as follows (in thousands):

	December 31,
	2010			2009
Foreign currency translation adjustment	$	30		$	150
Unrealized (loss) on interest-rate swap derivative contract, net of tax    ($66) and ($847), respectively		(110	)		(1,413	)
Unrealized (loss) on investment in marketable securities, net of tax    ($9) and ($7), respectively	(a)	(16	)	(a)	(12	)
	$	(96	)	$	(1,275	)

(a) Relates to marketable securities classified as available for sale, carried at market value of $16 and $20 at December 31, 2010 and 2009, respectively and is included in other current assets.

F-16

Note L - Income Taxes

The components of income/(loss) before income taxes were as follows (in thousands):

	Year Ended December 31,
	2010			2009
U.S.		$	13,216		$	(70	)
Foreign			1,330			(739	)
		$	14,546		$	(809	)

Income tax expense (benefit) consists of the following (in thousands):

	Year Ended December 31,
	2010			2009
Current
U.S. Federal	$	4,459		$	1,052
State and local		974			136
Foreign		0			0
		5,433			1,188
Deferred
U.S. Federal		(13	)		(1,320	)
State and local		(19	)		(166	)
Foreign		0			0
		(32	)		(1,486	)
	$	5,401		$	(298	)

The U.S. statutory rate can be reconciled to the effective tax rate as follows (in thousands):

	Year Ended December 31,
	2010			2009
Provision for taxes at statutory rate	$	4,991		$	(275	)
State and local taxes, net of federal tax effect		596			(23	)
Permanent differences and other current year adjustments		(91	)		42
Other adjustments to prior year accruals		(95	)		(42	)
	$	5,401		$	(298	)

F-17

Deferred tax assets and liabilities are composed of the following (in thousands):

	Year Ended December 31,
	2010			2009
Deferred tax assets
Allowance for doubtful accounts	$	126		$	126
Accrued expenses		302			181
Inventories		2,068			1,651
Marketable Securities		9			7
Property and Equipment		0			469
Stock Options		79			79
Derivative contracts		66			847
		2,650			3,360
Deferred tax liabilities
Property and Equipment		(39	)		0
		(39	)		0
Net deferred tax assets (a)	$	2,611		$	3,360
(a) included in other current assets in the accompanying                 consolidated balance sheet.

Income from foreign subsidiaries and related foreign income taxes primarily relate to Imbali, the Company’s Belgian subsidiary.  For US income tax purposes, the Company has elected to treat Imbali as a disregarded entity and include its taxable income in the Company’s consolidated federal income tax return and separate state income tax returns.  Federal income taxes attributable to Imbali’s taxable income are offset by tax credits for foreign taxes paid by Imbali.  Undistributed earnings of Imbali amounted to approximately $2,427 at December 31, 2010.  Upon distribution of the earnings in the form of dividends, the Company would be required to pay Belgian withholding tax at the rate of 5%.  As the Company intends to indefinitely reinvest such earnings, no provision for such withholding tax has been provided.  For federal income tax purposes, foreign tax credits would be available to the Company for the withholding tax, subject to limitations.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended December 31, 2010 and 2009 is as follows (in thousands).

	Year Ended December 31,
	2010		2009
Balance at January 1	$	329	$	100
Additions based on tax positions related to the current year		0		22
Additions for tax positions of prior years		57		207
Balance at December 31	$	386	$	329

F-18

The total amount of unrecognized tax benefits at December 31, 2010 and 2009 would impact the Company’s effective tax rate, if recognized. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company recognized approximately $46 and $144 of interest expense related to unrecognized tax benefits during the year ended December 31, 2010 and 2009, respectively. Interest related to unrecognized tax benefits accrued in the Company’s balance sheet at December 31, 2010 and 2009 amounted to approximately $190 and $144, respectively.

The Company’s federal and certain other income tax returns remain open to examination by the tax authorities for the tax years 2007 through 2010 and certain other returns remain open to examination by the tax authorities for the years 2006 through 2010.

Note M - Employee Retirement Benefits

The Company has implemented a salary reduction employee benefit plan, under Section 401 (k) of the Internal Revenue Code.  Employees may contribute up to the maximum amount allowable by law and the Company will provide a matching contribution of 50% of employee contributions limited to 2% of employee compensation.  The plan covers all employees who have attained age 18, and most of the eligible employees have elected to participate.

Each employee’s pre-tax contributions are immediately vested upon participation in the plan.  The employees’ vesting of the Company’s matching contribution is based upon length of service as follows:

Years of service	Vested %
1	25%
2	50%
3	75%
4	100%

Employees who terminate prior to 100% vesting forfeit their non-vested portion of the Company’s matching contribution, and those funds are used to reduce future matching contributions.  Employees in active service on the effective date of the plan were granted retroactive service credit for the purpose of determining their vested percentage.  Company matching contributions amounted to $73,000 in 2010 and $67,000 in 2009.

F-19

Note N – Per Share Data

The following is the reconciliation of the numerators and denominators of the basic and diluted earnings/(loss) per share:

	Year Ended December 31,
	2010		2009
Numerator:
Net Income/(Loss)	$	9,145	$	(511	)
Denominator:
Computation of basic earnings per share:
Weighted average shares outstanding – basic		9,260		9,437
Basic earnings/(loss) per share	$	0.99	$	(0.05	)
Computation of diluted earnings (loss) per share:
Weighted average shares outstanding – basic		9,260		9,437
Potentially dilutive shares:
Shares issuable upon exercise of dilutive options		175		0
Weighted average shares outstanding – diluted		9,435		9,437
Diluted earnings/ (loss) per share	$	0.97	$	(0.05	)

Options for 443,000 common shares were not included in the diluted calculation in 2009, as the Company had a net loss and the effect of including these shares would have been anti-dilutive.

Note O – Business Segment and Geographic Area Information

The Company’s only business segment is the sale and distribution of non-ferrous and ferrous metals. Sales are attributed to countries based on location of customer. Sales to domestic and foreign customers were as follows (in thousands):

	Year Ended December 31,
	2010		2009
United States	$	276,802	$	166,665
Europe, Canada & New Zealand		85,920	$	40,886
Brazil		61,300		14,021
Australia		40,991		24,490
	$	465,013	$	246,062

No country other than the United States and Brazil represented 10% of the Company’s net sales.

F-20

Note P - Commitments and Contingencies

[1] Lease:

The Company leases office facilities under a lease expiring in 2015.  The minimum non-cancelable scheduled rentals under such lease are as follows (in thousands):

Year Ending December 31,
2011	$	284
2012		284
2013		284
2014		284
2015		74
	$	1,210

Rent expense for corporate headquarters for the years ended December 31, 2010 and 2009 was $299,000 and $291,000 respectively.

[2] Letters of credit:

Outstanding letters of credit at December 31, 2010 amounted to approximately $42 million all of which expire prior to April 30, 2011.

[3] Employment agreements:

The Company has an employment agreement with one of its executive officers expiring in December 2011.   The agreement provides that the Company may terminate the agreement upon the disability of the executive or for cause (as such terms are defined in the agreement).  Base salary under this agreement is $528,000 per annum. The amount may be increased, but not decreased, by the Board of Directors.

The Company has an employment agreement with another officer, expiring in December 2011. The minimum base salary is $349,000 and is subject to possible upward annual adjustments based upon changes in a designated cost of living index.

F-21

[4] Litigation:

A. W. Financial Services, S.A., a French company ("AWF"), filed a complaint against the Company, as well as against the transfer agent for our shares, American Stock Transfer & Trust Company ("AST"), and AST's agent or sub-contractor, Affiliated Computer Services, Inc. ("ACS"), on September 28, 2007, in the U.S. District Court, Southern District of New York, claiming that 30,426 shares of the Company's common stock owned by AWF, as well as related dividends, were improperly delivered to the State of Delaware as unclaimed (escheated) property. AWF alleges that the escheatment resulted from, among other things, the negligence of each defendant and a breach of fiduciary duty and a failure of the Company to register their shares. In addition, AWF alleges that through the escheatment the Company and the other defendants converted its property. AWF claims that it has suffered damages of not less than $870,000, reflecting in general the difference between the value of the shares when liquidated by the State of Delaware (or its agent, ACS) and when AWF claims to have inquired about selling the shares in the spring of 2006, plus dividends that it would have received in that period, plus interest, plus an amount reflecting the loss in value of the dollar against the euro. AWF also is seeking specific performance, namely, that the Company deliver to it a stock certificate in its name representing 30,426 shares of the Company's common stock. AST subsequently filed cross-claims against the Company and ACS seeking indemnity for any losses resulting to it from AWF's claims. The Company first received actual notice of this lawsuit on March 5, 2008. On March 18, 2008, the Company filed an answer to the complaint denying its material allegations and asserting affirmative defenses. On April 4, 2008, AWF filed an amended complaint making allegations and asserting claims against the Company that were very similar to what was alleged in the original complaint. Counsel for AST agreed that, as a result of the filing of the amended complaint, AST's cross-claims were then moot. On May 2, 2008, the Company and the other defendants filed motions to dismiss the amended complaint for failure to state a claim. On January 29, 2009, the U.S. District Court denied the motions to dismiss without prejudice and instead certified four questions of law raised by the motions to the Supreme Court of Delaware. On September 15, 2009, the Supreme Court of Delaware issued its ruling on the certified questions substantially in favor of AWF. On January 13, 2010, the Company and the other defendants filed renewed motions to dismiss the amended complaint for failure to state a claim. On September 30, 2010, the Court granted in part and denied in part defendants' motions to dismiss, permitting claims of negligence and conversion against each of the defendants, as well as a claim against the Company for failure to register plaintiff's stock, to go forward. The Court's opinion dismissed the claims for breach of fiduciary duty and specific performance against the Company, and the claims for breach of contract against each of AST and ACS. On October 14, 2010, the Company filed an answer denying the material allegations of, and affirmative defenses in response to, the remaining counts of plaintiff's amended complaint. That same day, AST and ACS also jointly filed their answer and affirmative defenses to the remaining counts of plaintiff's amended complaint, but also lodged cross claims against the Company for contractual indemnification and contribution and for common law indemnification and contribution. On November 4, 2010, the Company filed its answer denying the material allegations of, and affirmative defenses in response to, AST's and ACS' cross claims and asserted a cross claim against AST and ACS for common law indemnification and contribution. AST and ACS subsequently filed an answer denying the material allegations of, and affirmative defenses in response to, the Company’s cross claim for common law indemnification and contribution. The Company believes that it has meritorious defenses to both (i) the remaining counts of the amended complaint and (ii) the cross claims and intend to defend against all these claims vigorously.

F-22

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands except share amounts)

	September 30, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash	$	2,206		$	1,270
Trade accounts receivable (less allowance for doubtful accounts of         $529 and $331)		68,892			41,174
Inventories		153,489			132,196
Other current assets		17,916			11,406
Total current assets		242,503			186,046
Advance and supply agreement		5,000			0
Long-term financing costs, net of amortization		1,308			0
Property and equipment, net		4,030			4,078
Total assets	$	252,841		$	190,124
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable - banks	$	151,006		$	100,447
Current maturities of mortgage payable		158			151
Trade accounts payable		38,074			31,482
Income taxes payable		2,818			6,143
Accrued expenses and derivative liabilities		4,371			10,537
Dividends payable		231			0
Total current liabilities		196,658			148,760
Mortgage payable, net of current maturities		1,502			1,621
Subordinated convertible debt net of unamortized discount of $2,640		9,360			0
Derivative liability for embedded conversion option		1,863			0
Deferred taxes payable		292			0
Commitments and Contingencies (Note 16)
Stockholders' equity:
Common stock $.01 par value, 20,000,000 shares authorized and           11,749,651 shares issued at September 30, 2011 and December 31, 2010		117			117
Additional paid-in capital		11,937			11,937
Retained earnings		34,711			31,235
Accumulated other comprehensive loss		(127	)		(96	)
Treasury stock 2,498,545 and 2,490,745 shares         at September 30, 2011 and December 31, 2010		(3,472	)		(3,450	)
Total stockholders' equity		43,166			39,743
Total liabilities and stockholders' equity	$	252,841		$	190,124

See notes to unaudited condensed consolidated financial statements

F-23

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)

(In thousands except per share amounts)

	Nine Months Ended September 30,
	2011			2010
Net sales	$	377,786		$	359,900
Cost of goods sold		360,584			335,535
Gross profit		17,202			24,365
Selling, general and administrative expenses		8,897			8,724
Operating income before impairment recovery		8,305			15,641
Impairment recovery		0			346
Operating income		8,305			15,987
Other income/(expense)
Change in value of derivative liability		966			0
Interest expense, including amortization of debt discount		(2,518	)		(3,547	)
Income before income taxes		6,753			12,440
Income taxes		2,583			4,547
Net income	$	4,170		$	7,893
Weighted average shares outstanding:
Basic		9,259			9,262
Diluted		10,654			9,401
Earnings per share:
Basic	$	0.45		$	0.85
Diluted	$	0.37		$	0.84

See notes to unaudited condensed consolidated financial statements

F-24

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2011			2010
Cash flows from operating activities:
Net income	$	4,170		$	7,893
Adjustments to reconcile net income to net cash used in           operating activities:
Depreciation and amortization		290			332
Change in value of derivative liability		(966	)		0
Amortization of convertible note discount		189			0
Impairment recovery		0			(346	)
Provision for doubtful accounts		209			0
Deferred income taxes		246			507
Foreign exchange loss, and other		12			27
Changes in:
Restricted cash		0			1,829
Trade accounts receivable		(27,944	)		(13,986	)
Inventories		(21,497	)		(2,315	)
Other current assets		(6,530	)		(4,092	)
Trade accounts payable		6,590			(11,695	)
Income taxes payable		(3,325	)		(3,009	)
Accrued expenses and derivative liabilities		(6,222	)		(15,356	)
Net cash  used in operating activities		(54,778	)		(40,211	)
Cash flows used in investing activities:
Advance and supply agreement		(5,000	)		0
Net proceeds from sale of property and equipment		0			346
Purchases of property and equipment		(32	)		(12	)
Net cash (used in)/provided by investing activities		(5,032	)		334
Cash flows provided by financing activities:
Proceeds from subordinated convertible debt		12,000			0
Proceeds from notes payable – banks		50,802			41,428
Repayments - mortgage payable		(112	)		(105	)
Dividends paid		(463	)		(696	)
Deferred financing costs		(1,443	)		0
Treasury stock purchased		(22	)		(83	)
Stock options exercised		0			2
Net cash provided by financing activities		60,762			40,546
Net increase in cash		952			669
Effect of exchange rate		(16	)		(19	)
Cash at beginning of period		1,270			1,142
Cash at end of the period	$	2,206		$	1,792
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	2,061		$	3,634
Income taxes	$	2,404		$	3,883
Non cash financing activities:
Dividend declared but not yet paid	$	231		$	231

See notes to unaudited condensed consolidated financial statements

F-25

EMPIRE RESOURCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In thousands)

	Common Stock Number of Shares		Common Stock Amount		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders' Equity			Total Comprehensive Income
Balance at December 31, 2010		11,750	$	117	$	11,937	$	31,235		$	(96	)	$	(3,450	)	$	39,743
Treasury stock acquired														(22	)		(22	)
Net change in cumulative translation adjustment											(28	)					(28	)		(28	)
Decrease in value of marketable securities net of   deferred tax											(3	)					(3	)		(3	)
Dividends ($0.075 per share)								(694	)								(694	)
Net income								4,170									4,170			4,170
																			$	4,139
Balance at September 30, 2011		11,750	$	117	$	11,937	$	34,711		$	(127	)	$	(3,472	)	$	43,166

See notes to unaudited condensed consolidated financial statements

F-26

Empire Resources, Inc. and Subsidiaries.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(In thousands, except per share amounts)

1. The Company

The condensed consolidated financial statements include the accounts of Empire Resources, Inc. and its wholly-owned subsidiaries, Empire Resources Pacific Ltd., which acts as a sales agent in Australia, 6900 Quad Avenue LLC (the company which owns the warehouse facility in Baltimore) and Imbali Metals BVBA (the European subsidiary).  All significant inter-company transactions and accounts have been eliminated on consolidation.  We purchase and sell semi-finished aluminum and steel products to a diverse customer base located in the Americas, Australia, Europe and New Zealand.

2. Interim Financial Statements

The consolidated interim financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting.  The information and note disclosures normally included in complete financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.  The interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2010, which are included elsewhere herein.

The Company’s management is responsible for interim financial information.  In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments which are of a normal and recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2011 and the results of operations and its cash flows for the nine months ended September 30, 2011 and 2010.   Interim results may not be indicative of the results that may be expected for the year.

3. Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period.  Actual results could differ from these estimates.

4. Concentrations

One customer accounted for approximately 13% of our consolidated net sales for the nine month period ended September 30, 2011, as compared to 9% for the period ended September 30, 2010.

We purchase metal from a number of suppliers located throughout the world.  Two suppliers,   combined, accounted for 41% of total purchases during the nine month period ended September 30, 2011 as compared to 39% during the same period ended September 30, 2010.

F-27

The loss of any one of our largest suppliers or a material default by any such supplier in its obligations to us could have a material adverse effect on our business.

5. Stock Options

We account for stock based compensation in accordance with GAAP which requires recognition of stock-based compensation expense for an award of equity instruments, including stock options, over the vesting period based on the fair value of the award at the grant date.  We do not have any outstanding unvested employee stock options, and during the nine month period ended September 30, 2011, we did not grant any stock options or any other stock-based awards.

6. Inventories

Inventories, which consist primarily of purchased semi-finished metal products, are stated at the lower of cost or market value.  Cost is determined by the specific-identification method. Inventory has generally been purchased for specific customer orders.  The carrying amount of inventory, which is hedged by futures contracts designated as fair value hedges, is adjusted to fair value.

7. Notes Payable—Banks

On April 28, 2011 we entered into a new working capital credit agreement with Rabobank International, for itself and as Lead Arranger and Agent, JPMorgan Chase, for itself and as Syndication Agent, and ABN AMRO, BNP Paribas, RBS Citizens, Société Générale, and Brown Brothers Harriman. The $200 million secured, asset-based credit facility matures on June 30, 2014 and refinanced the Company’s previous $175 million credit agreement which would have matured on June 30, 2011. The Agreement also allows additional increases in the line of credit of up to $50 million, subject to certain restrictions. Amounts borrowed bear interest (2.68% at September 30, 2011) at Eurodollar, money market or base rates, at our option, plus an applicable margin.   Our borrowings under this line of credit are secured by substantially all of our assets. The credit agreement contains financial and other covenants including but not limited to, covenants requiring maintenance of minimum tangible net worth and compliance with leverage ratios, as well as an ownership minimum and limitations on other indebtedness, liens, and investments and dispositions of assets.

The credit agreement provides that amounts under the facility may be borrowed and repaid, and re-borrowed, subject to a borrowing base test, until the maturity date of June 30, 2014.

As of September 30, 2011 and under the previous credit agreement at December 31, 2010, the credit utilized amounted to, respectively, $181,878 and $137,331 (including approximately $40,778 and $41,931 of outstanding letters of credit).

Our wholly owned Belgian subsidiary, Imbali Metals BVBA ("Imbali"), maintains a line of credit with ING Belgium S.A./N.V., (“ING”) for a EUR 8 million commitment for loans and documentary letters of credit.  Loan advances are limited to a percentage of Imbali’s pledged accounts receivables and inventory. This secured credit arrangement is unconditionally guaranteed by the Company. As of September 30, 2011 the outstanding loan amounted to EUR 7.4 million (US $9,906), bearing interest of 3.26% (EURIBOR + 1.75%), as compared to EUR 3.8 million (US $5,047) on December 31, 2010.

F-28

8. Mortgage Payable

We are a party to a related interest rate swap which we entered into in 2004 in connection with the purchase of our Baltimore warehouse.  The mortgage loan, which had an outstanding balance of $1.7 million at September 30, 2011 and $1.8 million at December 31, 2010, requires monthly payments of approximately $21.6 thousand, including interest at LIBOR + 1.75%, and matures in December 2014.  Under the interest rate swap, which has been designated as a cash flow hedge and remains effective through the maturity of the mortgage loan, we pay a monthly fixed interest rate of 6.37% to the counterparty bank on a notional principal equal to the outstanding principal balance of the mortgage.  In return, the bank pays us a floating rate, namely, LIBOR, which resets monthly, plus 1.75% on the same notional principal amount.

9. Convertible Subordinated Debt

On June 3, 2011 we issued $12 million of 10% Convertible Senior Subordinated Notes with a maturity date of June 1, 2016.  Each $1,000 note is initially convertible into 215.05 shares of common stock, subject to dilutive adjustments for cash and stock dividends, stock splits and similar transactions, at any time before maturity.  In addition, if the last reported sale price of the Company’s stock for 30 consecutive trading days is equal to or greater than $7.00, and a registration statement is effective covering the resale of shares of common stock issuable upon conversion of the notes, we have the right, in our sole discretion, to require the holders to convert all or part of their notes at the then applicable conversion rate.  Interest on the notes is payable in arrears on the first day of June and December every year the notes are outstanding.  The note contains covenants, including restrictions on the Company’s ability to incur certain indebtedness and create certain liens.

As of September 30, 2011, each $1,000 note is convertible into 216.86 shares of common stock (equivalent to a conversion price of $4.61 per share of common stock), which reflects adjustments for dividends declared on common stock subsequent to the issuance of the notes through such date.

Officers and directors of the Company and certain affiliated entities purchased $4 million principal amount of the notes.

The majority of proceeds of the convertible subordinated debt is earmarked for a long term advance and supply agreement with the Indonesian company PT Alumindo Light Metal Industry Tbk, (PT Alumindo) a leading producer of high quality semi-finished aluminum products.  The agreements call for us to provide a $10 million non-interest bearing loan to PT Alumindo to enable the expansion of capacity within that company's production network.  As of September 30, 2011, the Company had advanced $5 million to PT Alumindo.  The agreements also provide for a long term, multi-year substantial and preferential supply position from PT Alumindo's premier aluminum rolling mill located in Surabaya.   PT Alumindo is required to repay the loan over thirty six months with monthly payments beginning January 2, 2013.

As a result of transactions which cause adjustments to the conversion rate, the embedded conversion option has been bifurcated and recorded as a separate derivative liability at a fair value at issuance of the notes of $2,829,000, with a corresponding discount recorded on the notes.  The derivative liability is carried at fair value with changes therein recorded in income.  The quarterly mark to market of the derivative liability will result in non-operating, non-cash gains or losses based on decreases or increases in the Company’s stock market price, respectively, among other factors.  The non-cash discount is being amortized as additional interest expense over the term of the notes by use of the interest method.  During the period ended September 30, 2011, the change in the fair value of the derivative liability resulted in a gain of $966,000 and amortization of the discount amounted to $189,000.

F-29

The derivative liability was valued using a lattice model using Level 3 inputs.  This technique was selected because it embodies all of the types of inputs that we expect market participants would consider in determining the fair value of equity linked derivatives embedded in hybrid debt agreements.

The following table summarizes the significant inputs resulting from the calculations:

	2011
	September 30			June 3
Current equity value (in thousands)		25,435			36,811
Volatility		70	%		70	%
Risk free return		0.96	%		1.6	%
Dividend Yield		3.64	%		2.51	%
Strike Price	$	4.61		$	4.65

10. Earnings per Share

Basic earnings per share are based upon weighted average number of common shares outstanding during each period. Diluted earnings per share are based upon the weighted average number of common shares outstanding during each period, plus potential dilutive common shares from assumed exercise of the outstanding stock options using the treasury stock method and assumed conversion of subordinated debt, weighted for the period the debt was outstanding.

F-30

The following table sets forth the computation of basic and diluted earnings per share.

	Nine Months Ended September 30,
	2011			2010
Numerator:
Net income	$	4,170		$	7,893
Add back of interest on convertible subordinated debt, net of taxes		245			-
Add amortization of discount on convertible subordinated debt, net of taxes		118			-
Less change in value of convertible note derivative, net of taxes		(604	)		-
Numerator for diluted earnings per share	$	3,929		$	7,893
Denominator:
Weighted average shares outstanding-basic		9,259			9,262
Dilutive effect of stock options		248			139
Dilutive effect of convertible subordinated debt		1,147			-
Weighted average shares outstanding-diluted		10,654			9,401
Basic Earnings per Share	$	0.45		$	0.85
Diluted Earnings per Share	$	0.37		$	0.84

11. Dividends

On September 22, 2011, our Board of Directors declared a cash dividend of $0.025 per share to stockholders of record at the close of business on October 7, 2011.  The dividend totaling $231 is reflected in dividends payable on the accompanying balance sheet at September 30, 2011 and was paid on October 20, 2011.  The Board of Directors will review its dividend policy on a quarterly basis, and make a determination subject to the profitability and free cash flow and the other requirements of our business.

12. Derivative Financial Instruments and Risk Management

The Company uses derivative financial instruments designated as fair value hedges to manage its exposure to commodity price risk and foreign currency exchange risk inherent in its operations.  It is the Company’s policy to hedge such risks to the extent practicable.  The Company enters into high-grade aluminum futures contracts to limit its gross margin exposure by hedging the metal content element of firmly committed purchase and sales commitments. The Company also enters into foreign exchange forward contracts to hedge its exposure related to commitments to buy and sell non-ferrous metals denominated in international currencies.

F-31

The Company’s unrealized assets and liabilities in respect of its fair value hedges measured at fair value are as follows:

Derivatives designated as    fair value hedges	Balance Sheet Location	September 30, 2011		December 31, 2010
Asset derivatives:
Foreign currency futures      contracts	Other current assets	$	1,418
Aluminum futures     contracts	Other current assets		10,797	$	40
Total		$	12,215	$	40
Liability derivatives:
Foreign currency futures     contracts	Accrued expenses and derivative liabilities			$	2,037
Aluminum futures     contracts	Accrued expenses and derivative liabilities				3,532
Total		$	-	$	5,569

For the periods ended September 30, 2011 and December 31, 2010, hedge ineffectiveness associated with derivatives designated as fair value hedges was insignificant, and no fair value hedges were derecognized.

The Company has entered into interest rate swaps to convert its mortgage from a variable rate to a fixed rate obligation.  The swap has been designated as a cash flow hedge and the Company’s unrealized liabilities relating to it measured at fair value is as follows:

Derivatives designated as    cash flow hedges	Balance Sheet Location	September 30, 2011		December 31, 2010
Liability derivatives:
Interest rate swap     contracts	Accrued expenses and derivative liabilities	$	176	$	176

A corresponding debit, net of deferred taxes, is reflected in accumulated other comprehensive loss in the accompanying balance sheet.

The table below summarizes the realized gains or (losses) of the Company’s derivative instruments and their location in the income statement:

Derivatives in hedging    relationships		Location of Gain or   (Loss) Recognized	Nine Months Ended  September 30,
			2011			2010
Foreign currency futures	(a)	Cost of Goods Sold	$	812		$	508
Interest rate swaps	(b)	Interest Expense		(56	)		(2,363	)
Aluminum futures	(c)	Cost of Goods Sold		(2,401	)		(1,598	)
Total			$	(1,645	)	$	(3,453	)

F-32

(a) Fair value hedge: the related hedged item is accounts receivable and an offsetting loss is included in cost of goods sold in 2011 and 2010 in the same respective amounts.

(b) Cash flow hedge: recognized loss reclassified from accumulated other comprehensive loss.

(c) Fair value hedge: the related hedged item is inventory and offsetting gains are included in cost of goods sold in 2011 and 2010 in the same respective amounts.

13. Fair Value

Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  The fair value hierarchy consists of three broad levels, as described below:

· Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

· Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

· Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Derivative contracts consisting of aluminum contracts, foreign currency contracts, and interest rates swaps are valued using quoted market prices and significant other observable inputs.  These financial instruments are typically exchange-traded and are generally classified within Level 1 or Level 2 of the fair value hierarchy depending on whether the exchange is deemed to be an active market or not.

Major categories of financial assets and liabilities measured at fair value at September 30, 2011 and December 31, 2010 are classified as follows:

	September 30, 2011						December 31, 2010
	Level 1		Level 2		Level 3		Level 1		Level 2
Assets:
Inventories	$	144,257					$	120,702
Foreign currency futures contracts		1,418
Aluminum futures contracts		10,797						40
Liabilities:
Foreign currency futures contracts								2,037
Interest rate swap contracts			$	176					$	176
Aluminum futures contracts								3,532
Embedded conversion option					$	1,863

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14. Comprehensive Income

	Nine Months Ended September 30,
	2011			2010
Net income	$	4,170		$	7,893
Currency translation gain / (loss)		(28	)		(45	)
Marketable securities fair value loss, net of tax		(3	)		(3	)
Interest rate swap fair value gain, net of tax		-			1,278
Comprehensive income	$	4,139		$	9,123

15. Fair Value of Financial Instruments

The carrying amounts of variable rate notes payable to the banks and the variable rate mortgage payable approximate fair value as of September 30, 2011 and December 31, 2010, because these notes reflect market changes to interest rates.  The fair value of the subordinated convertible debt approximates its principal amount of $12 million at September 30, 2011 which exceeds its carrying amount as a result of the unamortized discount related to the bifurcation of the embedded conversion option. Derivative financial instruments are carried at fair value (see Note 13).

16. Business Segment and Geographic Area Information

The Company’s only business segment is the sale and distribution of non-ferrous and ferrous metals.  Sales are attributed to countries based on location of customers.  Sales to domestic and foreign customers were as follows:

	Nine Months Ended September 30,
	2011		2010
United States	$	260,185	$	212,248
Europe, Canada & New Zealand		71,038		61,619
Brazil		18,871		52,211
Australia		27,692		33,822
	$	377,786	$	359,900

17. Commitments and Contingencies

We have outstanding letters of credit to certain of our suppliers, which at September 30, 2011 amounted to approximately $40,778.

On October 31, 2011 MF Global UK Limited, one of our London Metal Exchange (“LME”) clearing brokers, went into special administration under The Investment Bank Special Administration Regulations 2011 in the UK.  On October 31, 2011 we had no cash balances with MF Global UK Limited. The majority of the positions cleared through MF Global UK Limited were transferred to another LME broker. There were some unsettled contracts that were not transferred at that time. Should these contracts or their net value not be realized it may result in a charge of approximately $800,000 based on the carrying value of the contracts at October 31, 2011.

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A. W. Financial Services, S.A., a French company ("AWF"), filed a complaint against us, as well as against the transfer agent for our shares, American Stock Transfer & Trust Company ("AST"), and AST's agent or sub-contractor, Affiliated Computer Services, Inc. ("ACS"), on September 28, 2007, in the U.S. District Court, Southern District of New York, claiming that 30,426 shares of the Company's common stock owned by AWF, as well as related dividends, were improperly delivered to the State of Delaware as unclaimed (escheated) property. AWF alleges that the escheatment resulted from, among other things, the negligence of each defendant and a breach of fiduciary duty and a failure to register their shares by us. In addition, AWF alleges that through the escheatment we and the other defendants converted its property. AWF claims that it has suffered damages of not less than $870,000, reflecting in general the difference between the value of the shares when liquidated by the State of Delaware (or its agent, ACS) and when AWF claims to have inquired about selling the shares in the spring of 2006, plus dividends that it would have received in that period, plus interest, plus an amount reflecting the loss in value of the dollar against the euro. AWF also is seeking specific performance, namely, that we deliver to it a stock certificate in its name representing 30,426 shares of the Company's common stock. AST subsequently filed cross-claims against us and ACS seeking indemnity for any losses resulting to it from AWF's claims. We first received actual notice of this lawsuit on March 5, 2008. On March 18, 2008, we filed an answer to the complaint denying its material allegations and asserting affirmative defenses. On April 4, 2008, AWF filed an amended complaint making allegations and asserting claims against us that were very similar to what was alleged in the original complaint. Counsel for AST agreed that, as a result of the filing of the amended complaint, AST's cross-claims were then moot. On May 2, 2008, we and the other defendants filed motions to dismiss the amended complaint for failure to state a claim. On January 29, 2009, the U.S. District Court denied the motions to dismiss without prejudice and instead certified four questions of law raised by the motions to the Supreme Court of Delaware. On September 15, 2009, the Supreme Court of Delaware issued its ruling on the certified questions substantially in favor of AWF. On January 13, 2010, we and the other defendants filed renewed motions to dismiss the amended complaint for failure to state a claim. On September 30, 2010, the Court granted in part and denied in part defendants' motions to dismiss, permitting claims of negligence and conversion against each of the defendants, as well as a claim against us for failure to register plaintiff's stock, to go forward. The Court's opinion dismissed the claims for breach of fiduciary duty and specific performance against us, and the claims for breach of contract against each of AST and ACS. On October 14, 2010, we filed an answer denying the material allegations of, and asserting affirmative defenses in response to, the remaining counts of plaintiff's amended complaint. That same day, AST and ACS also jointly filed their answer and affirmative defenses to the remaining counts of plaintiff's amended complaint, but also lodged cross claims against us for contractual indemnification and contribution and for common law indemnification and contribution. On November 4, 2010, we filed our answer denying the material allegations of, and asserting affirmative defenses in response to, AST's and ACS' cross claims and asserted a cross claim against AST and ACS for common law indemnification and contribution. AST and ACS subsequently filed an answer denying the material allegations of, and asserting affirmative defenses in response to, our cross claim for common law indemnification and contribution. On September 15, 2011, we entered into an agreement with AST and ACS dismissing our respective cross claims from the case without prejudice, while reserving each party’s right to reassert those same claims in binding arbitration within six months from the disposition of AWF’s claims.  We have reached an agreement in principle to resolve the matter including all claims and counterclaims and the action has been dismissed with prejudice while we negotiate the details of the settlement agreement, expected to be finalized by the end of January 2012.

F-35

18. Restatement

The company restated its previously issued consolidated financial statements for the nine months ended September 30, 2011 to correct an error in its accounting for convertible debt (see Note 9).  As restated, the consolidated balance sheet at September 30, 2011, reflects the embedded conversion feature as a separate derivative liability of $1,863, a reduction in the carrying amount of convertible debt of $2,640, a deferred tax liability of $292 and an increase in retained earnings of $485.  In addition, net income as previously reported for the nine months then ended has been increased by $485 ($0.05 per share-basic) as follows:

Net income as previously reported	$	3,685
Amortization of debt discount		(189	)
Gain on change in fair value of derivative liability		966
Provision for income taxes - deferred		(292	)
Net income as restated	$	4,170

In addition, diluted earnings per share has been increased by $0.04 per share from the amount previously reported due to a reduction in weighted average shares outstanding to reflect shares obtainable on conversion of debt weighted for the period the debt was outstanding.

F-36

3,100,384 Shares of Common Stock Underlying 10% Convertible Senior Subordinated Notes Due June 1, 2016

Empire Resources, Inc.

Until                           , all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.                                Other Expenses of Issuance and Distribution.

We are paying all of the selling stockholders’ expenses related to this offering, except that the selling stockholders will pay any applicable underwriting discounts and commissions. The fees and expenses payable by us in connection with this Registration Statement are estimated as follows:

SEC Registration Fee	$
Accounting Fees and Expenses
Legal Fees and Expenses
Printing Expenses
Miscellaneous Fees and Expenses
Total	$

Item 14.                                Indemnification of Directors and Officers.

Section 145 of the General Corporation Law of the State of Delaware provides, in general, that a corporation incorporated under the laws of the State of Delaware, as we are, may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.  In the case of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.

We are also permitted to apply for, and currently maintain, insurance on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether or not the General Corporation Law of the State of Delaware would permit indemnification.

Item 15.                                Recent Sales of Unregistered Securities.

On June 3, 2011, pursuant to the Convertible Notes Purchase Agreement, we issued 10% Convertible Senior Subordinated Notes Due June 1, 2016 in the aggregate principal amount of $12,000,000.  The notes were sold to accredited investors.  The notes were not registered under the Securities Act of 1933, as amended, or the securities laws of any state, and were offered and sold in reliance on the exemption from registration under the Securities Act of 1933, as amended, provided by Section 4(2) and Regulation D (Rule 506)under the Securities Act of 1933, as amended.

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Item 16.                                Exhibits and Financial Statement Schedules.

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation.
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation (Amendment No. 1).
3.3	Certificate of Amendment of the Amended and Restated Certificate of Incorporation (Amendment No. 2).
3.4	Amended and Restated By-Laws.
3.5	Amendment No. 1 to Amended and Restated By-Laws.
3.6	Amendment No. 2 to Amended and Restated By-Laws.
4.1	Form of Convertible Notes Purchase Agreement, dated June 3, 2011, by and among Empire Resources, Inc. and the purchasers listed on the signature pages thereto.
5.1^	Opinion of Haynes and Boone, LLP.
10.1	Employment and Non-Competition Agreement, dated September 15, 1999, by and between Empire Resources, Inc. and Nathan Kahn.
10.2	Amendment No. 1 to Employment and Non-Competition Agreement, dated July 19, 2002, by and between Empire Resources, Inc. and Nathan Kahn.
10.3	Employment and Non-Competition Agreement, dated September 15, 1999, by and between Empire Resources, Inc. and Sandra Kahn.
10.4	Employment and Non-Competition Agreement, dated September 15, 1999, by and between Empire Resources, Inc. and Harvey Wrubel.
10.5	1996 Stock Option Plan.
10.6	2006 Stock Option Plan.
10.7	Form of Option Grant under the Empire Resources, Inc. 2006 Stock Option Plan.
10.8	Letter of Confirmation of Trading Relationship, dated August 13, 2007, by and between Hulamin Rolled Products and Empire Resources, Inc.
10.9	Credit Agreement, dated April 28, 2011, by and among Empire Resources, Inc. as borrower, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as lead arranger, agent, swing line bank, issuing bank and acceptance bank, JPMorgan Chase Bank, N.A., as syndication agent, and the banks party thereto.
10.10	Supply Agreement, dated May 27, 2011, by and among Empire Resources, Inc., Southern Aluminum Industry (China) Co., Ltd., PT. Alumindo Light Metal Industry, TBK, and Fung Lam Trading Company Ltd.
10.11	Pre-Payment Advance Agreement, dated May 27, 2011, by and among Empire Resources, Inc., Southern Aluminum Industry (China) Co., Ltd., PT. Alumindo Light Metal Industry, TBK, and Fung Lam Trading Company Ltd.

II-2

21.1	List of Subsidiaries.
23.1	Consent of EisnerAmper LLP, Certified Public Accountants.
23.2^	Consent of Haynes and Boone, LLP (included in Exhibit 5.1).
24.1	Power of Attorney (included on signature page).

_______________________

^ To be filed by amendment

Item 17.                                Undertakings.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

 (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

II-3

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Lee, State of New Jersey on January 30, 2012.

EMPIRE RESOURCES, INC.
By:	/s/ Nathan Kahn
	Name: Nathan Kahn
	Title: Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of Empire Resources, Inc., a Delaware corporation, do hereby constitute and appoint Nathan Kahn and Sandra Kahn, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended, which relates to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Nathan Kahn	Chief Executive Officer, President and Director	January 30, 2012
Nathan Kahn	(principal executive officer)
/s/ Sandra Kahn	Vice President, Chief Financial Officer and Director	January 30, 2012
Sandra Kahn	(principal financial and accounting officer)
/s/ William Spier	Chairman of the Board of Directors	January 30, 2012
William Spier
/s/ Jack Bendheim	Director	January 30, 2012
Jack Bendheim
/s/ Peter G. Howard	Director	January 30, 2012
Peter G. Howard
/s/ Douglas Kass	Director	January 30, 2012
Douglas Kass

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/s/ Nathan Mazurek	Director	January 30, 2012
Nathan Mazurek
/s/ L. Rick Milner	Director	January 30, 2012
L. Rick Milner
/s/ Harvey Wrubel	Vice President of Sales/Director of Marketing and Director	January 30, 2012
Harvey Wrubel
/s/ Morris J. Smith	Director	January 30, 2012
Morris J. Smith

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

INTEGRATED TECHNOLOGY USA, INC.

INTEGRATED TECHNOLOGY USA, INC., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies as follows:

1. The name of the Corporation is INTEGRATED TECHNOLOGY USA, INC., and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on August 30, 1990.

2. Pursuant to Sections 242 and 245 of the Delaware General Corporation Law, this Amended and Restated Certificate of Incorporation restates and integrates and further amends the provisions of the Corporation's Certificate of Incorporation.

3. The terms and provisions of this Amended and Restated Certificate of Incorporation have been duly adopted pursuant to the provisions of Sections 242 and 245 of the Delaware General Corporation Law and has been approved by written consent of the required number of shares of outstanding stock of the Corporation pursuant to Section 228 of the Delaware General Corporation Law and written notice pursuant to Subsection 228(d) of the Delaware General Corporation Law has been given to those stockholders whose written consent has not been obtained.

4. The text of the Amended and Restated Certificate of Incorporation is as hereby restated and further amended to read in its entirety as follows:

ARTICLE I

The name of the corporation is Integrated Technology USA, Inc.

ARTICLE II

The address of the corporation's registered office in the State of Delaware is United Corporate Services, Inc., 15 East North Street, Dover, Delaware 19901, County of Kent. The name of its registered agent at such address is United Corporate Services, Inc.

ARTICLE III

A. The corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock". The amount of the total authorized capital stock of the corporation is 45,000,000 shares, divided into (a) 40,000,000 shares of Common Stock having a par value of $0.01 per share, and (b) 5,000,000 shares of Preferred Stock having a par value of $0.01 per share.

B. The Preferred Stock may be issued from time to time in one or more series. Subject to the restrictions prescribed by law, the Board of Directors is authorized to fix by resolution or resolutions the number of shares of any series of Preferred Stock and to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series of Preferred Stock, to increase (but not above the total number of authorized shares of Preferred Stock) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series.

The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following: (a) the number of shares constituting that series and the distinctive designation of that series; (b) the dividend rate on the shares of that series, whether dividends shall be cumulative, and if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series; (c) whether that series shall have voting rights in addition to the voting rights provided by law, and if so, the terms of such voting rights; (d) whether that series shall have conversion privileges, and if so, the terms and conditions of such privileges, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine; (e) whether or not the shares of that series shall be redeemable, and if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (f) whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and if so, the terms and the amount of such sinking funds; (g) the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and (h) any other relative rights, preferences and limitations of that series.

C. Effective at the time of filing with the Secretary of State of the State of Delaware of this Amended and Restated Certificate of Incorporation (the "Effective Time"), each single share of the corporation's Common Stock no par value that is issued and outstanding or held in treasury at the Effective Time shall, automatically and without any action on the part of the respective holders thereof, be converted into 760.6291 shares of the corporation's Common Stock, par value $0.01 per share; provided, however, that if a stockholder would be entitled to receive a fractional share of Common Stock based upon the foregoing conversion ratio, such stockholder shall receive a whole share of Common Stock in lieu of such fractional share.

ARTICLE IV

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the Delaware General Corporation Law.

2

ARTICLE V

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, adopt, alter, amend or repeal the bylaws of the corporation.

ARTICLE VI

The election of directors need not be by written ballot unless the bylaws of the corporation shall so provide.

ARTICLE VII

Meetings of stockholders may be held within or without the State of Delaware, as the bylaws may provide. The books of the corporation may be kept (subject to any provision contained in the statute) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the bylaws of the corporation.

ARTICLE VIII

A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be duly executed this 9th day of September, 1996.

INTEGRATED TECHNOLOGY USA, INC.
By:	/s/ Alan P. Haber
	Alan P. Haber, Chief Executive Officer

3

EX-3.2

Exhibit 3.2

CERTIFICATE OF AMENDMENT

OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

INTEGRATED TECHNOLOGY USA, INC.

Integrated Technology USA, Inc., a corporation organized and existing under and by virtue of the general corporation Law of the State of Delaware, DOES HEREBY CERTIFY:

FIRST: That the Board of Directors of said corporation, at a meeting duly convened and held, adopted the following resolution:

RESOLVED, That the Board of Directors hereby declare it advisable and in the best interest of the Company that Article I of the Amended and Restated Certificate of Incorporation be amended to read as follows:

"The name of this corporation shall be Empire Resources, Inc."

SECOND: That said amendment was duly adopted in accordance in the applicable provision of Section 242 of the General Corporation laws of the State of Delaware.

IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed this 27th day of March 2000.

By:	/s/ Nathan Kahn
	Name: Nathan Kahn Title: Vice President

EX-3.3

Exhibit 3.3

CERTIFICATE OF AMENDMENT

OF THE

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

EMPIRE RESOURCES, INC.

(formerly known as Integrated Technology USA, Inc.)

EMPIRE RESOURCES, INC., a corporation organized under the General Corporation Law of the State of Delaware, for the purpose of amending its Amended and Restated Certificate of Incorporation pursuant to Subchapter VIII, § 242 of Title 8 of the General Corporation Law of the State of Delaware, hereby certifies that:

FIRST: That at a meeting of the Board of Directors of the corporation, resolutions were duly adopted setting forth a proposed amendment to the Amended and Restated Certificate of Incorporation of the corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of the corporation for consideration thereof. The resolution setting forth the proposed amendment reads, in pertinent part, as follows:

"Article III of the Amended and Restated Certificate of Incorporation is hereby amended by deleting Section A and Section B thereof in their entirety and inserting in their place the following:

A. The corporation is authorized to issue 20,000,000 shares of common stock having a par value of $0.01 per share (the "Common Stock")

B. [Intentionally Omitted]"

SECOND: That thereafter, pursuant to resolution of its Board of Directors, the annual meeting of the stockholders of the corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment.

THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment this 24th day of October 2001.

By:	/s/ Sandra Kahn
	Vice President

EX-3.4

Exhibit 3.4

AMENDED AND RESTATED BY-LAWS

-OF-

INTEGRATED TECHNOLOGY USA, INC.

(a Delaware corporation hereinafter called the "Corporation")

Adopted                              , 1996

ARTICLE I

Offices

SECTION 1.01. Offices. The Corporation may have offices both within and without the State of Delaware as the Board of Directors may from time to time determine.

ARTICLE II

Meetings of Stockholders

SECTION 2.01. Place of Meetings. Meetings of stockholders may be held at any place, either within or without the State of Delaware, designated by the Board of Directors.

SECTION 2.02. Annual Meeting. The annual meeting of stockholders for election of directors shall be held on such date and at such time as shall be designated by the Board of Directors. Any other proper business may be transacted at the annual meeting.

SECTION 2.03. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, may be called by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President or the Secretary.

SECTION 2.04. Quorum. The holders of a majority of the shares entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation.

SECTION 2.05. Organization. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in his absence by the President, or in his absence by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

SECTION 2.06. Conduct of Meetings. The Board of Directors may adopt such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

ARTICLE III

Directors

SECTION 3.01. Number of Directors. The number of directors which shall constitute the entire Board of Directors shall be ten or such other number as shall be set by the Board of Directors from time to time. No reduction in the number of directors constituting the entire Board of Directors shall have the effect of removing any director before that director's term of office expires.

SECTION 3.02. Term of Office. Each director, including a director elected to fill a vacancy, shall hold office until such director's successor is elected and qualified or the earlier resignation or removal of such director.

SECTION 3.03 Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors, the Chief Executive Officer, the President or any director. Notice of the time and place of special meetings shall be delivered to each director either (i) personally (either orally or in writing), (ii) by telephone, (iii) by telex, telecopy or other facsimile transmission, or (iv) by first-class mail, postage prepaid, addressed to a director at that director's address as it is shown on the records of the Corporation. If the notice is mailed, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting (ten days in the case of a director whose address as shown on the records of the Corporation is outside of the United State of America). If the notice to a director is delivered in any other manner it shall be delivered (which shall for this purpose mean received by the director) at least 48 hours before the time of the holding of the meeting.

SECTION 3.04. Quorum. At all meetings of the Board of Directors, a majority of the entire Board shall be necessary and sufficient to constitute a quorum for the transaction of business.

SECTION 3.03. Meetings by Conference Telephone or Similar Device. Members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

SECTION 3.04. Organization. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in the absence of the foregoing persons by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

SECTION 3.05. Board Action by Written Consent Without a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee. Written consents representing actions taken by the board or committee may be executed by telex, telecopy or other facsimile transmission, and such facsimile shall be valid and binding to the same extent as if it were an original.

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ARTICLE IV

Officers

SECTION 4.01. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer, a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also choose one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. The Board of Directors, in its discretion, may also choose a Chairman of the Board and a Vice Chairman of the Board from among its members. The Chairman and Vice Chairman of the Board of Directors, in such capacity, shall not be considered officers of the Corporation. Each such officer shall hold office until his resignation or removal. Any officer may resign at any time upon written notice to the Corporation. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation.

SECTION 4.02. Powers and Duties of Executive Officers. The officers of the Corporation shall have such powers and duties in the management of the Corporation as may be prescribed in a resolution by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. Without limiting the foregoing, the Secretary shall have the duty to record the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his duties.

ARTICLE V

Miscellaneous

SECTION 5.1. Waivers of Notice. Whenever any notice is required by law, the Certificate of Incorporation or these By-laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, and, in the case of a waiver of notice of a meeting, whether or not the business to be transacted at or the purposes of such meeting is set forth in such waiver, shall be deemed equivalent thereto. The attendance of any person at any meeting, in person or, in the case of the meeting of stockholders, by proxy, shall constitute a waiver of notice of such meeting except where such person attends such meeting for the express purpose of objecting at the beginning of such meeting to the transaction of any business on the grounds that such meeting is not duly called or convened.

SECTION 5.2. Fiscal Year. The fiscal year of the Corporation shall be fixed from time to time by the Board of Directors.

SECTION 5.3. Seal. The corporate seal shall have inscribed thereon the name of the Corporation and shall be in such form as may be approved from time to time by the Board of Directors.

SECTION 5.4. Entire Board. As used in these bylaws, "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies in the Board of Directors.

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EX-3.5

Exhibit 3.5

AMENDMENT NO. 1 TO

AMENDED AND RESTATED BY-LAWS

-OF-

INTEGRATED TECHNOLOGY USA, INC.

(a Delaware corporation hereinafter called the "Corporation")

Effective as of March 3, 1997

Section 3.04 of the Company's By-laws is replaced by the following new section:

Section 3.04. Quorum. At all meetings of the Board of Directors, a majority of the entire Board shall be necessary and sufficient to constitute a quorum for the transaction of business; provided, however, that in order to constitute a quorum such majority must include at least three independent directors (or, if less, all independent directors then serving on the Board of Directors). For purposes of the foregoing, an "independent director" means a director that is neither an officer or employee of the Company.

EX-3.6

Exhibit 3.6

AMENDMENT NO. 2 TO

AMENDED AND RESTATED BY-LAWS

-OF-

INTEGRATED TECHNOLOGY USA, INC.

(a Delaware corporation hereinafter called the "Corporation")

Effective as of May 11, 1997

The By-laws of the Corporation, as amended to date, are hereby amended as follows:

1. Section 2.03 of the Corporation's By-laws is replaced by the following new Section 2.03:

SECTION 2.03. Special Meetings. Special meetings of the stockholders may be called at any time by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President or the Secretary. Special meetings may not be called by any other person or persons.

2. The following new Sections 2.07, 2.08 and 2.09 are hereby added to Article II of the By-laws.

SECTION 2.07. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors; provided, however, that the following procedures shall not apply to the nomination of persons for election as directors by vote of any class or series of preferred stock of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation at the annual meeting may be made at such meeting by or at the direction of the Board of Directors, by any committee appointed by the Board of Directors or by any common stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 2.07. Such nominations, other than those made by or at the direction of the Board of Directors or by any committee appointed by the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 75 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders and the meeting is held on a day which is not within five calendar days of the date on which the prior year's meeting was held, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs; and provided, further, however, that in the case of the 1997 annual meeting of stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which the Corporation files a Report on Form 8-K, pursuant to the Securities Exchange Act of 1934, as amended, that indicates that this Section 2.07 has been added to the Corporation's By-Laws. Such stockholder's notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the person and (v) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder, (ii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder and (iii) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder. Such notice shall be accompanied by the executed consent of each nominee to serve as a director if so elected. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation by the holders of Common Stock of the Corporation unless nominated in accordance with the procedures set forth herein. The officer of the Corporation presiding at an annual meeting shall, if the facts warrant, determine that a nomination was not made in accordance with the foregoing procedure and, if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.

SECTION 2.08. Advance Notification of Business to be Transacted at Stockholder Meetings. To be properly brought before the annual or any special meeting of stockholders, business must be either (a) specified in the notice of meeting (or any supplement or amendment thereto) given by or at the direction of the Board of Directors or any committee appointed by the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before any annual or special meeting of stockholders by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting;

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provided, however, that in the event that less than 75 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders and the meeting is either an annual meeting that is held on a day which is not within five calendar days of the date on which the prior year's annual meeting was held or is a special meeting whenever held, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs; provided, further, however, that in the case of the 1997 annual meeting of stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which the Corporation files a Report on Form 8-K, pursuant to the Securities Exchange Act of 1934, as amended, that indicates that this Section 2.08 has been added to the Corporation's By-Laws. and provided, further, however, that this Section 2.08 shall not apply to any special meeting of stockholders where only the holders of one or more classes or series of preferred stock of the Corporation are entitled to vote. Such stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder and (iv) any material interest of the stockholder in such business.

No business shall be conducted at the annual or any special meeting of stockholders unless it is properly brought before the meeting in accordance with the procedures set forth in this Section 2.08, provided, however, that nothing in this Section 2.08 shall be deemed to preclude discussion by any stockholder of any business properly brought before the meeting in accordance with the procedures set forth in this Section 2.08. The officer of the Corporation presiding at the meeting shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the provisions of this Section 2.08 and, if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

SECTION 2.09. Compliance with Securities and Exchange Act of 1934. Notwithstanding any other provision of these By-laws, the Corporation shall be under no obligation to include any stockholder proposal in its proxy statement materials or otherwise present any such proposal to stockholders at a special or annual meeting of stockholders if the Board of Directors reasonably believes that the proponents thereof have not complied with Sections 13 and 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, and the Corporation shall not be required to include in its proxy statement material to stockholders any stockholder proposal not required to be included in its proxy material to stockholders in accordance with such Act, rules, or regulations

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EX-4.1

Exhibit 4.1

EMPIRE RESOURCES, INC.

$12,000,000 Principal Amount

of

10% Convertible Senior Subordinated Notes Due June 1, 2016

FORM OF CONVERTIBLE NOTES PURCHASE AGREEMENT

Dated as of June 3, 2011

TABLE OF CONTENTS

Page

SECTION 1.	PURCHASE AND SALE OF SECURITIES	1
1.1	Issue and Sale of Securities	1
1.2	Purchase and Sale of Notes	2
1.3	Note Register; Payment of Interest	2
1.4	Delivery Expenses	3
1.5	Issue Taxes	3
1.6	Direct Payment	3
1.7	Lost, Etc. Securities	4
1.8	Other Covenants	4
1.9	References to Interest	4
SECTION 2.	CLOSING CONDITIONS	5
2.1	Delivery of Documents	5
2.2	Legal Investment; Purchase Permitted by Applicable Laws	6
2.3	Compliance with Agreements and Applicable Laws	6
2.4	Truth of Representations and Warranties	6
2.5	No Event of Default	6
2.6	Consents and Permits	6
2.7	No Material Judgment or Order	6
2.8	Purchase of Notes	7
SECTION 3.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND HOLDING	7
3.1	Authorization; Capitalization	7
3.2	No Violation or Conflict; No Default	7
3.3	Issuance of Securities	8
3.4	Third Party Consents	8
3.5	Private Offering	8
3.6	Solvency	9
3.7	Litigation, Other Governmental Actions, Complaints	9
3.8	Compliance with Laws	10
3.9	Use of Proceeds	10
3.10	No Material Adverse Change; Financial Statements	11
3.11	No Violation of Regulations of Board of Governors of Federal Reserve System	12
3.12	Governmental Regulations	12
3.13	Labor Relations	12
3.14	Taxes	12
3.15	Environmental Matters	13
3.16	ERISA	13
3.17	Intellectual Property	14
3.18	Foreign Assets Control Regulations, Etc.	14
3.19	Absence of Bankruptcy	14

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3.20	Subsidiaries	15
SECTION 4.	REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER	15
4.1	Purchase for Own Account	15
4.2	Accredited Investor	15
4.3	Authorization	16
4.4	Securities Restricted	16
4.5	No Governmental Review.	17
4.6	W-9	17
4.7	No Broker or Finder	17
4.8	ERISA	17
SECTION 5.	COVENANTS	17
5.1	Payment of Notes; Satisfaction of Obligations	17
5.2	Corporate Existence; Merger; Successor Corporation	17
5.3	Same Business	19
5.4	Taxes	19
5.5	Investment Company Act	19
5.6	Insurance	19
5.7	Compliance with Laws; Maintenance of Licenses	19
5.8	Maintenance of Office or Agency	20
5.9	Reports	20
5.10	Limitation on Additional Indebtedness and Issuance of Disqualified Stock	20
5.11	Restrictions on Liens	23
5.12	Payments Restricted Upon Default	23
5.13	Registration of Common Stock	24
5.14	Board Composition	28
SECTION 6.	DEFAULTS AND REMEDIES	29
6.1	Events of Default	29
6.2	Acceleration of Notes; Remedies	32
6.3	Other Remedies	32
6.4	Waiver of Past Defaults	32
6.5	Rights of Holders to Receive Payment	33
6.6	Undertaking for Costs	33
SECTION 7.	SUBORDINATION	33
7.1	Notes Subordinated to Senior Indebtedness	33
7.2	No Payment on Notes or in respect of the Common Stock in Certain Circumstances	33
7.3	Subordinated Indebtedness Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization	37
7.4	Noteholders to Be Subrogated to Rights of Holders of Senior Indebtedness	37
7.5	Obligations of the Company Unconditional	38
7.6	Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Indebtedness	38
7.7	Section 7 Not to Prevent Events of Default	39

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7.8	Subordination of Liens	39
7.9	Senior Creditor Rights	39
7.10	Subordinated Debt Limitations	39
SECTION 8.	AMENDMENTS AND WAIVERS	39
8.1	With Consent of Holders	39
8.2	Revocation and Effect of Consents	41
8.3	Notation on or Exchange of Notes	41
8.4	Payment of Expenses	41
SECTION 9.	DEFINITIONS	42
9.1	Definitions	42
9.2	Rules of Construction	57
SECTION 10.	CONVERSION OF NOTES	57
10.1	Conversion Privilege	57
10.2	Conversion Procedure; Settlement Upon Conversion	57
10.3	Effect of Recapitalizations	59
10.4	Certain Covenants	61
10.5	Mandatory Conversion	61
10.6	Adjustment of the Conversion Rate	62
SECTION 11.	REDEMPTION	70
11.1	Redemption	70
11.2	Redemption Procedures	70
SECTION 12.	MISCELLANEOUS	71
12.1	Notices	71
12.2	Successors and Assigns	72
12.3	Counterparts	72
12.4	Headings	72
12.5	Survival of Representations and Warranties	72
12.6	GOVERNING LAW; SUBMISSION TO JURISDICTION	72
12.7	Entire Agreement	73
12.8	Severability	73
12.9	Further Assurances	73
12.10	Notes Solely Corporate Obligations	73
12.11	Disclosure of Financial Information	74
ANNEX A	FORM OF NOTE
ANNEX B	FORM W-9

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CONVERTIBLE NOTES PURCHASE AGREEMENT

This CONVERTIBLE NOTES PURCHASE AGREEMENT is dated as of June 3, 2011, (this “Agreement”), and entered into by and among Empire Resources, Inc., a Delaware corporation (the “Company”), and the purchasers listed on the signature pages hereto (each a “Purchaser” and collectively, the “Purchasers”).

Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in Section 9.1 hereof.

In consideration of the premises, mutual covenants and agreements hereinafter contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company agrees, and each of the Purchasers agrees, severally but not jointly, as follows:

SECTION 1. PURCHASE AND SALE OF SECURITIES

1.1 Issue and Sale of Securities

(a)           On or before the Closing, the Company will have authorized the issue and sale to the Purchasers, in the respective amounts set forth on each Purchaser’s signature page hereto, of its $12,000,000 aggregate principal amount 10% Convertible Senior Subordinated Notes due June 1, 2016 (the “Notes”), to be substantially in the form attached hereto as Annex A, as well as the Common Stock issuable upon conversion of the Notes in accordance with the terms of this Agreement. The Notes and the Common Stock issued upon the conversion of any Note shall each individually be referred to herein as a “Security” and collectively referred to herein as the “Securities.” In addition, the Company subsequently may, with the consent of the Majority Holders (which consent shall not be unreasonably withheld), issue one or more series of additional Notes after the Closing Date (“Additional Notes”). Such Additional Notes shall be treated, along with the Notes issued on the Closing Date, as a single class for all purposes under this Agreement and, unless the context otherwise requires, all references to the Notes herein shall include any Additional Notes.

(b)           The Notes and the Common Stock shall include such notations, legends or endorsements set forth thereon or required by law.  The Notes will be in the principal amount of $1,000 (except in the case of any redemption following which the aggregate principal amount remaining is less than $1,000) or integral multiples of $1,000 in excess thereof.  Each Note shall be dated the date of its issuance and shall bear interest from and including the Closing Date or from the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until June 1, 2016.

(c)           Accrued interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months. The principal amount of the Notes, along with accrued and unpaid interest, shall become due and payable on the Maturity Date.

(d)           The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Agreement and, to the extent applicable, the Company, by its execution and delivery of this Agreement, expressly agrees to such terms and provisions and to be bound thereby.

1.2 Purchase and Sale of Notes

(a)           Purchase and Sale.  The Company agrees to sell and, subject to the terms and conditions set forth herein and in reliance on the representations and warranties of the Company contained or incorporated herein, and each of the Purchasers agrees, severally but not jointly, to purchase the Notes set forth on such Purchaser’s signature page hereto at the purchase price set forth on such Purchaser’s signature page.  Based upon their determination of the relative fair market values of the Notes, the Company and the Purchasers hereby agree to treat, for Federal income and all other tax purposes, the Notes as having an aggregate issue price equal to $1,000 (i.e., $1,000 per $1,000 principal amount of Notes).  Unless otherwise required by applicable law, the Company and the Purchasers shall not take any position contrary to such treatment for any Federal income or other tax purposes.

(b)           Closing.  The purchase and sale of the Notes shall take place at a closing (the “Closing”) at the offices of Proskauer Rose LLP, Eleven Times Square, New York, New York 10036, at 10:00 a.m., New York time, on the date of this Agreement, or such other Business Day as may be mutually agreed upon by the Purchasers and the Company (the “Closing Date”).  At the Closing, the Company will deliver to each of the Purchasers the Notes to be purchased by such Purchaser (in such permitted denomination or denominations and registered in such Purchaser’s name), dated the Closing Date, against payment of the purchase price therefor by intra-bank or Federal funds bank wire transfer of same day funds to such bank account as the Company shall designate at least two Business Days prior to the Closing.

(c)           Other Purchasers.  Each Purchaser’s obligations hereunder are subject to the execution and delivery of this Agreement by the other Purchasers listed on the signature pages hereto.  The obligations of each Purchaser shall be several and not joint, and no Purchaser shall be liable or responsible for the acts of any other Purchaser under this Agreement.

1.3 Note Register; Payment of Interest

(a)           The Company shall cause to be kept at its principal office a register for the registration and transfer of each of the Notes (the “Note Register”).  The names and addresses of the Holders of Notes, the transfer of Notes, and the names and addresses of the transferees of the Notes shall be registered in the Note Register.

(b)           The Person in whose name any registered Security shall be registered shall be deemed and treated as the owner and holder thereof for all purposes of this Agreement, and the Company shall not be affected by any notice to the contrary, until due presentment of such Security for registration of transfer so provided in this Section 1.3.  Payment of or on account of the principal, premium, if any, and interest on any registered Notes shall be made to or upon the written order of such registered holder.

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(c)           When Securities are presented to the Company with a request to register the transfer of such Securities or to exchange such Securities for an equal principal amount of Securities of other authorized denominations (in the case of Notes) or an equal aggregate amount of Common Stock (in the case of Common Stock), the Company shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction, including, but not limited to, any requirements set forth under Section 4.4 herein, are met.

(d)           The Person in whose name any Note is registered on the Note Register at the close of business on any Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date.  Interest shall be payable at the office or agency of the Company maintained by the Company for such purposes.  The Notes will be payable both as to principal and interest by Federal funds wire transfer of U.S. Legal Tender to each Holder’s account in any bank in the United States as may be designated and specified in writing by such Holder at least two Business Days prior thereto.

1.4 Delivery Expenses

If a Holder surrenders any Note or Common Stock certificate issued upon conversion of any Note to the Company for any reason, the Company agrees to pay the cost of delivering to such Holder’s home office or to the office of such Holder’s designee from the Company, the Security issued in substitution, replacement or exchange for, or upon conversion of, the surrendered Security.

1.5 Issue Taxes

The Company agrees to pay all documentary, stamp or similar issue or transfer taxes and governmental fees in connection with the issuance, sale, delivery or transfer by the Company to each Holder of the Securities and the execution and delivery of the other Documents and any modification of any of such Securities and Documents and will hold such Holder harmless without limitation as to time against any and all liabilities with respect to all such taxes and fees.  The obligations of the Company under this Section 1.5 shall survive the payment or prepayment of the Notes, at maturity, upon redemption, or otherwise and the termination of this Agreement and the other Documents.

1.6 Direct Payment

(a)           The Company will pay or cause to be paid all amounts payable with respect to any Note (without any presentment of such Note and without any notation of such payment being made thereon) by crediting (before 12:00 Noon, New York time), by intra-bank or Federal funds bank wire transfer in same day funds to each Holder’s account in any bank in the United States as may be designated and specified in writing by such Holder at least two Business Days prior thereto.  Each Purchaser’s initial bank account for this purpose is set forth on the signature pages hereto.

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(b)           Notwithstanding anything to the contrary contained in the Notes, if any principal amount payable with respect to a Note is payable, at maturity, upon redemption, or otherwise, on a Legal Holiday, then the Company shall pay such amount on the next succeeding Business Day, and interest shall accrue on such amount until the date on which such amount is paid and payment of such accrued interest shall be made concurrently with the payment of such amount, provided that the Company may elect to pay in full (but not in part) any such amount on the last Business Day prior to the date such payment otherwise would be due, and no such additional interest shall accrue on such amount.  Notwithstanding anything to the contrary contained in the Notes, if any interest payable with respect to a Note is payable on a Legal Holiday, then the Company shall pay such interest on the next succeeding Business Day, and such extension of time shall be included in the computation of the interest payment, provided that the Company may elect to pay in full (but not in part) any such interest on the last Business Day prior to the date such payment otherwise would be due, and such diminution in time shall be included in the computation of the interest payment.

1.7 Lost, Etc. Securities

If a mutilated Security is surrendered to the Company or if the Holder of a Security claims and submits an affidavit or other evidence, satisfactory to the Company to the effect that the Security has been lost, destroyed or wrongfully taken, the Company shall issue a replacement Security if the customary requirements relating to replacement securities are reasonably satisfied.  If required by the Company, such Holder must provide an indemnity bond, or other form of indemnity, sufficient in the judgment of the Company to protect the Company from any loss which it may suffer if a Security is replaced. The affidavit of such Holder at the time of loss, setting forth the fact of loss, theft or destruction and of its ownership of the Security at the time of such loss, theft or destruction shall be accepted as satisfactory evidence thereof, and no further indemnity shall be required as a condition to the execution and delivery of a new Security other than the unsecured written agreement of such Holder reasonably satisfactory to the Company to indemnify the Company or, at the option of the Company, an indemnity bond in the amount of the Security remaining outstanding. Every replacement Security is an obligation of the Company.

1.8 Other Covenants

The Company further covenants and agrees not to, and to ensure that no affiliate (as defined in Rule 501(b) of the Securities Act) of the Company will, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the sale to the Purchasers of the Securities.

1.9 References to Interest

Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in this Agreement shall be deemed to include any Additional Payment due if, in such context, such Additional Payment, was or would be payable pursuant to Section 5.13(e).  Unless the context otherwise requires, any express mention of any Additional Payment in any provision hereof shall not be construed as excluding any Additional Payment in those provisions hereof where such express mention is not made.

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SECTION 2. CLOSING CONDITIONS

The obligations of each Purchaser to purchase and pay for the Notes to be delivered to such Purchaser at the Closing shall be subject to the satisfaction of each of the following conditions on or before the Closing Date:

2.1 Delivery of Documents

The Company shall have delivered to each Purchaser (unless otherwise specified), in form and substance satisfactory to such Purchaser (unless otherwise specified), and each Purchaser shall have received, the following:

(a)           The Notes being purchased by such Purchaser, duly executed by the Company, in the aggregate principal amount set forth below such Purchaser’s name on the signature pages hereto.

(b)           Resolutions of the Board of Directors of the Company, certified by the Secretary or Assistant Secretary of the Company, duly adopted and in full force and effect on such date, authorizing (i) the execution, delivery and performance of this Agreement, the Notes, the other Documents to which the Company is a party and the consummation of the transactions contemplated hereby and thereby, (ii) the issuance of the Notes, (iii) the reservation and issuance of the Common Stock issuable upon the conversion of the Notes, and (iv) specific officers of the Company to execute and deliver this Agreement, the Notes and any other Documents to which the Company is a party.

(c)           Certificates of the Chief Executive Officer and Chief Financial Officer of the Company, dated the Closing Date, certifying that all of the conditions set forth in Sections 2.3, 2.4, 2.5, 2.6, and 2.7 are satisfied on and as of such date and specifying as to each such condition the satisfaction thereof.

(d)           Copies of the Charter Documents of the Company certified as of a recent date by the Secretary of State of the State of Delaware, and certified by the Secretary or Assistant Secretary of the Company, as true and correct as of the Closing Date.

(e)           Certificates of the Secretary or an Assistant Secretary of the Company, as to the incumbency and signatures of the officers or representatives of such entity executing this Agreement, the Securities, the other Documents, and any other certificate or other document to be delivered pursuant hereto or thereto, together with evidence of the incumbency of such Secretary or Assistant Secretary.

(f)           Certificate of the Secretary of State of the State of Delaware as to the good standing of the Company.

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2.2 Legal Investment; Purchase Permitted by Applicable Laws

Each Purchaser’s acquisition of the Securities (a) shall not be prohibited by any applicable law or governmental regulation, release, interpretation or opinion, (b) shall constitute a legal investment as of the Closing Date under the laws and regulations and orders of each jurisdiction to which such Purchaser may be subject, and (c) shall not subject such Purchaser to any penalty or, in its reasonable judgment, other onerous condition in or pursuant to any such law, regulation or order; and such Purchaser shall have received such certificates or other evidence as such Purchaser may reasonably request to establish compliance with this condition.

2.3 Compliance with Agreements and Applicable Laws

The Company shall have (a) performed and complied in all material respects with all agreements, covenants and conditions contained herein, in each of the other Documents and in any other document contemplated hereby or thereby which are required to be performed or complied with by the Company on or before the Closing Date and (b) complied in all material respects with all applicable laws in connection with the transactions contemplated by this Agreement and the other Documents.

2.4 Truth of Representations and Warranties

Unless stated to relate to another date, all of the representations and warranties of the Company contained herein or in any of the other Documents shall be true and correct on and as of the Closing Date, both before and after giving effect to this Agreement and the transactions contemplated hereby and by the other Documents.

2.5 No Event of Default

No event shall have occurred and be continuing, or would result from the consummation of the transactions contemplated to be consummated on or prior to the Closing Date by this Agreement or any of the other Documents (including without limitation the purchase of the Notes), which constitutes or would constitute a Default or an Event of Default.

2.6 Consents and Permits

The Company shall have received all consents, permits, approvals and authorizations and, other than such filings under Federal and state securities laws which are permitted to be made after the Closing Date, sent or made all notices, filings, registrations and qualifications as may be required pursuant to any law, statute, regulation or rule (Federal, state, local or foreign) or pursuant to any other agreement, order or decree to which it is a party or to which it is subject, in connection with the transactions to be consummated on or prior to the Closing Date as contemplated by this Agreement or any of the other Documents.

2.7 No Material Judgment or Order

There shall not be on the Closing Date any judgment or order of a court of competent jurisdiction or any ruling of any agency of the Federal, state or local government that, in the reasonable judgment of any Purchaser or its counsel, would prohibit the sale or issuance of the Notes hereunder or subject the Company to any material penalty if the Notes were to be issued and sold hereunder.

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2.8 Purchase of Notes

Each Purchaser’s obligation to purchase his, her or its respective principal amount of Notes as set forth on each Purchaser’s signature page hereto on the Closing Date shall be subject to the purchase by every other Purchaser of his, her or its respective principal amount of Notes as set forth on such Purchasers’ signature pages hereto on the Closing Date, resulting in the issuance of $12,000,000 aggregate principal amount of Notes on the Closing Date.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND HOLDING

The Company represents and warrants on the date hereof and as of the Closing, as follows:

3.1 Authorization; Capitalization

The Company has all necessary corporate power, authority and legal right, and has taken all actions necessary to authorize it (i) to execute, deliver and perform all of its obligations under this Agreement, (ii) to issue and perform all of its obligations under the Notes and (iii) to consummate the transactions contemplated hereby and thereby.  Each of this Agreement, the Notes and the other Documents to which the Company is a party is a legally valid and binding obligation of the Company, enforceable against it in accordance with its respective terms, except for (A) the effect thereon of bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other similar laws relating to or affecting the rights of creditors generally and (B) limitations imposed by equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions thereof and upon the availability of injunctive relief or other equitable remedies.

On the Closing Date, the Notes shall be duly authorized and validly issued, shall be fully paid and nonassessable and shall not have been issued in violation of, nor shall they be subject to, any preemptive or similar rights.

The Company has not entered into an agreement to register its securities under the Securities Act.  Except for this Agreement, the Company has not entered into any agreement to issue, purchase or sell any of its securities that has not been fully performed.

There are no securities of the Company registered under the Exchange Act or listed on a national securities exchange registered under Section 6 of the Exchange Act.

3.2 No Violation or Conflict; No Default

Neither the execution, delivery, issuance or performance of this Agreement, the Notes or any other Documents, as applicable, nor the consummation of any of the transactions contemplated thereby will conflict with, violate, constitute a breach of or a default (with the passage of time or otherwise) under, require the consent of any Person (other than consents already obtained and in full force and effect) under, result in the imposition of a lien on any assets of the Company or any of its Subsidiaries or result in an acceleration of indebtedness under or pursuant to (i) the Charter Documents, (ii) any agreement to which the Company or any of its Subsidiaries is a party or (iii) any violation of any Federal, state, local or foreign statute, law (including, without limitation, common law) or ordinance, or any judgment, decree, rule, regulation or order of any Governmental Body applicable to any of them or any of their respective properties, except for, with respect to clauses (ii) and (iii), any conflict, violation, breach or default that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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3.3 Issuance of Securities

As of the Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance, free of pre-emptive rights, sufficient for the purpose of enabling the Company to satisfy all obligations to issue the Common Stock upon conversion of all of the Notes. Upon conversion of the Notes in accordance with terms herein, the Common Stock will be validly issued and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.

3.4 Third Party Consents

Neither the nature of the Company nor of any of its businesses or properties, nor any relationship between the Company and any other Person, nor any circumstance in connection with the offer, issuance, sale or delivery of the Notes at the Closing or the delivery of the Common Stock upon conversion of the Notes in accordance with the terms of this Agreement, nor the performance by the Company of its other obligations hereunder or thereunder, or the consummation of the transactions contemplated by, this Agreement and any other Document, as the case may be, is such as to require a consent, approval or authorization of, or notice to, or filing, registration or qualification with, any governmental authority or other Person on the part of the Company as a condition to the execution and delivery of this Agreement or any of the other Documents or the offer, issuance, sale or delivery of the Notes at the Closing or the delivery of the Common Stock upon conversion of the Notes in accordance with the terms of this Agreement, other than such consents, approvals, authorizations, notices, filings, registrations or qualifications which shall have been made or obtained on or prior to the Closing Date and such filings under Federal and state securities laws which are permitted to be made after the Closing Date and which the Company hereby agrees to file within the time period prescribed by applicable law.

3.5 Private Offering

Assuming the truth and correctness of the representations and warranties set forth in Section 4 of this Agreement, the sale of the Notes and the conversion of the Notes into Common Stock in accordance with the terms of this Agreement are exempt from the registration under the Securities Act.  In the case of each offer or sale of the Notes, no form of general solicitation or general advertising was used by the Company, any of its Subsidiaries or any of their respective representatives, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.

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The Purchasers are the sole purchasers of the Notes.  No securities have been issued and sold by the Company within the six-month period immediately prior to the date hereof which could be integrated with the issuance of the Securities as a single offering for purposes of the Securities Act.  It is not necessary, in connection with the transactions contemplated hereby, to qualify an indenture under the Trust Indenture Act of 1939, as amended.

3.6 Solvency

Immediately prior to and after giving effect to the issuance of the Notes and the execution, delivery and performance of this Agreement, any other Documents and any instrument governing Indebtedness of the Company incurred as of the Closing Date, the Company is Solvent.

3.7 Litigation, Other Governmental Actions, Complaints

(a)           There is no action, claim, suit, citation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced, or to the knowledge the Company, threatened (“Proceedings”) against or affecting the Company, any of its Subsidiaries or any of their properties or assets, except for such Proceedings that, if finally determined adversely to the Company or any of its Subsidiaries, could not reasonably be expected to have a Material Adverse Effect, and there is no Proceeding seeking to restrain, enjoin, prevent the consummation of or otherwise challenge this Agreement or any of the other Documents or the transactions contemplated hereby or thereby.

(b)           Neither the Company nor any of its Subsidiaries is subject to any judgment, order, decree, rule or regulation of any court, governmental authority or arbitration board or tribunal that has had a Material Adverse Effect or that could reasonably be expected to have a Material Adverse Effect.

(c)           Neither the Company nor any of its Subsidiaries is a party to any written agreement, consent decree or memorandum of understanding with, or a party to any commitment letter, Board of Directors’ resolution or similar undertaking to, or is subject to any order or directive by, any Governmental Body; and neither the Company nor any of its Subsidiaries has been advised by any Governmental Body that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter or similar submission.

(d)           Neither the Company nor any of its Subsidiaries has received, or been made aware of, any material consumer complaint, which could reasonably result in a Material Adverse Effect, regarding its sales or other business practices that have been, or will be, made to any Governmental Body.

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3.8 Compliance with Laws

(a)           The Company and each of its Subsidiaries is a corporation, limited liability company, partnership or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.

(b)           The Company and each of its Subsidiaries is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary, and has obtained and has maintained in good standing any licenses, permits, consents and authorizations required to be obtained by it under all laws or regulations relating to its business, the absence of which could reasonably be expected to have a Material Adverse Effect, and any such licenses, permits, consents and authorizations remain in full force and effect, except as to any of the foregoing, the absence of which could not reasonably be expected to have a Material Adverse Effect.

(c)           The Company and each of its Subsidiaries is in full compliance with the requirements imposed by any statutes, ordinances, rules and regulations, orders, decrees, interpretations or similar issuances of any Governmental Body to which either is subject, except for violations that could not reasonably be expected to have a Material Adverse Effect.

3.9 Use of Proceeds

(a)           The net proceeds from the sale of the Securities hereunder will be used solely for general corporate purposes; provided, however, that at least $10,000,000 of such net proceeds shall be used to fund, or be irrevocably committed to funding, a manufacturing joint venture in China by no later than 45 days after the Closing Date; provided further, however, that if there is a Default with respect to the Company’s representation under this Section 3.9, then each Holder may, at its option, require the Company to repurchase all, but not less than all, of its Common Stock issued upon any prior exercise of Notes and/or all, but not less than all, of its Notes, as the case may be, for 110% of the principal amount of the Notes from which such Common Stock was converted and/or the Notes to be repurchased, as the case may be. The Company shall pay the repurchase price for such Securities to any Holder within 10 Business Days of receipt of written notification from such Holder that he, she or it intends to exercise his, her or its repurchase right in accordance with this Section 3.9, which notification must be provided to the Company by no later than 15 days from the date such Holder is notified or otherwise becomes aware of the Default under this Section 3.9 in order for such Holder to require any repurchase of his, her or its Securities by the Company, provided that (i) such written notification must be accompanied by any and all certificates and/or Notes representing the Securities to be repurchased, unless the Company is already in possession of such certificates and/or Notes and (ii) the Company shall have no obligation to make any payment under this Section 3.9 or to otherwise re-purchase Notes or Common Stock until the Senior Credit Agreement Payment Date shall have occurred.

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(b)           All Securities tendered for repurchase in accordance with this Section 3.9 shall be automatically cancelled and cease to be outstanding and the Holders of such Securities shall cease to have any rights with respect thereto, except the right to receive payment for such repurchase in accordance with Section 3.9(a). For the avoidance of any doubt, such payment shall not include, and the Company shall in no way be obligated to pay to any Holder tendering Securities in accordance with this Section 3.9, any accrued and unpaid interest or any other payments due on such Securities. As a result, the Company shall cease to owe to any such Holder any accrued and unpaid interest or any other payments other than the repurchase price, and all obligations of the Company to pay any such Holder any sums whatsoever pursuant to this Agreement shall cease to exist upon payment of the repurchase price as set forth in Section 3.9(a).

(c)           The Company shall not be required to issue, register the transfer of or exchange any Security of any Holder after such Holder has notified the Company that it intends to have the Company repurchase its Securities in accordance with this Section 3.9.

3.10 No Material Adverse Change; Financial Statements

(a)           No Material Adverse Change.  Except as disclosed in the Company’s Quarterly Report for the period ended March 31, 2011 as filed with the OTCQX U.S. Market, since the date of the Company’s last audited financial statements as filed with the OTCQX U.S. Market in the Company’s Annual Report for the fiscal year ended December 31, 2010, the Company has not suffered any change in its properties, business, operations, assets, condition (financial or otherwise) or prospects which could reasonably be expected to result in a Material Adverse Effect.

(b)           Financial Statements.  The Company’s audited consolidated financial statements for the fiscal year ended December 31, 2010 and unaudited interim financial statements for the quarter ended March 31, 2011 present fairly the consolidated financial position, results of operations, shareholders’ equity and cash flows of the Company at the respective dates or for the respective periods to which they apply.  Except as disclosed therein, such statements and related notes have been prepared in accordance with GAAP consistently applied throughout the periods involved.  All financial statements concerning the Company (and any of their Subsidiaries) that will hereafter be furnished by the Company to the Purchasers or any Holder pursuant to this Agreement will be prepared in accordance with GAAP consistently applied (except as disclosed therein) and will present fairly the financial condition of the entities covered thereby as of the dates thereof and the results of their operations for the periods then ended.

(c)           Neither the Company nor any of its Subsidiaries have any Indebtedness that is not reflected in the financial statements referred to in subparagraph (b) above, whether or not required under GAAP to be reflected on a balance sheet or the notes thereto, other than any incurred in the ordinary course of business since March 31, 2011 or as set forth in Schedule I to this Agreement. The Indebtedness set forth on Schedule I also constitutes the outstanding Senior Indebtedness of the Company as of the date of this Agreement.

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3.11 No Violation of Regulations of Board of Governors of Federal Reserve System

None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities) will violate or result in a violation of Section 7 of the Exchange Act or any regulation issued pursuant thereto, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System.

3.12 Governmental Regulations

Neither the Company nor any of its Subsidiaries is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Federal Power Act, the Interstate Commerce Act, the Commodity Exchange Act or to any Federal or state statute or regulation limiting its ability to incur indebtedness for borrowed money or consummate the transactions contemplated hereby and by any other Documents.

3.13 Labor Relations

(i) Neither the Company nor any of its Subsidiaries is party to or bound by any collective bargaining agreement with any labor organization; (ii) none of the employees of the Company or any of its Subsidiaries is represented by a labor union; (iii) to the Company’s knowledge, after reasonable internal inquiry, no union organizing or decertification efforts are underway or threatened against the Company or the Subsidiaries; (iv) no labor strike, work stoppage, slowdown, or other material labor dispute is pending against the Company or the Subsidiaries, or, to the knowledge of the Company, after reasonable internal inquiry, threatened against the Company or the Subsidiaries; (v) to the knowledge of the Company after reasonable internal inquiry, there is no worker’s compensation liability, experience or matter that could be reasonably expected to have a Material Adverse Effect; (vi) to the knowledge of the Company, after reasonable internal inquiry, there is no threatened or pending liability against the Company or the Subsidiaries pursuant to the Worker Adjustment Retraining and Notification Act of 1988, as amended, or any similar state or local law; (vii) to the knowledge of the Company after reasonable internal inquiry, there is no employment-related charge, complaint, grievance, investigation or unfair labor practice charge, pending against the Company or the Subsidiaries that could, individually or in the aggregate, have a Material Adverse Effect; and (viii) to the knowledge of the Company, after reasonable internal inquiry, no employee or agent of the Company or the Subsidiaries has committed any act or omission giving rise to liability for any violation identified in subsection (vi) and (vii) above, other than such acts or omissions that would not, individually or in the aggregate, have a Material Adverse Effect.

3.14 Taxes

All material Tax Returns required to be filed by the Company have been duly filed and all such Tax Returns are true, complete and correct in all material respects.  All Taxes shown as due on such Tax Returns have been paid, other than those being contested in good faith by appropriate proceedings timely instituted and diligently pursued.  The Company is unaware of any proposed or pending Tax assessments, deficiencies or audits that could be reasonably expected to result in a Material Adverse Effect.

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3.15 Environmental Matters

The Company and each of its Subsidiaries (i) is in compliance with any and all applicable foreign, provincial, Federal, state and local laws and regulations relating to health and safety, or the pollution or the protection of the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) has received and is in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its respective businesses and (iii) has not received notice of, and is not aware of, any actual or potential liability for damages to natural resources or the investigation or remediation required under Environmental Law of any disposal, release or existence of hazardous or toxic substances or wastes, pollutants or contaminants, in each case except where such non-compliance with Environmental Laws, failure to receive and comply with required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a Material Adverse Effect. Except as would not, individually or in the aggregate, have a Material Adverse Effect, neither the Company nor any of its Subsidiaries has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or any similar state or local or foreign or provincial Environmental Laws requiring the Company or any of its Subsidiaries to investigate or remediate any pollutants or contaminants.

3.16 ERISA

Each of the Company, its Subsidiaries, and each ERISA Affiliate has fulfilled its obligations, if any, under the minimum funding standards of Section 302 of the United States Employee Retirement Income Security Act of 1974, as amended (“ERISA”) with respect to each “pension plan” (as defined in Section 3(2) of ERISA), subject to Section 302 and Title IV of ERISA, that the Company, the Subsidiaries or any ERISA Affiliate sponsors or maintains (the “Pension Plan”), or with respect to which it has (or within the last three years had) any obligation to make contributions, and each such plan is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended (the “Code”), in each case, except as would not, individually or in the aggregate, have a Material Adverse Effect. None of the Company, the Subsidiaries, or any ERISA Affiliate has incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other than for the payment of premiums in the ordinary course) or to any such plan under Title IV of ERISA. “ERISA Affiliate” means a corporation, trade or business that is, along with the Company, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in Section 414 of the Code or Section 4001 of ERISA. To the Company’s knowledge, and in reliance on and subject to the accuracy of the representations of the Purchaser in Section 4.8 hereof, neither the execution and delivery of this Agreement nor the issuance and sale of the Notes hereunder will involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a Tax could reasonably be expected to be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.  The Company has maintained its Pension Plans in all material respects in accordance with their terms and with ERISA, the Code (including rules and regulations thereunder) and other applicable Federal and state laws and regulations, and neither the Company nor, to its knowledge, any “party in interest” or “disqualified person” with respect to such Pension Plans has engaged in a non-exempt “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA that would give rise to any material liability.

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3.17 Intellectual Property

The Company owns or possesses adequate licenses or other rights to use all intellectual property, including but not limited to trademarks, service marks, trade names, copyrights, patents and know-how, necessary to conduct the business now conducted by the Company, and, the Company has not received any notice of infringement of or conflict with (or knows or has known of such infringement of or conflict with) asserted rights of others with respect to the use of intellectual property, including but not limited to trademarks, service marks, trade names, copyrights, patents, computer software, or know-how that could reasonably be expected to result in a Material Adverse Effect.  To the knowledge of the Company, all intellectual property rights material to the business now conducted by the Company are valid and enforceable and the Company has performed all acts and has paid all required fees and taxes to maintain all registrations and applications of such intellectual property rights in full force and effect.  The Company does not in the conduct of its business as now conducted, infringe or conflict with any right of any third party, known to the Company, where such infringement or conflict could reasonably be expected to result in any Material Adverse Effect.  To the knowledge of the Company, the Company is not, nor will it be as a result of the execution and delivery of this Agreement and the other Documents or the performance of any obligations hereunder and thereunder, in breach of any license or other agreement relating to any intellectual property right.

3.18 Foreign Assets Control Regulations, Etc.

Neither the sale of the Notes by the Company nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.  None of the Company and its Subsidiaries are Persons described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or engage in any dealings or transactions with any such Person.  The Company and its Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.  No part of the proceeds from the sale of the Notes will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

3.19 Absence of Bankruptcy

None of the Company and its Subsidiaries has commenced (within the meaning of any Bankruptcy Law) a voluntary case, nor consented to the entry of an order for relief against it in an involuntary case, nor consented to the appointment of a Custodian of it or for all or any substantial part of its property, nor to the knowledge of the Company, has a court of competent jurisdiction entered an order or decree under any Bankruptcy Law that is for relief against the Company or any of the Subsidiaries or appointed a Custodian for all or any substantial part of their respective properties.

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3.20 Subsidiaries

The Company holds 100% of the outstanding Equity Interests of each of its Subsidiaries.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

Each Purchaser (as to itself only) represents and warrants to the Company that:

4.1 Purchase for Own Account

Such Purchaser is (i) acquiring the Notes and (ii) upon conversion of the Notes, will acquire the Common Stock issuable upon conversion of the Notes, in each case, solely for its own account and not as nominee or agent for any other Person and not with a view to, or for offer or sale in connection with, any distribution thereof (within the meaning of the Securities Act) that would be in violation of the securities laws of the United States of America or any state thereof, without prejudice, however, to its right at all times to sell or otherwise dispose of all or any part of said Securities pursuant to a registration statement under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act, and subject, nevertheless, to the disposition of its property being at all times within its control. Such Purchaser acknowledges that it is not purchasing the Notes as a result of any advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising. Such Purchaser further acknowledges, to its knowledge, that it is not purchasing the Notes as a result of any general solicitation or general advertising, as such terms are used in Regulation D under the Securities Act. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.

4.2 Accredited Investor

Such Purchaser is knowledgeable, sophisticated and experienced in business and financial matters; it has previously invested in securities similar to the Securities and it acknowledges that the Securities have not been registered under the Securities Act and understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or such sale is permitted pursuant to an available exemption from such registration requirement; it is able to bear the economic risk of its investment in the Securities and is presently able to afford the complete loss of such investment; it is an “accredited investor” as defined in Regulation D promulgated under the Securities Act; and it has been afforded access to information about the Company and each of its Subsidiaries and their financial condition and business sufficient to enable it to evaluate its investment in the Securities.

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4.3 Authorization

Such Purchaser has taken all actions necessary to authorize it (i) to execute, deliver and perform all of its obligations under this Agreement, (ii) to perform all of its obligations under the Securities and (iii) to consummate the transactions contemplated hereby and thereby.  This Agreement is a legally valid and binding obligation of such Purchaser enforceable against it in accordance with its terms, except for (A) the effect thereon of bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium and other similar laws relating to or affecting the rights of creditors generally and (B) limitations imposed by Federal or state law or equitable principles upon the specific enforceability of any of the remedies, covenants or other provisions thereof and upon the availability of injunctive relief or other equitable remedies.

4.4 Securities Restricted

Such Purchaser acknowledges that the Securities have not been registered under the Securities Act and understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or such sale is permitted pursuant to an available exemption from such registration requirement. Such Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States Federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein and in any other Documents in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the Securities.

No transfer or sale (including, without limitation, by pledge or hypothecation) of Securities by any Holder which is otherwise permitted hereunder, other than a transfer or sale to the Company, shall be effective unless such transfer or sale is made (i) pursuant to an effective registration statement under the Securities Act and a valid qualification under applicable state securities or “blue sky” laws or (ii) without such registration or qualification as a result of the availability of an exemption therefrom, and, if reasonably requested by the Company, counsel for such Holder (who may be in-house) shall have furnished the Company with an opinion, reasonably satisfactory in form and substance to the Company, to the effect that no such registration is required because of the availability of an exemption from the registration requirements of the Securities Act; provided, however, that with respect to transfers by Holders to their Affiliates, no such opinion shall be required; provided further, however, thatwithout the prior written consent of the Company, which consent shall not be unreasonably withheld, each Purchaser shall be prohibited from offering, pledging, selling, contracting to sell, selling any option or contract to purchase, purchasing any option or contract to sell, granting any option, right or warrant for the sale of, lending or otherwise disposing of or transferring, directly or indirectly, any Notes, or otherwise entering into any swap or other arrangement that transfers to another, in whole or in part, directly or indirectly, any of the economic consequences of ownership of any Notes other than with respect to transfers by the Purchasers to their Affiliates, in which case such Affiliates shall be subject to the foregoing prohibition.

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4.5 No Governmental Review.

Such Purchaser understands that no Governmental Body has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

4.6 W-9

Such Purchaser has delivered to the Company an IRS Form W-9, a copy of which is attached hereto as Annex B or, if applicable, an appropriate IRS Form W-8.

4.7 No Broker or Finder

Such Purchaser acknowledges that it is making a new investment decision with respect to the Securities offered pursuant to this Agreement, and such Purchaser has not dealt with any broker, finder, commission agent or other such intermediary in connection with the sale of the Securities and the transactions contemplated by this Agreement, the Notes and any other Documents.

4.8 ERISA

By acceptance of the Securities, or an interest therein, each Purchaser and subsequent transferee will be deemed to have represented and warranted that no portion of the assets used by such Purchaser or transferee to acquire and hold the Securities, or an interest therein, constitutes assets of any (i) employee benefit plans that are subject to Title I of ERISA, (ii) plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any Federal, state, local, non-U.S. or other laws, rules or regulations that are similar to such provisions of ERISA or the Code, or (iii) entities whose underlying assets are considered to include “plan assets” of such plans, accounts and arrangements.  Any purported transfer of the Securities (or an interest therein) to a transferee that does not comply with the foregoing requirements without the written consent of the Company shall be null and void ab initio.

SECTION 5. COVENANTS

So long as any of the Notes remain unpaid and outstanding, the Company covenants to the Holders of outstanding Securities as follows:

5.1 Payment of Notes; Satisfaction of Obligations

The Company shall pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes.

5.2 Corporate Existence; Merger; Successor Corporation

(a)           The Company will do or cause to be done all things necessary to preserve and keep in full force and effect its and its material Subsidiaries’ corporate or other existence in accordance with its organizational documents and the corporate or other rights (charter and statutory), licenses and franchises of the Company and each of its material Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or corporate or other existence, if the Board of Directors of the Company shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not adverse in any material respect to any Holder.

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(b)           The Company shall not, and shall not permit any of its material Subsidiaries to, in a single transaction or through a series of related transactions, (i) consolidate with or merge with or into any other Person, or transfer (by lease, assignment, sale or otherwise) all or substantially all of its properties and assets as an entirety or substantially as an entirety to another Person or group of affiliated Persons or (ii) adopt a Plan of Liquidation, unless, in either case:

(A)           either the Company or such Subsidiary, as the case may be, shall be the continuing Person, or the Person (if other than the Company or such Subsidiary, as the case may be) formed by such consolidation or into which the Company or such Subsidiary, as the case may be, is merged or to which all or substantially all of the properties and assets of the Company or such Subsidiary, as the case may be, are transferred (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (the Company, such Subsidiary or such other Person being hereinafter referred to as the “Surviving Person”) shall be a corporation or other entity organized and validly existing under the laws of the United States, any State thereof or the District of Columbia, and shall expressly assume, by an amendment to this Agreement,  all the Obligations of the Company under this Agreement and the other Documents to which it is a party;

(B)           immediately after and giving effect to such transaction and the assumption contemplated by clause (A) above and the incurrence or anticipated incurrence of any Indebtedness to be incurred in connection therewith, the Surviving Person shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company or such Subsidiary, as the case may be, immediately preceding the transaction;

(C)           immediately before and immediately after and giving effect to such transaction and the assumption of the Obligations as set forth in clause (A) above and the incurrence or anticipated incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; and

(D)           the Company or such Subsidiary, as the case may be, shall have delivered to each Holder an Officers’ Certificate stating that such consolidation, merger, transfer or adoption and such amendment to this Agreement comply with this Section 5.2, that the Surviving Person agrees to be bound hereby, and that all conditions precedent herein provided relating to such transaction have been satisfied.

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(c)           Upon any consolidation or merger, or any transfer of assets (including pursuant to a Plan of Liquidation) in accordance with this Section 5.2, the Surviving Person formed by such consolidation or into which the Company or any Subsidiary is merged or to which such transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such Subsidiary, as the case may be, under this Agreement with the same effect as if such Surviving Person had been named as the Company or such Subsidiary herein; provided, however, that neither the Company nor such Subsidiary shall be released from the covenants under this Agreement or under the Notes.

5.3 Same Business

For so long as any Securities are outstanding, the Company and its Subsidiaries will engage only in the same type of business engaged in by the Company immediately prior to the date hereof.

5.4 Taxes

The Company shall, and shall cause its respective Subsidiaries to, (i) duly file all material Tax Returns required to be filed by the Company or such Subsidiary, respectively, and (ii) pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (A) all Taxes levied or imposed upon the Company or such Subsidiary, as the case may be, and (B) all lawful claims, whether for labor, materials, supplies, services or anything else, which, if unpaid, would or may by law become a Lien, upon the property of the Company or such Subsidiary, as the case may be; provided, however, that none of the Company or any of its Subsidiaries shall be required to pay or discharge or cause to be paid or discharged any such Tax, the applicability or validity of which is being contested in good faith by appropriate proceedings timely instituted and diligently pursued which will prevent the forfeiture or sale of any property of the Company or such Subsidiary.

5.5 Investment Company Act

None of the Company or any of their respective Subsidiaries shall become an investment company subject to registration under the Investment Company Act of 1940, as amended.

5.6 Insurance

Each of the Company shall, and shall cause its material Subsidiaries to, maintain liability, casualty and other insurance with a reputable insurer or insurers in such amounts and against such risks as is carried by responsible companies engaged in similar businesses and owning similar assets.

5.7 Compliance with Laws; Maintenance of Licenses

The Company shall, and shall cause each of its Subsidiaries to, comply with all statutes, ordinances, governmental rules and regulations, judgments, orders and decrees to which any of them is subject, and maintain, obtain and keep in effect all licenses, permits, franchises and other governmental authorizations necessary to the ownership or operation of their respective properties or the conduct of their respective businesses, except to the extent that the failure to so comply or maintain, obtain and keep in effect could not reasonably be expected to have a Material Adverse Effect.

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5.8 Maintenance of Office or Agency

The Company shall maintain an office or agency where the Notes may be presented for registration and transfer and for exchange as provided in this Agreement and where notices and demands to or upon the Company in respect of the Notes may be served.

5.9 Reports

For so long as any of the Securities remain outstanding, the Company will furnish to the Purchasers copies of all reports and other communications (financial or otherwise) required to be furnished by the Company under the Exchange Act and the rules and regulations promulgated thereunder and the rules of the OTCQX U.S. Market or such other national or foreign securities exchange on which any class of securities of the Company may be listed, unless such reports or other communications are filed with and made publicly available by the SEC, the OTCQX U.S. Market or such other national or foreign securities exchange on which any class of securities of the Company may be listed or are otherwise publicly available. The Company shall use its reasonable best efforts to maintain current public information and file any requisite periodic reports in accordance with the rules of the OTCQX and any applicable Governmental Body.

5.10 Limitation on Additional Indebtedness and Issuance of Disqualified Stock

(a)           The Company shall not, and shall not permit any of its Subsidiaries (including without limitation, upon the creation or acquisition of such Subsidiary) to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, “incur”) any Indebtedness or issue any Disqualified Stock without first obtaining the prior written consent of the Majority Holders.

(b)           The foregoing limitations of Section 5.10(a) shall not apply to:

(i)           the incurrence of Indebtedness under the Senior Credit Agreement in an aggregate amount not to exceed $250,000,000 (subject to increase with the consent of the Majority Holders, which consent shall not be unreasonably withheld), which shall include any secured obligations, whether for principal, interest (including, without limitation, interest accruing after the commencement of a proceeding under Bankruptcy Law as to the Company or any of its Subsidiaries, whether or not a claim for such interest is an allowed claim in such proceeding), costs, fees, expenses, indemnities or otherwise, of the Company or any of its Subsidiaries, now existing or hereafter incurred under the Senior Credit Agreement or any guarantee executed and delivered by the Company or any of its Subsidiaries thereunder or pursuant thereto;

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(ii)           the incurrence by the Company of the Indebtedness represented by the Notes, including any Additional Notes; provided, however, that the Company may not issue any Additional Notes after the Closing Date without the prior written consent of the Majority Holders, which consent shall not be unreasonably withheld;

(iii)           the incurrence by the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company referred to in this Section 5.10(b);

(iv)           intercompany Indebtedness among the Company and its wholly-owned Subsidiaries; provided, however, that the obligations of the Company in respect of such Indebtedness shall be subordinated to the obligations of the Company hereunder and under the Notes to no less an extent as such obligations under the Notes are subordinated to Senior Indebtedness and that the disposition, pledge or transfer of such Indebtedness of the Company to a Person other than a wholly owned Subsidiary and the occurrence of any event pursuant to which such wholly owned Subsidiary is no longer a wholly owned Subsidiary shall each constitute an incurrence of Indebtedness that is not permitted by this clause (iv);

(v)            Hedging Obligations that are incurred in the ordinary course of business for the purpose of fixing or hedging interest rate risk with respect to (a) interest rate risk with respect to any Indebtedness permitted to be incurred pursuant to this Section 5.10(b), (b) exchange rate risk with respect to any currency exchange, (c) commodity risk; or (d) any combination of the foregoing;

(vi)           the incurrence by the Company or any of its Subsidiaries of Indebtedness represented by Capital Lease Obligations, Synthetic Lease Obligations, mortgage financings, purchase money obligations or letters of credit, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property (real or personal), plant or equipment used in the business of the Company or any of its Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (vi), not to exceed $1,000,000 outstanding at any time;

(vii)           the issuance by any of the Company’s Subsidiaries to the Company or any of its other Subsidiaries shares of Disqualified Stock ; provided, however, that: (a) any subsequent issuance or transfer of Equity Interests that results in any such Disqualified Stock being held by a Person other than the Company or a Subsidiary of the Company; or (b) any sale or other transfer of any such Disqualified Stock to a Person that is not either the Company or a Subsidiary of the Company, will be deemed, in each case, to constitute an issuance of such Disqualified Stock by such Subsidiary that was not permitted by this clause (vii);

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(viii)        the guarantee by the Company or any of its Subsidiaries of Indebtedness of the Company or any of its other Subsidiaries so long as the incurrence of such Indebtedness incurred by such Subsidiary is permitted under the terms of this Section 5.10(b); provided, in each case, that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

(ix)           the incurrence by the Company or any of its Subsidiaries of Indebtedness in respect of workers’ compensation or general liability claims, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance obligations, insurance premium finance agreements, statutory obligations, bankers’ acceptances and performance, appeal or surety bonds in the ordinary course of business;

(x)            the incurrence by the Company or any of its Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;

(xi)           the incurrence of Indebtedness consisting of indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than Indebtedness or guarantees of Indebtedness incurred or assumed by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;

(xii)          any unsecured Indebtedness of the Company or any of its Subsidiaries that is created, incurred, assumed, guaranteed or in effect guaranteed by the Company or any of its Subsidiaries after the date of this Agreement if, in the case of any particular Indebtedness, the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that such Indebtedness shall be subordinated in right of payment to the Notes;

(xiii)         the incurrence of any Indebtedness under any instrument evidencing such Indebtedness that was outstanding on the date of this Agreement, including, but not limited to, (A) Indebtedness of 6900 Quad Avenue, LLC and (B) Indebtedness of Imbali Metals Bvba, and any guarantee by the Company or any of its Subsidiaries of such Indebtedness, and any extensions, renewals, refinancing and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date thereof;

(xiv)         the incurrence of the following Indebtedness; provided that the aggregate amount of the Indebtedness permitted under this clause (xiv) outstanding at any time shall not exceed $25,000,000 (calculated without duplication of Indebtedness and a guarantee of such Indebtedness):

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(A)           Indebtedness of the Company which is incurred to finance the acquisition of Inventory in the ordinary course of business and is non-recourse to the Company and any of its property other than the Inventory financed thereby, pursuant to customary non-recourse provisions (including normal and customary exceptions to the non-recourse nature thereof); provided that such Indebtedness does not exceed 100% of the cost of acquiring such Inventory;

(B)           Indebtedness in the form of reimbursement obligations under letters of credit issued for the account of the Company to secure the purchase price of Inventory in the ordinary course of business to be acquired by the Company if (1) such reimbursement obligation is secured only by the Inventory the purchase price of which is secured by the applicable letter of credit; and (2) such Indebtedness does not exceed 100% of the cost of acquiring such Inventory; and

(C)           Guarantees by the Company of Indebtedness in the form of loans made under pre-export finance arrangements by third parties to certain of the Company's suppliers; provided that (1) with respect to any one supplier, the amount of the guarantee provided for the benefit of such supplier shall be limited to an amount not to exceed 20% of the aggregate amount of such loans to such supplier and (2) the aggregate amount of the Indebtedness guaranteed pursuant to the guarantees provided under this clause (C) shall not exceed $3,000,000; and

(xv)           the incurrence by the Company or any of its Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (xv), not to exceed $13,000,000.

5.11 Restrictions on Liens

The Company shall not, and shall not permit any of its Subsidiaries to, create or suffer to exist any Liens upon any assets of the Company or any such Subsidiaries or any shares of Capital Stock of such Subsidiaries, in each case now owned or hereafter acquired; provided, however, that this Section 5.11 shall not prohibit the creation or continuing existence of any Permitted Lien.

5.12 Payments Restricted Upon Default

The Company will not, directly or indirectly (i) declare or pay any dividend or make any other payment or distribution on account of the Company’s Equity Interests or to the direct or indirect holders of the Company’s Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company and other than dividends or distributions payable to the Company or any of its Subsidiaries), or (ii) purchase, redeem, defease or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company (other than Equity Interests of the Company held by any of its Subsidiaries) unless, at the time of and after giving effect to such dividend, purchase, redemption, defeasance, acquisition or retirement, as the case may, be no Default has occurred and is continuing to or would occur as a consequence of such action.

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5.13 Registration of Common Stock

(a)           The Company agrees that it shall file with the SEC a registration statement (the “Registration Statement”), for the registration under the Securities Act, of an offering to be made on a continuous basis under the Securities Act covering all of the Common Stock issuable upon conversion of the Notes in accordance with the terms of this Agreement. Furthermore, if, prior to the filing of the Registration Statement with the SEC, the Company proposes to register any of its securities (other than the Common Stock issuable upon conversion of the Notes) under the Securities Act, whether or not for sale for its own account (other than pursuant to Form S-4 or Form S-8 or any successor or similar forms), the Company shall use such registration statement for the registration under the Securities Act of all of the shares of Common Stock issuable upon conversion of the Notes, and such registration statement shall be deemed the Registration Statement for purposes of this Section 5.13. Upon filing of the Registration Statement, the Company shall take all additional actions necessary or appropriate to cause the Registration Statement to become effective by no event later than March 31, 2012 (the “Effectiveness Deadline”), and to cause a current prospectus to be and remain available for delivery in connection with such Common Stock after the Effectiveness Deadline. In addition, the Company agrees to use commercially reasonable efforts to register and qualify for sale such Common Stock under the “blue sky” laws in such states as the Majority Holders shall reasonably request to the extent an exemption is not available.

(b)           The Company shall use its reasonable best efforts to keep the Registration Statement continuously effective under the Securities Act until the date which is one year after the Maturity Date, or such shorter period ending when (i) all shares of Common Stock issued upon conversion of the Notes and covered by the Registration Statement have been sold by the Holders named as sellers in the Registration Statement as of the Effectiveness Deadline in the manner set forth and as contemplated in the Registration Statement or (ii) a subsequent registration statement covering all of the Common Stock issuable upon conversion of the Notes covered by and not sold under the Registration Statement (a “Subsequent Registration Statement”) or an earlier Subsequent Registration Statement has been declared effective under the Securities Act (in which case the Company shall use its reasonable best efforts to keep any Subsequent Registration Statement continuously effective under the Securities Act until the date which is the earlier of (A) one year after the Maturity Date or (B) the date when all shares of Common Stock issued upon conversion of the Notes and covered by the Registration Statement have been sold by the Holders named as sellers in the Registration Statement on the Effectiveness Deadline in the manner set forth and as contemplated in such Subsequent Registration Statement).

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(c)           The Company shall promptly supplement and amend the Registration Statement or any Subsequent Registration Statement if required by the rules, regulations or instructions applicable to the registration form used for such Registration Statement or Subsequent Registration Statement, if required by the Securities Act, or if reasonably requested in writing by the Holders of a majority of the shares of Common Stock covered by such Registration Statement which have not been previously sold or disposed of by such Holders in the manner set forth and as contemplated in such Registration Statement or Subsequent Registration Statement or by any underwriter of such Common Stock.

(d)           No Holder shall be entitled to include any of its Common Stock in any Registration Statement or Subsequent Registration Statement pursuant to this Agreement unless such Holder furnishes to the Company  in writing, within 15 days after receipt of a written request therefor, such information as the Company after conferring with counsel with regard to information relating to Holders that would be required by the SEC to be included in such Registration Statement, Subsequent Registration Statement or prospectus included therein, may reasonably request for inclusion in any such Registration Statement, Subsequent Registration Statement or prospectus included therein, and no such Holder shall be entitled to additional interest or any other payment pursuant to Section 5.13(e) hereof unless and until such Holder shall have provided such information.

(e)           If the Registration Statement shall not have been declared or remain effective under the Securities Act by the Effectiveness Deadline, or if the Registration Statement or any Subsequent Registration Statement shall not remain effective under the Securities Act in accordance with Section 5.13(b), and the Common Stock issuable upon conversion of the Notes is not otherwise freely tradable by the Holders named as sellers in the Registration Statement as of the Effectiveness Deadline in the manner set forth and as contemplated in the Registration Statement or any Subsequent Registration Statement, if applicable (as a result of restrictions pursuant to United States securities law or the terms of this Agreement, the Notes, or any other Document), the Company shall, at each Holder’s option, (i) repurchase all, but not less than all, of the Common Stock issued upon any prior exercise of any such Holder’s Notes (provided such Holder is entitled to be named as a seller in the Registration Statement as of the Effectiveness Deadline in accordance with this Section 5.13) or the Notes from which such Holder’s Common Stock registered or to be registered pursuant to the Registration Statement or any Subsequent Registration Statement, if applicable, is convertible, as the case may be, for 110% of the principal amount of the Notes repurchased, plus accrued and unpaid interest to, but not including the date of repurchase (the “Repurchase Option”); provided, however, that such Holder must elect to exercise the Repurchase Option, in the case of the initial effectiveness of the Registration Statement, within the period beginning on the day immediately following the Effectiveness Deadline and ending on the earlier of the 30th  day immediately following the Effectiveness Deadline or such date as the Registration Statement has been declared effective by the SEC or, in the case of the Company’s failure to maintain effectiveness in accordance with Section 5.13(b) above, beginning on the date such Holder has been notified by the Company that the Company received notification of such failure from the SEC (which notice shall be provided as promptly as practicable after such notification from the SEC has been received by the Company) and ending on the earlier of the 30th  day immediately following the date such Holder received such notice or such date as the Registration Statement or Subsequent Registration Statement, as the case may be, has been declared effective by the SEC; provided further, however, that such Holder shall not be entitled to any Additional Payment (as defined below) for any reason whatsoever with respect to any such Securities to be repurchased pursuant to the Repurchase Option, and no payment due to such Holder in connection with the Repurchase Option shall include all or any portion of any Additional Payment, or (ii) if such Holder has not timely exercised its Repurchase Option, make an additional payment (“Additional Payment”) in an amount equal to 2% per annum of the principal amount of the Notes from which such Holder’s Common Stock registered or to be registered pursuant to the Registration Statement or any Subsequent Registration Statement, if applicable, was converted or is convertible, as the case may be (including, for the avoidance of any doubt, any Securities not repurchased in accordance with clause (i) above). Additional Payments shall be made as if they were additional interest on the Notes (regardless of whether such Notes have been exercised, in which case such Additional Payments shall be made to the Holders of Common Stock issued upon conversion of any Notes that were entitled to be named as sellers in the Registration Statement as of the Effectiveness Deadline, and on the dates and in the manner provided for payment of interest in this Agreement), and shall accrue as such from the date on which any of the Defaults described in this Section 5.13(e) occurred to, but excluding, the earlier of (A) the declaration of effectiveness of the Registration Statement under the Securities Act by the SEC after the Effectiveness Deadline or the declaration of effectiveness under the Securities Act by the SEC of the Registration Statement or a Subsequent Registration Statement that had ceased to remain effective (in the case of Section 5.13(b) above), as applicable, or (B) the date on which all of the Common Stock issuable upon conversion of the Notes otherwise becomes freely tradable by all Holders, without further registration under the Securities Act.  Holders who do not provide information pursuant to Sections 5.13(d) in a timely manner as set forth therein shall not be entitled to receive any Additional Payment or to have their Securities repurchased pursuant to the Repurchase Option.

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(f)           The Company shall pay all expenses in connection with registration of Common Stock pursuant to this Section 5.13.

(g)           The Company agrees to indemnify and hold harmless each Holder and each Person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (each Selling Holder and such controlling Persons are referred to collectively as the “Selling Holder Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the registrable Common Stock) to which each Selling Holder Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, a Subsequent Registration Statement or a prospectus included therein, or in any amendment or supplement thereto or in any preliminary prospectus relating to such registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Selling Holder Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, a Subsequent Registration Statement or a prospectus included therein or in any amendment or supplement thereto or in any preliminary prospectus relating to such registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein.

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(h)           Each Holder shall, severally and not jointly, indemnify and hold harmless the Company and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (the Company and such controlling Persons are referred to collectively as the “Company Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the registrable Common Stock) to which each Company Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, a Subsequent Registration Statement or a prospectus included therein, or in any amendment or supplement thereto or in any preliminary prospectus relating to such registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such losses resulted solely from an untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact contained in or omitted from an information so furnished in writing by such Holder to the Company expressly for use therein.

(i)           The Company shall furnish to any selling Holders who so request in writing (i) upon the Company’s receipt, a copy of the order of the SEC declaring the Registration Statement, any Subsequent Registration Statement and any post-effective amendment thereto effective under the Securities Act, (ii) such reasonable number of copies of such Registration Statement or Subsequent Registration Statement and of each amendment and supplement thereto (in each case including any documents incorporated therein by reference and all exhibits), (iii) such reasonable number of copies of the prospectus included in such Registration Statement or Subsequent Registration Statement (including each preliminary prospectus, if applicable) and each amendment and supplement thereto, and such reasonable number of copies of the final prospectus as filed by the Company pursuant to Rule 424(b) under the Securities Act, in conformity with the requirements of the Securities Act and each amendment and supplement thereto, and (iv) such other documents, as any such Holder may reasonably request in writing. In addition, the Company shall promptly notify the Holders in writing when any event has occurred that will require the amendment of the Registration Statement or any Subsequent Registration Statement.

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(j)           The Company shall comply with all applicable rules and regulations of the SEC and make generally available to the Holders with regard to the Registration Statement or any Subsequent Registration Statement any earning statements satisfying the provisions of section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) commencing on the first day of the first fiscal quarter of the Company after the effective date of a Registration Statement, which statements shall cover said 12-month periods.

(k)           In case any Holder elects to exercise the Repurchase Option pursuant to Section 5.13(e), the Company shall provide such Holder with the requisite payment in connection therewith within 10 Business Days of receipt of written notification from such Holder that he, she or it intends to exercise her, her or its Repurchase Option, provided that such written notification must be accompanied by any and all certificates and/or Notes representing the Securities to be repurchased, unless the Company is already in possession of such certificates and/or Notes.

(l)           Any Securities repurchased in accordance with this Section 5.13 shall be automatically cancelled and cease to be outstanding and the Holders of such Securities shall cease to have any rights with respect thereto, except the right to receive payment for such repurchase in accordance with 5.13(e).

(m)           In the event of any Holder’s exercise of the Repurchase Option, the Company shall not be required to issue, register the transfer of or exchange any Security of such Holder at any time after such Holder has notified the Company that he, she or it has exercised the Repurchase Option.

5.14 Board Composition

(a)           The Company shall take any and all actions as may be required under the laws of its state of incorporation, its Charter Documents and any all other applicable laws set forth by any Governmental Body in order to (i) fix the size of its Board of Directors at ten within 15 days after the Closing Date (the “Board Designation Deadline”) (which size may subsequently be changed, provided that such change does not effect the rights accorded to Mr. Leon G. Cooperman and his Affiliates in accordance with this Section 5.14 and Section 6.2 herein); (ii) cause the election of a director designated by Mr. Leon G. Cooperman, which designee shall initially be Mr. Douglas Kass, to serve as a member of the Company’s Board of Directors  from the Board Designation Deadline until such director designee’s resignation, death, removal or disqualification; provided, however, that such director designee must be approved by the Company’s Board of Directors prior to being seated as a director, but may subsequently only be removed by the Company’s Board of Directors, absent a vote for such removal by the holders of the Company’s Capital Stock entitled to vote on such matters in accordance with any applicable laws set forth by any Governmental Body, (A) for gross negligence or a material breach of such director designee’s fiduciary or similar duties owed to the Company or (B) at any time after Mr. Leon G. Cooperman and/or any of his Affiliates collectively cease to be a Holder of at least (x) Notes convertible into at least 10% of the outstanding voting Capital Stock of the Company as of the Closing Date, (y) 10% of the outstanding voting Capital Stock of the Company as of the Closing Date, or (z) any combination thereof (a “10% Holder”); and (iii) if at any time the members of the Company’s Board of  Directors are to be re-elected by any holders of the Company’s Capital Stock prior to the such time as Mr. Leon G. Cooperman and/or any of his Affiliates collectively cease to be a 10% Holder, include such director designee or replacement (as set forth in Section 5.14(b) below) as a nominee for election or re-election as a member of the Company’s Board of Directors, as the case may be, in the proxy statement to be sent to any holders of the Company’s Capital Stock in connection with the next annual or special meeting of such holders entitled to vote on such matters if the re-election of the members of the Company’s Board of Directors shall be proposed by the Company’s Board of Directors in such proxy statement and, in such instance, the Company’s Board of Directors shall recommend to any such holders of its Capital Stock entitled to vote at such meeting in such proxy statement the election or re-election, as applicable, of such director designee. For the avoidance of any doubt, at no time shall Mr. Leon G. Cooperman or his Affiliates be entitled to appoint more than a single director designee to the Company’s Board of Directors other than upon an Event of Default in accordance with Section 6.2 below, in which case Mr. Leon G. Cooperman or his Affiliates shall be entitled to appoint a second director designee in accordance with the provisions herein. For purposes of this Section 5.14 and Section 6.2 below, Mr. Leon Cooperman and/or his Affiliates shall not collectively cease to be a 10% Holder for any reason whatsoever other than their sale or disposition of any Securities.

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(b)           In the event of the resignation, death, removal or disqualification of such director designee at any time after the Board Designation Deadline, Mr. Leon G. Cooperman shall be entitled, for so long as he and/or any of his Affiliates collectively remain a 10% Holder, to nominate a replacement director and, after the Company’s Board of Directors has approved such designee, the Company’s Board of Directors shall, subject to any requisite approvals of any holders of the Company’s Capital Stock entitled to vote on such matters, take such actions as may be necessary under the laws of its state of incorporation, its Charter Documents and any all other applicable laws set forth by any Governmental Body to elect such nominee to the Company’s Board of Directors to serve until his or her resignation, death, removal or disqualification  or until his or her successor is duly elected.

SECTION 6. DEFAULTS AND REMEDIES

6.1 Events of Default

An “Event of Default” occurs if:

(a)           the Company defaults in the payment of the principal amount of any Note when the same becomes due and payable at maturity, upon acceleration, upon redemption, or otherwise (whether or not prohibited by the subordination provisions hereunder);

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(b)           the Company defaults in the payment of interest on any Note or any other amount payable hereunder when the same becomes due and payable and the Default continues for a period of 10 Business Days (whether or not prohibited by the subordination provisions hereunder);

(c)           the Company fails to comply with any of the agreements, covenants or provisions applicable to the Company under this Agreement or the Notes, and such Default continues for the period and after the notice specified below; provided, however, that, notwithstanding the foregoing, the exercise of the Repurchase Option and/or the payment of any Additional Payment shall be the sole remedy available to any Holder upon the occurrence of any Event of Default resulting from the failure by the Company to fulfill its obligations under Section 5.13 of this Agreement;

(d)           if any of the representations or warranties of the Company made in this Agreement (including those representations and warranties incorporated by reference herein) are untrue in any respect, the result of which could reasonably be expected to have a Material Adverse Effect;

(e)           if the Company (i) defaults in the payment of principal or interest payments under any loan agreement, note, mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any other Indebtedness of the Company or any of its Subsidiaries for borrowed money (or the payment of which is guaranteed by the Company or any of its Subsidiaries) in a principal amount in excess of $5,000,000 individual or in the aggregate, whether such Indebtedness or guarantee now exists or shall be created hereafter and which Indebtedness constitutes Senior Indebtedness but excluding defaults in payment under the Senior Credit Agreement, or (ii) an event of default occurs under any loan agreement, note, mortgage, indenture or instrument (including the Senior Credit Agreement) which shall represent a default in payment upon final maturity or otherwise result in the acceleration of such Indebtedness prior to its expressed maturity and the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness with respect to which there has been a default in payment upon final maturity or the maturity of which has been so accelerated and has not been paid, aggregates $5,000,000 or more;

(f)           a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Company or any Subsidiary of the Company and such remains undischarged for a period (during which execution shall not be effectively stayed) of 30 days, provided that the aggregate of all such judgments exceeds $1,000,000;

(g)           the filing by the Company or any of its material Subsidiaries (any such Person, a “Debtor”) of a petition commencing a voluntary case under Section 301 of Title 11 of the United States Code, or the commencement by a Debtor of a case or proceeding under any other Bankruptcy Law seeking the adjustment, restructuring, or discharge of the debts of such Debtor, or the liquidation of such Debtor, including without limitation the making by a Debtor of an assignment for the benefit of creditors; or the taking of any corporate action by a Debtor in furtherance of or to facilitate, conditionally or otherwise, any of the foregoing;

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(h)           the filing against a Debtor of a petition commencing an involuntary case under Section 303 of Title 11 of the United States Code, with respect to which case (i) such Debtor consents or fails to timely object to the entry of, or fails to seek the stay and dismissal of, an order of relief, (ii) an order for relief is entered and is pending and unstayed on the 60th day after the filing of the petition commencing such case, or if stayed, such stay is subsequently lifted so that such order for relief is given full force and effect, or (iii) no order for relief is entered, but the court in which such petition was filed has not entered an order dismissing such petition by the 60th day after the filing thereof; or the commencement under any other Bankruptcy Law of a case or proceeding against a Debtor seeking the adjustment, restructuring, or discharge of the debts of such Debtor, or the liquidation of such Debtor, which case or proceeding is pending without having been dismissed on the 60th day after the commencement thereof;

(i)           the entry by a court of competent jurisdiction of a judgment, decree or order appointing a receiver, liquidator, trustee, custodian or assignee of a Debtor or of the property of a Debtor, or directing the winding up or liquidation of the affairs or property of a Debtor, and (i) such Debtor consents or fails to timely object to the entry of, or fails to seek the stay and dismissal of, such judgment, decree, or order, or (ii) such judgment, decree or order is in full force and effect and is not stayed on the 60th day after the entry thereof, or, if stayed, such stay is thereafter lifted so that such judgment, decree or order is given full force and effect; or

(j)           failure by the Company to comply with its obligation to convert the Notes into Common Stock in accordance with the terms of this Agreement upon exercise of a Holder’s conversion right and such failure continues for five Business Days.

The term “Bankruptcy Law” means title 11, U.S. Code or any similar Federal or state insolvency law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

A Default under clause (c) of this Section 6.1 (other than a Default under Sections 5.2 or 5.3 of this Agreement, which Default shall be an Event of Default without notice or passage of time specified in this paragraph) or under clause (f) of this Section 6.1 is not an Event of Default until the Holders of at least 25% in aggregate principal amount of the then outstanding Notes notify the Company of the Default and, in the case of a Default under clause (c), the Company does not cure the Default or the Default is not waived within 30 days after receipt of the notice.  The notice must specify the Default, demand that it be remedied and state that the notice is a “Notice of Default.”

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6.2 Acceleration of Notes; Remedies

Subject to the following paragraph and Section 7 of this Agreement, if an Event of Default (other than an Event of Default specified in clause (g), (h) or (i) of Section 6.1) occurs and is continuing, the Majority Holders, by notice to the Company, may declare the unpaid principal of and any accrued interest on all the Notes to be due and payable, and immediately upon such declaration, the principal, premium, if any, and interest shall be due and payable; provided, however, that, provided Mr. Leon G. Cooperman and/or any of his Affiliates collectively are a 10% Holder at such time as such declaration may be made after the occurrence of Event of Default (other than an Event of Default specified in clause (g), (h) or (i) of Section 6.1), Mr. Leon G. Cooperman or his Affiliates may, in lieu of any declaration of the acceleration of payment of the unpaid principal and any accrued interest due on all of the Notes, appoint a second director designee to the Company’s Board of Directors in addition to their right to appoint an initial director designee pursuant to Section 5.14 above, and the Company shall take such actions as necessary, upon approval of such director designee by the Company’s Board of Directors, to cause such director designee to be seated on the Company’s Board of Directors and otherwise fulfill its obligations with respect to such director designee to the same extent as such obligations run toward Mr. Leon G. Cooperman, his Affiliates and their first director designee in accordance with Section 5.14 above.  If an Event of Default specified in clause (g), (h) or (i) of Section 6.1 occurs, such an amount shall ipso facto become and be immediately due and payable without any declaration or other act on the part of any Holder.

The Majority Holders by notice to the Company may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration.

6.3 Other Remedies

If an Event of Default occurs and is continuing, Holders of the Notes may, subject to Section 7 of this Agreement, pursue any available remedy to collect the payment of principal or interest on the Notes or to enforce the performance of any provision of the Notes or this Agreement.

A delay or omission by any Holder of any Notes in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  All remedies are cumulative to the extent permitted by law.

6.4 Waiver of Past Defaults

The Majority Holders by notice to the Company may waive an existing Default or Event of Default and its consequences except a continuing Default or Event of Default in the payment of the principal of or interest on any Notes.

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6.5 Rights of Holders to Receive Payment

Notwithstanding any other provision of this Agreement (other than Section 7), the right of any Holder of a Note to receive payment of principal and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder.

6.6 Undertaking for Costs

In any suit for the enforcement of any right or remedy under this Agreement, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.

SECTION 7. SUBORDINATION

7.1 Notes Subordinated to Senior Indebtedness

The Company, for itself and its successors, and each Holder, by his acceptance of Notes, agrees that, the Subordinated Indebtedness is subordinated, to the extent and in the manner provided in this Section 7, to the prior payment in full in cash of all Senior Indebtedness and that these subordination provisions are for the benefit of the holders of Senior Indebtedness and may not be amended or otherwise modified without the consent of such holders.

This Section 7 shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders are made obligees hereunder and any one or more of them may enforce such provisions.  If all Senior Indebtedness shall at any time be paid in full, the provisions of this Section 7 shall remain in full force and effect with respect to any Senior Indebtedness thereafter incurred.  In furtherance of the foregoing, this Section 7 shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment of any of the Senior Indebtedness, in whole or in part, is rescinded or must otherwise be restored or refunded by a holder of the Senior Indebtedness as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made.  This Section 7 is a "subordination agreement" under section 510(a) of the Bankruptcy Code and shall be effective before, during and after the commencement of an insolvency proceeding.

7.2 No Payment on Notes or in respect of the Common Stock in Certain Circumstances

(a)           No payment shall be made by or on behalf of the Company on account of the Subordinated Indebtedness until the Senior Credit Agreement Repayment Date; except that when no Indefinite Blockage Period or Payment Blockage Period exists, cash payments in respect of interest which accrues on the Notes (including all Additional Payments) may be made by the Company.

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(b)           No payment shall be made by or on behalf of the Company on account of the Subordinated Indebtedness for cash or property during the period (the “Indefinite Blockage Period”) beginning on the date that either (i) an Event of Default of the type specified in clause (g), (h) or (i) of Section 6.1 occurs ("Insolvency Default")or (ii) the Company and the Holders receive written notice (a “Payment Notice”) from holders of such Senior Indebtedness (or their representative) (which notice will be promptly given to the Holders) of any default in payment (a “Payment Default”) of any principal of, premium, if any, or interest on any Senior Indebtedness or any obligation owing under or in respect of Senior Indebtedness, and ending on the earliest of:  (i) the date on which the Senior Indebtedness to which such Payment Default relates is paid in full in cash, Cash Equivalents or in other consideration satisfactory to the holders of such Senior Indebtedness or such default is cured pursuant to the terms of the agreement evidencing such Senior Indebtedness, and (ii) the date on which such Payment Default is waived in writing in accordance with the agreements governing such Senior Indebtedness by the holders of such Senior Indebtedness; provided that if an Insolvency Default shall have occurred, then the Indefinite Blockage Period shall not end until all the Senior Indebtedness is paid in full in cash, in Cash Equivalents or in other consideration satisfactory to the holders of such Senior Indebtedness.

(c)           If an event of default other than a Payment Default (an “Other Default”) with respect to any Designated Senior Indebtedness, as such event of default is defined in the agreements governing such Designated Senior Indebtedness, has occurred, is continuing and permits the holders (or any requisite percentage thereof) to declare such Designated Senior Indebtedness due and payable prior to the date on which it would otherwise have become due and payable, then, during the period (the “Payment Blockage Period”) commencing on the date that the Company and the Holders receive written notice (a “Default Notice”) of the Other Default (which notice will be promptly given to the Holders) from holders of such Designated Senior Indebtedness (or their representative) and ending on the earliest of:  (i) 179 days after such date, (ii) the date, if any, on which the Senior Indebtedness to which the Other Default relates is paid in full in cash, Cash Equivalents or in other consideration satisfactory to the holders of such Designated Senior Indebtedness (and if such Designated Senior Indebtedness is the Senior Indebtedness outstanding under the Senior Credit Agreement, the Senior Credit Agreement Payment Date shall have otherwise occurred) or the Other Default is cured or waived in writing in accordance with the agreements governing such Designated Senior Indebtedness by the holders of such Designated Senior Indebtedness, and (iii) the date on which the Holders receive from the holders of such Designated Senior Indebtedness (or their representative) that commenced the Payment Blockage Period written notice that the Payment Blockage Period has been terminated, no payment shall be made by or on behalf of the Company on account of the Subordinated Indebtedness.  During any consecutive 360-day period, the aggregate of all Payment Blockage Periods shall not exceed 179 days and there shall be a period of at least 181 consecutive days in each consecutive 360-day period when no Payment Blockage Period is in effect.  No facts or circumstances that resulted in an event of default that existed or was continuing with respect to such Senior Indebtedness for which a Default Notice commencing a Payment Blockage Period was given on the date such Payment Blockage Period commenced shall be, or be made, the basis for the commencement of any subsequent Payment Blockage Period unless the resulting event of default is cured or waived for a period of not less than 90 consecutive days.

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(d)           Until the Senior Credit Agreement Payment Date, no Holder will demand payment of, accelerate the maturity of or commence or join in any action or proceeding against the Company or its Subsidiaries (or any property of the Company or its Subsidiaries) to recover all or any part of Subordinated Indebtedness (including any right to sue the Company or any Subsidiary or to file or participate in the filing of any involuntary bankruptcy petition against the Company or any Subsidiary) unless: (i) the holders of the Senior Indebtedness outstanding under the Senior Credit Agreement shall have accelerated such Senior Indebtedness and otherwise commence enforcement action against the Company or its property and (ii) the applicable Holder shall have given the agent under the Senior Credit Agreement 30 days prior written notice of its or his intention to commence such action; provided, however, no Holders shall be prohibited by the terms of this clause (d) from: (x) filing proofs of debt or claim and voting all claims in any bankruptcy, insolvency, receivership or similar proceeding or upon assignment for the benefit of creditors initiated by others or (y) from exercising the rights under Section 6.2 of this Agreement to appoint a second director designee to be seated on the Company's Board of Directors.

(e)           The provisions of this clause (e) are only applicable after the Senior Credit Agreement Payment Date.  For purposes of this Agreement, the term “Standstill Period” shall mean a period which commences on the date (which must be after the Senior Credit Agreement Payment Date) that the Company and the Holders receive a Default Notice or a Payment Notice, as the case may be, and ends on the earliest to occur of (i) the termination of the Payment Blockage Period relating to such Default Notice or the termination of the Indefinite Blockage Period relating to such Payment Notice, as the case may be, (ii) acceleration of the Senior Indebtedness to which such Default Notice or Payment Notice, as the case may be, relates, (iii) an Insolvency Default, (iv) 90 days after the receipt by the Company or the Holders of such Default Notice or Payment Notice, as the case may be, (v) the written waiver or amendment by or on behalf of the lenders under any Senior Indebtedness of the restrictions, during such Standstill Period, on asset sales or dispositions by the Company or any of its Subsidiaries so as to permit the Company or any of its Subsidiaries to transfer or apply the net proceeds from such asset sales or dispositions to or for the benefit of any holders of long-term Indebtedness of the Company or its Subsidiaries other than to repay Obligations under the Senior Credit Agreement, (vi) the written waiver or amendment, during such Standstill Period, by or on behalf of the lenders under any Senior Indebtedness of the prohibition on the creation or existence of liens on property, revenue or assets of the Company or any of its Subsidiaries so as to permit the creation or existence of liens (including without limitation judgment liens) securing payment of Indebtedness of the Company or any of its Subsidiaries which ranks pari passu with the Notes or is subordinate or junior in right of payment to the Notes, or (vii) such time as the holders of the Senior Indebtedness or their designated representative consents in writing to the termination of the Standstill Period.  For purposes of this Agreement, the term “Standstill Notice” means notice to the Holders of the Notes from the holders of the Designated Senior Indebtedness that a Standstill Period is in effect as a result of the occurrence of a Payment Default or an Other Default, as the case may be.  Upon receipt by the Holders of the Notes of a Standstill Notice, such Holders shall be prohibited from accelerating the Notes and shall be prohibited from enforcing any of their default remedies with respect thereto (including any right to sue the Company or to file or participate in the filing of any involuntary bankruptcy petition against the Company) until the Standstill Period relating to such Standstill Notice shall cease to be in effect; provided, however, that if a Holder had initiated an enforcement action (A) prior to the commencement of such Standstill Period at a time when such Holder was entitled to do so, or (B) during such Standstill Period but prior to receipt by such Holder of a Standstill Notice, then such Holder shall not be prevented during the Standstill Period from taking any steps with respect to such pending enforcement action as are required by law or are reasonably required to avoid material prejudice to the rights of such Holder.  Upon the termination of any Standstill Period, the Holders of the Notes may, at their sole election, exercise any and all remedies (including acceleration of the maturity of the Notes) available to them under this Agreement or applicable law; provided that the Indefinite Blockage Period or the Payment Blockage Period, as the case may be, shall (if not also terminated) continue notwithstanding the termination of the Standstill Period.  Notwithstanding the foregoing, not more than one Standstill Period may be commenced within a period of 365 consecutive days.

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(f)           In furtherance of the provisions of Section 7.1, in the event that, notwithstanding the foregoing provisions of this Section 7.2, any payment or distribution of assets on account of the Subordinated Indebtedness shall be made by the Company and received by any Holder, at a time when such payment or distribution was prohibited by the provisions of this Section 7.2, then, unless such payment or distribution is no longer prohibited by this Section 7.2, such payment or distribution shall be received and held in trust by such Holder for the benefit of the holders of Senior Indebtedness, and shall be paid or delivered by such Holders to the holders of Senior Indebtedness remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts on account of the Senior Indebtedness held or represented by each, to the extent necessary to enable payment in full (except as such payment otherwise shall have been provided for), of all Senior Indebtedness remaining unpaid, after giving effect to all concurrent payments and distributions and all provisions therefor, to or for the holders of such Senior Indebtedness, but only to the extent that as to any holder of such Senior Indebtedness such holder (or a representative thereof) notifies the Holders of the amounts then due and owing on such Senior Indebtedness, if any, held by such holder and only the amounts specified in such notices to the Holders shall be paid to the holders of such Senior Indebtedness.

The Company shall give prompt written notice to the Holders of any default or event of default, and any cure or waiver thereof, or any acceleration under any Senior Indebtedness or under any agreement pursuant to which Senior Indebtedness may have been issued.

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7.3 Subordinated Indebtedness Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization

Upon any distribution of assets of the Company upon any dissolution, winding up, total or partial liquidation or reorganization of the Company, whether voluntary or involuntary, in bankruptcy, insolvency, receivership or similar proceeding or upon assignment for the benefit of creditors:

(a)           the holders of all Senior Indebtedness shall first be entitled to receive payments in full (or to have such payment duly provided for) of the principal of and interest on and other amounts payable in respect thereof, before the Holders are entitled to receive any payment on account of any Subordinated Indebtedness;

(b)           any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders would be entitled except for the provisions of this Section 7 shall be paid by the liquidating trustee or agent or other Person making such a payment or distribution, directly to the holders of Senior Indebtedness or their representative, ratably according to the respective amounts of Senior Indebtedness held or represented by each, to the extent necessary to make payment in full (or have such payment duly provided for) of all such Senior Indebtedness remaining unpaid after giving effect to all concurrent payments and distributions and all provisions therefor to or for the holders of such Senior Indebtedness; and

(c)           in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by the Holders on account of any Subordinated Indebtedness, before all Senior Indebtedness is paid in full (or provision made therefor), such payment or distribution shall be received and held in trust by such Holder for the benefit of the holders of such Senior Indebtedness, or their respective representative, ratably according to the respective amounts of Senior Indebtedness held or represented by each, to the extent necessary to make payment in full (except as such payment otherwise shall have been provided for) of all such Senior Indebtedness remaining unpaid after giving effect to all concurrent payments and distributions and all provisions therefor to or for the holders of such Senior Indebtedness, but only to the extent that as to any holder of such Senior Indebtedness such holder (or a representative therefor) notifies the Holders of the amounts then due and owing on such Senior Indebtedness, if any, held by such holder and only the amounts specified in such notices to the Holders shall be paid to the holders of such Senior Indebtedness.

The Company shall give prompt written notice to the Holders of any dissolution, winding up, liquidation or reorganization of the Company or assignment for the benefit of creditors by the Company.

7.4 Noteholders to Be Subrogated to Rights of Holders of Senior Indebtedness

Subject to the payment in full of all Senior Indebtedness (or provision made for its payment as contemplated by the definition of the term "Senior Credit Agreement Payment Date"), the Holders of Notes shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until all amounts owing on the Notes shall be paid in full, and for the purpose of such subrogation no such payments or distributions to the holders of such Senior Indebtedness by or on behalf of the Company, or by or on behalf of the Holders by virtue of this Section 7, which otherwise would have been made to the Holders shall, as between the Company and the Holders, be deemed to be payment by the Company, to or on account of such Senior Indebtedness, it being understood that the provisions of this Section 7 are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of such Senior Indebtedness, on the other hand.

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If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Section 7 shall have been applied, pursuant to the provisions of this Section 7, to the payment of amounts payable under Senior Indebtedness, then the Holders shall be entitled to receive from the holders of such Senior Indebtedness any payments or distributions received by such holders of Senior Indebtedness in excess of the amount sufficient to pay all amounts payable under or in respect of such Senior Indebtedness in full.

7.5 Obligations of the Company Unconditional

Nothing contained in this Section 7 or elsewhere in this Agreement or in the Notes is intended to or shall impair, as between the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of, premium, if any, and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Indebtedness.  Upon any distribution of assets of the Company referred to in this Section 7, the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 7.

7.6 Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Indebtedness

No right of any present or future holders of any Senior Indebtedness to enforce subordination provisions contained in this Section 7 shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Agreement, regardless of any knowledge thereof which any such holder may have or be otherwise charged with.  The holders of Senior Indebtedness may extend, renew, modify or amend the terms of the Senior Indebtedness or any security therefor and release, sell or exchange such security and otherwise deal freely with the Company all without affecting the liabilities and obligations of the parties to this Agreement or the Holders.

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7.7 Section 7 Not to Prevent Events of Default

The failure to make a payment on account of principal of, premium, if any, or interest on the Notes by reason of any provision of this Section 7 shall not be construed as preventing the occurrence of a Default or an Event of Default under this Agreement or in any way prevent the Holders from exercising any right hereunder other than the right to receive payment on the Notes.

7.8 Subordination of Liens

This Agreement and the Notes are unsecured.  In the event any Subordinated Indebtedness is secured by any assets of the Company or any Subsidiary, whatever right, title, and interest (including any Liens) that a Holder has in and to any such assets securing the Subordinated Indebtedness shall, at all time and in all respects, be subject and subordinate to the right, title, and interest (including Liens) of the holders of the Senior Indebtedness, if any, in such assets.

7.9 Senior Creditor Rights

Each Holder hereby grants the agent under the Senior Credit Agreement the right in the name of such Holder (if such Holder fails to file by the date which is thirty (30) days before the applicable bar date) to file any proof of debt or claim on behalf of such Holder in respect of the Subordinated Indebtedness in any bankruptcy, insolvency, receivership or similar proceeding or upon assignment for the benefit of creditors and to vote any such claim (if such Holder fails to do so by the date which is thirty (30) days before the applicable bar date).

7.10 Subordinated Debt Limitations

The Holders agree that without the consent of the holders of the Designated Senior Indebtedness, the Holders will not amend or otherwise modify this Agreement or the Notes if the effect of any such modification would be to: (i) increases the interest rate of the Notes, (ii) amends the dates that the principal or interest on the Notes is due if the effect of such amendment or modification accelerates such dates or makes them more frequent, (iii) changes or adds covenants or event of default that are more burdensome or restrictive to the Company than those in the Senior Credit Agreement or (iv) requires the Company to repurchase, redeem or otherwise acquire the Notes or the Common Stock prior to the Senior Credit Agreement Payment Date.

SECTION 8. AMENDMENTS AND WAIVERS

8.1 With Consent of Holders

The Company, when authorized by a resolution of the Board of Directors of the Company, with the written consent of the Majority Holders, may amend this Agreement or the Notes, provided that each Holder shall have received prior notice of such proposed amendment.  The Majority Holders may waive compliance by the Company with any provision of this Agreement or the Notes, provided that each Holder shall have received prior notice of such proposed waiver.  Without the consent of each Holder affected, however, no amendment or waiver may (with respect to any Notes held by a nonconsenting Holder of Notes):

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(a)           reduce the principal amount of Notes whose Holders must consent to an amendment or waiver of any provision of this Agreement or the Notes;

(b)           reduce the principal of or change the fixed maturity of any Note, or alter the provisions with respect to the redemption of the Notes;

(c)           reduce the rate of or change the time for payment of interest on any Note;

(d)           waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Majority Holders and a waiver of the Payment Default that resulted from such acceleration);

(e)           make the principal of, premium, if any, or the interest on, any Note payable in any manner other than that stated in this Agreement and the Notes;

(f)           make any change in the provisions of this Agreement relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, premium (if any) or interest on the Notes;

(g)           waive a redemption payment with respect to the Notes;

(h)           make any change to the subordination provisions of this Agreement that adversely affect any Holder;

(i)           make any change that impairs or adversely affects the right of a Holder to convert any Note or the Conversion Rate thereof; or

(j)           make any change in the foregoing amendment and waiver provisions.

It shall not be necessary for the consent of the Holders under this Section 8 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment or waiver under this Section 8 becomes effective, the Company shall mail to all Holders a notice briefly describing the amendment or waiver and a copy of the fully executed amendment or waiver.  Any failure of the Company to mail such notice and copy, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment or waiver.

In connection with any amendment under this Section 8, the Company may offer, but shall not be obligated to offer, to any Holder who consents to such amendment or waiver, consideration for such Holder’s consent.

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8.2 Revocation and Effect of Consents

Until an amendment or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note.  However, any such Holder or subsequent Holder may revoke the consent as to his Note or portion of his Note by notice to the Company received before the date on which the Majority Holders have consented (and not theretofore revoked such consent) to the amendment or waiver.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver, which record date shall be at least 30 days prior to the first solicitation of such consent.  If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective for more than 90 days after such record date.

After an amendment or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (a) through (i) of Section 8.1, in which case, the amendment or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note; provided that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of, premium (if any) and interest on a Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder.

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver, consent or amendment, Notes owned by the Company or any Affiliate of the Company shall be considered as though not outstanding.

8.3 Notation on or Exchange of Notes

If an amendment or waiver changes the terms of a Note, the Company may require the Holder of the Note to deliver it to the Company so that it may place an appropriate notation on the Note about the changed terms and return it to the Holder.

8.4 Payment of Expenses

The Company agrees to pay or reimburse each Purchaser’s out-of-pocket expenses (including the fees and expenses of counsel) relating to any amendment or modification of, or any waiver or consent under, this Agreement, the Securities and any other Documents.

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SECTION 9. DEFINITIONS

9.1 Definitions

As used in this Agreement, the following terms shall have the following meanings:

“10% Holder” shall have the meaning set forth in Section 5.14(a).

“Additional Notes” shall have the meaning set forth in Section 1.1(a).

“Additional Payment” shall have the meaning set forth in Section 5.13(e).

“Affiliate” means, with respect to any referenced Person, a Person (i) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such referenced Person, (ii) which directly or indirectly through one or more intermediaries beneficially owns or holds 10% or more of the combined voting power of the total Voting Securities of such referenced Person or (iii) of which 10% or more of the combined voting power of the total Voting Securities directly or indirectly through one or more intermediaries is beneficially owned or held by such referenced Person or a Subsidiary of such referenced Person.  When used herein without reference to any Person, Affiliate means an Affiliate of the Company.  For purposes of this definition, “control” when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Securities, by agreement or otherwise; and the terms “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.

“Agreement” means this Convertible Notes Purchase Agreement dated as of June 3, 2011, by and among the Company and the Purchasers.

 “Bankruptcy Law” shall have the meaning set forth in Section 6.1.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.  The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

“Board Designation Deadline” shall have the meaning set forth in Section 5.14(a).

“Board of Directors” means (i) in the case of a Person that is a limited partnership, the board of directors of its corporate general partner or any committee authorized to act therefor (or, if the general partner is itself a limited partnership, the board of directors of such general partner’s corporate general partner or any committee authorized to act therefor); (ii) in the case of a Person that is a corporation, the board of directors of such Person or any committee authorized to act therefor, and (iii) in the case of any other Person, the board of directors, management committee or similar governing body or any authorized committee thereof responsible for the management of the business and affairs of such Person.

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“Business Day” means any day which is not a Legal Holiday.

“Capital Lease” means any lease of any property (whether real, personal or mixed) that, in conformity with GAAP, should be accounted for as a capital lease.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of corporate stock, including without limitation all common stock and preferred stock.

“Capital Lease Obligation” means, with respect to any Person for any period, any obligation of such Person to pay rent or other amounts under a Capital Lease; the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

 “Cash Equivalents” means (i) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) commercial paper maturing within one year from the date issued and, at the time of acquisition, having a rating of at least A-1 from Standard & Poor’s Corporation or at least P1 from Moody’s Investors Service, Inc.; (iii) certificates of deposit or bankers’ acceptances maturing within one year from the date of issuance thereof issued by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000 and not subject to setoff rights in favor of such bank; (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof with commercial banks having membership in the Federal Deposit Insurance Corporation in amounts not exceeding the lesser of $100,000 or the maximum amount of insurance applicable to the aggregate amount of the Company’s deposits at such institution; (v) repurchase obligations with a term of not more than seven (7) days for underlying securities of the types described in clauses (i), (ii) and (iii) above entered into with any commercial bank meeting the qualifications specified in clause (iii) above; (vi) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state of the United States or the District of Columbia, or by any political subdivision or taxing authority of any such state or the District of Columbia, the securities of which state, the District of Columbia, political subdivision or taxing authority (as the case may be) are rated at least AAA by Standard and Poor’s Corporation or Aaa by Moody’s Investors Services, Inc.; and (vii) shares of money market mutual or similar funds having assets in excess of $100,000,000 and that invest exclusively in assets satisfying the requirements of clauses (i) through (vi) above.

“Change of Control” means the occurrence of any of the following:

(i)           the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole to any “person” or “group” (as such terms are defined in Section 13(d) of the Exchange Act);

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(ii)            the adoption of a plan relating to the liquidation or dissolution of the Company;

(iii)           the consummation of any transaction after the date of this Agreement (including, without limitation, any merger or consolidation), the result of which is that any “person” (as defined above) becomes the Beneficial Owner, directly or indirectly, of shares of the voting Capital Stock of the Company representing (i) 50% or more of the total voting power of all of the Company’s outstanding Capital Stock or (ii) the power, directly or indirectly, to elect a majority of the members of the Company’s Board of Directors;

(iv)           the Company consolidates with, or merges with or into, another Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding voting Capital Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the voting Capital Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for voting Capital Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such voting Capital Stock of such surviving or transferee Person (immediately after giving effect to such issuance); or

(v)            the first day on which a majority of the members of the Company’s Board of Directors are not Continuing Directors.

“Charter Documents” means the articles of organization, articles of incorporation, bylaws, certificate of formation, limited liability company agreement, certificate of incorporation, declaration of trust and any other organizational documents, as amended or restated (or both) to date, of the Company and its Subsidiaries, as applicable.

“Closing” shall have the meaning set forth in Section 1.2(b).

“Closing Date” shall have the meaning set forth in Section 1.2(b).

“Code” shall have the meaning set forth in Section 3.16.

“Common Stock” means the Common Stock, $0.01 par value, of the Company issuable upon conversion of the Notes in accordance with the terms set forth in this Agreement.

“Company” shall have the meaning set forth in the preamble to this Agreement.

“Company Indemnified Parties” shall have the meaning set forth in Section 5.13(h).

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“Consolidated” or “consolidated,” when used with reference to any accounting term, means the amount described by such accounting term, determined on a consolidated basis in accordance with GAAP, after elimination of intercompany items.

“Consolidated Net Worth” means, with respect to any Person as of any date, the sum of (i) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date plus (ii) the respective amounts reported on such Person’s balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock, less (to the extent otherwise included in (i) and (ii) above) (A) all write-ups (other than write-ups resulting from foreign currency translations and write-ups of tangible assets of a going concern business made within 12 months after the acquisition of such business) subsequent to the Closing Date in the book value of any asset owned by such Person or a consolidated Subsidiary of such Person, (B) all amounts attributable to interests in Subsidiaries of such Person held by Persons other than such Person or its Subsidiaries, (C) all investments as of such date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries, and (D) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP.

“Continuing Directors” means, as of any date of determination, any member of the Company’s Board of Directors who:

(i)            was a member of the Company’s Board of Directors on the date of this Agreement; or

(ii)           was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election, including, without limitation, the director designee of Mr. Leon G. Cooperman or his Affiliates in accordance with the terms of Section 5.14 and, if applicable, Section 6.02 herein.

“Conversion Date” shall have the meaning set forth in Section 10.2(d).

“Conversion Obligation” shall have the meaning set forth in Section 10.1.

“Conversion Price” shall have the meaning set forth in Section 10.6(b).

“Conversion Rate” shall have the meaning set forth in Section 10.1.

“Custodian” shall have the meaning set forth in Section 6.1.

“Debtor” shall have the meaning set forth in Section 6.1(g).

“Default” means any event which is, or after notice or passage of time would be, an Event of Default.

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“Default Notice” shall have the meaning set forth in Section 7.2(c).

“Designated Senior Indebtedness” means the “Obligations” as defined in the Senior Credit Agreement, provided that after the Senior Credit Agreement Payment Date, the term Designated Senior Indebtedness shall include all of the following: (i) any Indebtedness permitted under clause (xiii) of Section 5.10(b) herein, and (ii) any other Senior Indebtedness having an initial principal amount (or, if such Senior Indebtedness is issued at a discount, an initial issue price) of at least $13,000,000 and that is specifically designated by the Company in the instrument creating or evidencing such Senior Indebtedness as “Designated Senior Indebtedness.”

“Disqualified Stock” means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof, in whole or in part, on or prior to the Maturity Date.

“Documents” means this Agreement and the Securities, collectively, or each of such documents singularly, and any documents or instruments contemplated by or executed in connection with any of them or any of the transactions contemplated hereby or thereby.

“Effectiveness Deadline” shall have the meaning set forth in Section 5.13(a).

“Environmental Laws” shall have the meaning set forth in Section 3.15.

 “Equity Interest” means (i) with respect to a corporation, any and all Capital Stock or warrants, options or other rights to acquire Capital Stock (but excluding any debt security which is convertible into, or exchangeable or exercisable for, Capital Stock) and (ii) with respect to a partnership, limited liability company or similar Person, any and all units, interests, rights to purchase, warrants, options or other equivalents of, or other ownership interests in any such Person (but excluding any debt security which is convertible into any of the foregoing).

“ERISA” have the meaning set forth in Section 3.16.

“ERISA Affiliate” have the meaning set forth in Section 3.16.

“Event of Default” shall have the meaning set forth in Section 6.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, from time to time, and any successor statute or law thereto.

“GAAP” means those generally accepted accounting principles and practices which are recognized as such on the Closing Date by the American Institute of Certified Public Accountants acting through its Accounting Principles Board or by the Financial Accounting Standards Board or through other appropriate boards or committees thereof and which are consistently applied for all periods after the date hereof so as to properly reflect the financial conditions, and the results of operations, shareholders’ equity and cash flows, of the Company and its consolidated Subsidiaries.

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“Governmental Body” shall mean any Federal, state, local or foreign governmental authority or regulatory body, any subdivision, agency, commission or authority thereof or any quasi-governmental or private body exercising any governmental regulatory authority thereunder and any Person directly or indirectly owned by and subject to the control of any of the foregoing, or any court, arbitrator or other judicial or quasi-judicial tribunal.

“guarantee” means, with respect to any Person, any contract, agreement or understanding of such Person pursuant to which such Person guarantees, or in effect guarantees, any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including without limitation:

(i)           agreements to purchase such Indebtedness or any property constituting security therefor;

(ii)           agreements to advance or supply funds (i) for the purchase or payment of such Indebtedness, or (ii) to maintain working capital, equity capital or other balance sheet conditions;

(iii)           agreements to purchase property, securities or services primarily for the purpose of assuring the holder of such Indebtedness of the ability of the primary obligor to make payment of the Indebtedness;

(iv)           letters or agreements commonly known as “comfort” or “keepwell” letters or agreements; or

(v)           any other agreements to assure the holder of the Indebtedness of the primary obligor against loss in respect thereof;

except that “guarantee” shall not include (A) the endorsement by a Person in the ordinary course of business of negotiable instruments or documents for deposit or collection, or (B) indemnities given by the Company or its Subsidiaries in brokerage, management and other agreements in the ordinary course of business substantially consistent with past practices.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates.

“Holder” or “Holders” means each Purchaser (so long as it holds any Securities) and any other holder of any of the Securities.

“incur” shall have the meaning set forth in Section 5.10(a).

“Indebtedness” means, with respect to any Person, the aggregate amount of, without duplication, the following:

(i) all obligations for borrowed money;

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(ii)           all obligations evidenced by bonds, debentures, notes or other similar instruments;

(iii)          the deferred purchase price of property or services (except Trade Payables, accrued commissions and other similar accrued current liabilities in respect of such obligations, in any case, not overdue, arising in the ordinary course of business);

(iv)          all Capital Lease Obligations and Synthetic Lease Obligations;

(v)           all obligations or liabilities of others secured by a lien on any asset owned by such Person or Persons whether or not such obligation or liability is assumed;

(vi)          all obligations of such Person or Persons, contingent or otherwise, in respect of any letters of credit or bankers’ acceptances;

(vii)         all Hedging Obligations; and

(viii)        all guarantees.

“Indefinite Blockage Period” shall have the meaning set forth in Section 7.2(b).

“Insolvency Default” shall have the meaning set forth in Section 7.2(b).

“Interest Payment Date” means each June 1 and December 1 of each year, beginning on December 1, 2011, or if any such day is not a Business Day, on the next succeeding Business Day.

"Inventory" means semi-finish aluminum and steel products and aluminum billets.

“Last Reported Sale Price” of the Common Stock on any date means the last quoted bid price for the Common Stock in the OTCQX U.S. Market or such other over-the-counter market on which the Common Stock is listed on the relevant date as reported by such organization; provided, however, that if the Common Stock is listed for trading on a  principal U.S. national or regional securities exchange, the “Last Reported Sale Price” shall be the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on the relevant date as reported  in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is listed for trading.   If the Common Stock is not so quoted or listed, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.

“Legal Holiday” means a Saturday, Sunday or day on which banks and trust companies in the principal place of business of the Company or in New York are not required to be open.

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“Lien” means any mortgage, pledge, lien, encumbrance, charge or adverse claim affecting title or resulting in a charge or security interest of any kind against real or personal property or tangible or intangible property, now owned or hereafter acquired, (including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell and any filing of any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

“Majority Holders” means the Holder or Holders of at least a majority in aggregate principal amount of the outstanding Notes.

“Mandatory Conversion Date” shall have the meaning set forth in Section 10.5(b).

“Mandatory Conversion Election” shall have the meaning set forth in Section 10.5(a).

“Mandatory Conversion Notice” shall have the meaning set forth in Section 10.5(b).

“Market Disruption Event” means (i) a failure by the OTCQX U.S. Market, primary U.S. national or regional securities exchange or market or over-the-counter or other market on which the Common Stock is listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any Trading Day for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options, contracts or future contracts relating to the Common Stock.

“Material Adverse Effect” means (i) a material adverse effect upon the business, operations, properties, assets, condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries or (ii) a material adverse effect on the ability of the Company to perform its obligations under this Agreement or any of the other Documents or of any Purchaser or Holder to enforce or collect any of the obligations hereunder or thereunder.  In determining whether any individual event could reasonably be expected to result in a Material Adverse Effect, notwithstanding that such event does not of itself have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then existing events could reasonably be expected to result in a Material Adverse Effect.

“Maturity Date” means June 1, 2016.

“Merger Event” shall have the meaning set forth in Section 10.3(a).

“Note Register” shall have the meaning set forth in Section 1.3(a).

“Notes” shall have the meaning set forth in Section 1.1.

“Notice of Conversion” shall have the meaning set forth in Section 10.2(c).

“Obligations” means, with reference to any Indebtedness, any principal of, premium, interest, penalties, fees and other liabilities payable from time to time and obligations performable under the documentation governing such Indebtedness.

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“Officer” of a Person means its Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Treasurer, any Vice President, Secretary or any Assistant Secretary.

“Officers’ Certificate” means a certificate signed by any two Officers, one of whom must be the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer or a Vice President of the Company.

 “Other Default” shall have the meaning set forth in Section 7.2(c).

“Payment Blockage Period” shall have the meaning set forth in Section 7.2(c).

“Payment Default” shall have the meaning set forth in Section 7.2(b).

“Payment Notice” shall have the meaning set forth in Section 7.2(b).

“Pension Plan” shall have the meaning set forth in Section 3.16.

“Permitted Liens” means with respect to any Person:

(i)           Liens incurred or deposits made by such Person under worker’s compensation laws, unemployment insurance laws or similar legislation, or Liens incurred or good faith deposits made in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or Liens incurred or deposits made to secure public or statutory obligations of such Person or deposits of cash or United States government bonds made to secure the performance of statutory obligations, surety, stay, customs and appeal bonds to which such Person is a party, or deposits made as security for contested Taxes or import duties or for the payment of rent, in each case in the ordinary course of business;

(ii)          Liens imposed by law, such as carriers, warehousemen’s, materialmen’s and mechanics’ Liens or Liens arising out of judgments or awards against such Person with respect to which such Person shall then be prosecuting appeal or other proceedings for review and which do not constitute an Event of Default under Section 6.1(f); provided that, in each case, such appeal or other proceeding is being made in good faith and with respect to which reserves or other appropriate provisions are being made in accordance with GAAP;

(iii)         Liens securing the payment of Taxes which (A) are not yet subject to penalties for non-payment, or (B) are being contested in good faith by appropriate proceedings timely instituted and diligently pursued;

(iv)         Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

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(v)           minor survey exceptions, encumbrances, easements or reservations of, or rights of others for, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness or other extensions of credit and which do not in the aggregate Materially Adversely Effect the value of said properties or materially impair their use in the operation of the business of such Person;

(vi)          Liens existing on the date of this Agreement including, but not limited to, Liens on any property securing the Indebtedness permitted under clause (xiii) of Section 5.10(b) hereof;

(vii)         Liens in favor of any holder of Senior Indebtedness incurred pursuant to the Senior Credit Agreement, whether now existing or hereafter arising on any or all assets of the Company and its Subsidiaries and the refinancings thereof (including, without limitation, any refinancing that increases the principal amount thereof to an amount permitted by Section 5.10(b)(i)), whether or not such refinancing constitutes a Permitted Refinancing Indebtedness;

(viii)        purchase money Liens upon or in any real or personal property (including fixture and other equipment and Capital Stock) acquired or held by the Company or any of its Subsidiaries in the ordinary course of business, to secure the purchase price of such property or to secure Indebtedness incurred solely for the purpose of financing the acquisition of such property, including any Liens to secure any Indebtedness permitted by clause (vi) of Section 5.10(b), or Liens existing on such property at the time of its acquisition (other than any such Lien created in contemplation of such acquisition), provided that (A) no such Lien shall extend to or cover any property other than the property being acquired and (B) any such Indebtedness would be permitted to be incurred under this Agreement;

(ix)           Liens on property of a Person existing at the time such Person is, or all or substantially all of the assets of such Person are, acquired by, merged with or into or consolidated with the Company or any of its Subsidiaries; provided that such Liens were in existence prior to the contemplation of such acquisition, merger or consolidation and do not extend to any assets other than those of the Person acquired, merged into or consolidated with the Company or any such Subsidiary;

(x)            Liens created at any time for the benefit of (or to secure) the Notes (including any Additional Notes);

(xi)           Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Agreement, secured by the same property securing such Hedging Obligations;

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(xii)           Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Agreement; provided that (A) the new Lien is limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Indebtedness (plus improvements and accessions to, such property or proceeds or distributions thereof) and (B) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (1) the outstanding principal amount, or, if greater, committed amount, of the original Indebtedness and (2) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(xiii)          Liens encumbering Inventory securing the Indebtedness permitted pursuant to clause (xiv) of Section 5.10(b) hereof; and

(xiv)          Liens (in addition to those referenced above) which secure obligations permitted under this Agreement not exceeding an aggregate principal amount of $13,000,000 at anytime.

“Permitted Refinancing Indebtedness” means, with respect to any Person, any Indebtedness of such Person issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease, discharge or refund other Indebtedness of such Person; provided that:

(xv)           the principal amount of such Indebtedness does not exceed the principal amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded or, in the case of Indebtedness being refinanced that was issued with an original issue discount, the accreted value thereof (as determined in accordance with GAAP) at the time of such refinancing, renewal, replacement, defeasance or refunding (plus the amount of reasonable expenses incurred in connection therewith);

(xvi)          such Indebtedness has a maturity date that is equal to or later than the maturity date of, and the Weighted Average Life to Maturity is equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(xvii)         if the Indebtedness being refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Indebtedness has a final maturity date equal to or later than the Maturity Date, and is subordinated in right of payment to the Notes on terms at least as favorable to the holders of Notes as those, if any, contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

(xviii)        the annual interest rate with respect to such Indebtedness is less than or equal to, and is payable no more frequently than, that of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

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(xix)          such Indebtedness is incurred by such Person who is an obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(xx)           such Indebtedness satisfies the provisions of the subsection of Section 5.10(b) pursuant to which the Indebtedness being refinanced was incurred.

“Person” means an individual, partnership, corporation, limited liability company, trust or unincorporated organization or a government or agency or political subdivision thereof.

“Plan of Liquidation” means, with respect to any Person, a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise) (i) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such person otherwise than as an entirety or substantially as an entirety and (ii) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such person to holders of Capital Stock of such person.

“principal” of any Note includes premium, if any.

“Proceedings” shall have the meaning set forth in Section 3.7(a).

 “Purchasers” means the purchasers on the signature pages hereto.

“Record Date,” means, with respect to any Interest Payment Date, the May 15 or November 15 (whether or not such day is a Business Day) immediately preceding the applicable June 1 or December 1 Interest Payment Date.

“Redemption Date” shall have the meaning set forth in Section 11.2(a).

“Redemption Election” shall have the meaning set forth in Section 11.1.

“Redemption Notice” shall have the meaning set forth in Section 11.2(a).

“Reference Property” and “unit of Reference Property” shall have the meanings set forth in Section 10.3(a).

“Registration Statement” shall have the meaning set forth in Section 5.13(a).

“Repurchase Option” shall have the meaning set forth in Section 5.13(e).

“SEC” means the Securities and Exchange Commission and any successor thereto.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute or law thereto.

“Security” or “Securities” shall have the meaning set forth in Section 1.1.

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“Selling Holder Indemnified Parties” shall have the meaning set forth in Section 5.13(g).

 “Senior Credit Agreement” means that certain Credit Agreement, dated as of April 28, 2011, by and among the Company, as Borrower, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as Administrative Agent and the lenders party thereto, as amended, modified, supplemented, refinanced or replaced from time to time. For purposes hereof, each amendment, restatement, modification or supplement of the Senior Credit Agreement, and the execution of each replacement, successor or new credit agreement, shall constitute the Senior Credit Agreement for purposes of this Agreement and the Notes.

"Senior Credit Agreement Payment Date" shall mean the first date after which all the following shall have occurred: (a) the principal of and interest accrued to such date on all the "Obligations" as defined in the Senior Credit Agreement shall have been paid in full in cash (including, without limitation, interest accruing after the commencement of a proceeding under Bankruptcy Law as to the Company or any of its Subsidiaries, whether or not a claim for such interest is an allowed claim in such proceeding), (b) all fees, expenses and other amounts then outstanding which constitute such Obligations shall have been paid in full in cash (other than as provided in clause (d) of this definition), (c) the commitments provided for under the Senior Credit Agreement shall have expired or irrevocably been terminated, and (d) no letters of credit or banker's acceptances issued under the term of the Senior Credit Agreement shall remain outstanding or the contingent reimbursement obligations arising in respect thereof shall have been secured by either (i) the grant of a first priority, perfected Lien on cash or cash equivalents in an amount at least equal to 102% of the amount thereof or other collateral which is acceptable to the holders of the Senior Indebtedness incurred under the Senior Credit Agreement in their sole discretion or (ii) the issuance of a "back–to–back" letter of credit in form and substance acceptable to such holders with an original face amount at least equal to 102% of the amount of such Indebtedness and issued by an issuing bank satisfactory such holders in their sole discretion.

“Senior Indebtedness” means, with respect to the Company or any of its Subsidiaries, the principal of, and interest on, any Indebtedness of the Company or any it its Subsidiaries, whether outstanding on the date of this Agreement or thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company or any of its Subsidiaries if, in the case of any particular Indebtedness, the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that such Indebtedness shall be senior in right of payment to the Notes or the Company’s or any of its Subsidiaries’ senior subordinated Indebtedness; provided, however, Senior Indebtedness shall not include (i) in the case of the obligation of the Company and its Subsidiaries in respect of each Note, the obligation of the Company and its Subsidiaries in respect of other Notes; (ii) Indebtedness of the Company or any of its Subsidiaries to a Subsidiary or an Affiliate of the Company; (iii) Indebtedness represented by Capital Lease Obligations or Synthetic Lease Obligations; and (iv) Trade Payables and other Indebtedness and other amounts incurred in connection with obtaining goods, materials or services; provided, however, that notwithstanding the foregoing, all "Obligations" (as defined in the Senior Credit Agreement), whether for principal, interest (including, without limitation, interest accruing after the commencement of a proceeding under Bankruptcy Law as to the Company or any of its Subsidiaries, whether or not a claim for such interest is an allowed claim in such proceeding), costs, fees, expenses, indemnities or otherwise, of the Company or any of its Subsidiaries, now existing or hereafter incurred under the Senior Credit Agreement or any guarantee executed and delivered by the Company or any of its Subsidiaries thereunder or pursuant thereto shall in any event constitute Senior Indebtedness of the Company.

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“Solvent” means, with respect to any Person on a particular date, that on such date, (i) the fair saleable value of the assets of such Person exceeds its probable liability on its debts as they become absolute and mature; (ii) all of such Person’s assets, at a fair valuation, exceed the sum of such Person’s debts; (iii) such Person is able to pay its debts or liabilities as such debts and liabilities mature; and (iv) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person’s assets would constitute an unreasonably small capital.

“Standstill Notice” shall have the meaning set forth in Section 7.2(e).

“Standstill Period” shall have the meaning set forth in Section 7.2(e).

“Subsequent Registration Statement” shall have the meaning set forth in Section 5.13(b).

"Subordinated Indebtedness" means all obligations of the Company to pay the principal of, premium, if any, and interest on the Notes (including, without limitation, all Additional Payments) and all obligations of the Company to make any payment on account of the acquisition, redemption or other repurchase of the Notes or the Common Stock, including, without limitation, any obligations to make payments under Section 3.9(a) or Section 5.13(e) of this Agreement.

“Subsidiary” means, with respect to any Person, (i) a corporation a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is, at the date of determination, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, (ii) a partnership in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but, in the case of a limited partner, only if such Person or its Subsidiary is entitled to receive more than 50% of the assets of such partnership upon its dissolution, or (iii) any limited liability company or any other Person (other than a corporation or a partnership) in which such Person, a Subsidiary of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination, has (A) at least a majority ownership interest or (B) the power to elect or direct the election of a majority of the directors or other governing body of such Person.

“Surviving Person” shall have the meaning set forth in Section 5.2(b).

“Synthetic Lease Obligation” means the monetary obligation of a Person under (i) a so-called synthetic or tax-retention lease, or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, for United States Federal income tax purposes is characterized as the indebtedness of such Person (without regard to accounting treatment).

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“Taxes” means all Federal, state, local and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto.

“Tax Returns” means all Federal, state, local and foreign tax returns, declarations, statements, reports, schedules, forms and information returns (including any amended Tax Return).

 “Trade Payables” means, with respect to any Person, accounts payable and other similar accrued current liabilities in respect of obligations or indebtedness to trade creditors created, assumed or guaranteed by such Person or any of its Subsidiaries in the ordinary course of business in connection with the obtaining of property or services.

“Trading Day” means a day on which (i) trading in the Common Stock generally occurs on the OTCQX U.S. Market or such other over-the-counter or other market on which the Common Stock is listed, or if the Common Stock is not then listed on such over-the-counter or other market, on the principal U.S. national or regional securities exchange on which the Common Stock is then listed and (ii) a Last Reported Sale Price for the Common Stock is available on such securities exchange or market; provided that if the Common Stock (or other security for which a closing sale price must be determined) is not so listed or traded, “Trading Day” means a Business Day; and provided, further, that for purposes of determining amounts due upon conversion only, “Trading Day” means a day on which (A) there is no Market Disruption Event and (B) trading in the Common Stock generally occurs on the OTCQX U.S. Market or such other over-the-counter or other market on which the Common Stock is listed, or if the Common Stock is not then listed on such over-the-counter or other market, on the principal U.S. national or regional securities exchange on which the Common Stock is then listed, except that if the Common Stock is not so listed or admitted for trading, “Trading Day” means a Business Day.

“U.S. Legal Tender” means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

“Voting Securities” means any class of Equity Interests of a Person pursuant to which the holders thereof have, at the time of determination, the general voting power under ordinary circumstances to vote for the election of directors, managers, trustees or general partners of such Person (regardless of whether at the time any other class or classes will have or might have voting power by reason of the happening of any contingency).

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness.

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9.2 Rules of Construction

Unless the context otherwise requires:

(a) a term has the meaning assigned to it;

(b) “or” is not exclusive;

(c) words in the singular include the plural, and words in the plural include the singular;

(d) provisions apply to successive events and transactions;

(e) “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision; and

(f) references to agreements (including the Documents) and other contractual instruments shall (unless otherwise indicated herein) be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Document, and references to any law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law.

SECTION 10. CONVERSION OF NOTES

10.1 Conversion Privilege

Subject to and upon compliance with the provisions of this Section 10, each Holder of a Note shall have the right, at such Holder’s option, to convert all or any portion (if the portion to be converted is $1,000 principal amount or an integral multiple of $1,000 thereafter) of such Note at any time prior to the close of business on the Business Day immediately preceding the Maturity Date, at a conversion rate of 215.05 shares of Common Stock, subject to adjustment as provided herein (the “Conversion Rate”), per $1,000 principal amount of Notes (the “Conversion Obligation”).

10.2 Conversion Procedure; Settlement Upon Conversion

(a)           Upon conversion of any Note, the Company shall deliver to the converting Holder, in respect of each $1,000 principal amount of Notes being converted, shares of Common Stock at the applicable Conversion Rate in accordance with this Section 10.2, together with cash, if applicable, in lieu of any fractional share of Common Stock in accordance with 10.2(i).

(b)           The number of shares of Common Stock in respect of any conversion of Notes to be delivered to a converting Holder shall be computed by delivering to the converting Holder a number of shares of Common Stock equal to the product of (1) the aggregate principal amount of Notes to be converted, divided by $1,000, and (2) the applicable Conversion Rate.

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(c)           Before any Holder of a Note shall be entitled to convert a Note as set forth in this Section 10, such Holder shall (i) complete, manually sign and deliver an irrevocable notice to the Company as set forth in the Form of Notice of Conversion (or a facsimile thereof) set forth on the Form of Note attached hereto as Annex A (a “Notice of Conversion”) and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any shares of Common Stock to be delivered upon settlement of the Conversion Obligation to be registered, (ii) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Company, and (iii) if required, furnish appropriate endorsements and transfer documents. If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered.

(d)           A Note shall be deemed to have been converted immediately prior to the close of business on the date (the “Conversion Date”) that the Holder has complied with the requirements set forth in subsection (c) above.  Except as otherwise provided herein, the Company shall deliver the shares of Common Stock together with cash, if applicable, in lieu of any fractional share of Common Stock in accordance with Section 10.2(i), due in respect of the Conversion Obligation on the third Business Day immediately following the relevant Conversion Date.  The Company shall issue or cause to be issued, and deliver to such Holder certificates for the full number of shares of Common Stock to which such Holder shall be entitled in satisfaction of the Company’s Conversion Obligation.

(e)           In case any Note shall be surrendered for partial conversion, the Company shall execute and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but, if required by the Company, with payment of a sum sufficient to cover any transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion.

(f)           If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of Common Stock upon conversion, unless the tax is due because the Holder requests such shares to be issued in a name other than the Holder’s name, in which case the Holder shall pay that tax.  The Company may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder’s name until it receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence.

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(g)           Upon conversion, a Holder shall receive a separate cash payment for accrued and unpaid interest, if any, on such Notes surrendered for conversion.  The Company’s settlement of the Conversion Obligation and payment of such accrued and unpaid interest shall be deemed to satisfy in full its obligation to pay the principal amount of the Note and accrued and unpaid interest, if any, to, but not including, the Conversion Date.  As a result, accrued and unpaid interest, if any, to, but not including, the Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited.

(h)           The Person in whose name the certificate for any shares of Common Stock delivered upon conversion of a Note is registered shall be treated as a stockholder of record as of the close of business on the relevant Conversion Date.  Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.

(i)           The Company shall not issue any fractional share of Common Stock upon conversion of the Notes and shall instead pay cash in lieu of any fractional share of Common Stock issuable upon conversion based on the Last Reported Sale Price of the Common Stock on the relevant Conversion Date.

10.3 Effect of Recapitalizations

(a)           In the case of:

(i)            any recapitalization, reclassification or change of the Common Stock of the Company (other than changes resulting from a subdivision or combination);

(ii)           any consolidation, merger or combination involving the Company;

(iii)          any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Company’s Subsidiaries substantially as an entirety; or

(iv)          any statutory share exchange,

in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Merger Event”), then, at and after the effective time of such Merger Event, and subject to redemption in accordance with Section 11 below, the right to convert each $1,000 principal amount of Notes shall be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the applicable Conversion Rate prior to such Merger Event would have owned or been entitled to receive (the “Reference Property”, with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one share of Common Stock is entitled to receive) upon such Merger Event and, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute an amendment to this Agreement providing for such change in the right to convert each $1,000 principal amount of Notes; provided, however, that at and after the effective time of the Merger Event any shares of Common Stock that the Company would have been required to deliver upon conversion of the Notes in accordance with this Section 10 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Common Stock would have been entitled to receive in such Merger Event.

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If the Merger Event causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), then (i) the Reference Property into which the Notes will be convertible shall be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election, and (ii) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (i) attributable to one share of Common Stock.  If the holders receive only cash in such Merger Event, then for all conversions that occur after the effective date of such Merger Event (A) the consideration due upon conversion of each $1,000 principal amount of Notes shall be solely cash in an amount equal to the Conversion Rate, multiplied by the price paid per share of Common Stock in such Merger Event and (B) the Company shall satisfy the Conversion Obligation by paying cash to converting Holders on the third Business Day immediately following the Conversion Date.  The Company shall notify Holders of such weighted average as soon as practicable after such determination is made.

Such amendment to this Agreement described in the second immediately preceding paragraph shall provide for adjustments that shall be as nearly equivalent as is possible to the adjustments provided for in this Section 10.3.  If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the successor or purchasing corporation, as the case may be, in such Merger Event, then such amended Agreement shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors of the Company or such successor or purchasing corporation shall reasonably consider necessary by reason of the foregoing, including to the extent required by the Board of Directors.

(b)           The Company shall not become a party to any Merger Event unless its terms are consistent with this Section 10.3.  None of the foregoing provisions shall affect the right of a holder of Notes to convert its Notes into shares of Common Stock as set forth in this Section 10 prior to the effective date of such Merger Event.

(c)           The above provisions of this Section 10.3 shall similarly apply to successive Merger Events.

(d)           In the case of any Merger Event, the Company shall mail to each Holder at its address appearing on the Note Register, as promptly as possible but in any event at least 20 days prior to the applicable date hereinafter specified, a notice stating the date on which such Merger Event is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Merger Event.  Failure to give such notice, or any defect therein, shall not affect the legality or validity of such Merger Event.

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10.4 Certain Covenants

(a)           The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Notes hereunder require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly issued upon conversion, the Company will, to the extent then permitted by the rules and interpretations of the SEC, secure such registration or approval, as the case may be.

(b)           The Company further covenants that if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system the Company will list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, any Common Stock issuable upon conversion of the Notes.

10.5 Mandatory Conversion

(a)           If the Last Reported Sale Price of the Common Stock for 30 consecutive Trading Days ending on the Trading Day prior to the date the Company provides a Conversion Notice is equal to or greater than $7.00, the Company shall have the right, in its sole discretion and without the consent of any Holder, to elect (a “Mandatory Conversion Election”), by notice to Holders, promptly at any time prior to the Maturity Date, to require the Holders to convert all of or part of their Notes, upon notice as set forth in Section 10.5(b) at the applicable Conversion Rate; provided, however, that the Company may not make a Mandatory Conversion Election or implement the same unless the Registration Statement or any Subsequent Registration Statement, if applicable, is effective on the date of such election and on the Mandatory Conversion Date.

(b)           In case the Company makes a Mandatory Conversion Election with respect to all or any part of the Notes pursuant to Section 10.5(a), it shall fix a date for conversion (each, a “Mandatory Conversion Date”) and it shall mail or cause to be mailed or otherwise delivered a notice of such mandatory conversion (a “Mandatory Conversion Notice”),  not less than 30 nor more than 60 calendar days prior to the Mandatory Conversion Date to each Holder of Notes to be converted at its last address as the same appears on the Note Register.

(c)           The Mandatory Conversion Notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, failure to give such Mandatory Conversion Notice by mail or any defect in the Mandatory Conversion Notice to the Holder of any Note designated for conversion as a whole or in part shall not affect the validity of the proceedings for the conversion of any other Note. Each Mandatory Conversion Notice shall specify the Mandatory Conversion Date (which must be a Business Day) and, in case any Note is to be converted in part only, the portion of the principal amount thereof to be converted and after the Mandatory Conversion Date, upon surrender of such Note, a new Note in principal amount equal to the unconverted portion thereof shall be issued.  A Mandatory Conversion Notice shall be revocable.

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(d)           If fewer than all of the outstanding Notes are to be converted pursuant to a Mandatory Conversion Election, the Company shall select the Notes to be converted on a pro rata basis.  If any Note selected for partial conversion is submitted for conversion in part after such selection, the portion of the Note submitted for conversion shall be deemed (so far as may be possible) to be the portion selected for mandatory conversion.

(e)           If any Mandatory Conversion Notice has been given in respect of the Notes in accordance with Section 10.2(b), on the Mandatory Conversion Date the Notes shall be automatically cancelled and cease to be outstanding and the Holders of the Notes shall cease to have any rights with respect thereto, except the right to receive the number of shares of Common Stock issuable upon the conversion of the Notes on the Mandatory Conversion Date at the Conversion Rate.

(f)           The Company may not make a Mandatory Conversion Election with respect to any Notes on any date if (i) the principal amount of the Notes has been accelerated in accordance with the terms of this Agreement, and such acceleration has not been rescinded, on or prior to the Mandatory Conversion Date or (ii) the Company has not paid or is not simultaneously paying all accrued and unpaid interest thereon for all periods between Interest Payment Dates or portions thereof terminating prior to the Mandatory Conversion Date.

(g)           In the event of any mandatory conversion of the Notes, the Company shall not be required to issue, register the transfer of or exchange any Note during the 15 calendar day period prior to the date on which a Mandatory Conversion Notice is deemed to have been given to all Holders of Notes to be converted, or register the transfer of or exchange any Notes so selected for mandatory conversion, in whole or in part, except the portion of any Notes being converted in part that shall not be converted.

10.6 Adjustment of the Conversion Rate

(a)           If the Company issues shares of Common Stock as a dividend or distribution on shares of Common Stock, or if it effects a share split or share combination, the Conversion Rate will be adjusted based on the following formula:

where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the effective date for such dividend or distribution, or immediately prior to the open of business on the effective date of such share split or combination, as the case may be;

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CR' = the Conversion Rate in effect immediately after the open of business on such effective date;

OS0 = the number of shares of Common Stock outstanding immediately prior to the open of business on such effective date; and

OS' = the number of shares of Common Stock that will be outstanding immediately after, and solely as a result of, giving effect to such dividend, distribution, share split or share combination.

Any adjustment made under this clause (a) shall become effective immediately after the open of business on the effective date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination.  If any dividend or distribution of the type described in this clause (a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Company’s Board of Directors determines not to pay such dividend or distribution to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(b)           If the Company sells or otherwise distributes shares of Common Stock to any Person, or any rights or warrants entitling any Person for a period expiring not more than 60 days after the Record Date for such distribution to subscribe for or purchase shares of Common Stock, at a price per share less than the greater of (i) the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of sale, or (ii) the conversion price immediately preceding the date of announcement of sale (the “Conversion Price”) (which Conversion Price shall be calculated by dividing (A) $1,000 by (B) the applicable Conversion Rate immediately prior to the announcement of sale), the Conversion Rate will be adjusted based on the following formula; provided that the Conversion Rate will be readjusted to the extent that, if applicable, such rights or warrants are not exercised prior to their expiration as set forth in the following paragraph:

where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the issue for such distribution;

CR' = the Conversion Rate in effect immediately after the open of business on the effective date for such distribution;

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OS0 = the number of shares of Common Stock outstanding immediately prior to the open of business on the effective date for such distribution;

X = the total number of shares of Common Stock issued or issuable pursuant to such rights or warrants, as the case may be; and

Y = the number of shares of Common Stock equal to the aggregate price paid for such shares of Common Stock, or payable to exercise such rights or warrants, as the case may be, divided by either (A) the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such sale (in the case of clause (i) of this Section 10.6(b)), or (B) the Conversion Price (in the case of clause (ii) of this Section 10.6(b)), as applicable.

Such adjustment shall be successively made whenever any such shares of Common Stock, rights or warrants are distributed and shall become effective immediately after the opening of business on the effective date for such sale.  To the extent that shares of Common Stock are not delivered after the expiration of any such rights or warrants, if applicable, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.  If such shares of Common Stock, rights or warrants are not so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such effective date for such distribution had not been fixed.

In determining whether any rights or warrants, if applicable, entitle the holders thereof to subscribe for or purchase shares of Common Stock at less than either the average of the Last Reported Sale Prices for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such rights or warrants or the Conversion Price, as applicable, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Company’s Board of Directors.

(c)           If the Company distributes shares of its Capital Stock, evidences of its indebtedness or other assets or property to all or substantially all holders of Common Stock, excluding:

(i)           dividends or distributions referred to in clause (a) or (b) above;

(ii)           dividends or distributions described in clause (d) below; and

(iii)           spin-offs described below in this paragraph (c),

then the Conversion Rate will be adjusted based on the following formula:

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where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the effective date for such distribution;

CR' = the Conversion Rate in effect immediately after the open of business on the effective date for such distribution;

SP0 = the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the effective date for such distribution; and

FMV = the fair market value, on the effective date for such distribution, as determined by the Board of Directors of the shares of Capital Stock, evidences of Indebtedness, assets or property distributed with respect to each outstanding share of Common Stock.

Such adjustment shall become effective immediately after the open of business on the effective date for such distribution.  If such distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than the “SP0” (as defined above), in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Notes shall receive, for each $1,000 principal amount thereof, the amount and kind of the Company’s Capital Stock, evidences of indebtedness, or other assets or property that such Holder would have received had such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect on the effective date for the distribution, without being required to convert the notes.

With respect to an adjustment pursuant to this clause (c) where there has been a payment of a dividend or other distribution on the Common Stock in shares of Capital Stock of any class or series, or similar Equity Interest, of or relating to a Subsidiary or other business unit, which is referred to herein as a “spin-off,” the Conversion Rate in effect immediately before 5:00 p.m., New York time, on the 10th Trading Day immediately following, and including, the effective date of the spin-off will be increased based on the following formula:

where,

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CR0 = the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the effective date for the spin-off;

CR' = the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the effective date for the spin-off;

FMV0 = the average of the Last Reported Sale Prices of the Capital Stock or similar Equity Interest distributed to holders of Common Stock applicable to one share of Common Stock over the first 10 consecutive Trading Day period immediately following, and including, the effective date for the spin-off; and

MP0 = the average of the Last Reported Sale Prices of the Common Stock over the first 10 consecutive Trading Day period immediately following, and including, effective date for the spin-off.

The adjustment to the Conversion Rate under the preceding paragraph will become effective at the close of business on the 10th Trading Day from, and including, the effective date of the spin-off; provided that, for purposes of determining the Conversion Rate, in respect of any conversion within the 10 Trading Days immediately following, and including, the effective date of any spin-off, references with respect to the spin-off to 10 Trading Days shall be deemed replaced with such lesser number of consecutive Trading Days as have elapsed between the effective date of such spin-off and the Conversion Date.  If the effective date for the spin-off is less than 10 Trading Days prior to, and including, the end of the cash settlement averaging period in respect of any conversion, references with respect to 10 Trading Days shall be deemed replaced, for purposes of calculating the affected daily Conversion Rates in respect of that conversion, with such lesser number of Trading Days as have elapsed from, and including, the effective date for such spin-off to, and including, the last Trading Day of such cash settlement averaging period.

(d)           If the Company pays any cash dividends or distributions to all or substantially all holders of Common Stock, the Conversion Rate will be adjusted based on the following formula:

where,

CR0 = the Conversion Rate in effect immediately prior to the open of business on the effective date for such distribution;

CR' = the Conversion Rate in effect immediately after the open of business on the effective date for such distribution;

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SP0 = the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the “ex- date” for such distribution; and

C = the amount in cash per share the Company distributes to holders of Common Stock.

Such adjustment shall become effective immediately after the opening of business on the effective date for such dividend or distribution.  If such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, adequate provision shall be made so that each Holder of Notes shall receive, for each $1,000 principal amount thereof, the amount of cash that such holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate immediately prior to the open of business on the effective date for such cash dividend or distribution, without being required to convert the Notes.

(e)           If the Company or any of its Subsidiaries make a payment in respect of a tender offer or exchange offer for Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate will be increased based on the following formula:

where,

CR0 = the Conversion Rate in effect immediately prior to the close of business on the last Trading Day of the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

CR' = the Conversion Rate in effect immediately after the close of business on the last Trading Day of the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

AC = the aggregate value, as determined by the Board of Directors, of all cash and any other consideration paid or payable for shares purchased in such tender or exchange offer;

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OS0 = the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares accepted for purchase or exchange in such tender or exchange offer);

OS' = the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares accepted for purchase or exchange in such tender offer or exchange offer); and

SP' = the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires.

The increase to the Conversion Rate under the preceding paragraph will become effective at the close of business on the 10th Trading Day immediately following, but excluding, the date such tender or exchange offer expires; provided that, for purposes of determining the Conversion Rate, in respect of any conversion during the 10 Trading Days immediately following, but excluding, the date that any such tender or exchange offer expires, references within this clause (e) to 10 consecutive Trading Days shall be deemed replaced with such lesser number of consecutive Trading Days as have elapsed between the date such tender or exchange offer expires and the relevant Conversion Date.  If the Trading Day immediately following the date the tender or exchange offer expires is less than 10 Trading Days prior to, and including, the end of the cash settlement averaging period in respect of any conversion, references to 10 Trading Days shall be deemed replaced, for purposes of calculating the affected daily Conversion Rates in respect of that conversion, with such lesser number of Trading Days as have elapsed from, and including, the Trading Day immediately following the date such tender or exchange offer expires to, and including, the last Trading Day of such cash settlement averaging period.

Such adjustment shall become effective immediately after close of business on the 10th Trading Day immediately following, but excluding, the date such tender or exchange offer expires.  If the Company or any of its Subsidiaries is obligated to purchase shares of Common Stock pursuant to any such tender or exchange offer, but it is permanently prevented by applicable law from effecting all or any such purchases or all or any portion of such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made or had only been made in respect of the purchases that had been effected.

(f)           If the application of any of the foregoing formulas in subsections (a) through (e) above (other than in respect of a share combination) would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made.  Notwithstanding the foregoing, if a Conversion Rate adjustment becomes effective on any effective date as described above, and a Holder that has converted its Notes on or after such effective date and on or prior to the related Record Date would be treated as the record holder of shares of Common Stock as of the related Conversion Date based on an adjusted Conversion Rate for such “ex-date,” then, notwithstanding the foregoing Conversion Rate adjustment provisions, the Conversion Rate adjustment relating to such effective date will not be made for such converting Holder.  Instead, such Holder will be treated as if such Holder were the record owner of the shares of Common Stock on an un-adjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.

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(g)           Except as stated herein, the Conversion Rate will not be adjusted for the issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock or the right to purchase shares of Common Stock or such convertible or exchangeable securities. In addition, the applicable Conversion Rate will not be adjusted:

(i)            upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any such plan;

(ii)           upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;

(iii)          upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) above and outstanding as of the date of this Agreement;

(iv)          for a change in the par value of the Common Stock; or

(v)           for accrued and unpaid interest.

(h)           Adjustments to the applicable Conversion Rate will be calculated to the nearest 1/10,000th of a share.  The Company will not be required to make an adjustment to the Conversion Rate unless the adjustment would require a change of at least 1% in the Conversion Rate.  However, the Company will carry forward any adjustments that are less than 1% of the Conversion Rate and make such carried forward adjustments, regardless of whether the aggregate adjustment is less than 1%, (i) annually, on the anniversary of the first date of issue of the Notes, (ii) upon a designated event and (iii) on the Maturity Date.  Except as described in this Section 10, the Conversion Rate shall not be adjusted.

(i)           For purposes of this Section 10.6, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

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(j)           In addition to those adjustments required by clauses (a), (b), (c), (d) and (e) of this Section 10.6, and to the extent permitted by applicable law and subject to the applicable rules of the OTCQX U.S. Market or such other over-the-counter or other market on which the Common Stock is listed, or if the Common Stock is not then listed on such over-the-counter or other market, on the principal U.S. national or regional securities exchange on which the Common Stock is then listed, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Company’s Board of Directors or a committee thereof determines that such increase would be in the Company’s best interest.  In addition, the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event.  Whenever the Conversion Rate is increased pursuant to either of the preceding two sentences, the Company shall mail to the Holder of each Note at its last address appearing on the Note Register a notice of the increase at least 15 days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

SECTION 11. REDEMPTION

11.1 Redemption

The Company shall have the right, in its sole discretion and without the consent of any Holder, to elect (a “Redemption Election”), upon notice to Holders as set forth in Section 11.2(a), promptly at any time prior to the Maturity Date but solely in connection with a Change of Control, to redeem all or part of the Notes at a redemption price equal to 100% of the principal amount thereof, plus the present value of all remaining interest payments due on such Notes selected for redemption (which shall include accrued and unpaid interest, if any, to the date of redemption) through the Maturity Date (subject to the right of Holders of record on the relevant Redemption Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date); provided, however, that in the event there is a Change of Control whereby the holders of Common Stock are to receive all or substantially all of the consideration for such Change of Control in the form of cash or Cash Equivalents, and such cash consideration is less than $4.65 per share of Common Stock, the Company will be required to make a Redemption Election in accordance with this Section 11 with respect to all, but not less than all, of the outstanding Notes at a price equal to 110% of the principal amount of the Notes, plus accrued and unpaid interest through the Redemption Date.

11.2 Redemption Procedures

(a)           In case the Company makes a Redemption Election with respect to all or any part of the Notes pursuant to Section 11.1, it shall fix a date for redemption (each, a “Redemption Date”) and it shall mail or cause to be mailed or otherwise delivered a notice of such redemption (a “Redemption Notice”), not less than 30 nor more than 60 calendar days prior to the Redemption Date to each Holder of Notes to be redeemed at its last address as the same appears on the Note Register.

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(b)           The Redemption Notice, if mailed in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, failure to give such Redemption Notice by mail or any defect in the Redemption Notice to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Each Redemption Notice shall specify the Redemption Date (which must be a Business Day) and, in case any Note is to be redeemed in part only, the portion of the principal amount thereof to be redeemed and after the Redemption Date, upon surrender of such Note, a new Note in principal amount equal to the unredeemed portion thereof shall be issued.  A Redemption Notice shall be revocable other than with respect to a mandatory redemption as set forth in Section 11.1(a).

(c)           If fewer than all of the outstanding Notes are to be redeemed pursuant to a Redemption Election, the Company shall select the Notes to be redeemed on a pro rata basis.  If any Note selected for partial redemption is submitted for conversion in part after such selection, the portion of the Note submitted for conversion shall be deemed (so far as may be possible) to be the portion selected for redemption.

(d)           If any Redemption Notice has been given in respect of the Notes in accordance with Section 11.2(a), on the Redemption Date the Notes shall be automatically cancelled and cease to be outstanding and the Holders of the Notes shall cease to have any rights with respect thereto, except the right to receive payment for such redemption in accordance with Section 11.1.

(e)           The Company may not redeem any Notes on any date if (a) the principal amount of the Notes has been accelerated in accordance with the terms of this Indenture, and such acceleration has not been rescinded, on or prior to the Redemption Date (except in the case of an acceleration resulting from a Default by the Company in the payment of the redemption price with respect to such Notes) or (b) the Company has not paid or is not simultaneously paying all accrued and unpaid interest thereon for all periods between Interest Payment Dates or portions thereof terminating prior to the Redemption Date.

(f)           In the event of any redemption of the Notes in accordance with this Section 11, the Company shall not be required to issue, register the transfer of or exchange any Note during the 15 calendar day period prior to the date on which a Redemption Notice is deemed to have been given to all Holders of Notes to be redeemed, or register the transfer of or exchange any Notes so selected for redemption, in whole or in part, except the portion of any Notes being redeemed in part that shall not be redeemed.

SECTION 12. MISCELLANEOUS

12.1 Notices

All notices and other communications provided for or permitted hereunder shall be made by hand-delivery, first-class mail, telex, telecopier, or overnight air courier guaranteeing next day delivery:

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(a)           if to any Purchaser or Holder at the address or telecopy number set forth on the signature pages hereto or, in the case of a Holder that is not a Purchaser, at the address of such Holder provided in writing to the Company; and

(b)           if to the Company, to Empire Resources, Inc., One Parker Plaza, Fort Lee, New Jersey  07024, Facsimile Number. (201) 944-2226, Attention: Sandra Kahn, Chief Financial Officer, with a copy to Proskauer Rose LLP, Eleven Times Square, New York, New York  10036-8299, Facsimile Number (212) 969-2900, Attention:  Bruce L. Lieb, Esq.

All such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back if telexed; when receipt acknowledged, if delivered by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.  The parties may change the addresses to which notices are to be given by giving five days’ prior notice of such change in accordance herewith.

12.2 Successors and Assigns

This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties.

12.3 Counterparts

This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

12.4 Headings

The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

12.5 Survival of Representations and Warranties

All of the Company’s representations and warranties hereunder and under the other Documents shall survive the execution and delivery of the same, any investigation by any Purchaser and the issuance of the Securities.

12.6 GOVERNING LAW; SUBMISSION TO JURISDICTION

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES.  THE COMPANY AND EACH OF THE HOLDERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE NOTES, AND IRREVOCABLY ACCEPT FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.  THE COMPANY, AND EACH OF THE HOLDERS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

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12.7 Entire Agreement

This Agreement, together with the Securities and any other Document, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein.  This Agreement, together with the Securities and any other Document, supersedes all prior agreements and understandings between the parties with respect to such subject matter.

12.8 Severability

In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that each Purchaser’s rights and privileges shall be enforceable to the fullest extent permitted by law.

12.9 Further Assurances

The Company shall, at its cost and expense, upon request of any Purchaser or Holder, duly execute and deliver, or cause to be duly executed and delivered, to such Purchaser or Holder such further instruments and do or cause to be done such further acts as may be necessary or proper in the reasonable opinion of such Purchaser or Holder to carry out more effectually the provisions and purposes of this Agreement and the other Documents.

12.10           Notes Solely Corporate Obligations

No recourse for the payment of the principal of or accrued and unpaid interest on any Note, nor for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Agreement, the Securities or in any other Document, nor because of the creation of any Indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, Officer, member of the Board of Directors or Subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Agreement and the issue of the Notes.

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12.11 Disclosure of Financial Information

Each Holder is hereby authorized to deliver a copy of any financial statement or any other information relating to the business, operations or financial condition the Company or each of its Subsidiaries which may be furnished to it hereunder or otherwise, to any other Holder, to any court, to any Governmental Body claiming to have jurisdiction over such Holder, to the National Association of Insurance Commissions or similar organizations, as may be required or appropriate in response to any summons or subpoena in connection with any litigation, to the extent necessary to comply with any law, order, regulation or ruling applicable to such Holder, to any rating agency, in order to protect its investment hereunder, or to any Person which shall, or shall have any right or obligation to, succeed to all or any part of such Holder’s interest in any of the Securities and this Agreement or to any actual or prospective purchaser or assignee thereof.

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IN WITNESS WHEREOF, each Purchaser has executed this Convertible Notes Purchase Agreement as of the date first written above.

Name:

PURCHASER

Signature Page to Convertible Notes Purchase Agreement

Agreed and Accepted

this ___ day of June, 2011:

EMPIRE RESOURCES, INC.

By:
	Name: Sandra Kahn
	Title: Chief Financial Officer

 

Signature Page to Convertible Notes Purchase Agreement

ANNEX A

FORM OF NOTE

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM UNDER THE ACT, THE RULES AND REGULATIONS THEREUNDER AND APPLICABLE STATE LAWS.  THE TRANSFER OF THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE CONVERTIBLE NOTES PURCHASE AGREEMENT DATED AS OF JUNE 3, 2011, BY AND AMONG THE COMPANY AND THE PURCHASERS PARTY THERETO.

10% CONVERTIBLE SENIOR SUBORDINATED NOTE DUE JUNE 1, 2016

No.____  $________

EMPIRE RESOURCES, INC.

FOR VALUE RECEIVED, EMPIRE RESOURCES, INC., a company organized under the laws of Delaware (the “Company”), hereby promises to pay _________________, or his, her, or its registered assigns, on the Maturity Date (as hereinafter defined) (or earlier as hereinafter provided) the principal sum of $________, with interest on the unpaid principal amount of this Note from time to time as provided herein.  For the purposes of this Note, the term “Maturity Date” shall mean June 1, 2016.

Capitalized terms used herein shall have the meanings ascribed to them in the Agreement (as defined below) unless otherwise indicated.

1.           INTEREST.  The Company promises to pay interest on the principal amount of this Note at 10% per annum from June 3, 2011, or from the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date, until the Maturity Date.  The Company will pay interest on the Notes semi-annually in arrears to the Persons who are registered Holders of Notes at the close of business on the Record Date immediately preceding the applicable June 1 or December 1 Interest Payment Date.  The Notes will be payable both as to principal and interest by Federal funds wire transfer of U.S. Legal Tender to each Holder’s account in any bank in the United States as may be designated and specified in writing by such Holder at least two Business Days prior thereto.

A-1

2.           NOTES PURCHASE AGREEMENT.  The Company issued the Notes under the Convertible Notes Purchase Agreement dated as of June 3, 2011 (the “Agreement”) by and among the Company and the purchasers party thereto (the “Purchasers”).  The Notes and the Common Stock issuable upon conversion of the Notes are subject to, and qualified by, all such terms, certain of which are summarized herein, and Holders of Securities are referred to the Agreement for a statement of such terms.  The Notes are general obligations of the Company.

3.           CONVERSION. Subject to the provisions of the Agreement, the Holder hereof has the right, at its option, at any time prior to the close of business on the Business Day immediately preceding the Maturity Date, to convert any Notes or portion thereof that is $1,000 or an integral multiple of $1,000 thereafter, into shares of Common Stock at a conversion rate of 215.05 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment as set forth in the Agreement.

4.           MANDATORY CONVERSION.  Subject to the provisions of the Agreement, if the Last Reported Sale Price of the Common Stock for 30 consecutive Trading Days ending on the Trading Day prior to the date the Company provides a Conversion Notice is equal to or greater than $7.00, the Company shall have the right, in its sole discretion and without the consent of any Holder, to elect, by notice to Holders, promptly at any time prior to the Maturity Date, to require the Holders to convert of all or part of their Notes at the applicable Conversion Rate.

5.           REDEMPTION.  Subject to the provisions of the Agreement, the Company shall have the right, in its sole discretion and without the consent of any Holder, to elect, by notice to Holders, promptly at any time prior to the Maturity Date but solely in connection with a Change of Control, to redeem all or part of the Notes at a redemption price equal to 100% of the principal amount thereof plus the present value of all remaining interest payments due on such Notes selected for redemption (which shall include accrued and unpaid interest, if any, to the date of redemption) through the Maturity Date (subject to the right of Holders of record on the relevant Redemption Date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date); provided, however, that in the event there is a Change of Control whereby the holders of Common Stock are to receive all or substantially all of the consideration for such Change of Control in the form of cash or Cash Equivalents, and such cash consideration is less than $4.65 per share of Common Stock, the Company will be required to make a Redemption Election in accordance with this Section 11 with respect to all, but not less than all, of the outstanding Notes at a price equal to 110% of the principal amount of the Notes, plus accrued and unpaid interest through the Redemption Date.

6.           SUBORDINATION.  The Company’s payment of the principal, premium, if any, and interest on the Notes is subordinated to the prior payment in full of the Company’s Senior Indebtedness to the extent set forth in the Agreement.

7.           DENOMINATIONS, TRANSFER, EXCHANGE.  The Notes are without coupons in the principal amount of $1,000 or integral multiples of $1,000 in excess thereof (except in the case of any redemption following which the aggregate principal amount remaining is less than $1,000).  The transfer of Notes may be registered and Notes may be exchanged as provided in the Agreement.  The Company may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Agreement.In the event the Company makes, and does not revoke, a Mandatory Conversion Election, the Company shall not be required to issue, register the transfer of or exchange any Note during the 15 calendar day period prior to the date on which a Mandatory Conversion Notice is deemed to have been given to all Holders of Notes to be converted, or register the transfer of or exchange any Notes so selected for mandatory conversion, in whole or in part, except the portion of any Notes being converted in part that shall not be converted.

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8.           PERSONS DEEMED OWNERS.  The registered Holder of a Note may be treated as its owner for all purposes.

9.           AMENDMENTS AND WAIVERS.  Subject to certain exceptions, the Agreement and the Notes may be amended or supplemented and any existing Default under, or compliance with any provision of, the Agreement may be waived with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Notes.

The right of any Holder to participate in any consent required or sought pursuant to any provision of the Agreement (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Company in a notice furnished to Holders in accordance with the terms of this Agreement.

10.           NO RECOURSE AGAINST OTHERS.  No recourse for the payment of the principal of or accrued and unpaid interest on any Note, nor for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Agreement, the Securities, including this Note, or in any other Document, nor because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, Officer, member of the Board of Directors or Subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability has been expressly waived and released as a condition of, and as a consideration for, the execution of the Agreement and the issue of the Notes.

11.           ABBREVIATIONS.  Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

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12.           GOVERNING LAW; SUBMISSION TO JURISDICTION.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES.  THE COMPANY AND EACH OF THE HOLDERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, AND IRREVOCABLY ACCEPT FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.  THE COMPANY AND EACH OF THE HOLDERS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF THIS NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

The Company will furnish to any Holder upon written request and without charge a copy of the Agreement.  Requests may be made to:

Empire Resources, Inc.,

One Parker Plaza

Fort Lee, New Jersey  07024

Facsimile Number. (201) 944-2226

Attention: Sandra Kahn, Chief Financial Officer

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

EMPIRE RESOURCES, INC.
By:	/s/
	Name:
	Title:

Dated:____________________

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ASSIGNMENT FORM

To assign this Note, fill in the form below:  (I) or (we) assign and

transfer this Note to 

(Insert assignee’s Soc. Sec. or tax I.D. no.)

 (Print or type assignee’s name, address and zip code)

and irrevocably appoint

to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

Date:  __________________________

Your Signature:

(Sign exactly as your name appears on the face of this Note)

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FORM OF NOTICE OF CONVERSION

The undersigned registered owner of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1,000 principal amount or an integral multiple of $1,000 thereafter) below designated, into shares of Common Stock  in accordance with the terms of the Agreement referred to in this Note, and directs that the shares of Common Stock issuable and deliverable upon such conversion and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below.  If any shares of Common Stock or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer or similar taxes in accordance with the terms of the Agreement.

Dated:
	Signature(s)
	(Sign exactly as your name appears on the face of this Note)

Signature Guarantee

Fill in for registration of shares if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder:

Name

(Street Address)

(City, State and Zip Code)

Please print name and address

Principal amount to be converted (if less than all):

$ ______,000

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SCHEDULE I

Indebtedness

1.           Indebtedness of Imbali Metals Bvba consisting of a revolving working capital facility provided by ING Belgium S.A./N.V., in a principal amount not to exceed €10,000,000 at any one time outstanding, and any extensions, renewals, refinancing and replacements of any such facility that do not increase the outstanding principal amount thereof or result in an earlier maturity date thereof, and related guarantee of the Company.

2.           Loan Agreement dated as of December 27, 2004 between 6900 Quad Avenue, LLC and JPMorgan, as the same shall be amended, supplemented or otherwise modified and in effect from time to time, and any guarantee by the Company of the Indebtedness outstanding thereunder.

3.           The Senior Credit Agreement.

EX-10.1

Exhibit 10.1

EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT, is entered into as of this 15th day of September, 1999 by and between Integrated Technology USA, Inc. (the "Company"), a Delaware corporation, c/o Madison Partners, 444 Madison Avenue, New York, New York 10022 and Nathan Kahn, c/o Empire Resources, Inc., One Parker Plaza, Fort Lee, New Jersey 07024 (the "Executive").

W I T N E S S E T H:

WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed by the Company; and

WHEREAS, the Company and the Executive desire to set forth the terms and conditions of such employment.

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Term of Employment. The Company hereby agrees to employ the Executive and the Executive hereby accepts employment, in accordance with the terms and conditions set forth herein, for a term (the "Employment Term") commencing on the date of the consummation of the merger of the Company and Empire Resources, Inc. (the "Merger") and terminating, unless otherwise terminated earlier in accordance with Section 5 hereof, on the third anniversary of the Merger (the "Original Employment Term"), provided that the Employment Term shall be automatically extended, subject to earlier termination as provided in Section 5 hereof, for successive additional two (2) year periods (the "Additional Terms"), unless, at least one hundred eighty (180) days prior to the end of the Original Employment Term or the then Additional Term, the Company or the Executive has notified the other in writing that the Employment Term shall terminate at the end of the then current term.

2. Position and Responsibilities. During the Employment Term, the Executive shall serve as the Chief Executive Officer of the Company and the Executive shall report exclusively to the Board of Directors of the Company (the "Board"). During the Employment Term, the Company shall recommend the Executive for election as a director. The Executive shall, to the extent appointed or elected, serve on the Board as a director and as a member of any committee of the Board, in each case, without additional compensation. The Executive shall, to the extent appointed or elected, serve as a director or as a member of any committee of the board of any of the Company's subsidiaries or affiliates and as an officer or employee (in a capacity commensurate with his position with the Company) of any such subsidiaries or affiliates, in all cases, without additional compensation and any compensation paid to the Executive in such capacities shall be a credit with regard to the amounts due hereunder from the Company. The Executive shall have all of the duties, authorities, powers and responsibilities commensurate with all of the duties, authorities, powers and responsibilities of a chief executive officer. The Executive shall devote substantially all of his business time, attention and energies to the performance of his duties hereunder, provided that the foregoing shall not prevent the Executive from participating in charitable, community or industry affairs, from managing his and his family's personal investments and from serving on the boards of directors of not-for-profit companies to the extent such activities do not interfere with the performance of his duties hereunder.

3. Compensation and Benefits. The Company shall pay and provide the Executive the following:

3.1 Base Salary. The Company shall pay the Executive a base salary (the "Base Salary") at an annual rate of not less than Two Hundred Fifty Thousand Dollars ($250,000) per year in accordance with the Company's normal payroll practices for senior executives. Base Salary shall be subject to annual review by the Board (or a duly authorized committee thereof) for increase (but not decrease) following each anniversary of the date hereof, provided that on such anniversary date, the Base Salary shall be increased by not less than an amount necessary to adjust for any increase in the cost of living during the immediately prior twelve (12) months based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) selected areas (NY-NJ-CT), all items index published by the Bureau of Labor Statistics of the United States Department of Labor. Once increased, Base Salary shall not be reduced and shall thereafter, as increased, shall be the Base Salary hereunder.

3.2 Annual Bonus. The Company shall pay the Executive an annual bonus for each fiscal year of the Company ending during the Employment Term, commencing with the 1999 fiscal year, equal to five percent (5%) of the amount by which the Company's Earnings Before Taxes (as defined below) for each such fiscal year exceeds $4,000,000 (the "Annual Bonus Payments"); provided, however, that if any fiscal year is less than twelve (12) months due to a change in the fiscal year, then such $4,000,000 amount shall be proportionately reduced. Each Annual Bonus Payment shall be paid in a single cash lump sum not later than thirty (30) days after the audited financial statements for such fiscal year are complete. "Earnings Before Taxes" shall mean, for each fiscal year, the Company's earnings before income taxes determined without regard to charges to earnings for extraordinary items and Annual Bonus Payments with respect to the Executive or to the Chief Financial Officer (as long as its Chief Financial Officer is Sandra Kahn). Earnings Before Taxes and the amount of each Annual Bonus Payment shall be determined by the Company's independent certified public accountants (the "Accountants"), or such other party as mutually agreed by the parties hereto, in accordance with GAAP as consistently applied by the Company (as specifically modified hereby). The Company shall provide the Executive with a copy of the Accountants' final determination (together with supporting quantitative data and the methods used to make such calculations) for his review and comment at least five (5) business days prior to the payment of each Annual Bonus Payment. The Accountants' determinations shall be final, binding and conclusive on the parties hereto.

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3.3 Employee Benefits. The Executive shall, to the extent eligible, be entitled to participate at a level commensurate with his position in all employee benefit, fringe benefit, welfare, retirement, savings and incentive plans and programs generally provided by the Company to its senior executives from time to time.

3.4 Vacation. The Executive shall be entitled to paid vacation in accordance with the standard written policies of the Company with regard to vacations of senior executives, but in no event less than six (6) weeks per calendar year (with proration for partial years).

4. Expenses. Upon submission of appropriate documentation, the Company shall pay, or reimburse, the Executive for all ordinary and necessary business expenses (including, but not limited to, travel and entertainment expenses) which the Executive incurs in connection with the performance of his duties hereunder.

5. Termination of Employment and the Employment Term. The Executive's employment with the Company and the Employment Term shall terminate upon the occurrence of the first of the following events:

5.1 Death. Automatically on the date of the Executive's death.

5.2 Disability. Upon thirty (30) days' written notice by the Company to the Executive of a termination due to Disability, provided such notice is delivered during the period of Disability. "Disability" shall mean the inability of the Executive, due to injury, illness, disease or bodily or mental infirmity, to engage in the performance of his material duties hereunder for a period of more than one hundred eighty (180) days in any twelve (12) month period.

5.3 For Cause. Immediately upon written notice by the Company to the Executive of a termination for Cause, provided such notice is given within ninety (90) days after the discovery by the Board of the Cause event and has been approved by at least two-thirds of the directors then in office (other than the Executive and Sandra Kahn) at a meeting at which the Executive and his counsel had the right to appear and address after receiving at least five (5) business days written notice of the meeting and reasonable detail of the facts and circumstances claimed to provide a basis for such termination. "Cause" shall mean: (i) an act or acts of willful and material misrepresentation, fraud or willful dishonesty (other than good faith expense account disputes) by the Executive which is intended to result in his substantial personal enrichment at the expense of the Company; (ii) any willful misconduct by the Executive with regard to the Company that has a material adverse impact on the Company; (iii) any material, willful and knowing violation by the Executive of any fiduciary duties owed by him to the Company which has a material adverse impact on the Company; (iv) the Executive's conviction of, or pleading nolo contendere or guilty to, a felony (other than (x) a traffic infraction or (y) vicarious liability solely as a result of his position provided that the Executive did not have actual knowledge of the actions or inactions creating the violation of the law or the Executive relied in good faith on the advice of counsel with regard to the legality of such action or inaction); or (v) any other material breach by the Executive of this Agreement that is not cured by the Executive within twenty (20) days after receipt by the Executive of a written notice from the Company of such breach specifying the details thereof. No action or inaction should be deemed willful if not demonstrably willful and if taken or not taken by the Executive in good faith as not being adverse to the best interests of the Company. Reference in this Section 5.3 to the Company shall also include direct and indirect subsidiaries of the Company.

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6. Non-Competition/Non-Solicitation.

6.1 Non-Competition. The Executive agrees that during the Specified Period (as defined below), the Executive shall not, directly or indirectly, be engaged as a principal in any other business, activity or conduct which competes with the business of the Company (or be an employee, consultant, director, principal, shareholder or adviser of, or otherwise be affiliated with, any such business, activity or conduct), provided that competition shall not include: (i) holding five percent (5%) or less of an interest in the equity or debt of any publicly traded company, (ii) engaging in any activity with the prior written approval of the Board, or (iii) being involved only in a noncompeting portion of a business which is in competition with the business of the Company (but only if such non-competing portion of the business is conducted as a separate business unit, and the Executive has no direct or indirect involvement with the operations of the competing business unit (with the burden of so demonstrating being on the Executive) and the foregoing shall not affect Executive's obligations of confidentiality). For purposes of this Section 6, "Company" shall mean the Company and its subsidiaries and affiliates. The "Specified Period" means the Executive's period of employment and the four (4) year period thereafter, provided that in the event the Executive is terminated without Cause or due to his Disability or the Executive voluntarily terminates his employment following a breach by the Company of this Agreement, the Specified Period will terminate two (2) years after the termination of his employment.

6.2 Non-Solicitation. The Executive agrees that during the Specified Period the Executive shall not, directly or indirectly, (i) solicit any customer, client, supplier, or middleman of the Company or induce any customer, client, supplier, or middleman of the Company to terminate, or otherwise to cease, reduce, or diminish in any way its relationship with the Company or (ii) solicit or induce, or attempt to solicit or induce, any non-clerical employee(s), sales representative(s), agent(s), or consultant(s) of the Company to terminate such person's employment, representation or other association with the Company for the purpose of affiliating with any entity with which the Executive is associated.

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6.3 Confidentiality. The Executive specifically acknowledges that any trade secrets or confidential business and technical information of the Company or its vendors, suppliers or customers, whether reduced to writing, maintained on any form of electronic media, or maintained in mind or memory and whether compiled by the Executive or the Company (collectively, "Confidential Information"), derives independent economic value from not being readily known to or ascertainable by proper means by others; that reasonable efforts have been made by the Company to maintain the secrecy of such information; that such information is the sole property of the Company or its vendors, suppliers, or customers and that any retention, use or disclosure of such information by the Executive during the Employment Term (except in the course of performing duties and obligations of employment with the Company) or any time after termination thereof, shall constitute misappropriation of the trade secrets of the Company or its vendors, suppliers, or customers, provided that Confidential Information shall not include: (i) information that is at the time of disclosure public knowledge or generally known within the industry; (ii) information deemed in good faith by the Executive, while employed by the Company, desirable to disclose in the course of performing the Executive's duties; (iii) information the disclosure of which the Executive in good faith deems necessary in defense of the Executive's rights provided such disclosure by the Executive is limited to only disclose as necessary for such purpose; or (iv) information disclosed by the Executive to comply with a court, or other lawful compulsory, order compelling him to do so, provided the Executive gives the Company prompt notice of the receipt of such order and the disclosure by the Executive is limited to only disclosure necessary for such purpose.

6.4 Return of Property. Upon the termination of the Executive's employment or at any other time upon written request by the Company, the Executive shall promptly deliver to the Company all records, files, memoranda, designs, data, reports, drawings, plans, computer programs, software and other documents (and all copies or reproductions of such materials in his possession or control) belonging to the Company. Notwithstanding the foregoing, the Executive may retain his rolodex and similar phone directories (collectively, the "Rolodex") to the extent the Rolodex does not contain information other than name, address, telephone number and similar information.

6.5 Scope of Restrictions/Remedies. If, at the time of enforcement of this Section 6, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. In the event of a material breach or threatened material breach of this Section 6, the Company, in addition to its other remedies at law or in equity, shall be entitled to injunctive or other equitable relief in order to enforce or prevent any violations of the provisions of this Section 6. The Company agrees that it will not assert to enjoin or otherwise limit the Executive's activities based on an argument of inevitable disclosure of confidential information. Upon written request of the Executive, the Company shall within thirty (30) days notify the Executive in writing whether or not in good faith it believes that any proposed activities would be in Competition and, if it so determines or does not reply within thirty (30) days, it shall be deemed to waive any right to treat such activities as Competition unless the facts are otherwise than as presented by the Executive or there is a change thereafter in such activities.

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7. Indemnification/Liability Insurance. The Company shall concurrently with the execution and delivery of this Agreement enter into an Indemnification Agreement with the Executive (such agreement to be the same as the agreement previously entered into by the Company with its other executives, a copy of which is filed as an exhibit to the Company's Report on Form 10-KSB for the year ended December 31, 1997). The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists, after the Employment Term in the same amount and to the same extent, if any, as the Company covers its other officers and directors.

8. Assignment. This Agreement may and shall be assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any Successor of the Company, and any such Successor shall be deemed substituted for all purposes of the "Company" under the terms of this Agreement. Successor shall mean any person, firm, corporation or business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets of the Company. Notwithstanding such assignment, the Company shall remain, with such successor, jointly and severally liable for all its obligations hereunder. Except as herein provided, this Agreement may not otherwise be assigned by the Company. This Agreement is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, and administrators, successors, heirs, distributees, devisees, and legatees. If the Executive should die after a termination while any amounts payable to the Executive hereunder remain outstanding, all such amounts, unless otherwise provided herein, shall be paid to the Executive's devisee, legatee, or other designee or, in the absence of such designee, to the Executive's estate.

9. Legal Remedies.

9.1 Notices. All notices hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, or one (1) day after sending by express mail or other "overnight mail service," or three (3) days after sending by certified or registered mail, postage prepaid, return receipt requested. Notice shall be sent as follows: if to the Executive, to the address as listed in the Company's records, and if to the Company, to the address set forth on the first page of this Agreement, attention of the Chairman of the Board with a copy to the Company's General Counsel. Either party may change the notice address by notice given as aforesaid.

9.2 Arbitration. All disputes and controversies arising under or in connection with this Agreement, other than the seeking of injunctive or other equitable relief pursuant to Section 7 hereof, shall be settled exclusively by arbitration in New York City, New York, or such other location agreed by the parties hereto, in accordance with the rules for expedited resolution of commercial disputes of the American Arbitration Association ("AAA") then in effect. The determination of the arbitrators shall be final and binding on the parties. Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction. All expenses of the AAA and the arbitrator shall be borne as determined by the arbitrator.

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10. Miscellaneous.

10.1 Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto with respect to the subject matter hereof.

10.2 Modification. This Agreement shall not be varied, altered, modified, canceled, changed, or in any way amended, nor any provision hereof waived, except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

10.3 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

10.4 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

10.5 Tax Withholding. The Company may withhold from any benefits payable under this Agreement all federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

10.6 Governing Law. The provisions of this Agreement shall be construed and enforced in accordance with the laws of the state of New York, without regard to any otherwise applicable principles of conflicts of laws.

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement, as of the day and year first above written.

INTEGRATED TECHNOLOGY USA, INC.
By:	/s/ William Spier
	Name:  William Spier
	Title:
/s/ Nathan Kahn
Nathan Kahn

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EX-10.2

Exhibit 10.2

AMENDMENT NO. 1 TO EMPLOYMENT AND NON-COMPETITION AGREEMENT

This AMENDMENT is entered into as of this 19th day of July 2002 by and between Empire Resources, Inc., a Delaware corporation (the "Company"), with its principal place of business at One Parker Plaza, Fort Lee, NJ 07024 and Nathan Kahn, ("Executive").

W I T N E S S E T H

WHEREAS, the Company and Executive are parties to an Employment and Non-Competition Agreement entered into as of September 1999 (the "Agreement"); and

WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the Company to modify Executive's compensation and provide for certain rights of repurchase of Executive's equity in the Company upon his death in order to retain and properly incentivize Executive;

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Amendment to Section 3.

(a)  Amendment to Section 3.1. The first sentence of Section 3.1 of the Agreement is deleted and the following is inserted in lieu thereof:

Effective as of January 1, 2002, the Company shall pay the Executive a base salary (the "Base Salary") at an annual rate of Four Hundred Fifty Thousand Dollars ($450,000) per year in accordance with the Company's normal payroll practices for senior executives.

2. Amendment to Section 1.

Section 1 is hereby amended and restated to read in its entirety as follows:

1. Term of Employment. The Company hereby agrees to employ the Executive and the Executive hereby accepts employment, in accordance with the terms and conditions set forth herein, for a term (the "Employment Term") commencing on January 1, 2002 and terminating, unless otherwise terminated earlier in accordance with Section 5 hereof, on the second anniversary of such commencement date.

3. Stock Repurchase. The following shall be added to Section 5 of the Agreement:

5.4. Key Man Insurance. The Company shall continue to maintain a minimum of $10 million of key man life insurance on the life of Executive during the Employment Term (the "Insurance"). Executive, upon request of the Company, shall submit to such physical examinations, and execute such applications and other documents as may reasonably be required for the procurement and maintenance of such insurance.

5.5. Repurchase of Shares upon Death.

(a)           Subject to Section 5.5(e) below, upon the death of Executive, the Company shall be obligated to repurchase and Executive's estate, legal representatives and heirs shall be obligated to sell to the Company all shares of Common Stock of the Company then owned by Executive, his spouse and any of his children (including any such Shares held in trust for any of the foregoing) (collectively "the Shares"). Upon the later of receipt of notice of death from Executive's estate or legal representatives, together with the certificate or certificates representing the Shares, duly endorsed in blank, all in form suitable for transfer or five (5) days after the Company's receipt of the proceeds of the Insurance, the Company shall deliver to Executive's estate or legal representatives a check in the amount of the Fair Value of a Share multiplied by the number of Shares being purchased.

(b)           No Stockholder Rights. After the time at which any Shares are required to be delivered to the Company for transfer to the Company pursuant to paragraph (a) above, the Company shall not pay any dividends on account of such Shares or permit Executive's estate or legal representatives to exercise any of the privileges or rights of a stockholder with respect to such Shares, but shall, insofar as permitted by law, treat the Company as the owner of such Shares.

(c)           Fair Value. For purposes of this Agreement, the Fair Value of a Share of Common Stock of the Company, as of any date shall be determined by the Board of Directors, as follows: if market quotations are readily available, a Share shall be valued at the greater of (i) the last trade on the exchange on which such Shares are primarily traded or, if not traded on an exchange, at the closing bid price (or average of bid prices) last quoted by an established over-the-counter quotation service on the day immediately preceding the date of death and (ii) 150% of the Book Value of such Shares as determined by the Company's accountants based on the audited financial statements of the Company for the quarter ended immediately preceding the date of death ("Adjusted Book Value"). If the Shares are not publicly traded, then a Share shall be valued at the Adjusted Book Value.

(d)           Limits on Repurchase. The Company's obligation under this Section 5.5 shall be limited to repurchasing such number of Shares as shall result in a maximum aggregate purchase price equal to the lesser of (i) $10,000,000 and (ii) the amount of proceeds actually received by the Company from the Insurance.

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5.6 Binding Effect. All of the obligations of Executive with respect to the Shares shall, as the context requires, bind Executive's spouse, estate, heirs and legal representatives and the divorce or death of such spouse, shall not vitiate the binding nature of such obligation. Executive shall simultaneously herewith deliver to the Company, the written consent and agreement of his spouse to the provisions hereof.

4. No Other Amendments. Except as expressly provided herein, the Agreement shall remain in full force and effect as written.

5. Miscellaneous.

5.1. Entire Agreement. This Amendment supersedes any prior agreement or understandings, oral or written, between the parties hereto with respect to the subject matter hereof.

5.2 Modification. This Amendment shall not be varied, altered, modified, cancelled, or in any way amended, nor any provision hereof waived, except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

5.3. Severability. In the event that any provision or portion of this Amendment shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Amendment shall be unaffected thereby and shall remain in full force and effect.

5.4. Counterparts. This Amendment may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same agreement.

5.5. Governing Law. The provisions of this Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to any otherwise applicable principles of conflicts of laws.

IN WITNESS WHEREOF, the Executive and the Company have executed this Amendment as of the day and year first above written.

EMPIRE RESOURCES, INC.
By:	/s/ Harvey Wrubel
	/s/  Nathan Kahn

CONSENTED AND AGREED TO:

/s/ Sandra Kahn                                      

Sandra Kahn

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EX-10.3

Exhibit 10.3

EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT, is entered into as of this 15th day of September, 1999 by and between Integrated Technology USA, Inc. (the "Company"), a Delaware corporation, c/o Madison Partners, 444 Madison Avenue, New York, New York 10022 and Sandra Kahn, c/o Empire Resources, Inc., One Parker Plaza, Fort Lee, New Jersey 07024 (the "Executive").

W I T N E S S E T H:

WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed by the Company; and

WHEREAS, the Company and the Executive desire to set forth the terms and conditions of such employment.

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Term of Employment. The Company hereby agrees to employ the Executive and the Executive hereby accepts employment, in accordance with the terms and conditions set forth herein, for a term (the "Employment Term") commencing on the date of the consummation of the merger of the Company and Empire Resources, Inc. (the "Merger") and terminating, unless otherwise terminated earlier in accordance with Section 5 hereof, on the third anniversary of the Merger (the "Original Employment Term"), provided that the Employment Term shall be automatically extended, subject to earlier termination as provided in Section 5 hereof, for successive additional two (2) year periods (the "Additional Terms"), unless, at least one hundred eighty (180) days prior to the end of the Original Employment Term or the then Additional Term, the Company or the Executive has notified the other in writing that the Employment Term shall terminate at the end of the then current term.

2. Position and Responsibilities. During the Employment Term, the Executive shall serve as the Chief Financial Officer of the Company and the Executive shall report exclusively to the Chief Executive Officer of the Company. During the Employment Term, the Company shall recommend the Executive for election as a director. The Executive shall, to the extent appointed or elected, serve on the Board as a director and as a member of any committee of the Board, in each case, without additional compensation. The Executive shall, to the extent appointed or elected, serve as a director or as a member of any committee of the board of any of the Company's subsidiaries or affiliates and as an officer or employee (in a capacity commensurate with her position with the Company) of any such subsidiaries or affiliates, in all cases, without additional compensation and any compensation paid to the Executive in such capacities shall be a credit with regard to the amounts due hereunder from the Company. The Executive shall have all of the duties, authorities, powers and responsibilities commensurate with all of the duties, authorities, powers and responsibilities of a chief financial officer. The Executive shall devote substantially all of her business time, attention and energies to the performance of her duties hereunder, provided that the foregoing shall not prevent the Executive from participating in charitable, community or industry affairs, from managing her and her family's personal investments and from serving on the boards of directors of not-for-profit companies to the extent such activities do not interfere with the performance of her duties hereunder.

3. Compensation and Benefits. The Company shall pay and provide the Executive the following:

3.1 Base Salary. The Company shall pay the Executive a base salary (the "Base Salary") at an annual rate of not less than One Hundred Thousand Dollars ($100,000) per year in accordance with the Company's normal payroll practices for senior executives. Base Salary shall be subject to annual review by the Board of Directors of the Company (the "Board"), or a duly authorized committee thereof, for increase (but not decrease) following each anniversary of the date hereof, provided that on such anniversary date, the Base Salary shall be increased by not less than an amount necessary to adjust for any increase in the cost of living during the immediately prior twelve (12) months based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) selected areas (NY-NJ-CT), all items index published by the Bureau of Labor Statistics of the United States Department of Labor. Once increased, Base Salary shall not be reduced and shall thereafter, as increased, shall be the Base Salary hereunder.

3.2 Annual Bonus. The Company shall pay the Executive an annual bonus for each fiscal year of the Company ending during the Employment Term, commencing with the 1999 fiscal year, equal to two percent (2%) of the amount by which the Company's Earnings Before Taxes (as defined below) for each such fiscal year exceeds $4,000,000 (the "Annual Bonus Payments"); provided, however, that if any fiscal year is less than twelve (12) months due to a change in the fiscal year, then such $4,000,000 amount shall be proportionately reduced. Each Annual Bonus Payment shall be paid in a single cash lump sum not later than thirty (30) days after the audited financial statements for such fiscal year are complete. "Earnings Before Taxes" shall mean, for each fiscal year, the Company's earnings before income taxes determined without regard to charges to earnings for extraordinary items and Annual Bonus Payments with respect to the Executive or to the Chief Executive Officer (as long as its Chief Executive Officer is Nathan Kahn). Earnings Before Taxes and the amount of each Annual Bonus Payment shall be determined by the Company's independent certified public accountants (the "Accountants"), or such other party as mutually agreed by the parties hereto, in accordance with GAAP as consistently applied by the Company (as specifically modified hereby). The Company shall provide the Executive with a copy of the Accountants' final determination (together with supporting quantitative data and the methods used to make such calculations) for her review and comment at least five (5) business days prior to the payment of each Annual Bonus Payment. The Accountants' determinations shall be final, binding and conclusive on the parties hereto.

3.3 Employee Benefits. The Executive shall, to the extent eligible, be entitled to participate at a level commensurate with her position in all employee benefit, fringe benefit, welfare, retirement, savings and incentive plans and programs generally provided by the Company to its senior executives from time to time.

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3.4 Vacation. The Executive shall be entitled to paid vacation in accordance with the standard written policies of the Company with regard to vacations of senior executives, but in no event less than six (6) weeks per calendar year (with proration for partial years).

4. Expenses. Upon submission of appropriate documentation, the Company shall pay, or reimburse, the Executive for all ordinary and necessary business expenses (including, but not limited to, travel and entertainment expenses) which the Executive incurs in connection with the performance of her duties hereunder.

5. Termination of Employment and the Employment Term. The Executive's employment with the Company and the Employment Term shall terminate upon the occurrence of the first of the following events:

5.1 Death. Automatically on the date of the Executive's death.

5.2 Disability. Upon thirty (30) days' written notice by the Company to the Executive of a termination due to Disability, provided such notice is delivered during the period of Disability. "Disability" shall mean the inability of the Executive, due to injury, illness, disease or bodily or mental infirmity, to engage in the performance of her material duties hereunder for a period of more than one hundred eighty (180) days in any twelve (12) month period.

5.3 For Cause. Immediately upon written notice by the Company to the Executive of a termination for Cause, provided such notice is given within ninety (90) days after the discovery by the Board of the Cause event and has been approved by at least two-thirds of the directors then in office (other than the Executive and Nathan Kahn) at a meeting at which the Executive and her counsel had the right to appear and address after receiving at least five (5) business days written notice of the meeting and reasonable detail of the facts and circumstances claimed to provide a basis for such termination. "Cause" shall mean: (i) an act or acts of willful and material misrepresentation, fraud or willful dishonesty (other than good faith expense account disputes) by the Executive which is intended to result in her substantial personal enrichment at the expense of the Company; (ii) any willful misconduct by the Executive with regard to the Company that has a material adverse impact on the Company; (iii) any material, willful and knowing violation by the Executive of any fiduciary duties owed by the Executive to the Company which has a material adverse impact on the Company; (iv) the Executive's conviction of, or pleading nolo contendere or guilty to, a felony (other than (x) a traffic infraction or (y) vicarious liability solely as a result of her position provided that the Executive did not have actual knowledge of the actions or inactions creating the violation of the law or the Executive relied in good faith on the advice of counsel with regard to the legality of such action or inaction); or (v) any other material breach by the Executive of this Agreement that is not cured by the Executive within twenty (20) days after receipt by the Executive of a written notice from the Company of such breach specifying the details thereof. No action or inaction should be deemed willful if not demonstrably willful and if taken or not taken by the Executive in good faith as not being adverse to the best interests of the Company. Reference in this Section 5.3 to the Company shall also include direct and indirect subsidiaries of the Company.

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6. Non-Competition/Non-Solicitation.

6.1 Non-Competition. The Executive agrees that during the Specified Period (as defined below), the Executive shall not, directly or indirectly, be engaged as a principal in any other business, activity or conduct which competes with the business of the Company (or be an employee, consultant, director, principal, shareholder or adviser of, or otherwise be affiliated with, any such business, activity or conduct), provided that competition shall not include: (i) holding five percent (5%) or less of an interest in the equity or debt of any publicly traded company, (ii) engaging in any activity with the prior written approval of the Board, or (iii) being involved only in a noncompeting portion of a business which is in competition with the business of the Company (but only if such non-competing portion of the business is conducted as a separate business unit, and the Executive has no direct or indirect involvement with the operations of the competing business unit (with the burden of so demonstrating being on the Executive) and the foregoing shall not affect Executive's obligations of confidentiality). For purposes of this Section 6, "Company" shall mean the Company and its subsidiaries and affiliates. The "Specified Period" means the Executive's period of employment and the four (4) year period thereafter, provided that in the event the Executive is terminated without Cause or due to her Disability or the Executive voluntarily terminates her employment following a breach by the Company of this Agreement, the Specified Period will terminate two (2) years after the termination of her employment.

6.2 Non-Solicitation. The Executive agrees that during the Specified Period the Executive shall not, directly or indirectly, (i) solicit any customer, client, supplier, or middleman of the Company or induce any customer, client, supplier, or middleman of the Company to terminate, or otherwise to cease, reduce, or diminish in any way its relationship with the Company or (ii) solicit or induce, or attempt to solicit or induce, any non-clerical employee(s), sales representative(s), agent(s), or consultant(s) of the Company to terminate such person's employment, representation or other association with the Company for the purpose of affiliating with any entity with which the Executive is associated.

6.3 Confidentiality. The Executive specifically acknowledges that any trade secrets or confidential business and technical information of the Company or its vendors, suppliers or customers, whether reduced to writing, maintained on any form of electronic media, or maintained in mind or memory and whether compiled by the Executive or the Company (collectively, "Confidential Information"), derives independent economic value from not being readily known to or ascertainable by proper means by others; that reasonable efforts have been made by the Company to maintain the secrecy of such information; that such information is the sole property of the Company or its vendors, suppliers, or customers and that any retention, use or disclosure of such information by the Executive during the Employment Term (except in the course of performing duties and obligations of employment with the Company) or any time after termination thereof, shall constitute misappropriation of the trade secrets of the Company or its vendors, suppliers, or customers, provided that Confidential Information shall not include: (i) information that is at the time of disclosure public knowledge or generally known within the industry; (ii) information deemed in good faith by the Executive, while employed by the Company, desirable to disclose in the course of performing the Executive's duties; (iii) information the disclosure of which the Executive in good faith deems necessary in defense of the Executive's rights provided such disclosure by the Executive is limited to only disclose as necessary for such purpose; or (iv) information disclosed by the Executive to comply with a court, or other lawful compulsory, order compelling her to do so, provided the Executive gives the Company prompt notice of the receipt of such order and the disclosure by the Executive is limited to only disclosure necessary for such purpose.

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6.4 Return of Property. Upon the termination of the Executive's employment or at any other time upon written request by the Company, the Executive shall promptly deliver to the Company all records, files, memoranda, designs, data, reports, drawings, plans, computer programs, software and other documents (and all copies or reproductions of such materials in her possession or control) belonging to the Company. Notwithstanding the foregoing, the Executive may retain her rolodex and similar phone directories (collectively, the "Rolodex") to the extent the Rolodex does not contain information other than name, address, telephone number and similar information.

6.5 Scope of Restrictions/Remedies. If, at the time of enforcement of this Section 6, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. In the event of a material breach or threatened material breach of this Section 6, the Company, in addition to its other remedies at law or in equity, shall be entitled to injunctive or other equitable relief in order to enforce or prevent any violations of the provisions of this Section 6. The Company agrees that it will not assert to enjoin or otherwise limit the Executive's activities based on an argument of inevitable disclosure of confidential information. Upon written request of the Executive, the Company shall within thirty (30) days notify the Executive in writing whether or not in good faith it believes any proposed activities would be in Competition and, if it so determines or does not reply within thirty (30) days, it shall be deemed to waive any right to treat such activities as Competition unless the facts are otherwise than as presented by the Executive or there is a change thereafter in such activities.

7. Indemnification/Liability Insurance. The Company shall concurrently with the execution and delivery of this Agreement enter into an Indemnification Agreement with the Executive (such agreement to be the same as the agreement previously entered into by the Company with its other executives, a copy of which is filed as an exhibit to the Company's Report on Form 10-KSB for the year ended December 31, 1997). The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists, after the Employment Term in the same amount and to the same extent, if any, as the Company covers its other officers and directors.

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8. Assignment. This Agreement may and shall be assigned or transferred to, and shall be binding upon and shall inure to the benefit of, any Successor of the Company, and any such Successor shall be deemed substituted for all purposes of the "Company" under the terms of this Agreement. Successor shall mean any person, firm, corporation or business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets of the Company. Notwithstanding such assignment, the Company shall remain, with such successor, jointly and severally liable for all its obligations hereunder. Except as herein provided, this Agreement may not otherwise be assigned by the Company. This Agreement is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, and administrators, successors, heirs, distributees, devisees, and legatees. If the Executive should die after a termination while any amounts payable to the Executive hereunder remain outstanding, all such amounts, unless otherwise provided herein, shall be paid to the Executive's devisee, legatee, or other designee or, in the absence of such designee, to the Executive's estate.

9. Legal Remedies.

9.1 Notices. All notices hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, or one (1) day after sending by express mail or other "overnight mail service," or three (3) days after sending by certified or registered mail, postage prepaid, return receipt requested. Notice shall be sent as follows: if to the Executive, to the address as listed in the Company's records, and if to the Company, to the address set forth on the first page of this Agreement, attention of the Chairman of the Board with a copy to the Company's General Counsel. Either party may change the notice address by notice given as aforesaid.

9.2 Arbitration. All disputes and controversies arising under or in connection with this Agreement, other than the seeking of injunctive or other equitable relief pursuant to Section 6 hereof, shall be settled exclusively by arbitration in New York City, New York, or such other location agreed by the parties hereto, in accordance with the rules for expedited resolution of commercial disputes of the American Arbitration Association ("AAA") then in effect. The determination of the arbitrators shall be final and binding on the parties. Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction. All expenses of the AAA and the arbitrator shall be borne as determined by the arbitrator.

10. Miscellaneous.

10.1 Entire Agreement. This Agreement supersedes any prior agreements or understandings, oral or written, between the parties hereto with respect to the subject matter hereof.

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10.2 Modification. This Agreement shall not be varied, altered, modified, canceled, changed, or in any way amended, nor any provision hereof waived, except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

10.3 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

10.4 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

10.5 Tax Withholding. The Company may withhold from any benefits payable under this Agreement all federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

10.6 Governing Law. The provisions of this Agreement shall be construed and enforced in accordance with the laws of the state of New York, without regard to any otherwise applicable principles of conflicts of laws.

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement, as of the day and year first above written.

INTEGRATED TECHNOLOGY USA, INC.
By:	/s/ William Spier
	Name: William Spier
	Title:
/s/ Sandra Kahn
Sandra Kahn

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EX-10.4

Exhibit 10.4

EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT, is entered into as of this 15th day of September, 1999 by and between Integrated Technology USA, Inc. (the "Company"), a Delaware corporation c/o Madison Partners, 444 Madison Avenue, 38th Floor, New York, New York 10022, and Harvey Wrubel residing at 670 South Forest Drive, Teaneck, New Jersey 07666 (the "Executive").

W I T N E S S E T H:

WHEREAS, Empire Resources, Inc. ("ERI") and the Company are merging (the "Merger");

WHEREAS, the Executive is currently employed by ERI;

WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed by the Company effective upon the consummation of the Merger; and

WHEREAS, the Company and the Executive desire to set forth the terms and conditions of such employment.

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Term of Employment. The Company hereby agrees to employ the Executive and the Executive hereby accepts employment, in accordance with the terms and conditions set forth herein, for a term (the "Employment Term") commencing on the effective date of the Merger (the "Effective Date") and terminating, unless otherwise terminated earlier in accordance with Section 5 hereof, on December 31, 2002 (the "Original Employment Term"), provided that the Employment Term shall be automatically extended, subject to earlier termination as provided in Section 5 hereof, for successive additional two (2) year periods (the "Additional Terms"), unless, at least ninety (90) days prior to the end of the Original Employment Term or the then Additional Term, the Company or the Executive has notified the other in writing that the Employment Term shall terminate at the end of the then current term.

2. Position and Responsibilities. During the Employment Term, the Executive shall serve as an executive officer of the Company with the initial title of Vice President of Sales of the Company and the Executive shall report to the Chief Executive Officer of the Company. The Executive shall perform such services consistent with his position as may be assigned to him from time to time by the Chief Executive Officer of the Company. The Executive shall devote substantially all of his business time, attention and energies to the performance of his duties hereunder, provided that the foregoing shall not prevent the Executive from participating in charitable, community or industry affairs and from managing his and his family's passive personal investments to the extent such activities do not interfere with the performance of his duties hereunder.

3. Compensation and Benefits. During the Employment Term, the Company shall pay and provide the Executive the following:

3.1 Base Salary. The Company shall pay the Executive a base salary (the "Base Salary") at an annual rate of not less than Two Hundred Three Thousand Dollars ($203,000) per year in accordance with the Company's normal payroll practices for executives. Base Salary shall be subject to annual review by the Board of Directors of the Company (the "Board"), or a duly authorized committee thereof, for increase (but not decrease) in January of each year, commencing in January, 2000, provided that in each such January the Base Salary shall be increased by an amount necessary to adjust for any increase in the cost of living during the twelve (12) month period ending during the prior November based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) selected areas (NY-NJ-CT), all items index published by the Bureau of Labor Statistics of the United States Department of Labor. Once increased, Base Salary shall not be reduced and shall thereafter, as increased, shall be the Base Salary hereunder.

3.2 Commissions. The Company shall pay the Executive an annual commission (the "Annual Commission") for each fiscal year ending during the Employment Term, commencing with the fiscal year commencing on January 1, 1999, equal to ten percent (10%) of the Margin (as defined below) during each such fiscal year. Each Annual Commission shall be paid in a single cash lump sum after the end of each fiscal year based on the Company's actual receipts during such year. "Margin" shall mean, for each fiscal year, the net paid revenues (after deduction of duty and shipping) received during such fiscal year from all sales directly and solely made by the Executive reduced by all costs directly attributable to such sales (including, but not limited to, cost of materials, finance charges in accordance with the Company's policy in effect from time to time, storage charges and fees to third parties), provided that Margin shall be determined without regard to the cost of the Annual Commissions. The Annual Commission payments will be based solely on the Company's actual cash receipts (rather than receivables) for each fiscal year and direct costs shall be first attributed to any amounts from sales revenues received in installments. Any refunds, chargebacks, increases and similar adjustments for amounts received in prior fiscal years shall be adjusted in the next Annual Commission or, if none, refunded by or paid to the Executive, as appropriate. Not more than thirty (30) days after the end of each fiscal year, the Executive shall submit to the Company a written summary of his calculation of the Margin and Annual Commission payable with respect to such fiscal year (together with supporting quantitative date and the methods used to make such calculations). The Company shall have twenty (20) days to review such calculations. In the event that the Company does not agree with the Executive's calculation of the Margin or Annual Commission, the Company will provide the Executive with written notice specifying the details of such dispute within such twenty (20) day period. If the parties cannot resolve the dispute within ten (10) days,  the Margin and the Annual Commission shall be referred to the Company's independent certified public accountants, or such other party as mutually agreed by the parties hereto, for determination (the "Accountants"). The Company shall provide the Executive with a copy of the Accountants' determination (together with supporting quantitative data and the methods used to make such calculations). The Accountants' determination shall be final, binding and conclusive on the parties hereto. The Accountants' shall have thirty (30) days to perform such calculations and such calculations shall delay the payment date with regard to amounts in question, but not other amounts. All amounts shall be paid within ten (10) days of the determination (as set forth above) that such amounts are due. The Company may, in its sole discretion and without liability for lost Annual Commissions, reject sales or other transactions, compromise or settle amounts due, make refunds or not pursue collections. In no event shall the Executive be entitled to receive any Annual Commission with regard to any sales made after his date of termination.

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3.3 Employee Benefits. The Executive shall, to the extent eligible, be entitled to participate at a level commensurate with his position in all employee benefit, welfare, retirement, savings, stock option and incentive plans and programs generally provided by the Company to its senior executives from time to time.

3.4 Vacation. The Executive shall be entitled to paid vacation in accordance with the standard written policies of the Company with regard to vacations of executives, but in no event less than three (3) weeks per calendar year (with proration for partial years). Unused vacation shall not accrue from year to year nor be paid for.

4. Expenses. In accordance with its policies in effect from time to time, upon submission of appropriate documentation, the Company shall pay, or reimburse, the Executive for ordinary and necessary business expenses within such policy which the Executive incurs in connection with the performance of his duties hereunder.

5. Termination of Employment and the Employment Term. The Executive's employment with the Company and the Employment Term shall terminate upon the occurrence of the first of the following events:

5.1 Death. Automatically on the date of the Executive's death.

5.2 Termination By the Company for Cause. Immediately upon written notice by the Company to the Executive of a termination for Cause. "Cause" shall mean: (i) the Executive's commission of, or indictment for (A) a felony, or (B) any misdemeanor involving theft, fraud or moral turpitude; (ii) the Executive's failure to reasonably promptly follow the legal written direction of the Chief Executive Officer of the Company with regard to matters commensurate with his position; (iii) theft, dishonesty, fraud or breach of fiduciary duty by the Executive with regard to the Company; (iv) willful misconduct or gross negligence by the Executive with regard to the Company, its business, assets or employees; (v) any material breach by the Executive of this Agreement that is not cured by the Executive within twenty (20) days after receipt by the Executive of a written notice from the Company specifying the details thereof; (vi) the Executive's failure to attempt to perform his duties hereunder which is not remedied within five (5) days after receipt by the Executive of a written notice from the Company specifying the details thereof; (vii) the Executive's Material Unsatisfactory Performance (as defined below); or (viii) the Executive's inability due to injury, illness, disease or bodily or mental infirmity, to perform his material duties hereunder for a period of more than one hundred twenty (120) days during any three hundred sixty-five (365) consecutive day period. Reference in this Section 5.2 to the Company shall also include direct and indirect subsidiaries of the Company. Material Unsatisfactory Performance shall mean that, with regard to any fiscal year, the Margin (determined in accordance with Section 3.2 above) in such fiscal year is less than $500,000 (prorated for any short fiscal year). For purposes of this Section 5.2, a "sale" shall be deemed made at the earliest of (i) when an order is formally confirmed or otherwise accepted in writing by the Company, (ii) when an order number is issued, or (iii) when actions are initially taken by the Company to fill the order.

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5.3 Termination By the Company without Cause. Upon written notice by the Company to the Executive of a termination without Cause.

6. Consequences of a Termination of Employment.

6.1 Termination due to Death. If the Employment Term terminates on account of the Executive's death, (i) the Executive's estate shall be entitled to: (x) prompt payment of any unpaid Base Salary and any accrued vacation, and (y) reimbursement for any unreimbursed business expenses, and (ii) any amounts or benefits due under any benefit plan, grant or program (including, but not limited to, group health and life insurance arrangements in which the Executive participates) shall be paid in accordance with the terms of said plan, grant or program (collectively, the "Accrued Obligations"). In addition, in the event of the termination of the Executive's employment on account of his death, the Executive's estate shall be entitled to payment of any unpaid Annual Commissions on sales occurring on or prior to the date of the Executive's termination of employment.

6.2 Termination by the Company for Cause or Voluntary Termination by the Executive. If the Executive is terminated by the Company for Cause or the Executive terminates his employment in breach of this Agreement, the Executive shall be entitled to receive any Accrued Obligations and payment of any unpaid Annual Commissions on sales occurring on or prior to the Executive's date of termination in full settlement of all amounts owed him. In the event the Executive terminates his employment in breach of this Agreement, the Company hereby reserves all rights which it has at law arising in connection with such breach (without limitation of its rights under Section 7.6 below).

6.3 Termination by the Company without Cause. If the Executive is terminated by the Company without Cause, the Executive shall, subject to cutoff in accordance with Section 7.6 below, be entitled to receive in full settlement of all amounts owed to him, provided he delivers to the Company a release of all claims relating to his employment and the termination thereof (other than those specifically payable hereunder and any rights of indemnification under the Company's organizational documents) running to the Company, its subsidiaries and related entities and their respective past or present officers, directors and employees in such form as requested by the Company, the following:

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(a)           Any Accrued Obligations;

(b)           Payment of any unpaid Annual Commissions on sales occurring on or prior to the date of the Executive's termination of employment; and

(c)           Continued payment on a monthly basis of the Executive's then current monthly Base Salary (without future increase) for the number of months then remaining in the Employment Term.

6.4 Sales after a Termination of Employment. Notwithstanding anything herein to the contrary, in no event shall the Executive be entitled to receive Annual Commissions under this Agreement or otherwise be compensated for sales occurring following his date of termination.

7. Non-Competition, Non-Solicitation, Confidentiality, Return of Property.

7.1 Non-Competition. During the Employment Term and the twelve (12) month period thereafter or, if longer, the period during which the Executive is receiving severance payments pursuant to Section 6.3(b) above, the Executive shall not be engaged as, or be, an employee, director, partner, principal, shareholder, advisor, in any other business, activity or conduct which competes with the business of the Company, provided that, with regard to the period after the Executive's termination of employment, the foregoing shall only apply to competition with regard to aluminum and such other commodities as were being sold by the Company within six (6) months prior to the date of termination. Notwithstanding the foregoing, competition shall not include holding five percent (5%) or less of an interest in the equity or debt of any publicly traded company. For purposes of this Section 7, "Company" shall mean the Company and its subsidiaries and affiliates.

7.2 Non-Solicitation. During the Employment Term and the eighteen (18) month period thereafter or, if longer, the period during which the Executive is receiving severance payments pursuant to Section 6.3(b) above, the Executive shall not, directly or indirectly (i) solicit any customer, client, supplier, or middleman of the Company or induce any customer, client, supplier, or middleman of the Company to terminate, or otherwise to cease, reduce, or diminish in any way its relationship with the Company, provided that, with regard to the period after the Executive's termination of employment, the foregoing shall only apply to solicitation or inducement involving aluminum and such other commodities as were being sold by the Company within six (6) months prior to the date of termination so long as the Executive is not in violation of his obligations under Section 7.3 below, or (ii) solicit or induce, or attempt to solicit or induce, any non-clerical employees, sales representatives, agents, consultants, of the Company to terminate such person's employment, representation or other association with the Company.

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7.3 Confidentiality. The Executive specifically acknowledges that any trade secrets or confidential business and technical information of the Company or its vendors, suppliers or customers, whether reduced to writing, maintained on any form of electronic media, or maintained in mind or memory and whether compiled by the Executive or the Company (collectively, "Confidential Information"), derives independent economic value from not being readily known to or ascertainable by proper means by others; that reasonable efforts have been made by the Company to maintain the secrecy of such information; that such information is the sole property of the Company or its vendors, suppliers, or customers and that any retention, use or disclosure of such information by the Executive during the Employment Term (except in the course of performing duties and obligations of employment with the Company) or any time after termination thereof, shall constitute misappropriation of the trade secrets of the Company or its vendors, suppliers, or customers, provided that Confidential Information shall not include: (i) information that is at the time of disclosure public knowledge or generally known within the industry; (ii) information deemed in good faith by the Executive, while employed by the Company, desirable to disclose in the course of performing the Executive's duties; (iii) information the disclosure of which the Executive in good faith deems necessary in defense of the Executive's rights provided such disclosure by the Executive is limited to only disclose as necessary for such purpose; or (iv) information disclosed by the Executive to comply with a court, or other lawful compulsory, order compelling him to do so, provided the Executive gives the Company prompt notice of the receipt of such order and the disclosure by the Executive is limited to only disclosure necessary for such purpose.

7.4 Return of Property. Upon the termination of the Executive's employment or at any other time upon written request by the Company, the Executive shall promptly deliver to the Company all records, files, memoranda, designs, data, reports, drawings, plans, computer programs, software and other documents (and all copies or reproductions of such materials in his possession or control) belonging to the Company. Notwithstanding the foregoing, the Executive may retain his rolodex and similar phone directories (collectively, the "Rolodex") to the extent the Rolodex does not contain information other than name, address, telephone number and similar information.

7.5 Scope of Restrictions. If, at the time of enforcement of this Section 7, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

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7.6 Remedies. In the event of a material breach or threatened material breach of this Section 7, the Company, in addition to its other remedies at law or in equity, shall be entitled to injunctive or other equitable relief in order to enforce or prevent any violations of the provisions of this Section 7. In the event the Executive breaches his covenants under Section 7.1 or Section 7.2 above, the Company may immediately cease payment to the Executive of all future amounts due under Sections 6.3(b) and (c) above.

8. Assignment. This Agreement may be assigned by the Company only with all or substantially all of the assets of the Company or the portion of the Company with which the Executive is primarily employed. This Agreement is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the parties' representatives, executors, and administrators, successors, permitted assigns, heirs, distributees, devisees, and legatees. If the Executive should die after a termination while any amounts payable to the Executive hereunder remain outstanding, all such amounts, unless otherwise provided herein, shall be paid to the Executive's devisee, legatee, or other designee or, in the absence of such designee, to the Executive's estate.

9. Arbitration. All disputes and controversies arising under or in connection with this Agreement, other than the seeking of injunctive or other equitable relief pursuant to Section 7 hereof, shall be settled exclusively by arbitration in New York City, New York, or such other location agreed by the parties hereto, in accordance with the rules for expedited resolution of commercial disputes of the American Arbitration Association ("AAA") then in effect. The determination of the arbitrators shall be final and binding on the parties. Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction. All expenses of the AAA and the arbitrator shall be borne as determined by the arbitrator.

10. Miscellaneous.

10.1 Entire Agreement. This Agreement supersedes any and all prior agreements or understandings, oral or written, between the parties hereto with respect to the subject matter hereof.

10.2 Modification. This Agreement shall not be varied, altered, modified, canceled, changed, or in any way amended, nor any provision hereof waived, except by mutual agreement of the parties in a written instrument executed by the parties hereto or their legal representatives.

10.3 Notices. All notices hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, or one (1) day after sending by express mail or other "overnight mail service," or three (3) days after sending by certified or registered mail, postage prepaid, return receipt requested. Notice shall be sent as follows: if to the Executive, to the address as listed in the Company's records with a copy to Cheryl V. Reicin, Esq., McDermott, Will & Emory, 50 Rockefeller Plaza, New York, New York 10020, and if to the Company, to the address set forth on the first page of this Agreement, attention of the Chief Executive Officer with a copy to the Company's General Counsel. Either party may change the notice address by notice given as aforesaid.

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10.4 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

10.5 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

10.6 Tax Withholding. The Company may withhold from any benefits payable under this Agreement or otherwise all federal, state, city, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

10.7 Governing Law. The provisions of this Agreement shall be construed and enforced in accordance with the laws of the state of Delaware, without regard to any otherwise applicable principles of conflicts of laws.

IN WITNESS WHEREOF, the Executive and the Company have executed this Agreement as of the day and year first above written.

INTEGRATED TECHNOLOGY USA, INC.
By:	/s/ William Spier
	Name: William Spier
	Title:
/s/ Harvey Wrubel
Harvey Wrubel

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EX-10.5

Exhibit 10.5

INTEGRATED TECHNOLOGY USA, INC.

1996 STOCK OPTION PLAN

1. Purpose.

The purpose of the Integrated Technology USA, Inc., 1996 Stock Option Plan (the "Plan") is to encourage and enable employees (which term, as used herein, shall include officers), and directors of Integrated Technology USA, 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. It is also expected that the Plan will 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.  In the event that the Plan is not approved by the stockholders of the Company in the manner and within the time frame required by the Code for incentive options, then any options designated as incentive options shall instead be treated as options that are not incentive 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 July 29, 1996. No option may be granted under the Plan after July 29, 2006, 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.  Each such committee to which any duties or authority is delegated as aforesaid is referred to herein as a "Committee".  If there are multiple Committee, 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.

(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 adopt, amend and rescind rules and regulations for the administration of the Plan; and (vii) 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 833,333.  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).

(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)           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 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.

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(b)           Exercise Price. The exercise price of each option shall be determined by the Plan Administrator, subject to the following: (i) in the case of an incentive option, the exercise price per share of stock shall not be less than 100% (110% for a stock 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 and (ii) in the case of all options, the exercise price per share of Stock shall not be less than the par value per share (unless the Stock subject to the option is treasury stock).  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).

(c)           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(b)) 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.

(d)           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.

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(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.

(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.

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(e)           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, if any, that such options were exercisable immediately prior to the date of such termination) 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); 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(e), 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.

(f)           Payment for Stock.

Stock purchased under the Plan upon exercise of an option shall be paid for as follows:

(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(b)) 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

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(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)  any combination of any of the foregoing payment methods provided for in this Section 7(f).

(g) 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. 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.

(h) 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 him; 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.

(i) 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.

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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 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 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 may be 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 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 distortion in the operation of the Plan. 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.

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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 8(b). The Plan Administrator may at any time terminate the Plan as to any further grants of options.

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EX-10.6

Exhibit 10.6

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.

(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 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.

(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:

(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.

(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 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 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.

EX-10.7

Exhibit 10.7

FORM OF OPTION GRANT

EMPIRE RESOURCES, INC. 2006 STOCK OPTION PLAN

This instrument evidences that Empire Resources, Inc., formerly known as Integrated Technology USA, Inc., (the “Company”), has granted to the optionee named below (Optionee”) the stock option described below (the Option”).  The Option was granted pursuant to the Company’s 2006 Stock Option Plan (the “Plan”) on the grant date set forth below. A copy of the Plan is attached as Exhibit A hereto and should be read carefully.

IMPORTANT: please sign the extra copy of this grant instrument and return it to the Company in order to confirm your acceptance of the Option and the terms set forth herein.

Optionee:

Grant date:

Number of shares subject to option:

Purchase price per share:

Expiration Date: The earlier of (a) the tenth anniversary of the grant date and (b) 90 calendar days after termination of employment (subject to certain exceptions pursuant to the Plan).

Terms of the option: The Option is subject in all respects to the terms and conditions of the Plan and to the terms set forth below.

General Description.  Optionee has been granted an Option to purchase from the Company the number of shares of the Company’s Common Stock set forth above at the purchase price per share set forth above. The Option is nonstatutory (i.e., it is not an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended.)

Time When Option becomes Exercisable.  The Option is exercisable immediately.

Termination of Option.  The Option may not be exercised after the Expiration Date set forth above.

Procedure For Exercise.  Optionee may exercise all or any portion of the Option, to the extent it is exercisable pursuant to the terms hereof, at any time and from time to time prior to its termination, by  (1) delivering to the Company written notice containing the information and representations appearing on the form attached as Exhibit B hereto, and (2) paying to the Company the purchase price for the shares being purchased (such payment to be made as provided in the Plan). Notwithstanding the foregoing, the Option may not be exercised with respect to fractional shares.

Withholding taxes.   As provided in the Plan, the Plan Administrator ( as defined in the Plan) shall have the right to require that Optionee 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.

Restrictions On Transfer.  The Option may not be transferred other than by will or by the laws of descent and distribution, and during the lifetime of Optionee it may be exercised only by Optionee; provided, however, that the Option may be otherwise transferred to the extent, if any, permitted by the Plan Administrator (as defined in the Plan).

Conformity with Plan.  The Option is intended to conform in all respects with, and is subject to all applicable provisions of , the Plan, which is incorporated herein by reference.  Any inconsistencies between this instrument and the plan shall be resolved in accordance with the terms of the Plan.

IN WITNESS WHEREOF,  the undersigned has executed this instrument.

EMPIRE RESOURCES, INC.
BY:
	Name:
	Title:

The undersigned, by signing below, confirms that the undersigned accepts the Option on the terms set forth above and that the undersigned has received a copy of the Plan.

Signed:_______________________

Name:________________________

Date:_________________________

Empire Resources, Inc. Exhibit B

Gentlemen:

I have heretofore been granted the stock option identified below (the “Option”):

Date of grant:_________________________________________

Exercise price per share:__________________________________

Number of shares subject

    to option when granted:________________________________

Number of shares remaining subject to option_________________

I am hereby exercising the Option with respect to the following number of shares:______________.

In connection with this exercise, [check one]

______I enclose a certified check, bank draft or money order in the amount of $_________

______I am delivering irrevocable instructions to a broker to sell shares acquired upon exercise and promptly to deliver to the Company a portion of the proceeds thereof equal to the exercise price.

I hereby agree to execute whatever other documents are necessary in order to comply with the Plan and any applicable legal requirements in connection with the issuance of the stock to me pursuant to the Plan.

_____________________________       _____________________________

Optionee signature                                         Social Security Number

_____________________________       _____________________________

Please print name

_____________________________       _____________________________

Date                                                                   Address

EX-10.8

Exhibit 10.8

10 August 2007

Empire Resources Inc

One Parker Plaza

Fort Lee

NJ07024

Dear Nathan

LETTER OF CONFIRMATION OF TRADING RELATIONSHIP

This letter outlines the mutual agreement between Empire Resources Incorporated (Empire) and Hulamin Rolled Products (Hulamin) as at 10 August 2007. This agreement remains valid until 9 August 2008 and replaces the agreement as captured in the letter dated 6th September 2000, and signed by Empire Resources Incorporated and Hulett Aluminium Rolled Products (Pty) Ltd.

Hulamin confirms that Empire is the exclusive distributor of Hulamin’s products in the United States of America and Canada. As is currently the case, Empire may order from and be invoiced by Hulamin. Each transaction between Empire and Hulamin will be negotiated on a transaction by transaction basis. Empire will continue to provide support to service the customers in the above mentioned territory as if they are customers of Hulamin.

Empire shall not incur any liability on behalf of Hulamin or in any way pledge or purport to pledge Hulamin’s credit, or accept any order or make any contract binding upon Hulamin without the prior consent of Hulamin.

Empire warrants that upon expiry of the agreement that it will have no claim for compensation of any type against Hulamin.

This agreement shall be governed by and interpreted in accordance with the laws of the Republic of South Africa.

Neither party has made any representation to the other or given any warranty or commitment to extend the agreement. At the same time this agreement can be amended or extended by mutual agreement subject to any such amendment or extension being recorded in writing and signed by the authorized representatives of Empire and Hulamin.

Kind regards

/s/ Frank Bradford	/s/ Nathan Kahn, August 13, 2007
Frank Bradford.	Nathan Kahn
For Hulamin Rolled Products	For Empire Resources Inc.

 

EX-10.9

Exhibit 10.9

CREDIT AGREEMENT

by and among

EMPIRE RESOURCES, INC.

as Borrower,

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH,

as Lead Arranger, Agent,

Swing Line Bank, Issuing Bank and Acceptance Bank

and

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent

and

the banks party hereto

28 April 2011

TABLE OF CONTENTS

Page

Section 1.	Definitions and Accounting Matters.	1
1.01	Certain Defined Terms	1
1.02	Accounting Terms and Determinations.	20
(a)	GAAP Consistently Applied	20
(b)	No Change to Fiscal Year	21
(c)	Financial Covenants Determined on a Consolidated Basis	21
(d)	Terms Generally	21
1.03	Types of Loans	21
Section 2.	Commitments, Loans, Notes and Prepayments.	21
2.01	Loans.	21
(a)	Revolving Loans	21
(b)	Increase in Revolving Loan Commitments	22
(c)	Swing Line Commitment; Banks' Participation	22
(d)	Repayment of Swing Line Loans; Funding of Participations	23
2.02	Borrowings	24
2.03	Letters of Credit	24
(a)	Letter of Credit Request Procedure	24
(b)	Bank Participation in Letters of Credit	24
(c)	Drawings on Letters of Credit; Reimbursement	25
(d)	Borrowing to Fund Reimbursement	25
(e)	Funding of Bank Participation in Letters of Credit	25
(f)	Payments Received by the Issuing Bank	25
(g)	Letter of Credit Fees	25
(h)	Letter of Credit Liability Accounting	26
(i)	Conditions to Issuance	26
(j)	Default Interest	27
(k)	Modifications to Letters of Credit	27
(l)	Company Indemnification	27
(m)	Obligations Absolute	27
(n)	Exculpation	27
2.04	Acceptances	28
(a)	Request for Acceptances	28
(b)	Creation of Acceptances	28
(c)	Bank Participation in Acceptances	29
(d)	Company Payment of Acceptance Liability	29
(e)	Borrowing to Pay Acceptance Liability	29
(f)	Funding of Participation	29
(g)	Accepting Bank's Receipt of Payment	30
(h)	Failure to Rediscount	30
(i)	Default Interest	30
(j)	Appointment of Attorney in Fact	30
2.05	Changes of the Commitment.	31
(a)	Revolving Credit Commitment Termination Date	31
(b)	Optional Termination	31
(c)	No Reinstatement	31
2.06	Commitment Fee	31
2.07	Lending Offices	31
2.08	Several Obligations; Remedies Independent	31
2.09	Evidence of Indebtedness.	31
(a)	Maintenance of Loan Accounts by Banks	31
(b)	Maintenance of Loan Accounts by the Agent	32

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(c)	Effect of Entries	32
(d)	Promissory Notes	32
2.10	Optional Prepayments and Conversions or Continuations of Loans	32
2.11	Mandatory Prepayments.	32
(a)	Borrowing Base	32
(b)	Cover for Letter of Credit Liabilities and Acceptance Liabilities	32
Section 3.	Payments of Principal and Interest.	33
3.01	Repayment of Loans	33
3.02	Interest.	33
(a)	Revolving Loans	33
(b)	Swing Line Loans	33
(c)	Post Default Interest	33
(d)	Payment of Interest	33
Section 4.	Payments; Computations; Etc.	34
4.01	Payments.	34
(a)	Payments Generally	34
(b)	Payments to the Banks	34
(c)	Payments on a Non-Business Day	34
4.02	Computations	34
4.03	Pro Rata Treatment	34
4.04	Minimum Amounts	35
4.05	Certain Notices	35
4.06	Non-Receipt of Funds by the Agent	36
4.07	Sharing of Payments, etc.	36
(a)	Set off	36
(b)	Sharing of Payments on Loan Obligations	37
(c)	Sharing of Benefits of Secured Claim	37
(d)	Certain Deductions by the Agent	37
4.08	Application of Proceeds of Collateral and Subsidiary Guarantee	38
4.09	Noncash Proceeds	38
4.10	Return of Proceeds	38
4.11	Notice of Amount of Obligations	38
4.12	Defaulting Banks.	39
(a)	Required Assignment	39
(b)	Administrative Provisions	39
(c)	Cure of Defaulting Bank Status	40
Section 5.	Yield Protection, Etc.	40
5.01	Additional Costs.	40
5.02	Limitation on Types of Loans	42
5.03	Illegality	42
5.04	Break Funding Compensation	42
5.05	Additional Costs in Respect of Letters of Credit	43
5.06	Taxes.	43
(a)	Payments Free of Taxes	43
(b)	Payment of Other Taxes by the Company	44
(c)	Indemnification by the Company	44
(d)	Evidence of Payments	44
(e)	Status of Banks	44
(f)	FATCA	44
Section 6.	Conditions Precedent.	45

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6.01	Obligations to Extend Credit	45
(a)	Executed Counterparts	45
(b)	JPMorgan Credit Agreement	45
(c)	Corporate Documents	45
(d)	Good Standing	45
(e)	Officer's Certificate	45
(f)	Borrowing Base Certificate	45
(g)	Opinion of Counsel to the Company	45
(h)	Security Documents	46
(i)	Insurance	46
(j)	No Material Adverse Effect	46
(k)	Fees and Expenses	46
(l)	Subordination Agreement	46
(m)	Other Documents	46
6.02	Initial and Subsequent Extensions of Credit	47
Section 7.	Representations and Warranties.	47
7.01	Corporate Existence	47
7.02	Financial Condition	47
7.03	Litigation	48
7.04	No Breach	48
7.05	Action	48
7.06	Approvals	48
7.07	Use of Credit	48
7.08	ERISA	48
7.09	Taxes	48
7.10	Indebtedness and Investments.	49
(a)	Indebtedness	49
(b)	Investments	49
7.11	True and Complete Disclosure	49
7.12	Subsidiaries	49
7.13	Property	49
7.14	Compliance with Laws and Agreements	50
7.15	Investment Company Status	50
7.16	OFAC Money Laundering Representations	50
7.17	Insurance	51
7.18	Solvency	51
Section 8.	Covenants of the Company.	51
8.01	Financial Statements Etc	51
(a)	Quarterly Financial Statements	51
(b)	Annual Financial Statements	51
(c)	ERISA Events	52
(d)	Borrowing Base Certificate	52
(e)	Collateral Audit	53
(f)	Shareholder Material	53
(g)	Notice of Default	53
(h)	Other Information	53
8.02	Litigation	54
8.03	Existence, Etc	54
(a)	Existence	54
(b)	Compliance with Laws	54

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(c)	Payment of Obligations	54
(d)	Maintain Property	54
(e)	Books and Records	54
(f)	Inspection	54
8.04	Insurance	55
8.05	Prohibition of Fundamental Changes	55
8.06	Limitation on Liens	55
8.07	Indebtedness	56
8.08	Investments	57
8.09	Leverage Ratio	57
8.10	Tangible Net Worth	57
8.11	No Net Loss	58
8.12	Lines of Business	58
8.13	Dividend Payments	58
8.14	Use of Proceeds	58
8.15	Subordinated Debt	58
8.16	Dormant Subsidiaries	58
8.17	Additional Guarantors; Pledge of Additional Subsidiaries	58
(a)	Subsidiary Guarantee	58
(b)	Secured Documents	58
(c)	Corporate Authorization	59
8.18	Australian Matters	59
(a)	Registration of Floating Charge	59
(b)	Australian Registration	59
8.19	Amendment to Organizational Documents	59
8.20	Capital Expenditures	59
8.21	Transactions with Affiliates	59
8.22	Post Closing Obligations.	59
(a)	Insurance	60
(b)	Imbali Corporate Documents	60
(c)	Pledge of Imbali Stock	60
Section 9.	Events of Default.	60
9.01	Events of Default	60
(a)	Payment Default	60
(b)	Cross Default	60
(c)	Representations and Warranties	60
(d)	Covenant Defaults	61
(e)	Failure to Pay Debts	61
(f)	Voluntary Insolvency Proceedings	61
(g)	Involuntary Insolvency Proceedings	61
(h)	Judgment Default	61
(i)	ERISA Events	61
(j)	Change of Control	62
(k)	Security Documents	62
(l)	Quad Avenue Loan Agreement	62
9.02	Cover for Contingent Obligations	62
Section 10.	The Agent.	63
10.01	Appointment, Powers and Immunities	63
10.02	Reliance by Agent	63
10.03	Defaults	63

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10.04	Rights as a Bank	64
10.05	Indemnification	64
10.06	Non-Reliance on Agent and Other Banks	64
10.07	Failure to Act	65
10.08	Resignation or Removal of Agent	65
10.09	Agency Fee	65
10.10	Consents under Other Basic Documents	65
10.11	Pendency of Insolvency	65
(a)	Filing Claims	65
(b)	Collection of Funds	66
10.12	Permitted Release of Collateral.	66
(a)	Automatic Release	66
(b)	Written Release	66
(c)	Other Authorized Release and Subordination	66
10.13	Powers and Immunities of Fronting Banks	66
10.14	Perfection by Possession and Control; Deposit Accounts	67
10.15	Bank Affiliates Rights	67
10.16	Other Agents	68
Section 11.	Miscellaneous.	68
11.01	Waiver	68
11.02	Notices.	68
(a)	General Address for Notices	68
(b)	Electronic Communications	68
(c)	Electronic Transmission System	69
(d)	Communications Through the Platform	69
11.03	Expenses, etc	69
11.04	Amendments, Etc	70
11.05	Successors and Assigns	70
11.06	Assignments and Participations.	71
(a)	Assignments by Banks.	71
(b)	Maintenance of Register by the Agent	72
(c)	Effectiveness of Assignments	72
(d)	Participations	72
(e)	Limitations on Rights of Participants	72
(f)	Certain Pledges	72
(g)	No Assignments to the Company or Affiliates	73
11.07	Survival	73
11.08	Captions	73
11.09	Counterparts	73
11.10	Governing Law; Submission to Jurisdiction	73
11.11	Waiver of Jury Trial	74
11.12	Severability	74
11.13	Independence of Covenants	74
11.14	PATRIOT ACT PROVISION	74
11.15	No Fiduciary Relationship	74
11.16	Construction	74
11.17	Interest Rate Limitation.	74
(a)	Limitation to Maximum Rate; Recapture	74
(b)	Cure Provisions	75
11.18	Waiver of Consequential Damages, etc	75

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EXHIBIT A	–	Form of Note
EXHIBIT B	–	Form of Borrowing Base Certificate
EXHIBIT C	–	Form of Security Agreement
EXHIBIT D	–	Form of Subsidiary Guarantee
EXHIBIT E	–	Form of Assignment and Assumption
EXHIBIT F	–	Form of Increased Commitment Supplement
EXHIBIT G	–	Form of Compliance Certificate
EXHIBIT H	–	Form of Subordination Agreement
EXHIBIT I	–	Form of Borrowing Request
EXHIBIT J	–	Form of Notice of Prepayment, Conversion and Continuation
EXHIBIT K	–	Subordination Terms
SCHEDULE A	–	Commitments
SCHEDULE I	–	Indebtedness
SCHEDULE II	–	Investments
SCHEDULE III	–	Subsidiaries
SCHEDULE IV	–	Existing Letters of Credit

vi

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this "Agreement") is dated as of April 28, 2011, by and among EMPIRE RESOURCES, INC., a corporation duly organized and validly existing under the laws of the State of Delaware (the "Company"), COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent for the Secured Parties defined below (in such capacity, together with its successors in such capacity, the "Agent"), and each of the lenders that is a signatory hereto identified under the caption "Banks" on the signature pages hereto (including Rabobank) or that, pursuant to Section 2.01(b) or 11.06(b) hereof shall become a "Bank" hereunder (individually, a "Bank", and collectively, the "Banks").

RECITALS:

The Company has requested that the Banks extend credit to the Company and the Banks are prepared to extend such credit upon the terms and conditions hereof.  Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION 1.

Definitions and Accounting Matters.

1.01           Certain Defined Terms.  As used herein, the following terms have the following meanings (all terms defined in this Section 1.01 or in other provisions of this Agreement in the singular to have the same meanings when used in the plural and vice versa):

"6900 Quad Avenue, LLC" means 6900 Quad Avenue, LLC a Delaware limited liability company.

"Acceptance" means a draft drawn by the Company on the Accepting Bank payable to the order of the Accepting Bank in Dollars, conforming to the requirements of Section 2.04 hereof and accepted by the Accepting Bank in accordance with Section 2.04(b) hereof.

"Acceptance Liability" means, with respect to any Acceptance, the obligation of the Company to pay to the Agent, for account of the Accepting Bank, the face amount thereof as required by Section 2.04(d) hereof.

"Accepting Bank" means Rabobank, as the Bank that creates and discounts Acceptances pursuant to Section 2.04 hereof together with its successors and assigns in such capacity.

"Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Agent which will be prepared by the applicable Bank and delivered to the Agent.

"Advance Date" has the meaning assigned to such term in Section 4.06 hereof.

"Affiliate" means as to any Person, any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person and, if such Person is an individual, any member of the immediate family (including parents, spouse, children and siblings) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust.  As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person that owns directly or indirectly securities having 5% or more of the voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person.  Notwithstanding the foregoing, no individual shall be an Affiliate solely by reason of his or her being a director, officer or employee of the Company.

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"Agent Parties" has the meaning assigned to such term in Section 11.02(c) hereof.

"Agreement" means this Credit Agreement, as the same may be amended, restated supplemented, amended and restated or otherwise modified in accordance with terms hereof and in effect from time to time.

"All-in Rate" means, with respect to any Acceptance, a rate per annum specified by Rabobank to the Company at the time of the creation of such Acceptance.

"Applicable Lending Office" means, for each Bank and for each Type of Loan, the "Lending Office" of such Bank (or of an affiliate of such Bank) designated from time to time by such Bank for such Type of Loan as the office by which its Loans of such Type are to be made and maintained.

"Applicable Margin" means (i) one percent (1.00%) as it relates to the Base Rate, (ii) two and one-half percent (2.50%) as it relates to the Money Market Rate, (iii) two and one-half percent (2.50%) as it relates to the Eurodollar Rate and (iv) with respect to Swing Line Loans, two and one-half percent (2.50%) or such other percentage agreed to by the Company and the Swing Line Bank from time to time.

"Approved Fund" means (a) a CLO and (b) with respect to any Bank that is a fund which invests in whole or in material part in bank loans and similar extensions of credit, any other fund that invests in whole or in material part in bank loans and similar extensions of credit and is administered or managed by the same investment adviser as such Bank or by an Affiliate of such investment adviser.  As used herein, the term "CLO" means any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in whole or in material part in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Bank or an Affiliate of a Bank.

"ASIC" means the Australian government authority known as the "Australian Securities & Investments Commission.

"Assignment and Assumption" means an Assignment and Assumption entered into by a Bank and an assignee (with the consent of any party whose consent is required by Section 11.05) and accepted by the Agent, substantially in the form of Exhibit E or any other form approved by the Agent and the Company.

"Australia" means the Commonwealth of Australia.

"Australian Effective Date" means, with respect to any Australian State or Territory, the date on which each of the following conditions has been satisfied:

(a)           a Floating Charge with respect to all Receivables located in such State or Territory, has been duly executed and delivered by the Company and the Agent;

2

(b)           a duly executed and undated Australian ASIC Form 309 to enable ASIC registration of the Floating Charge in Australia if the Company is, or becomes at any time, Australian Registered or such other form as may then be required by applicable law to register the Lien created by the Floating Charge, has been delivered by the Company to the Agent's Australian counsel;

(c)           the Floating Charge has been stamped in the relevant State or Territory (if applicable) or arrangements for stamping acceptable to the Agent are in place, and that all other fees, costs and expenses with respect to the execution and delivery of such Floating Charge has been paid;

(d)           evidence that the Company is not, and does not intend to become, Australian Registered (or that it has been so registered and has complied with its obligations under Section 8.18(a) hereof); and

(e)           the Company's Australian counsel (such counsel being acceptable to the Agent) has furnished to the Agent and the Banks a legal opinion (in form satisfactory to the Agent) with respect to the enforceability and priority under Australian law of the Floating Charge over the Receivables purported to be covered thereby.

"Australian Receivables" means, as at any date, the aggregate amount of all Receivables at such date payable to the Company that would constitute Tier I Eligible Receivables or Tier II Eligible Receivables but for the fact that the principal place of business of the relevant account debtor is in Australia and/or such Receivables are payable in lawful money of Australia.

"Australian Registered" means registered as a foreign company under the Corporations Act 2001 (Cth), or any successor legislation of the parliament of the Commonwealth of Australia.

"Bank" has the meaning set forth in the introductory paragraph to this Agreement.  Unless the context otherwise requires, the term "Bank" includes each Fronting Bank.

"Bankruptcy Code" means the Federal Bankruptcy Code of 1978, as amended from time to time.

"Base Rate" means for any day, a rate per annum equal to the greatest of (a) the rate of interest most recently announced by Rabobank as its base rate in effect at its principal office in New York City, (b) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (c) the Eurodollar Rate plus 1.00%.  Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate.

"Base Rate Loans" means Loans that bear interest at rates based upon the Base Rate.

"Basic Documents" means, collectively, this Agreement, the Notes, the Letter of Credit Documents, the Security Documents and all other documentation now or hereafter executed and/or delivered pursuant to the express terms of any of the foregoing.

"Basel Accord" means the proposals in effect as of the date hereof for risk-based capital framework described by the Basel Committee on Banking Regulations and Supervisory Practices, as amended, supplemented or otherwise modified and in effect from time to time or any replacement thereof.

3

"Borrowing Base" means, as at any date, the sum of (a) minus (b) calculated without duplication as of such date where:

(a)           equals the sum of:

(i)         if and to the extent requested by the Company, 85% of Eligible Net Liquidating Value of Brokerage Accounts; plus

(ii)         90% of the aggregate amount of Tier I Eligible Receivable; plus

(iii)         80% of the aggregate amount of Tier II Eligible Receivables; provided that in no event shall the aggregate amount of the Tier II Eligible Receivables included in the Borrowing Base under this clause (iii) exceed $15,000,000, plus

(iv)         70% of the aggregate amount of Australian Receivables; provided that (A) no Australian Receivable shall be included in the Borrowing Base unless the Australian Effective Date has occurred with respect to the State or Territory in which the account debtor of such Australian Receivables is located, and (B) in no event shall the aggregate amount of the Australian Receivables included in the Borrowing Base exceed an amount equal to 10% of the Borrowing Base; plus

(v)         80% of the aggregate amount of Eligible Inventory Ordered Under L/C; plus

(vi)         80% of the aggregate amount of Eligible Inventory; provided that in no event shall the aggregate amount of the Eligible Inventory included in the Borrowing Base exceed an amount equal to 65% of the Borrowing Base; plus

(vii)         without duplication of clause (vi) above, 65% of the aggregate amount of unsold metal Inventory (which, but for the absence of a hedge would constitute Eligible Inventory and valued at the lower of cost (as determined using the specific identification method) or market in accordance with GAAP); provided that in no event shall the aggregate amount of such unsold metal Inventory included in the Borrowing Base under this clause (vii) exceed $12,500,000 and in no event shall the aggregate amount of unsold stainless steel Inventory included in the Borrowing Base under this clause (vii) exceed $5,000,000, plus

(viii)         80% of the aggregate amount of Pledged Securities, plus

(ix)         100% of the aggregate amount of Pledged Cash, and

(b)           equals 100% of the aggregate amount of reserves established at any time and from time to time after the Closing Date by either the Agent or the Required Banks, which reserves are determined by the applicable Person to be necessary to protect the Banks' interests, such determination to be made in the applicable Person's judgment, in good faith and based on information which, in its judgment, supports such determination.  In the event of any conflict between the reserves established by the Agent and the reserves established by the Required Banks, the reserves established by the Required Banks shall control.  Reserves established under this clause (b) may include reserves for: (i) rent at any location leased or owned by the Company at which Inventory is located unless a landlord and/or mortgagee lien waiver or subordination has been obtained, (ii) shipping costs with respect to any Inventory held by a third party shipping company and (iii) accrued and unpaid warehouse and other storage charges with respect to any Inventory held at third party warehouses.  Any establishment of reserves under this clause (b) shall be effective on the date the Company receives Agent's written notice of the amount thereof.

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The Borrowing Base shall be determined at any time based on the Borrowing Base Certificate then most recently delivered or, if acceptable to the Agent, as otherwise certified by the Company to the Agent and the Banks.  Receivables denominated in a currency other than Dollars shall be reported in the Borrowing Base based on the Dollar equivalent thereof determined as of the date of the preparation of the Borrowing Base.

"Borrowing Base Certificate" means a certificate of the chief financial officer of the Company, substantially in the form of Exhibit B hereto and appropriately completed.

"Borrowing Request" has the meaning assigned to such term in Section 2.02 hereof.

"Business Day" means (a) any day on which commercial banks are not authorized or required to close in New York City and (b) if such day relates to a borrowing of a payment or prepayment of principal of or interest on a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice by the Company with respect to any such borrowing, payment, prepayment, Conversion or Interest Period, or the determination of the Eurodollar Rate, any day on which dealings in Dollar deposits are carried out in the London interbank market.

"Capital Lease Obligations" means, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP.

"Closing Date" means the date on which this Agreement becomes effective pursuant to satisfaction or waiver (pursuant to Section 11.04 hereof) of the conditions precedent set forth in Section 6.01.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Collateral" means the property over which a Lien has been granted to the Agent pursuant to the Security Documents.

"Collateral Account" means a segregated collateral account or accounts maintained by the Agent on behalf of the Secured Parties, which shall be under the sole dominion and control of the Agent.

"Commitment" means, as the context may require, the Revolving Loan Commitment or the Swing Line Commitment.

"Commitment Increase" has the meaning assigned to such term in Section 2.01(b) hereof.

"Communications" has the meaning assigned to such term in Section 11.02(a) hereof.

"Company" has the meaning assigned to such term in the preamble hereof.

"Compliance Certificate" has the meaning assigned to such term in the last sentence of Section 8.01 hereof.

5

"Continue", "Continuation" and "Continued" shall refer to the continuation pursuant to Section 2.10 hereof of a Eurodollar Loan from one Interest Period to the next Interest Period.

"Contract Rate" has the meaning assigned to such term in Section 11.17(a) hereof.

"Convert", "Conversion" and "Converted" shall refer to a conversion pursuant to Section 2.10 hereof of one Type of Loans into another Type of Loans, which may be accompanied by the transfer by a Bank (at its sole discretion) of a Loan from one Applicable Lending Office to another.

"Credit Exposure" means, at any time, the aggregate principal amount of all Loans, Acceptance Liabilities and Letter of Credit Liabilities outstanding at such time.  The Credit Exposure of any Bank at any time shall be the sum of such Bank's Revolving Credit Loans and its Fronting Exposure at such time.

"Default" means an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.

"Defaulting Bank" means:  (a) a Bank that has defaulted on its obligation to fund Loans hereunder or make any other payment required hereby for two (2) or more Business Days unless such Bank notifies the Agent and the Company in writing that such failure is the result of such Bank's determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing) has not been satisfied; (b) a Bank that has had an involuntary proceeding commenced or an involuntary petition filed seeking (i) liquidation, reorganization or other relief in respect of such Bank or its parent or its or its parent's debts, or of a substantial part of its or its parent's assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Bank or its parent or for a substantial part of its or its parent's assets; (c) a Bank that shall have or whose parent shall have (i) voluntarily commenced any proceeding or filed any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consented to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (b) of this definition, (iii) applied for or consented to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for it or a substantial part of its assets, (iv) filed an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) made a general assignment for the benefit of creditors or (vi) taken any action for the purpose of effecting any of the foregoing; (d) a Bank that has, for two (2) or more Business Days, failed to confirm in writing to the Agent, in response to a written request of the Agent, that it will comply with its funding obligations under this Agreement unless such Bank notifies the Agent and the Company in writing that such failure is the result of such Bank's determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing) has not been satisfied; or (e) has notified the Agent or the Company, or has made a public statement to the effect, that it does not intend to comply with its funding obligations under this Agreement, or has defaulted on its obligation to fund generally under any other loan agreement, credit agreement or other financing agreement in which it commits to extend credit (unless such writing or public statement relates to such Bank's obligation to fund a Loan hereunder and states that such position is based on such Bank's determination that a condition precedent to funding (which condition precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing or public statement) cannot be satisfied).

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"Deposit Obligations" means all obligations, indebtedness, and liabilities of the Company or any Subsidiary, or any one of them, to any Bank or any Affiliate of any Bank arising pursuant to any deposit, lock box, automated clearing house or cash management arrangements entered into by any Bank or any Affiliate of any Bank with the Company or any Subsidiary, whether now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including the obligation, indebtedness, and liabilities of the Company or any Subsidiary, or any one of them, to repay any credit extended in connection with such arrangements, interest thereon, and all reasonable fees, costs, and expenses (including reasonable attorneys' fees and expenses) provided for in the documentation executed in connection therewith.  The term "Deposit Obligations" includes any and all post-petition interest and expenses (including attorneys' fees) whether or not allowed under any bankruptcy, insolvency, or other similar law.

"Dividend Payment" means dividends (in cash, Property or obligations) on, or other payments or distributions on account of, or the setting apart of money for a sinking or other analogous fund for, or the purchase, redemption, retirement or other acquisition of, any shares of any class of stock of the Company or of any warrants, options or other rights to acquire the same, but excluding dividends payable solely in shares of common stock of the Company.

"Dollars" and "$" means lawful money of the United States of America.

"Dormant Subsidiary" means any Subsidiary that does not have any Property or liabilities.  As of the Closing Date, the Dormant Subsidiaries are identified on Schedule III.

"Effective Date" has the meaning assigned to such term in Section 2.01(b) hereof.

"Eligible Inventory" means, as at any date, the aggregate value of all Inventory (valued at the lower of cost (as determined using the specific identification method) or market value in accordance with GAAP):

(a)           that is owned by the Company as at such date, free and clear of all Liens, except for Liens permitted under clauses (a), (b) and (c) of Section 8.06 hereto,

(b)           that is (i) in possession of the Company in the United States of America, (ii) on a vessel bound for the United States of America, Canada or other jurisdiction acceptable to the Required Banks, the title of which is governed by a non-negotiable bill of lading or other title document made out to the order of the Agent or the Company or covered by a negotiable bill of lading or other title document that has been delivered to the Agent, (iii) held at a third party warehouse located in the United States, the title of which is governed by a non-negotiable warehouse receipt or other title document made out to the order of the Company or covered by a negotiable warehouse receipt or other title document that has been delivered to the Agent, (iv) held at a location in the United States that is controlled by a third party engaged in the business of storing goods of others for hire that does not issue either negotiable or non-negotiable documents of title as long as the goods stored by such third party on behalf of the Company are readily identifiable to the Company in a manner reasonably acceptable to the Agent; (v) in possession of a Permitted Bailee at a location in the United States of America; or (vi) in transit in the United States of America to or from a warehouse or other storage facility controlled by the Company, a Permitted Bailee or of the type described in clauses (iii), (iv) or (v) of this clause (b),

(c)           that is subject to a perfected first priority Lien in favor of the Agent,

(d)           that meets all standards imposed by any governmental agency or department or division thereof having regulatory authority over such Inventory, its use or sale,

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(e)           that either (i) one or more customers of the Company has agreed to purchase at a predetermined fixed price or (ii) is the subject of a hedge arrangement acceptable to the Required Banks protecting the Company against fluctuations in the price of such Inventory,

(f)           that is insured as to casualty loss by an insurance company acceptable to the Required Banks pursuant to an insurance policy acceptable to the Required Banks on which the Agent has been named additional insured or loss payee, as applicable,

(g)           that is not damaged, obsolete, slow moving or not currently saleable in the normal course of the Company's operations,

(h)           that is not Inventory that the Company or the Company's customer has returned, has attempted to return, is in the process of returning or intends to return,

(i)           that has not been shipped or delivered to a customer on consignment, a sale or return basis, or on the basis of any similar understanding, and

(j)           that is not Inventory the Agent has otherwise deemed ineligible at any time and from time to time, such determination to be made in the Agent's judgment, in good faith and based on information which, in its judgment, supports such determination.

"Eligible Inventory Ordered Under L/C" means, as at any date, the aggregate purchase price payable for all Inventory (not otherwise included in the Borrowing Base): (a) that the Company has contracted to purchase pursuant to a purchase contract in which the Agent has a first priority perfected Lien; (b) whose purchase price is secured by a commercial Letter of Credit issued by the Issuing Bank payable at sight; (c) that is to be delivered to the Company prior to the Revolving Credit Commitment Termination Date; and (d) that, upon receipt by the Company and payment under the Letter of Credit, will constitute Eligible Inventory.

"Eligible Net Liquidating Value in Brokerage Accounts" means, as of any date of determination, the aggregate amount of the net liquidating value of all commodities accounts of the Company held with commodity intermediaries acceptable to the Agent in which the Agent has been granted a Lien which has been perfected pursuant to the execution and delivery of one or more control agreements among the Agent, the Company and the applicable commodity intermediaries in form and substance acceptable to the Agent and that is free and clear of any other Liens other than customary Liens in favor of the applicable commodity intermediary securing obligations arising in connection with the operation of such commodity account in the ordinary course.

"Eligible Receivables" means, as at any date, the aggregate amount of all Receivables at such date payable to the Company other than the following (determined without duplication):

(a)           any Receivable not payable in Dollars or in lawful money of Canada,

(b)           any Receivable due from an account debtor whose principal place of business is (i) located in Australia or (ii) otherwise not located in the United States of America or Canada and with respect to this clause (ii) only, which are not: (A) backed by a bank letter of credit naming the Agent as beneficiary or assigned to the Agent, in the Agent's possession and acceptable to the Agent in all respects, such determination to be made in the Agent's judgment and in good faith or (B) covered by a foreign receivables insurance policy acceptable to the Agent, such determination to be made in the Agent's judgment and in good faith,

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(c)           any Receivable owing from an Affiliate of the Company,

(d)           any Receivable owing from an account debtor that the Required Banks (through the Agent) have notified the Company does not have a satisfactory credit standing (as determined by the Required Banks, such determination to be made in each of their respective judgments, in good faith and based on information which, in their respective judgments, supports such determination),

(e)           any Receivable that remains unpaid for more than 60 days after the original due date thereof,

(f)           all Receivables of any account debtor if more than 50% of the aggregate amount of the Receivables owing from such account debtor shall at the time have remained unpaid for more than 60 days after the original due date thereof,

(g)           any Receivable as to which there is any unresolved dispute with the respective account debtor (but only to the extent of the amount thereof in dispute),

(h)           any Receivable evidenced by an Instrument (as defined in the Uniform Commercial Code as in effect in the State of New York) not in the possession of the Agent,

(i)           any Receivable representing an obligation for goods sold on consignment, approval or a sale-or-return basis or subject to any other repurchase or return arrangement,

(j)           any Receivable that is payable more than 90 days after the date of the original invoice therefor,

(k)           any Receivable owed by any governmental authority, whether foreign or domestic (provided, however, that there shall be included in Eligible Receivables that portion of Receivable owed by such governmental authority for which the Company has provided evidence satisfactory to the Agent that (i) the Agent has a first priority perfected security interest in such Receivable and (ii) such Receivable may be enforced by the Agent directly against such governmental authority under all applicable laws),

(l)           any Receivable that has arisen in a transaction in which the Customer's obligations have been subcontracted to a third party or is assured by a performance, completion or other bond, and

(m)           any Receivable with respect to which the Agent does not have a first priority, perfected Lien on behalf of the Banks or which is subject to any other Lien.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

"ERISA Affiliate" means any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which the Company is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which the Company is a member.

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"Eurodollar Base Rate" means, with respect to any Eurodollar Loan for any Interest Period therefor, the rate of interest per annum determined on the basis of the offered rates for deposits in Dollars in the London interbank market for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Bloomberg page BBAM, pg. 1 (Official BBA LIBO Fixings) (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) as of 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period (the rate determined pursuant to this sentence, herein the "Page Rate"); provided that in the event that the Page Rate is not available at such time for any reason, the "Eurodollar Base Rate" for the purposes of this definition shall instead be the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) offered to Rabobank or one of its Affiliates at approximately 11:00 a.m. London time (or as soon thereafter as practicable) two Business Days prior to the first day of such Interest Period by leading banks in the London interbank market of Dollar deposits in immediately available funds having a term comparable to such Interest Period.  For purposes of determining the Eurodollar Rate as that term is used in the definition of the term "Base Rate", the Eurodollar Base Rate means, as of any day, the rate of interest per annum determined on the basis of the offered rates for deposits in Dollars in the London interbank market for a one month interest period appearing on Bloomberg page BBAM, pg. 1 (Official BBA Libor Fixings) (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) as of 11:00 a.m., London time, on such day or if such day is not a Business Day on the immediately preceding Business Days.

"Eurodollar Loans" means Loans that bear interest at rates based on rates referred to in the definition of "Eurodollar Base Rate" in this Section 1.01.

"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Agent to be equal to the Eurodollar Base Rate for such Loan for such Interest Period divided by 1 minus the Reserve Requirement (if any) for such Loan for such Interest Period.  The term "Eurodollar Rate" as that term is used in the definition of the term "Base Rate", means a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Agent to be equal to the Eurodollar Base Rate divided by 1 minus the Reserve Requirement (if any).

"Event of Default" has the meaning assigned to such term in Section 9 hereof.

"Excluded Taxes" means, with respect to the Agent, any Bank or any other recipient of any payment to be made by or on account of any obligation of any Obligor hereunder:  (a) taxes imposed on or measured by its overall net income by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Bank, in which its Applicable Lending Office is located; (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the applicable Obligor is located, (c) in the case of a Foreign Bank any withholding tax that is imposed on amounts payable to such Foreign Bank at the time such Foreign Bank becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Bank's failure (or inability) to comply with Section 5.06(e), except to the extent that such Foreign Bank's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Company with respect to such withholding tax pursuant to Section 5.06, and (d) any Taxes imposed on any "withholdable payment" as a result of the failure of a recipient to satisfy the applicable requirements as set forth in FATCA after December 31, 2012.

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"FATCA" means Sections 1471 through 1474 of the Code, as in effect on the date hereof, including any amendments made thereto after the date of this Agreement, and any current or future regulations or official interpretations thereof.

"Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if such rate is not so published for any Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by Rabobank from three Federal funds brokers of recognized standing selected by it.

"Floating Charge" means a Deed of Charge, in form and substance satisfactory to the Banks, that creates a charge under Australian law with respect to the Company's present and future, right, title and interest in specified Receivables.

"Foreign Bank" means any Bank that is organized under the laws of a jurisdiction that is not the United States of America or a jurisdiction located therein.

"Fronting Banks" means the Swing Line Bank, the Issuing Banks and the Acceptance Bank.

"Fronting Exposure" means, at any time, the aggregate principal amount of all Swing Line Loans, Acceptance Liabilities and Letter of Credit Liabilities outstanding at such time.  The Fronting Exposure of any Bank at any time shall be its Revolving Loan Commitment Percentage of the total Fronting Exposure at such time.

"GAAP" means generally accepted accounting principles in the United States of America.

"Guarantee" means a guarantee, an endorsement, a contingent agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor's obligations or an agreement to assure a creditor against loss, and including causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business.  The terms "Guarantee" and "Guaranteed" used as a verb has a correlative meaning.

"Guarantors" means each Subsidiary of the Company that executes and delivers a Subsidiary Guarantee.

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"Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement or any other similar transaction governed by an ISDA Master Agreement.

"Hedging Obligations" means all obligations, indebtedness, and liabilities of the Company or any Subsidiary, or any one of them, to any Bank or any Affiliate of any Bank, arising pursuant to any Hedging Agreements entered into by such Bank or Affiliate with the Company or any Subsidiary, or any one of them, whether now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including all fees, costs, and expenses (including attorneys' fees and expenses) provided for in such Hedging Agreements.  The term "Hedging Obligations" includes any and all post petition interest and expenses (including attorneys' fees) whether or not allowed under any bankruptcy, insolvency, or other similar law.

"Imbali Facility" means Indebtedness of Imbali Metals Bvba consisting of a revolving working capital facility provided by ING Belgium S.A./N.V., in a principal amount not to exceed €10,000,000 at any one time outstanding, and any extensions, renewals, refinancing and replacements of any such facility that do not increase the outstanding principal amount thereof or result in an earlier maturity date thereof.

"Imbali Guarantee" means a Guarantee by the Company of the Imbali Facility, which Guarantee shall be subordinated to the Obligations pursuant to the Subordination Agreement.

"Impacted Bank" means (a) a Defaulting Bank or (b) a Bank if its or its parent's senior unsecured debt rating has dropped below BBB+ by Standard & Poors or Baa1 by Moody's.  Each Bank agrees to notify the Agent promptly if its or its parent's senior unsecured debt rating has dropped below BBB+ by Standard & Poors or Baa2 by Moody's.

"Increased Commitment Supplement" means an Increased Commitment Supplement substantially in the form of Exhibit F hereto.

"Indebtedness" means, for any Person: (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) Capital Lease Obligations of such Person; and (f) Indebtedness of others Guaranteed by such Person.

"Indemnified Taxes" means Taxes other than Excluded Taxes.

"Interest Period" means,

(a)           with respect to any Eurodollar Loan, each period commencing on the date such Eurodollar Loan is made or Converted from a Base Rate Loan or the last day of the next preceding Interest Period for such Loan and ending on the numerically corresponding day in the first, second or third calendar month thereafter, as the Company may select as provided in Section 4.05 hereof, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; and

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(b)           with respect to any Money Market Loan, each period of seven, 30, 60 or 90 days as the Company may select as provided in Section 4.05 hereof.

Notwithstanding the foregoing, each Interest Period that would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day (or, if such next succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day).

"Inventory" means semi-finish aluminum and steel products and aluminum billets.

"Investment" means, for any Person:  (a) the acquisition (whether for cash, Property, services or securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person or any agreement to make any such acquisition (including any "short sale" or any sale of any securities at a time when such securities are not owned by the Person entering into such sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person), but excluding any such advance, loan or extension of credit having a term not exceeding 90 days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business; (c) the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person; or (d) the entering into of any Hedging Agreement.

"Issuing Bank" means Rabobank in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity.  The Company may, in its discretion, arrange for one or more Letters of Credit to be issued by any other Bank, in which case the term Issuing Bankshall include any such Bank with respect to Letters of Credit issued by such Bank.  Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term Issuing Bankshall include any such Affiliate with respect to Letters of Credit issued by such Affiliate, together with its successors and assigns in such capacity.

"JPMorgan" means JPMorgan Chase Bank, National Association together with its successors and assigns.

"Letter of Credit" has the meaning assigned to such term in Section 2.03 hereof. On the Closing Date, subject to the satisfaction of the conditions to effectiveness of the obligations of the Banks hereunder, each of letters of credit described on Schedule IV hereto shall automatically, and without any action on the part of any Person, become Letters of Credit hereunder.

"Letter of Credit Documents" means, with respect to any Letter of Credit, collectively, any application therefor and any other agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations, each as the same may be amended, supplemented or otherwise modified and in effect from time to time.

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"Letter of Credit Interest" means for each Bank, such Bank's participation interest (or, in the case of the Issuing Bank, the Issuing Bank's retained interest) in the Issuing Bank's liability under Letters of Credit and such Bank's rights and interests in Reimbursement Obligations and fees, interest and other amounts payable in connection with Letters of Credit and Reimbursement Obligations.

"Letter of Credit Liability" means, without duplication, at any time and in respect of any Letter of Credit, the sum of (a) the undrawn face amount of such Letter of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement Obligations of the Company at such time due and payable in respect of all drawings made under such Letter of Credit.

"Leverage Ratio" means, at any time, the ratio of (a) Total Liabilities at such time minus the amount of Subordinated Debt at such time to (b) Tangible Net Worth of the Company at such time.

"Lien" means, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property.  For purposes of this Agreement and the other Basic Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.

"Loan Obligations" means all obligations, indebtedness, and liabilities of the Company or any Subsidiary, or any one of them, to the Agent and the Banks arising pursuant to any of the Basic Documents, whether now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including the obligation of the Company or any Subsidiary to repay the Loans, the Letter of Credit Liabilities, Acceptance Liabilities, interest on the Loans, Letter of Credit Liabilities and Acceptance Liabilities, and all reasonable fees, costs, and expenses (including reasonable attorneys' fees and expenses) provided for in the Basic Documents.  The term "Loan Obligations" includes any and all post-petition interest and expenses (including attorneys' fees) whether or not allowed under any bankruptcy, insolvency, or other similar law.

"Loans" means, as the context may require, a Revolving Loan or a Swing Line Loan of any Type.

"Margin Stock" means "margin stock" within the meaning of Regulations T, U and X.

"Material Adverse Effect" means a material adverse effect on (a) the Property, business, operations, financial condition, prospects, liabilities or capitalization of the Company and its Non-Dormant Subsidiaries (on a consolidated basis), (b) the ability of the Company or any of its Non-Dormant Subsidiaries to perform its obligations under any of the Basic Documents to which it is a party, (c) the validity or enforceability of any of the Basic Documents, (d) the rights and remedies of the Banks and the Agent under any of the Basic Documents or (e) the timely payment of the principal of or interest on the Loans or the Reimbursement Obligations or other amounts payable in connection therewith.

"Maturity Date" means, with respect to any Acceptance, the maturity date of the draft whose acceptance hereunder by the Accepting Bank created such Acceptance.

"Maximum Rate" has the meaning assigned to such term in Section 11.17(a) hereof.

"Money Market Loans" means loans that bear interest at a rate based on the Money Market Rate.

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"Money Market Rate" means, with respect to any Money Market Loan for any Interest Period therefor, the highest interest rate per annum quoted by the Reference Banks to the Agent for such Loan for such Interest Period as the applicable rate therefor.  For purposes of this definition, the term "Reference Banks" means JPMorgan, Rabobank and any other Bank selected by the Agent at any time and approved by the Company.  If at any time a Person that is listed as a Reference Bank is no longer a Bank hereunder, such Person shall no longer be a Reference Bank hereunder.

"New Bank" has the meaning assigned to such term in Section 2.01(b) hereof.

"Non-Dormant Subsidiary" means any Subsidiary of the Company that is not a Dormant Subsidiary.

"Notes" means the promissory notes in substantially the form of Exhibit A hereto provided for by Section 2.09 hereof and all promissory notes delivered in substitution or exchange therefor, in each case as the same shall be amended, supplemented or otherwise modified and in effect from time to time.

"Obligations" means all Loan Obligations, the Hedging Obligations and all Deposit Obligations.

"Obligors" means, collectively, the Company and the Guarantors.

"Other Taxes" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Basic Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Basic Document.

"Participant" has the meaning assigned to such term in Section 11.05 hereof.

"Payor" has the meaning assigned to such term in Section 4.06 hereof.

"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

"Permitted Bailee" means a Person identified as a party in possession of Collateral; provided that each of the following has been complied with:  (a) the Company has protected its interest in the Collateral held by such Person pursuant to the requirements of the UCC of the applicable jurisdiction (including, if applicable, the filing of financing statements in the proper jurisdictions and notification to such Person's secured creditors of the Company's ownership interest in, and the Agent's Liens on, the property held by such Person), to the reasonable satisfaction of the Agent, (b) such Person has executed such documentation as the Agent may request to acknowledge the Agent's Lien in and to the Collateral held by such Person and (c) the Company has delivered such other documentation as the Agent may reasonably request to create, perfect or protect the Lien of the Agent in the Collateral held by such Person.  None of the following parties are required to be "Permitted Bailee" hereunder:  (i) third party shipping and warehouse companies that issue non-negotiable or negotiable bills of lading or other title documents and (ii) third parties engaged in the business of storing goods of others for hire that do not issue either negotiable or non-negotiable documents of title as long as the goods stored by such third party on behalf of the Company are readily identifiable to the Company in a manner reasonably acceptable to the Agent.

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"Permitted Investments" means:  (a) direct obligations of the United States of America, or of any agency thereof, or obligations guaranteed as to principal and interest by the United States of America, or of any agency thereof, in either case maturing not more than 90 days from the date of acquisition thereof; (b) certificates of deposit issued by any bank or trust company organized under the laws of the United States of America or any state thereof and having capital, surplus and undivided profits of at least $500,000,000, maturing not more than 90 days from the date of acquisition thereof; (c) commercial paper rated A-1 or better or P-1 by Standard & Poor's Rating Service or Moody's Investors Services, Inc., respectively, maturing not more than 90 days from the date of acquisition thereof; and (d) municipal bonds with a credit rating acceptable to the Required Banks.

"Person" means any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).

"Platform" has the meaning assigned to such term in Section 11.02(a) hereof.

"Plan" means an employee benefit or other plan established or maintained by the Company or any ERISA Affiliate and that is covered by Title IV of ERISA, other than a Multiemployer Plan.

"Pledged Cash" means deposit accounts maintained at any bank or trust company organized under the laws of the United States of America or any state thereof and having capital, surplus and undivided profits of at least $500,000,000 which are subject to control agreements in favor of the Agent (which must be in form and substance acceptable to the Agent) and are otherwise subject to a first priority, perfected security interest in favor of the Agent.

"Pledged Securities" means Permitted Investments that are pledged to, and under the dominion and control of, the Agent pursuant to documents satisfactory to the Required Banks creating a first priority, perfected security interest in favor of the Agent.

"Post-Default Rate" means a rate per annum equal to 2% plus the Base Rate as in effect from time to time plus the Applicable Margin for Base Rate Loans (provided that, (x) if the amount with respect to which interest at the Post-Default Rate is payable is principal of a Eurodollar Loan and the due date thereof is a day other than the last day of the Interest Period therefor, the "Post-Default Rate" for such principal shall be, for the period from and including such due date to but excluding the last day of such Interest Period, 2% plus the interest rate for such Loan as provided in Section 3.02(a)(ii) hereof and, thereafter, the rate provided for above in this definition, (y) if the amount so in default is the face amount of any Acceptance, 2% plus the All-in Rate for such Acceptance, and (z) if the amount with respect to which interest at the Post-Default Rate is payable is principal of a Money Market Loan and the due date thereof is a day other than the last day of the Interest Period therefor, the "Post-Default Rate" for such principal shall be, for the period from and including such due date to but excluding the last day of such Interest Period, 2% plus the interest rate for such Loan as provided in Section 3.02(a)(iii) or Section 3.02(b)(ii) hereof, as applicable, and, thereafter, the rate provided for above in this definition).

"Principal Shareholders" means Nathan S. Kahn and Sandra R. Kahn.

"Property" means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

"Quad Avenue Loan Agreement" means the Loan Agreement dated as of December 27, 2004 between 6900 Quad Avenue, LLC and JPMorgan, as the same shall be amended, supplemented or otherwise modified and in effect from time to time.

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"Quad Avenue Subsidiary" means 6900 Quad Avenue, LLC, unless such Person owns any property (real or otherwise) other than the approximately 122,000 square foot warehouse located at 6900 Quad Avenue, Baltimore, Maryland.

"Quarterly Dates" means the last Business Day of each March, June, September and December, the first of which shall be the first such day after the date of this Agreement.

"Rabobank" has the meaning set forth in the introductory paragraph herein.

"Receivables" means, as at any date, the unpaid portion of the obligation, as stated on the respective invoice, of a customer of the Company in respect of Inventory sold and shipped to such customer, net of any credits, rebates or offsets owed to such customer and also net of any commissions payable to third parties (and for purposes hereof, a credit or rebate paid by check or draft of the Company shall be deemed to be outstanding until such check or draft has been debited to the account of the Company) and net of any applicable taxes.

"Register" has the meaning set forth in Section 11.05.

"Regulations D, T, U and X" means, respectively, Regulations D, T, U and X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time.

"Regulatory Change" means, with respect to any Bank, any change after the date of this Agreement in Federal, state or foreign law or regulations (including Regulation D) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks including such Bank of or under any Federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any court or governmental or monetary authority charged with the interpretation or administration thereof.  The Dodd Frank Wall Street Reform and Consumer Protection Act, any new Basel Accord, and all requests, rules, guidelines, and directives promulgated under any of the foregoing shall be deemed to be a "Regulatory Change ", regardless of the date enacted or adopted.

"Reimbursement Obligations" means, at any time, the obligations of the Company then outstanding, or that may thereafter arise in respect of all Letters of Credit then outstanding, to reimburse amounts paid by the Issuing Bank in respect of any drawings under a Letter of Credit.

"Required Banks" means Banks having 51% of the aggregate amount of the Revolving Loan Commitments or, if the Revolving Loan Commitments have terminated, Banks holding at least 51% of the aggregate amount of the Credit Exposure.  If at the time of the calculation of the Required Banks, one or more Defaulting Banks exists, the Credit Exposure and unused Revolving Loan Commitments of each Defaulting Bank shall be excluded from both the numerator and denominator of the calculation.

"Required Payment" has the meaning assigned to such term in Section 4.06 hereof.

"Reserve Requirement" means the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against "Eurocurrency liabilities" (as such term is used in Regulation D).  Without limiting the effect of the foregoing, the Reserve Requirement shall include any other reserves required to be maintained by such member banks by reason of any Regulatory Change with respect to (i) any category of liabilities that includes deposits by reference to which the Eurodollar Base Rate is to be determined as provided in the definition of "Eurodollar Base Rate" in this Section 1.01 or (ii) any category of extensions of credit or other assets that includes Eurodollar Loans.

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"Revolving Credit Commitment Termination Date" means June 30, 2014.

"Revolving Loan Commitment" means, as to each Bank, the obligation of such Bank to make Loans and to acquire a participation in Letters of Credit and Acceptances in an aggregate principal or face amount at any one time outstanding up to but not exceeding the amount set opposite such Bank's name under the caption "Commitment" on Schedule A attached hereto and incorporated herein by reference (as the same may be reduced from time to time pursuant to Section 2.05 hereof and increased pursuant to Section 2.01(b) hereof).  The aggregate amount of the Revolving Loan Commitments on the Closing Date is $200,000,000.

"Revolving Loan Commitment Percentage" means, with respect to any Bank and except as set forth in clause (b) below:

(a)           the ratio of (i) the amount of the Revolving Loan Commitment of such Bank to (ii) the aggregate amount of the Revolving Loan Commitments of all of the Banks; provided that if at the time of the calculation one or more Defaulting Banks exists, the Revolving Loan Commitment Percentages are subject to reallocation as provided in Section 4.13, and

(b)           with respect to any Bank in respect of any indemnity claim under Section 10.05 arising out of an action or omission of the Agent under this Agreement, the ratio of (i) the amount of the Revolving Loan Commitment of such Bank to (ii) the aggregate amount of the Revolving Loan Commitments of all of the Banks.

If the Revolving Loan Commitments have terminated or expired, the Revolving Loan Commitment Percentage shall be determined based upon the Revolving Loan Commitments most recently in effect, giving effect to any assignments.

"Revolving Loans" means the loans provided for in Section 2.01 hereof, which may be Base Rate Loans, Eurodollar Loans and/or Money Market Loans.

"Secured Parties" means the Agent, the Banks and each Affiliate of a Bank who is owed any portion of the Obligations.

"Security Agreement" means the Security Agreement among the Company, the Guarantors and the Agent, substantially in the form of Exhibit C hereto, as the same shall be amended, supplemented or otherwise modified and in effect from time to time.

"Security Documents" means, collectively, the Security Agreement, the Subsidiary Guarantee, each Floating Charge (but only after the Australian Effective Date), the Share Pledge Agreement, all Uniform Commercial Code financing statements required by this Agreement and the Security Agreement to be filed with respect to the security interests in personal Property and fixtures created pursuant to the Security Agreement, and each other security agreement or other document executed and delivered pursuant to the Security Agreement, each Floating Charge and the Share Pledge Agreement to secure any of the Obligations.

"Share Pledge Agreement" means that certain Share Pledge Agreement dated the date hereof between the Company and the Agent pursuant to which the Company pledges 65% of the Capital Securities issued by Imbali Metals Bvba, as the same shall be amended, supplemented or otherwise modified and in effect from time to time.

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"Subordination Agreement" means that certain Subordination Agreement among the Company, the Agent and the lenders under the Imbali Facility (or an agent on their behalf) substantially in the form of Exhibit H hereto, as the same shall be amended, supplemented or otherwise modified and in effect from time to time.

"Subordinated Debt" means unsecured Indebtedness of the Company that is: (a) provided to the Company substantially on the terms set forth on Exhibit K hereto or on such other or different terms as shall be acceptable to the Required Banks in their sole discretion, (b) subordinated to the Obligations on terms outlined on Exhibit K or on such other or different subordination terms, as shall be acceptable to the Required Banks in their sole discretion and (c) not guaranteed by any Obligor unless such guarantee is subordinated to obligations of such Obligor under the Basic Documents on terms similar to those outlined on Exhibit K or on such other or different subordination terms, as shall be acceptable to the Required Banks in their sole discretion.

"Subsidiary" means, with respect to any Person, any corporation, partnership or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity has or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person.

"Subsidiary Guarantee" means the Subsidiary Guarantee in favor of the Agent substantially in the form of Exhibit D hereto as the same may be amended or otherwise modified from time to time.

"Swing Line Bank" means, subject to the terms of this Agreement, Rabobank.

"Swing Line Commitment" has the meaning assigned to such term in Section 2.01(c) hereof.

"Swing Line Loan" has the meaning assigned to such term in Section 2.01(c) hereof.

"Tangible Net Worth" means, as at any date for any Person, the sum for such Person (determined without duplication in accordance with GAAP), of the following:

(a)           the amount of common stock; plus

(b)           the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit); plus

(c)           accumulated other comprehensive income; plus

(d)           the amount of any Subordinated Debt; minus

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(e)           the sum of the following:  (i) the aggregate amount of Investments other than Permitted Investments plus (ii) the cost of treasury shares and the book value of all assets that should be classified as intangibles (without duplication of deductions in respect of items already deducted in arriving at surplus and retained earnings) but in any event including goodwill, minority interests, research and development costs, trademarks, trade names, copyrights, patents and franchises, unamortized debt discount and expense, all reserves and any write-up in the book value of assets resulting from a revaluation thereof subsequent to December 31, 2010.

"Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.

"Tier I Eligible Receivables" means, on any date, all Eligible Receivables that are: (a) owed by account debtors who maintain an investment grade credit rating from a third party rating agency acceptable to the Required Banks, (b) insured by a credit insurance company acceptable to the Required Banks under a credit insurance policy that is acceptable to the Required Banks and to which the Agent is named as an additional insured or loss payee, as applicable, provided that an Eligible Receivable that qualifies as a Tier I Eligible Receivable under this clause (b) shall only be a Tier I Eligible Receivable to the extent of the insured amount thereof or (c) otherwise approved by the Required Banks as "Tier I Eligible Receivables".

"Tier II Eligible Receivables" means, on any date, all Eligible Receivables that are either not covered by, or are in excess of the insured limits set by, an acceptable credit insurance policy issued by an acceptable insurance company under which the Agent is a named additional insured or loss payee, as applicable; provided that the aggregate amount of Tier II Eligible Receivables owed by any one account debtor and its affiliates shall not exceed an aggregate amount equal to $3,000,000 unless the Required Banks otherwise approve.

"Total Liabilities" means, as at any date, the sum, for the Company (determined without duplication in accordance with GAAP), of the following:  (a) all Indebtedness (including obligations of the Company in respect of letters of credit or similar instruments issued or accepted for account of such Person) and (b) all other liabilities that should be classified as liabilities on a balance sheet, including all reserves (other than general contingency reserves), but excluding all deferred taxes and other deferred items.

"Type" has the meaning assigned to such term in Section 1.03 hereof.

"UCC" means the Uniform Commercial Code as adopted in the State of New York.

1.02           Accounting Terms and Determinations.

(a)           GAAP Consistently Applied.  All calculations made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Company notifies the Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Agent notifies the Company that the Required Banks request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

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(b)           No Change to Fiscal Year.  To enable the ready and consistent determination of compliance with the covenants set forth in Section 8 hereof, the Company will not change the last day of its fiscal year from December 31 of each year, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30 and September 30 of each year, respectively.

(c)           Financial Covenants Determined on a Consolidated Basis.  Any and all financial information delivered pursuant to Section 8.01(a) and (b) shall be prepared on a consolidated basis for the Company and its Subsidiaries except as otherwise specifically required thereby.  Any and all calculations made hereunder for purposes of determining compliance with the financial covenants set forth in Sections 8.09 through 8.11 shall be on a consolidated basis for the Company and its Subsidiaries.

(d)           Terms Generally.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation".  The word "will" shall be construed to have the same meaning and effect as the word "shall".  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or other modifications set forth therein or herein); (b) any reference herein to any Person shall be construed to include such Person's permitted successors and assigns; (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof; (d) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, this Agreement; (e) reference herein to any law or regulation shall be construed to include any amendment, replacement or other modification thereto; and (f) terms that are used herein, defined in the UCC and not otherwise defined herein shall have the meanings provided for in the UCC.

1.03           Types of Loans.  Loans hereunder are distinguished by "Type". The "Type" of a Loan refers to whether such Loan is a Base Rate Loan, a Eurodollar Loan or a Money Market Loan, each of which constitutes a Type.

SECTION 2.

Commitments, Loans, Notes and Prepayments.

2.01           Loans.

(a)           Revolving Loans.  Each Bank severally agrees, on the terms and conditions of this Agreement, to make loans to the Company in Dollars during the period from and including the Closing Date to but not including the Revolving Credit Commitment Termination Date in an aggregate principal amount at any one time outstanding up to but not exceeding the amount of such Bank's Revolving Loan Commitment Percentage as in effect from time to time of the aggregate amount of the Revolving Loan Commitments as in effect from time to time; provided that the aggregate amount of all Credit Exposure at any one time outstanding shall not exceed the lesser of (x) the Revolving Loan Commitments as in effect from time to time and (y) the Borrowing Base.  Subject to the terms and conditions of this Agreement, during such period the Company may borrow, repay and reborrow the amount of the Revolving Loan Commitments by means of Base Rate Loans, Eurodollar Loans and Money Market Loans and may Convert one Type of Loan into Loans of another Type (as provided in Section 2.10 hereof) or Continue Loans of one Type as Loans of the same Type (as provided in Section 2.10 hereof), provided that (a) no more than ten separate Interest Periods in respect of Eurodollar Loans from each Bank may be outstanding at any one time and (b) no more than ten separate Interest Periods in respect of Money Market Loans from each Bank may be outstanding at any one time.

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(b)           Increase in Revolving Loan Commitments.  On a single occasion after the date hereof, the Company may, by written notice to the Agent (but without the consent of the Agent) and with the consent of each Fronting Bank (such consent not to be unreasonably withheld), request that a Bank and/or a financial institution not already a Bank hereunder and acceptable to the Agent (each a "New Bank") increase the amount of the Revolving Loan Commitments in an aggregate amount not to exceed $50,000,000 (the "Commitment Increase") in one or more increments of at least $10,000,000 on the date specified in such notice (the "Effective Date"); provided that each Bank has the right of first refusal with respect to any such Commitment Increase and no Bank shall be required to participate in such Commitment Increase.  Each New Bank (if any) shall become a Bank hereunder for all purposes of this Agreement and the other Basic Documents on the Effective Date.  The Commitment Increase shall be subject to the satisfaction of the following conditions on or prior to the Effective Date:

(i)           the execution and delivery by each New Bank, each Bank increasing its Revolving Loan Commitment, the Agent, each Fronting Bank and the Company of an Increased Commitment Supplement;

(ii)           the Company has paid any amounts payable under Section 5.04 hereof as if the Loans being assigned pursuant to the foregoing clause (ii) were being prepaid; and

(iii)           no Default shall be continuing on the effective date thereof.

If after giving effect to the requested increase, the outstanding Loans are not held pro rata in accordance with the new Revolving Loan Commitments, then, on the effective date of the Increased Commitment Supplement, the Banks shall make advances among themselves (either directly or through the Agent) so that after giving effect thereto the Loans will be held by the Banks (including any New Bank), pro rata in accordance with the Revolving Loan Commitment Percentages.  Any advances made under this Section 2.01(b) by a Bank shall be deemed to be a purchase of a corresponding amount of the Loans of the Bank or Banks who shall receive such advances.  The Revolving Loan Commitments of the Banks who do not agree to increase their Revolving Loan Commitments can not be reduced or otherwise changed pursuant to this Section 2.01(b).  In connection with the advances made hereunder, the Company shall make any payments required by Section 5.04.

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(c)           Swing Line Commitment; Banks' Participation.  Subject to the terms and conditions of this Agreement, the Revolving Loan Commitments may be utilized, upon the request of the Company to the Swing Line Bank, in addition to the Revolving Loans provided for by clause (a) hereof, to make swing line loans (the "Swing Line Loans") to the Company in Dollars during the period from and including the Closing Date to but not including the Revolving Credit Commitment Termination Date in an aggregate principal amount at any one time outstanding up to but not exceeding $10,000,000 (the "Swing Line Commitment").  Subject to the terms and conditions of this Agreement, during such period the Company may borrow, repay and reborrow Swing Line Loans, provided that the Swing Line Bank shall not make a Swing Line Loan to refinance an outstanding Swing Line Loan.  Swing Line Loans will only accrue interest at the Federal Funds Rate plus the Applicable Margin.  On the date a Swing Line Loan is made by the Swing Line Bank, the Swing Line Bank shall be deemed to have sold and transferred to each other Bank and each such other Bank shall be deemed irrevocably and unconditionally to have purchased and received from the Swing Line Bank, without recourse or warranty, an undivided interest and participation, to the extent of such other Bank's Revolving Loan Commitment Percentage of the Swing Line Loan so made.  The Swing Line Bank shall not be permitted or required to make Swing Line Loans if, after giving effect thereto, (i) the aggregate outstanding principal amount of all Swing Line Loans would exceed the then existing Swing Line Commitment or (ii) unless otherwise agreed to by the Swing Line Bank, in its sole discretion, the sum of all Revolving Loans made by the Swing Line Bank plus the Swing Line Bank's Revolving Loan Commitment Percentage of the aggregate amount of all Swing Line Loans and Letter of Credit Liabilities would exceed the Swing Line Bank's Revolving Loan Commitment Percentage of the then existing Revolving Loan Commitment; provided that the aggregate amount of all Credit Exposure at any one time outstanding shall not exceed the lesser of (x) the Revolving Loan Commitments as in effect from time to time and (y) the Borrowing Base.  The Swing Line Bank may at any time and from time to time require that an Impacted Bank's obligations to acquire a participation in the Swing Line Loans be collateralized with immediately available funds provided by such Impacted Bank in an amount equal to such Impacted Bank's Revolving Loan Commitment Percentage of the then outstanding Swing Line Loans.  If the Swing Line Bank shall have required an Impacted Bank to collateralize such obligation, the applicable Impacted Bank shall, within sixty (60) days after receipt of the written request of the Swing Line Bank, deposit with the Agent such amount in immediately available funds.  Such deposit shall be held by the Agent as collateral for such Impacted Bank's participation interest in the outstanding Swing Line Loans and such Impacted Bank's other obligations hereunder and for this purposes such Impacted Bank grants a security interest to the Agent for the benefit of the Swing Line Bank and the Agent in such deposit.

(d)           Repayment of Swing Line Loans; Funding of Participations.  If (i) any Swing Line Loan shall be outstanding for more than five consecutive Business Days, (ii) any Swing Line Loan is or will be outstanding on a date when the Company requests that a Revolving Loan be made, or (iii) any Default shall occur and be continuing, then each Bank (other than the Swing Line Bank) irrevocably agrees that it will, at the request of the Swing Line Bank in its sole and absolute discretion, make a Revolving Loan (which shall initially be funded as a Base Rate Loan) in an amount equal to such Bank's Revolving Loan Commitment Percentage of the aggregate principal amount of all such Swing Line Loans then outstanding (such outstanding Swing Line Loans hereinafter referred to as the "Refunded Swing Line Loans").  On or before 2:00 p.m. New York time on the first Business Day following receipt by each Bank (other than the Swing Line Bank) of a request to make Revolving Loans as provided in the preceding sentence, each Bank (other than the Swing Line Bank) shall deposit in an account specified by the Swing Line Bank the amount so requested in same day funds and such funds shall be applied by the Swing Line Bank to repay the Refunded Swing Line Loans.  In connection with the Refunded Swing Line Loans, the Swing Line Bank shall be deemed to have made Revolving Loans in an amount equal to the Swing Line Bank's Revolving Loan Commitment Percentage of the aggregate principal amount of the Refunded Swing Line Loans.  Upon the making (or deemed making, in the case of the Swing Line Bank) of any Revolving Loans pursuant to this paragraph, the amount so funded shall become an outstanding Revolving Loan and shall no longer be owed as a Swing Line Loan.  All interest payable with respect to any Revolving Loans made (or deemed made, in the case of the Swing Line Bank) pursuant to this paragraph shall be appropriately adjusted to reflect the period of time during which the Swing Line Bank had outstanding Swing Line Loans in respect of which such Revolving Loans were made.  Each Bank's (other than the Swing Line Bank's) obligation to make the Revolving Loans referred to in this paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Bank may have against the Swing Line Bank, any Obligor or any Person for any reason whatsoever; (ii) the occurrence or continuation of any Default; (iii) any adverse change in the condition (financial or otherwise) of any Obligor; (iv) the acceleration or maturity of the Loans or the termination of any Commitment after the making of any Swing Line Loan; (v) any breach of any Basic Document by any Person; or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing (and if, as a result of the occurrence of any Event of Default described in clauses (f) or (g) of Section 9 with respect to the Company, any Bank shall be prohibited or stayed from making any such Revolving Loan referred to in this paragraph, each such Bank shall pay to the Swing Line Bank an amount equal to each Revolving Loan otherwise required to be made by it pursuant to this Section in payment for the participation in the related Swing Line Loan purchased by such Bank pursuant to the foregoing clause (c)).

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2.02           Borrowings.  The Company shall give the Agent notice of each borrowing hereunder pursuant to a Borrowing Request substantially in the form of Exhibit I hereto as provided in Section 4.05 hereof.  The Agent shall promptly notify the Banks of the receipt of each Borrowing Request received hereunder on the date of its effective receipt of the same.  On the date specified for each borrowing hereunder of Revolving Loans, each Bank shall, subject to the terms and conditions of this Agreement, make available its Revolving Loan Commitment Percentage of the amount of such borrowing to the Agent by depositing the same, in immediately available funds, at an account maintained by the Agent not later than 2:00 p.m., New York time.  The amount so received by the Agent shall, subject to the terms and conditions of this Agreement, be made available to the Company, by depositing the same, in immediately available funds, in an account of the Company designated by the Company.

2.03           Letters of Credit.  Subject to the terms and conditions of this Agreement, the Revolving Loan Commitments may be utilized, upon the request of the Company, in addition to the Revolving Loans and Swing Line Loans provided for by Section 2.01 hereof, by the issuance by the Issuing Bank of letters of credit (collectively, "Letters of Credit") for account of the Company, provided that in no event shall: (i) the aggregate amount of all Credit Exposure exceed the lesser of (x) the Borrowing Base plus, with respect to any commercial Letter of Credit to be issued to secure the purchase price of Inventory, 80% of the cost of such Inventory that will be Eligible Inventory Ordered Under L/C once such Letter of Credit is issued, and (y) the aggregate amount of the Revolving Loan Commitments as in effect from time to time, (ii) the outstanding aggregate amount of all Letter of Credit Liabilities exceed $100,000,000, (iii) the outstanding aggregate amount of all Letter of Credit Liabilities arising out of standby Letters of Credit exceed $10,000,000, and (iv) the expiration date of any Letter of Credit extend beyond the Revolving Credit Commitment Termination Date.

(a)           Letter of Credit Request Procedure.  The Company shall give the Agent at least two Business Days' irrevocable prior notice (effective upon receipt) specifying the Business Day (which shall be no later than 30 days preceding the Revolving Credit Commitment Termination Date) each Letter of Credit is to be issued, the name of the Issuing Bank, and the account party or parties therefor and describing in reasonable detail the proposed terms of such Letter of Credit (including the beneficiary thereof) and the nature of the transactions or obligations proposed to be supported thereby (including whether such Letter of Credit is to be a commercial letter of credit or a standby letter of credit).

(b)           Bank Participation in Letters of Credit.  Upon the issuance of each Letter of Credit, the applicable Issuing Bank shall be deemed to have sold and transferred to each other Bank and each such other Bank shall be deemed irrevocably and unconditionally to have purchased and received from the applicable Issuing Bank, without recourse or warranty, an undivided interest and participation, to the extent of such other Bank's Revolving Loan Commitment Percentage of the Letter of Credit Liabilities with respect to the Letter of Credit so issued.  An Issuing Bank may at any time and from time to time require that an Impacted Bank's obligations to acquire a participation in all the Letters of Credit be collateralized with immediately available funds provided by such Impacted Bank in an amount equal to such Impacted Bank's Revolving Loan Commitment Percentage of the then outstanding Letter of Credit Liabilities.  If an Issuing Bank shall have required an Impacted Bank to collateralize such obligation, the applicable Impacted Bank shall, within sixty (60) days after receipt of the written request of the Issuing Bank, deposit with the Agent such amount in immediately available funds.  Such deposit shall be held by the Agent as collateral for such Impacted Bank's participation interest in the outstanding Letters of Credit and such Impacted Bank's other obligations hereunder and for this purposes such Impacted Bank grants a security interest to the Agent for the benefit of the Issuing Banks and the Agent in such deposit.

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(c)           Drawings on Letters of Credit; Reimbursement.  Upon receipt from the beneficiary of any Letter of Credit of any demand for payment under such Letter of Credit, the Issuing Bank shall promptly notify the Company (through the Agent) of the amount to be paid by the Issuing Bank as a result of such demand and the date on which payment is to be made by the Issuing Bank to such beneficiary in respect of such demand.  Notwithstanding the identity of the account party of any Letter of Credit, the Company hereby unconditionally agrees to pay and reimburse the Agent for the account of the Issuing Bank for the amount of each demand for payment under such Letter of Credit made in accordance with the terms thereof at or prior to the date on which payment is to be made by the Issuing Bank to the beneficiary thereunder in accordance with the terms thereof, without presentment, demand, protest or other formalities of any kind.

(d)           Borrowing to Fund Reimbursement.  Forthwith upon its receipt of a notice referred to in clause (c) of this Section 2.03, the Company shall advise the Agent whether or not the Company intends to borrow hereunder to finance its obligation to reimburse the Issuing Bank for the amount of the related demand for payment and, if it does, submit a notice of such borrowing as provided in Section 4.05 hereof.  In the event that the Company fails to reimburse the Issuing Bank for a payment under a Letter of Credit by the date of such payment, the Agent shall give each Bank prompt notice of the amount of the demand for payment, specifying such Bank's Revolving Commitment Percentage of the amount of the related demand for payment.

(e)           Funding of Bank Participation in Letters of Credit.  Each Bank (other than the Issuing Bank) shall pay to the Agent for account of the Issuing Bank in Dollars and in immediately available funds, the amount of such Bank's Revolving Commitment Percentage of any payment under a Letter of Credit upon notice by the Issuing Bank (through the Agent) to such Bank requesting such payment and specifying such amount.  Each such Bank's obligation to make such payment to the Agent for account of the Issuing Bank under this clause (e), and the Issuing Bank's right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including the failure of any other Bank to make its payment under this clause (e), the financial condition of the Company (or any other account party), the existence of any Default or the termination of the Commitment.  Each such payment to the Issuing Bank shall be made without any offset, abatement, withholding or reduction whatsoever.

(f)           Payments Received by the Issuing Bank.  Upon receipt by the Issuing Bank from or for account of the Company of any payment in respect of any Reimbursement Obligation or any such interest or other amount (including by way of setoff or application of proceeds of any collateral security) the Issuing Bank shall promptly pay to the Agent for account of each Bank that has funded its participation in such Reimbursement Obligations, such Bank's Revolving Commitment Percentage of such payment, each such payment by the Issuing Bank to be made in the same money and funds in which received by the Issuing Bank.  In the event any payment received by the Issuing Bank and so paid to the Banks hereunder is rescinded or must otherwise be returned by the Issuing Bank, each Bank shall, upon the request of the Issuing Bank (through the Agent), repay to the Issuing Bank (through the Agent) the amount of such payment paid to such Bank, with interest at the rate specified in clause (j) of this Section 2.03.

(g)           Letter of Credit Fees.  The Company shall pay to the Agent the following fees:

(i)           Commercial Letters of Credit.  on the date of the drawing under each commercial Letter of Credit (or if the letter of credit is cancelled without being drawn, on the date of cancellation), a letter of credit fee for the account of the Banks (other than any Defaulting Bank) in an amount equal to the greater of 175/1,000 of 1% of the amount of such Letter of Credit for each three month period or portion thereafter during which such Letter of Credit remained outstanding or $500, to be paid ratably to the Banks in accordance with their respective Revolving Loan Commitment Percentages,

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(ii)           Other Letters of Credit.  in respect of each other Letter of Credit, for the account of each Bank, a participation fee with respect to its participations in Letters of Credit, which shall accrue at a rate per annum equal to 2.50% per annum on the daily stated amount of such Bank's Revolving Loan Commitment Percentage of the Letter of Credit Liabilities (excluding any portion thereof attributable to unreimbursed Reimbursement Obligation) during the period from and including the Closing Date to but excluding the later of the date on which such Bank's Revolving Loan Commitment terminates and the date on which such Bank ceases to have any participation interest in the Letter of Credit Liabilities with such participation fees accrued through and including each Quarterly Date due and payable on the fifth Business Day following such Quarterly Date, commencing on the first such date to occur after the Closing Date; provided that all such fees shall be payable on the date on which the Revolving Loan Commitments terminate and any such fees accruing after the date on which the Revolving Loan Commitments terminate shall be payable on demand (For purposes of this paragraph, a Defaulting Bank shall not be deemed to have any interest in the Letter of Credit Liabilities for as long as such Bank is a Defaulting Bank);

(iii)           Fronting Fees.  to the Issuing Bank a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the Company and the Issuing Bank on the daily amount of the Letter of Credit Liabilities (excluding any portion thereof attributable to unreimbursed Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Loan Commitments and the date on which there ceases to be any Letter of Credit Liabilities, such fronting fees accrued through and including each Quarterly Date to be due and payable on the fifth Business Day following such Quarterly Date, commencing on the first such date to occur after the Closing Date; provided that all such fees shall be payable on the date on which the Revolving Loan Commitments terminate and any such fees accruing after the date on which the Revolving Loan Commitments terminate shall be payable on demand.

In addition, the Company shall pay to the Agent for account of the Issuing Bank, the Issuing Bank's standard fees with respect to the amendment or negotiation of any Letter of Credit or processing of drawings thereunder.  Any other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 Business Days after demand.

(h)           Letter of Credit Liability Accounting.  At the request of any Bank, the Issuing Bank shall deliver (through the Agent) to such Bank a notice describing the aggregate amount of all Letters of Credit outstanding at the end of any month.  Upon the request of any Bank from time to time, the Issuing Bank shall deliver any other information reasonably requested by such Bank with respect to each Letter of Credit then outstanding.

(i)           Conditions to Issuance.  The issuance by the Issuing Bank of each Letter of Credit shall, in addition to the conditions precedent set forth in Section 6 hereof, be subject to the conditions precedent that: (i) such Letter of Credit shall be in such form, contain such terms and support such transactions as shall be satisfactory to the Issuing Bank consistent with its then current practices and procedures with respect to letters of credit of the same type, (ii) all documents of title covering goods financed with a Letter of Credit shall either be issued (A) in the name of the Issuing Bank or (B) to the order of the shipper and endorsed in blank and delivered to the Issuing Bank and (iii) the Company has executed and delivered such applications, agreements and other instruments relating to such Letter of Credit as the Issuing Bank has reasonably requested consistent with its then current practices and procedures with respect to letters of credit of the same type, provided that in the event of any conflict between any such application, agreement or other instrument and the provisions of this Agreement or any Security Document, the provisions of this Agreement and the Security Documents shall control.

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(j)           Default Interest.  To the extent that any Bank shall fail to pay any amount required to be paid pursuant to clause (e) or (f) of this Section 2.03 on the due date therefor, such Bank shall pay interest to the Issuing Bank (through the Agent) on such amount from and including such due date to but excluding the date such payment is made at the Federal Funds Rate.

(k)           Modifications to Letters of Credit.  The issuance by the Issuing Bank of any modification or supplement to any Letter of Credit that increases the face amount thereof or extends the maturity date thereof shall be subject to the same conditions applicable under this Section 2.03 to the issuance of new Letters of Credit, and no such modification or supplement shall be issued hereunder unless the respective Letter of Credit affected thereby would have complied with such conditions had it originally been issued hereunder in such modified or supplemented form.

(l)           Company Indemnification.  The Company hereby indemnifies and holds harmless each Bank and the Agent from and against any and all claims, damages, losses, liabilities, costs or expenses that such Bank or the Agent may incur (or that may be claimed against such Bank or the Agent by any Person whatsoever) by reason of or in connection with the execution and delivery or transfer of or payment or refusal to pay by the Issuing Bank under any Letter of Credit; provided that the Company shall not be required to indemnify the Issuing Bank or the Agent for any such claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of the Issuing Bank in determining whether a request presented under any Letter of Credit complied with the terms of such Letter of Credit or (y) the Issuing Bank's failure to pay under any Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit or (z) the requirement of any Bank to pay interest pursuant to Section 2.03(j) hereof.  Nothing in this Section 2.03 is intended to limit the other obligations of the Company, any Bank or the Agent under this Agreement.

(m)           Obligations Absolute.  The Company's Reimbursement Obligations shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply strictly with the terms of such Letter of Credit, and (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of Company's obligations hereunder.

(n)           Exculpation.  Neither the Agent, the Banks nor the Issuing Bank, nor any of their respective officers, directors, employees, attorneys and agents shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit by the Issuing Bank or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding clause (m)), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Company to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Company to the extent permitted by applicable law) suffered by the Company that are caused solely by the Issuing Bank's gross negligence or willful misconduct when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that:

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(i)           The Issuing Bank may accept documents that appear on their face to be in substantial compliance with the terms of a Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that appear on their face to be in substantial compliance with the terms of such Letter of Credit;

(ii)           The Issuing Bank shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of such Letter of Credit; and

(iii)           This sentence shall establish the standard of care to be exercised by the Issuing Bank when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing).

2.04           Acceptances.  Subject to the terms and conditions of this Agreement, the Revolving Loan Commitment may be utilized, upon the request of the Company, for the creation and discount by the Accepting Bank of Acceptances, provided that in no event shall (i) the aggregate amount of the Credit Exposure exceed the lesser of (x) the Borrowing Base and (y) the aggregate amount of the Revolving Loan Commitments at such time and (ii) the Maturity Date of any Acceptance extend beyond the Revolving Credit Commitment Termination Date.  The following additional provisions shall apply to Acceptances:

(a)           Request for Acceptances.  When the Company wishes to request that the Accepting Bank create and discount Acceptances for account of the Company, the Company shall give the Accepting Bank notice of such request so as to be received by the Accepting Bank no later than 11:00 a.m. New York time on the Business Day next preceding the date proposed therein for the creation and discount of such Acceptances, specifying:

(i)           the aggregate face amount of such Acceptances;

(ii)           the tenor of such Acceptances (which in any event shall not exceed six months);

(iii)           the type and C.I.F. (or other applicable) value of the goods out of whose shipment such Acceptance will arise;

(iv)           the date of shipment of such goods (which in any event may not be more than 30 days prior to the date proposed in the notice requesting the creation and discount of such Acceptances);

(v)           the city and country of origin of shipment of such goods; and

(vi)           the city and state of destination of shipment of such goods.

(b)           Creation of Acceptances.  The Accepting Bank shall, not later than 1:00 p.m. New York time on the date specified for the creation and discount of such Acceptances:

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(i)           create such Acceptances in such aggregate amount by the acceptance of a draft or drafts in the form customarily employed by the Accepting Bank in creating bankers' acceptances (the denomination of each such Acceptance to be selected by the Accepting Bank in its sole discretion);

(ii)           discount such Acceptances at the All-In Rate and shall notify each Bank of such rate; and

(iii)           promptly make available to the Company the proceeds of such discount by depositing the same, in immediately available funds, in an account of the Company maintained designated by the Company.

(c)           Bank Participation in Acceptances.  On each day during the period commencing with the creation and discount by the Accepting Bank of any Acceptance and until the related Acceptance Liability has been paid in full, the Revolving Loan Commitment of each Bank shall be deemed to be utilized for all purposes of this Agreement in an amount equal to such Bank's Revolving Loan Commitment Percentage of the face amount of such Acceptance.  Each Bank (other than the Accepting Bank) agrees that, upon the creation and discount of any Acceptance hereunder, it shall automatically and without any further action on the part of the Agent, the Accepting Bank or such Bank acquire a participation in the Accepting Bank's liability under such Acceptance in an amount equal to such Bank's Revolving Loan Commitment Percentage of such liability, and each Bank (other than the Accepting Bank) thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and shall be unconditionally obligated to the Accepting Bank to pay and discharge when due, and to pay and reimburse the Accepting Bank in accordance with clause (f) below, its Revolving Loan Commitment Percentage of the Accepting Bank's liability under such Acceptance.  The Acceptance Bank may at any time and from time to time require that an Impacted Bank's obligations to acquire a participation in all Acceptance Liability be collateralized with immediately available funds provided by such Impacted Bank in an amount equal to such Impacted Bank's Revolving Loan Commitment Percentage of the then outstanding Acceptance Liabilities.  If Acceptance Bank shall have required an Impacted Bank to collateralize such obligation, the applicable Impacted Bank shall, within sixty (60) days after receipt of the written request of the Acceptance Bank, deposit with the Agent such amount in immediately available funds.  Such deposit shall be held by the Agent as collateral for such Impacted Bank's participation interest in the outstanding Letter of Credit Liabilities and such Impacted Bank's other obligations hereunder and for this purposes such Impacted Bank grants a security interest to the Agent for the benefit of the Acceptance Bank and the Agent in such deposit.

(d)           Company Payment of Acceptance Liability.  With respect to any Acceptance created and discounted hereunder, the Company unconditionally agrees to pay to the Agent for the account of the Accepting Bank, on the Maturity Date of such Acceptance, or such earlier date as may be required pursuant to the terms of this Agreement, the face amount of such Acceptance.

(e)           Borrowing to Pay Acceptance Liability.  The Company shall advise the  Agent whether or not the Company intends to borrow hereunder to finance its obligation to reimburse the Accepting Bank in the face amount of any Acceptance and, if it does, submit a notice of such borrowing as provided in Section 4.05 hereof.  In the event that the Company fails to reimburse the Accepting Bank for the face amount of an Acceptance on the Maturity Date therefor, the Agent shall give each Bank prompt notice of such face amount, specifying such Bank's Revolving Commitment Percentage of such face amount.

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(f)           Funding of Participation.  Upon demand of the Accepting Bank made through the Agent at any time from and including the Maturity Date of any Acceptance until the Company has reimbursed the Accepting Bank in the face amount of such Acceptance under clause (e) hereof, each Bank (other than the Accepting Bank) shall pay to the Agent for account of the Accepting Bank in Dollars and in immediately available funds, the amount of such Bank's Revolving Loan Commitment Percentage of the face amount of such Acceptance.  Each such Bank's obligation to make such payment to the Agent for account of the Accepting Bank under this clause (f), and the Accepting Bank's right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including the failure of any other Bank to make its payment under this clause (f), the financial condition of the Company (or any other Obligor), the existence of any Default or the termination of the Commitment.  Each such payment to the Accepting Bank shall be made without any offset, abatement, withholding or reduction whatsoever.

(g)           Accepting Bank's Receipt of Payment.  Upon receipt by the Accepting Bank from or for account of the Company of any payment in respect of any Acceptance Liability (including by way of setoff or application of proceeds of any collateral security) the Accepting Bank shall promptly pay to the Agent for account of each Bank entitled thereto, such Bank's Revolving Commitment Percentage of such payment, each such payment by the Accepting Bank to be made in the same money and funds in which received by the Accepting Bank.  In the event any payment received by the Accepting Bank and so paid to the Banks hereunder is rescinded or must otherwise be returned by the Accepting Bank, each Bank shall, upon the request of the Accepting Bank (through the Agent), repay to the Accepting Bank (through the Agent) the amount of such payment paid to such Bank, with interest at the rate specified in clause (j) of this Section 2.04.

(h)           Failure to Rediscount.  In the event the Accepting Bank is unable to rediscount any Acceptance in the secondary bankers' acceptance market for any reason whatsoever (or in the event the Accepting Bank repurchases any Acceptance theretofore rediscounted in such market because such Acceptance is not eligible for discount and purchase by a Federal Reserve Bank), each Bank (other than the Accepting Bank) shall, upon notice from the Accepting Bank, pay to the Agent for account of the Accepting Bank an amount equal to its Revolving Commitment Percentage of the proceeds of the discount of such Acceptance paid by the Accepting Bank.  Each such Bank's obligation to make such payments to the Agent for account of the Accepting Bank under this clause (h), and the Accepting Bank's right to receive the same, shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including the failure of any other Bank to make its payment under this clause (h), the financial condition of the Company or any other Obligor, the existence of any Default or the termination of the Commitments.  Each such payment to the Agent for account of the Accepting Bank shall be made without any offset, abatement, withholding or reduction whatsoever.  To the extent a Bank makes a payment under this clause (h), such Bank shall not be required to make a payment with respect to such Acceptance pursuant to clause (f) of this Section 2.04.

(i)           Default Interest.  To the extent that any Bank shall fail to pay any amount required to be paid pursuant to clause (f) or (g) of this Section 2.04 on the due date therefor, such Bank shall pay interest to the Accepting Bank (through the Agent) on such amount from and including such due date to but excluding the date such payment is made at the Federal Funds Rate.

(j)           Appointment of Attorney in Fact.  The Company hereby appoints the Accepting Bank to be, and the Accepting Bank hereby accepts such appointment to be, the Company's true and lawful attorney-in-fact for and on behalf of the Company to sign in the name of the Company, as drawer, drafts naming the Accepting Bank as drawee and payee and otherwise in the form customarily employed by the Accepting Bank in creating bankers' acceptances, and to complete such drafts as to amount, date and maturity (in such numbers and denominations as the Accepting Bank is hereby authorized to determine) in accordance with any request for the creation and discount of Acceptances under Section 2.04(a) hereof.

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2.05           Changes of the Commitment.

(a)           Revolving Credit Commitment Termination Date.  The Commitment shall be automatically reduced to zero on the Revolving Credit Commitment Termination Date.

(b)           Optional Termination.  The Company has the right at any time or from time to time (i) so long as no Loans, Letter of Credit Liabilities or Acceptance Liabilities are outstanding, to terminate the Revolving Loan Commitments and (ii) to reduce the unused amount of the Revolving Loan Commitments (for which purpose use of the Commitment shall be deemed to include the aggregate amount of Letter of Credit Liabilities, Acceptance Liabilities and Swing Line Loans); provided that (x) the Company shall give notice of each such termination or reduction as provided in Section 4.05 hereof, (y) each partial reduction shall be in an amount at least equal to $10,000,000 and (z) each such partial reduction shall be applied pro rata to reduce the Revolving Loan Commitment of each Bank.

(c)           No Reinstatement.  The Revolving Loan Commitment once terminated or reduced may not be reinstated.

2.06           Commitment Fee.  The Company shall pay to the Agent for account of each Bank a commitment fee on the daily average unused amount of the Revolving Loan Commitment of such Bank (for which purpose (a) the aggregate amount of any Letter of Credit Liabilities and any Acceptance Liabilities shall be deemed to be a use of the Revolving Loan Commitment and (b) in the case of each Bank, other than the Swing Line Bank, the aggregate amount of any Swing Line Loans then outstanding shall not be deemed to be a use of the Revolving Loan Commitment), for the period from and including the date of this Agreement to but not including the earlier of the date the Revolving Loan Commitment is terminated and the Revolving Credit Commitment Termination Date, at a rate per annum equal to 50/100 of 1%.  Accrued commitment fees shall be payable on each Quarterly Date and on the earlier of the date the Revolving Loan Commitment is terminated and the Revolving Credit Commitment Termination Date.  For purposes of this paragraph, the Revolving Loan Commitment of a Defaulting Bank shall be deemed to be fully utilized for as long as such Bank is a Defaulting Bank.

2.07           Lending Offices.  The Loans of each Type made by each Bank shall be made and maintained at such Bank's Applicable Lending Office for Loans of such Type.

2.08           Several Obligations; Remedies Independent.  The failure of any Bank to make any Loan or other extension of credit to be made by it on the date specified therefor shall not relieve any other Bank of its obligation to make its Loan or other extension of credit on such date and no Bank has any obligation to the Agent or any other Bank for the failure by any such other Bank to make any Loan or other extension of credit required to be made by such other Bank.  The amounts payable by the Company at any time hereunder and under the Notes to each Bank shall be a separate and independent debt and each Bank shall be entitled to protect and enforce its rights arising out of this Agreement and the Notes, and it shall not be necessary for any other Bank or the Agent to consent to, or be joined as an additional party in, any proceedings for such purposes.

2.09           Evidence of Indebtedness.

(a)           Maintenance of Loan Accounts by Banks.  Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company to such Bank resulting from each Loan made by such Bank, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder.

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(b)           Maintenance of Loan Accounts by the Agent.  The Agent shall maintain accounts in which it shall record: (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to each Bank hereunder; and (iii) the amount of any sum received by the Agent hereunder for the account of the Banks and each Bank's share thereof.

(c)           Effect of Entries.  The entries made in the accounts maintained pursuant to paragraph (a) or (b) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Bank or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Loans in accordance with the terms of this Agreement.

(d)           Promissory Notes.  Any Bank may request that Loans made by it be evidenced by a promissory note substantially in the form of Exhibit A hereto.  In such event, the Company shall prepare, execute and deliver to such Bank a promissory note payable to the order of such Bank (or, if requested by such Bank, to such Bank and its registered assigns) and in a form approved by the Agent.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 11.05 be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

2.10           Optional Prepayments and Conversions or Continuations of Loans.  Subject to Section 4.04 hereof, the Company has the right to prepay Loans, or to Convert Loans of one Type into Loans of another Type or Continue Loans of one Type as Loans of the same Type, at any time or from time to time, in whole or in part, without premium or penalty, except as may be required by Section 5 hereof, provided that:  (a) the Company shall give the Agent notice of each such prepayment, Conversion or Continuation pursuant to a Notice of Prepayment, Conversion or Continuation substantially in the form of Exhibit J hereto and as provided in Section 4.05 hereof (and, upon the date specified in any such notice of prepayment, the amount to be prepaid shall become due and payable hereunder); and (b) a Eurodollar Loan and a Money Market Loan may be prepaid or Converted only on the last day of an Interest Period for such Loan.  Notwithstanding the foregoing, and without limiting the rights and remedies of the Banks under Section 9 hereof, in the event that any Event of Default exists, the Agent may (and at the request of the Required Banks shall) suspend the right of the Company to Convert any Loan into a Eurodollar Loan or a Money Market Loan, or to Continue any Loan as a Eurodollar Loan or a Money Market Loan, in which event all Eurodollar Loans and Money Market Loans shall be Converted (on the last day(s) of the respective Interest Periods therefor) to Base Rate Loans.

2.11           Mandatory Prepayments.

(a)           Borrowing Base.  Until the Revolving Credit Commitment Termination Date, the Company shall from time to time prepay the Loans (and/or provide cover for Letter of Credit Liabilities and Acceptance Liabilities as specified in clause (b) below) in such amounts as shall be necessary so that at all times the aggregate outstanding amount of the Credit Exposure shall not exceed the lesser of the Borrowing Base and the aggregate amount of the Revolving Loan Commitments, such amount to be applied, first, to Revolving Loans outstanding, second, to Swing Line Loans outstanding, and, third, as cover for Letter of Credit Liabilities and Acceptance Liabilities outstanding.

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(b)           Cover for Letter of Credit Liabilities and Acceptance Liabilities.  In the event that the Company shall be required pursuant to this Section 2.11 to provide cover for Letter of Credit Liabilities or Acceptance Liabilities, the Company shall effect the same by paying to the Agent immediately available funds in an amount equal to the required cover amount, which funds shall be retained by the Agent in the Collateral Account (as collateral security in the first instance for the Letter of Credit Liabilities and Acceptance Liabilities) until such time as the relevant Letters of Credit have been terminated and all of the Letter of Credit Liabilities and Acceptance Liabilities thereunder paid in full or such time as such funds are no longer required pursuant to Section 2.11(a) hereof; provided that no amounts so held shall be released if an Event of Default then exists.

SECTION 3.

Payments of Principal and Interest.

3.01           Repayment of Loans.  The Company hereby promises to pay to the Agent for account of each Bank the entire outstanding principal amount of the Loans, and each Loan shall mature and be due and payable, on the Revolving Credit Commitment Termination Date.

3.02           Interest.

(a)           Revolving Loans.  The Company hereby promises to pay to the Agent for account of each Bank interest on the unpaid principal amount of each Revolving Loan made by such Bank for the period from and including the date of such Revolving Loan to but excluding the date such Revolving Loan shall be paid in full, at the following rates per annum:

(i)           during such periods as such Revolving Loan is a Base Rate Loan, the Base Rate (as in effect from time to time) plus the Applicable Margin;

(ii)           during such periods as such Revolving Loan is a Eurodollar Loan, for each Interest Period relating thereto, the Eurodollar Rate for such Revolving Loan for such Interest Period plus the Applicable Margin; and

(iii)           during such periods as such Revolving Loan is a Money Market Loan, the Money Market Rate for such Revolving Loan for such period.

(b)           Swing Line Loans.  The Company hereby promises to pay to the Agent for account of the Swing Line Bank interest on the unpaid principal amount of each Swing Line Loan made by the Swing Line Bank for the period from and including the date of such Swing Line Loan to but excluding the date such Swing Line Loan shall be paid in full, at the Federal Funds Rate (as in effect from time to time) plus the Applicable Margin.

(c)           Post Default Interest.  Notwithstanding the foregoing, the Company hereby promises to pay to the Agent for account of each Bank interest at the applicable Post-Default Rate on any principal of any Loan, on any Reimbursement Obligation, on any Acceptance Liabilities and on any other amount payable by the Company hereunder or under the Notes that shall not be paid in full when due (whether at stated maturity, by acceleration, by mandatory prepayment or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full.

(d)           Payment of Interest.  Accrued interest on each Loan shall be payable (i) in the case of a Base Rate Loan and Swing Line Loans, monthly on the last Business Day of each month, (ii) in the case of a Eurodollar Loan or a Money Market Loan, on the last day of each Interest Period therefor, and (iii) in the case of any Loan, upon the payment or prepayment thereof or the Conversion of such Loan to a Loan of another Type (but only on the principal amount so paid, prepaid or Converted), except that interest payable at the Post-Default Rate shall be payable from time to time on demand.  Promptly after the determination of any interest rate provided for herein or any change therein, the Agent shall give notice thereof to the Banks to which such interest is payable and to the Company.

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SECTION 4.

Payments; Computations; Etc.

4.01           Payments.

(a)           Payments Generally.  Except to the extent otherwise provided herein, all payments of principal, interest, Reimbursement Obligations, Acceptance Liabilities and other amounts to be made by the Company under this Agreement and the other Basic Documents, and, except to the extent otherwise provided therein, all payments to be made by the Obligors under any other Basic Document, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Agent, not later than 1:00 p.m. New York time on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).  The Company shall, at the time of making each payment under this Agreement or any Note, for account of any Bank specify to the Agent (which shall so notify the intended recipient(s) thereof) the Loans, Acceptance Liabilities, Reimbursement Obligations or other amounts payable by the Company hereunder to which such payment is to be applied (and in the event that the Company fails to so specify, or if an Event of Default exists, the Agent may distribute such payment to the Banks for application in such manner as it, subject to Section 4.03 hereof, may determine to be appropriate).

(b)           Payments to the Banks.  Except to the extent otherwise provided in the last sentence of Section 2.03(d) and Section 2.04(f) hereof, each payment received by the Agent under this Agreement or any Note for account of any Bank shall be paid by the Agent promptly to such Bank, in immediately available funds, for account of such Bank's Applicable Lending Office for the Loan or other obligation in respect of which such payment is made.

(c)           Payments on a Non-Business Day.  If the due date of any payment under this Agreement or any Note would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension.

4.02           Computations.  Interest on Loans, Reimbursement Obligations, Acceptance Liabilities and all fees shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.

4.03           Pro Rata Treatment.  Except to the extent otherwise provided herein:  (a) each borrowing of Loans from and participation interests in Swing Line Loans, Letters of Credit and Acceptances purchased by the Banks shall be made from the Banks, each payment of commitment fee under Section 2.06 hereof in respect of Revolving Loan Commitments shall be made for account of the Banks, each payment of Letter of Credit fee under Section 2.03 hereof, and each termination or reduction of the amount of the Revolving Loan Commitments under Section 2.05 hereof shall be applied to the Revolving Loan Commitments of the Banks, pro rata according to the amounts of their respective Revolving Loan Commitments; (b) each payment or prepayment of principal of Loans by the Company shall be made for account of the Banks pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (c) each payment of interest on Loans by the Company shall be made for account of the Banks pro rata in accordance with the amounts of interest on such Loans then due and payable to the Banks.

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4.04           Minimum Amounts.  Except for mandatory prepayments made pursuant to Section 2.11 hereof:

(a)           each borrowing, Conversion and partial prepayment of principal of Revolving Loans shall be in an amount at least equal to the following:

(i)           $1,000,000 or multiples of $250,000 in excess thereof in the case of Eurodollar Loans,

(ii)           $250,000 or multiples of $50,000 in excess thereof in the case of Base Rate Loans, and

(iii)           $1,250,000 or multiples of $50,000 in excess thereof in the case of Money Market Loans; and

(b)           each borrowing and partial prepayment of principal of Swing Line Loans shall be in an amount at least equal to $500,000 or multiples of $25,000 in excess thereof

(borrowings, Conversions or prepayments of or into Loans of different Types or, in the case of Eurodollar Loans, having different Interest Periods at the same time hereunder to be deemed separate borrowings, Conversions and prepayments for purposes of the foregoing, one for each Type or Interest Period).

4.05           Certain Notices.  Notices by the Company to the Agent of terminations or reductions of any Commitment, of borrowings, Conversions, Continuations and optional prepayments of Loans, of Types of Loans and of the duration of Interest Periods shall be irrevocable and shall be effective only if received by the Agent not later than 10:00 a.m. New York time (12:00 noon New York time in the case of Eurodollar Loans or Base Rate Loans) on the number of Business Days prior to the date of the relevant termination, reduction, borrowing, Conversion, Continuation or prepayment or the first day of such Interest Period specified below:

Notice	Number of Business Days Prior
Termination or reduction of the Commitment	Five
Borrowing or prepayment of, or Conversions into, Base Rate Loans or Swing Line Loans	Same day
Borrowing or prepayment of, Conversions into, Continuations as, or duration of Interest Period for, Eurodollar Loans	Three
Borrowing or prepayment of, Conversions into, Continuations as, or duration of Interest Period for, Money Market Loans	Same day

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Each such notice of termination or reduction shall specify the amount of the Commitment to be terminated or reduced.  Each such notice of borrowing, Conversion, Continuation or optional prepayment shall specify the amount (subject to Section 4.04 hereof) and Type of each Loan to be borrowed, Converted, Continued or prepaid and the date of borrowing, Conversion, Continuation or optional prepayment (which shall be a Business Day).  Each such notice of the duration of an Interest Period shall specify the Loans to which such Interest Period is to relate.  In the event that the Company fails to select the Type of Loan, or the duration of any Interest Period for any Eurodollar Loan or Money Market Loan, within the time period and otherwise as provided in this Section 4.05, such Loan (if outstanding as a Eurodollar Loan or a Money Market Loan) will be automatically Converted into a Base Rate Loan on the last day of the then current Interest Period for such Loan or (if outstanding as a Base Rate Loan) will remain as, or (if not then outstanding) will be made as, a Base Rate Loan.

4.06           Non-Receipt of Funds by the Agent.  Unless the Agent has been notified by a Bank or the Company (the "Payor") prior to the date on which the Payor is to make payment to the Agent of (in the case of a Bank) the proceeds of a Loan to be made by such Bank hereunder or (in the case of the Company) a payment to the Agent for account of one or more of the Banks hereunder (such payment being herein called the "Required Payment"), which notice shall be effective upon receipt, that the Payor does not intend to make the Required Payment to the Agent, the Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date; and, if the Payor has not in fact made the Required Payment to the Agent, the recipient(s) of such payment shall, on demand, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date (the "Advance Date") such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to make such payment, the Agent shall be entitled to recover such amount, on demand, from the Payor, together with interest as aforesaid, provided that if neither the recipient(s) nor the Payor shall return the Required Payment to the Agent within three Business Days of the Advance Date, then, retroactively to the Advance Date, the Payor and the recipient(s) shall each be obligated to pay interest on the Required Payment as follows:

(i)           if the Required Payment shall represent a payment to be made by the Company to the Banks, (x) the Company shall be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the Post-Default Rate and (y) the recipient(s) shall be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the Federal Funds Rate (and, in case the recipient(s) shall return the Required Payment to the Agent, without limiting the obligation of the Company under Section 3.02 hereof to pay interest to such recipient(s) at the Post-Default Rate in respect of the Required Payment) and

(ii)           if the Required Payment shall represent proceeds of a Loan to be made by the Banks to the Company, (x) the Payor shall be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the Federal Funds Rate and (y) the Company shall be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the rate of interest provided for such Required Payment pursuant to Section 3.02 hereof (and, in case the Company shall return the Required Payment to the Agent, without limiting any claim the Company may have against the Payor in respect of the Required Payment).

4.07           Sharing of Payments, etc.

(a)           Set off.  If an Event of Default exists, each Bank and each of their respective Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by law and Section 10.14, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness or obligations at any time owing by such Bank or any Affiliates to or for the credit or the account of any Obligor against any of and all the obligations of any Obligor now or hereafter existing under any Basic Document held by such Bank or Affiliate, irrespective of whether or not such Bank shall have made any demand and although such obligations may be unmatured.  The rights of each Bank under this Section are in addition to other rights and remedies (including other rights of setoff) which such Bank may have.

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(b)           Sharing of Payments on Loan Obligations.  If any Bank shall obtain from any Obligor payment of any Loan Obligation owing to it through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise (other than from the Agent as provided herein but including as a result of the rights under Section 4.07(a)), and, as a result of such payment, such Bank has received a greater percentage of the Loan Obligations due to such Bank than the percentage received by any other Bank, it shall promptly purchase from such other Banks participations in (or, if and to the extent specified by such Bank, direct interests in) the Loan Obligations owing to such other Banks in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Banks shall share the benefit of such excess payment (net of any expenses that may be incurred by such Bank in obtaining or preserving such excess payment) pro rata in accordance with the Loan Obligations owing to each of the Banks.  To such end all the Banks shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored.  The Company agrees that any Bank so purchasing such a participation (or direct interest) may exercise all rights of set-off, banker's lien, counterclaim or similar rights with respect to such participation as fully as if such Bank were a direct holder of Loans or other amounts (as the case may be) owing to such Bank in the amount of such participation.

(c)           Sharing of Benefits of Secured Claim.  Nothing contained herein shall require any Bank to exercise any such right or shall affect the right of any Bank to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of any Obligor.  If, under any applicable bankruptcy, insolvency or other similar law, any Bank receives a secured claim in lieu of a set-off to which this Section 4.07 applies, such Bank shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Banks entitled under this Section 4.07 to share in the benefits of any recovery on such secured claim.

(d)           Certain Deductions by the Agent.  If any Bank shall fail to make any payment required to be made by it to the Agent pursuant to any Basic Document or if any Bank is otherwise a Defaulting Bank, then any amount payable to such Defaulting Bank hereunder (whether on account of principal, interest, fees or otherwise) shall, in lieu of being distributed to such Defaulting Bank, be retained by the Agent in a segregated account and subject to any applicable requirements of law, be applied: (i) first, to the payment of any amounts owing by such Defaulting Bank to the Agent hereunder, (ii) second, to the payment of any amounts owing by such Defaulting Bank to the Fronting Banks hereunder, (iii) third, to the funding of cash collateralization of any participating interest in any Letter of Credit, Swing Line Loan or Acceptance Liability in respect of which such Defaulting Bank has failed to fund its portion thereof as required by this Agreement, as determined by the Agent, (iv) fourth, if so determined by the Agent, the Fronting Banks and the Company, held in such account as cash collateral for future funding obligations of any Defaulting Bank under this Agreement, (v) fifth, pro rata, to the payment of any amounts owing to the Company or the Banks as a result of any judgment of a court of competent jurisdiction obtained by the Company or any Bank against such Defaulting Bank as a result of such Defaulting Bank's breach of its obligations under this Agreement and (vi) sixth, to such Defaulting Bank or as otherwise directed by a court of competent jurisdiction, provided that if such payment is (x) a prepayment of the principal amount of any Loans or an obligations with respect to a Letter of Credit or Acceptance in respect of which a Defaulting Bank has funded its participation in accordance with its participation obligations hereunder and (y) made at a time when the conditions set forth in Section 6.02 are satisfied, such payment shall be applied solely to prepay the Loans of, and obligations owed to, all non-Defaulting Banks pro rata prior to being applied to the prepayment of any Loans, or obligations owed to, any Defaulting Bank.

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4.08           Application of Proceeds of Collateral and Subsidiary Guarantee.  All amounts received under the Subsidiary Guarantee and all proceeds received by the Agent from the sale or other liquidation of the Collateral when an Event of Default exists and the Loan Obligations are unpaid, shall first be applied as payment of the accrued and unpaid fees of the Agent hereunder and then to all other unpaid or unreimbursed Obligations (including reasonable attorneys' fees and expenses) owing to the Agent in its capacity as Agent only and then any remaining amount of such proceeds shall be distributed:

(a)           first, to the Secured Parties, pro rata in accordance with the respective unpaid amounts of Loan Obligations, until all the Loan Obligations have been paid and satisfied in full or cash collateralized;

(b)           second, to the Secured Parties, pro rata in accordance with the respective unpaid amounts of Hedging Obligations, until all the Hedging Obligations have been paid and satisfied in full or cash collateralized;

(c)           third, to the Secured Parties, pro rata in accordance with the respective unpaid amounts of the Deposit Obligations, until all Deposit Obligations have been paid and satisfied in full or cash collateralized; and

(d)           fourth, to the Secured Parties, pro rata in accordance with the respective unpaid amounts of the remaining Obligations.

After all the Obligations have been paid and satisfied in full, any proceeds of Collateral shall be delivered to the Person entitled thereto as directed by the Company or as otherwise determined by applicable law or applicable court order.

4.09           Noncash Proceeds.  Notwithstanding anything contained herein to the contrary, if the Agent shall ever acquire any Collateral through foreclosure or by a conveyance in lieu of foreclosure or by retaining any of the Collateral in satisfaction of all or part of the Obligations or if any proceeds of Collateral received by the Agent to be distributed and shared pursuant to this Section are in a form other than immediately available funds, the Agent shall not be required to remit any share thereof under the terms hereof and the Secured Parties shall only be entitled to their undivided interests in the Collateral or noncash proceeds as determined by Section 4.08.  The Secured Parties shall receive the applicable portions (in accordance with the foregoing Section 4.08) of any immediately available funds consisting of proceeds from such Collateral or proceeds of such noncash proceeds so acquired only if and when received by the Agent in connection with the subsequent disposition thereof.  While any Collateral or other property to be shared pursuant to Section 4.08 is held by the Agent pursuant to this Section 4.09, the Agent shall hold such Collateral or other property for the benefit of the Secured Parties and all matters relating to the management, operation, further disposition or any other aspect of such Collateral or other property shall be resolved by the agreement of the Required Banks.

4.10           Return of Proceeds.  If at any time payment, in whole or in part, of any amount distributed by the Agent hereunder is rescinded or must otherwise be restored or returned by the Agent as a preference, fraudulent conveyance, or otherwise under any bankruptcy, insolvency, or similar law, then each Person receiving any portion of such amount agrees, upon demand, to return the portion of such amount it has received to the Agent together with a pro rata portion of any interest paid by or other charges imposed on the Agent in connection with such rescinded or restored payment.

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4.11           Notice of Amount of Obligations.  Prior to making any distribution under Section 4.08, the Agent shall request each Bank to provide the Agent with a statement of the amounts of Hedging Obligations and Deposit Obligations then owed to such Bank and its Affiliates.  A Bank may provide such information to the Agent at any time and the Agent may also request such information at any time.  If a Bank does not provide the Agent a statement of the amount of any such Obligations within three (3) Business Days of the date requested, the Agent may make distributions under Section 4.08 thereafter and the amount of Hedging Obligations and Deposit Obligations then owed to such Bank and its Affiliates shall conclusively be deemed to be zero for purposes of such distributions.  Neither the Bank nor its Affiliates shall have a right to share in such distributions with respect to any Hedging Obligations or Deposit Obligations owed to it.  If a Bank shall thereafter provide the Agent a statement of the amount of the Hedging Obligations and Deposit Obligations then owed to such Bank and its Affiliates, any distribution under Section 4.08 made after the notice is received by the Agent shall take into account the amount of the Hedging Obligations and/or Deposit Obligations then owed.  No Bank nor any Affiliate of a Bank that has not provided the statement of the amount of the Hedging Obligations or Deposit Obligations owed under this Section 4.11 shall be entitled to share retroactively in any distribution made prior to the date when such statement was provided.  In furtherance of the provisions of Section 10, the Agent shall in all cases be fully protected in making distributions hereunder in accordance with the statements of the Hedging Obligations and Deposit Obligations received from the Banks under this Section 4.11.

4.12           Defaulting Banks.

(a)           Required Assignment.  The Company may, at its sole expense, upon notice to an Impacted Bank and the Agent or the Agent, upon notice to the Impacted Bank and the Company and at the sole expense of the Company, require that Impacted Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.05), all its interests, rights and obligations under the Basic Documents to an assignee that shall assume such obligations (which assignee may be another Bank, if a Bank accepts such assignment); provided that such Impacted Bank shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all other amounts) less any amount then owed by the Impacted Bank hereunder.

(b)           Administrative Provisions.  Notwithstanding anything herein to the contrary, if any Bank becomes a Defaulting Bank, then the following provisions shall apply for so long as such Bank is a Defaulting Bank:

(i)           Reallocation of Fronting Exposure.  if any Fronting Exposure exists at the time a Bank becomes a Defaulting Bank then:

(A)           such Fronting Exposure shall be reallocated among the non-Defaulting Banks in accordance with their respective Revolving Loan Commitment Percentages but only to the extent the sum of all non-Defaulting Banks' Credit Exposures plus such Defaulting Bank's Fronting Exposures which have been cash collateralized by such Defaulting Bank plus such Defaulting Bank's Fronting Exposure which has not been so cash collateralized does not exceed the total of all non-Defaulting Banks' Revolving Loan Commitments;

(B)           if the reallocation described in clause (A) above cannot, or can only partially, be effected, the Company shall, within one Business Day following notice by the Agent or a Fronting Bank, cash collateralize such Defaulting Bank's uncollateralized Fronting Exposure (after giving effect to any partial reallocation pursuant to clause (A) above) in accordance with the procedures set forth in Section 2.11(b) for so long as such Fronting Exposure is outstanding; and

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(C)           if the Company cash collateralizes any portion of such Defaulting Bank's Fronting Exposure pursuant to this Section, the Company shall not be required to pay any fees to such Defaulting Bank pursuant to Section 2.03(g) with respect to such cash collateralized portion of the Defaulting Bank's Fronting Exposure during the period such Defaulting Bank's Fronting Exposure is cash collateralized by the Company.

(ii)           Fronting Bank Entitled to Fees.  If any Defaulting Bank's Fronting Exposure is neither cash collateralized nor reallocated pursuant to this Section then, without prejudice to any rights or remedies of any Fronting Bank or any Bank hereunder, all fees payable to such Defaulting Bank as a result of its Fronting Exposure that is neither cash collateralized nor reallocated shall be payable to the applicable Fronting Bank that holds the credit risk with respect to such Fronting Exposure until such Fronting Exposure is fully cash collateralized and/or reallocated.  After the Fronting Exposure is fully cash collateralized and/or reallocated pursuant to this clause (ii), any additional fees payable to such Defaulting Bank shall be allocated to the non-Defaulting Banks pursuant to this Agreement.

(iii)           Limitations on Commitments.  So long as any Bank is a Defaulting Bank, no Fronting Bank shall be required to make Swing Line Loans, issue Letters of Credit or create and discount Acceptances unless it is satisfied, it its sole discretion, that the related exposure will be 100% covered by the Revolving Loan Commitments of the non-Defaulting Banks and/or cash collateralized.

(c)           Cure of Defaulting Bank Status.  In the event that the Agent, the Company, and the Fronting Banks each agree that a Defaulting Bank has adequately remedied all matters that caused such Bank to be a Defaulting Bank, then the Fronting Exposure of the Banks shall be readjusted to reflect the inclusion of such Bank's Revolving Loan Commitment and on such date such Bank shall purchase at par such of the Revolving Credit Loans of the other Banks as the Agent shall determine may be necessary in order for such Bank to hold such Revolving Credit Loans in accordance with its Revolving Loan Commitment Percentages.

SECTION 5.

Yield Protection, Etc.

5.01           Additional Costs.

(a)           Compensation for Additional Costs.  The Company shall pay directly to each Bank from time to time such amounts as such Bank may determine to be necessary to compensate such Bank for any costs that such Bank determines are attributable to its making or maintaining of any Eurodollar Loans or its obligation to make any Eurodollar Loans hereunder, or any reduction in any amount receivable by such Bank hereunder in respect of any of such Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), resulting from any Regulatory Change that:

(i)           imposes or modifies any reserve, special deposit or similar requirements (other than the Reserve Requirement utilized in the determination of the Eurodollar Rate for such Loan) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Bank (including any of such Loans or any deposits referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof), or any commitment of such Bank (including the Revolving Loan Commitment of such Bank hereunder); or

(ii)           imposes any other condition affecting this Agreement or the Note (or any of such extensions of credit or liabilities) or the Revolving Loan Commitment.

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If any Bank requests compensation from the Company under this Section 5.01(a), the Company may, by notice to such Bank (with a copy to the Agent), suspend the obligation of such Bank thereafter to make or Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change giving rise to such request ceases to be in effect), provided that such suspension shall not affect the right of such Bank to receive the compensation so requested.

(b)           Obligation to Make Eurodollar Loans Suspended.  Without limiting the effect of the provisions of paragraph (a) of this Section 5.01, in the event that, by reason of any Regulatory Change, any Bank either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Bank that includes deposits by reference to which the interest rate on Eurodollar Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Bank that includes Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Bank so elects by notice to the Company, the obligation of such Bank to make or Continue, or to Convert Base Rate Loans into, Eurodollar Loans hereunder shall be suspended until such Regulatory Change ceases to be in effect and the Company shall, upon the request of such Bank, at the option of the Company, prepay any of such Loans then outstanding hereunder together with accrued interest thereon or Convert such Loans into Base Rate Loans.

(c)           Capital Adequacy.  Without limiting the effect of the foregoing provisions of this Section 5.01 (but without duplication), the Company shall pay directly to each Bank from time to time on request such amounts as such Bank may determine to be necessary to compensate such Bank (or, without duplication, the bank holding company of which such Bank is a subsidiary) for any costs that it determines are attributable to the maintenance by such Bank (or any Applicable Lending Office or such bank holding company), pursuant to any law or regulation or any interpretation, directive or request (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) of any court or governmental or monetary authority (i) following any Regulatory Change or (ii) implementing any risk-based capital guideline or other requirement (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) heretofore or hereafter issued by any government or governmental or supervisory authority implementing at the national level the Basel Accord (including the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of its Commitments or Loans or participations in Letters of Credit or Acceptances (such compensation to include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of such Bank (or any Applicable Lending Office or such bank holding company) to a level below that which such Bank (or any Applicable Lending Office or such bank holding company) could have achieved but for such law, regulation, interpretation, directive or request).

(d)           Notice of Additional Costs.  Each Bank shall notify the Company of any event occurring after the date of this Agreement entitling such Bank to compensation under paragraph (a) or (c) of this Section 5.01 as promptly as practicable, but in any event within 45 days, after such Bank obtains actual knowledge thereof; provided that (i) if any Bank fails to give such notice within 45 days after it obtains actual knowledge of such an event, such Bank shall, with respect to compensation payable pursuant to this Section 5.01 in respect of any costs resulting from such event, only be entitled to payment under this Section 5.01 for costs incurred from and after the date 45 days prior to the date that such Bank does give such notice and (ii) each Bank will designate a different Applicable Lending Office for the Loans affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole opinion of such Bank, be disadvantageous to such Bank, except that such Bank has no obligation to designate an Applicable Lending Office located in the United States of America.  Each Bank will furnish to the Company a certificate setting forth the basis and amount of each request by such Bank for compensation under paragraph (a) or (c) of this Section 5.01.  Determinations and allocations by any Bank for purposes of this Section 5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or (b) of this Section 5.01, or of the effect of capital maintained pursuant to paragraph (c) of this Section 5.01, on its costs or rate of return of maintaining Loans or participations in Acceptances or its obligation to make Loans or participate in Acceptances, or on amounts receivable by it in respect of Loans or Acceptances, and of the amounts required to compensate such Bank under this Section 5.01, shall be conclusive, provided that such determinations and allocations are made on a reasonable basis.

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5.02           Limitation on Types of Loans.  Anything herein to the contrary notwithstanding, if, on or prior to the determination of any Eurodollar Base Rate for any Interest Period, the Agent determines (which determination shall be conclusive) that:

(a)           quotations of interest rates for the relevant deposits referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for Eurodollar Loans as provided herein; or

(b)           the relevant rates of interest referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the basis of which the rate of interest for Eurodollar Loans for such Interest Period is to be determined are not likely adequately to cover the cost to the Bank of making or maintaining Eurodollar Loans for such Interest Period;

then the Agent shall give the Company and each Bank prompt notice thereof and, so long as such condition remains in effect, the Banks (or such quoting Bank) shall be under no obligation to make additional Eurodollar Loans, to Continue Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the Company shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans into Base Rate Loans in accordance with Section 2.10 hereof.

5.03           Illegality.  Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Bank or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans hereunder, then such Bank shall promptly notify the Company (with a copy to the Agent) thereof and such Bank's obligation to make or Continue, or to Convert Loans of any other Type into, Eurodollar Loans shall be suspended until such time as the Bank may again make and maintain Eurodollar Loans and the Company shall, upon the request of such Bank, at the option of the Company, prepay any of such Loans then outstanding hereunder together with accrued interest thereon or Convert such Loans into Base Rate Loans.

5.04           Break Funding Compensation.  The Company shall pay to the Agent for account of each Bank, upon the request of such Bank (through the Agent), such amount or amounts as shall be sufficient (in the reasonable opinion of such Bank) to compensate it for any loss, cost or expense that such Bank determines is attributable to:

(a)           any payment, mandatory or optional prepayment or Conversion of a Eurodollar Loan, a Money Market Loan or an Acceptance for any reason (including the acceleration of the Loans and the Acceptances pursuant to Section 9 hereof and any repayment arising as a result of the operation of Section 2.01(b)) on a date other than the last day of the Interest Period for such Loan or the Maturity Date of such Acceptance; or

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(b)           any failure by the Company for any reason (including the failure of any of the conditions precedent specified in Section 6 hereof to be satisfied) to borrow a Eurodollar Loan or a Money Market Loan on the date for such borrowing specified in the relevant notice of borrowing given pursuant to Section 2.02 hereof or draw any Acceptance requested pursuant to Section 2.04 hereof or to Convert or prepay a Eurodollar Loan or Money Market Loan after notice thereof has been delivered to the Agent.

Without limiting the effect of the preceding sentence, such compensation shall include, with respect to Eurodollar Loans, an amount equal to the excess, if any, of (i) the amount of interest that otherwise would have accrued on the principal amount so paid, prepaid, Converted or not borrowed, prepaid or Converted for the period from the date of such payment, prepayment, Conversion or failure to borrow, prepay or Convert to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, prepay or Convert, the Interest Period for such Loan that would have commenced on the date specified for such borrowing) at the applicable rate of interest for such Loan provided for herein over (ii) the amount of interest that otherwise would have accrued on such principal amount at a rate per annum equal to the interest component of the amount such Bank would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by such Bank).

5.05           Additional Costs in Respect of Letters of Credit.  Without limiting the obligations of the Company under Section 5.01 hereof (but without duplication), if as a result of any Regulatory Change or any risk-based capital guideline or other requirement heretofore or hereafter issued by any government or governmental or supervisory authority implementing at the national level the Basel Accord there shall be imposed, modified or deemed applicable any tax, reserve, special deposit, capital adequacy or similar requirement against or with respect to or measured by reference to Letters of Credit issued or to be issued hereunder and the result shall be to increase the cost to any Bank or Banks of issuing (or purchasing participations in) or maintaining its obligation hereunder to issue any Letter of Credit hereunder or reduce any amount receivable by any Bank hereunder in respect of any Letter of Credit (which increases in cost, or reductions in amount receivable, shall be the result of such Bank's or Banks' reasonable allocation of the aggregate of such increases or reductions resulting from such event), then, upon demand by such Bank or Banks (through the Agent), the Company shall pay immediately to the Agent for account of such Bank or Banks, from time to time as specified by such Bank or Banks (through the Agent), such additional amounts as shall be sufficient to compensate such Bank or Banks (through the Agent) for such increased costs or reductions in amount.  A statement as to such increased costs or reductions in amount incurred by any such Bank or Banks, submitted by such Bank or Banks to the Company shall be conclusive in the absence of manifest error as to the amount thereof.

5.06           Taxes.

(a)           Payments Free of Taxes.  Any and all payments by or on account of any obligation of any Obligor under any Basic Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if any Obligor shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then:  (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent, or Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made; (ii) the applicable Obligor shall make such deductions; and (iii) the applicable Obligor shall timely pay the full amount deducted to the relevant governmental authority in accordance with applicable law.

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(b)           Payment of Other Taxes by the Company.  Without limiting the provisions of paragraph (a) above, the Company shall timely pay any Other Taxes to the relevant governmental authority in accordance with applicable law.

(c)           Indemnification by the Company.  The Company shall indemnify the Agent and each Bank, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Agent or such Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant governmental authority.  A certificate as to the amount of such payment or liability delivered to the Company by a Bank (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Bank, shall be conclusive absent manifest error.

(d)           Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Obligor to a governmental authority, the Company shall deliver to the Agent the original or a certified copy of a receipt issued by such governmental authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

(e)           Status of Banks.  Any Foreign Bank that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Company is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments under any Basic Document shall deliver to the Company (with a copy to the Agent), at the time or times prescribed by applicable law or reasonably requested by the Company or the Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  Notwithstanding the foregoing, no Foreign Bank shall be required to deliver any such documentation if such non-delivery is due to a Regulatory Change occurring after the date on which such documentation was originally required to be provided.  In addition, any Bank, if requested by the Company or the Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company or the Agent as will enable the Company or the Agent to determine whether or not such Bank is subject to backup withholding or information reporting requirements.

(f)           FATCA.  If a payment made to a Bank hereunder would be subject to United States Federal withholding tax imposed by FATCA if such Bank were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Bank shall deliver to the Company and the Agent, at the time or times prescribed by law and at such time or times reasonably requested by the Company or the Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Company or the Agent as may be necessary for the Company or the Agent to comply with its obligations under FATCA, to determine that such Bank has complied with such Bank's obligations under FATCA or to determine the amount to deduct and withhold from such payment.  A Bank shall not be entitled to payment or indemnification under this Section 5.06 with respect to Taxes imposed on any "withholdable payment" payable to such Bank as a result of the failure of such Bank to satisfy the applicable requirements as set forth in FATCA after December 31, 2012.

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SECTION 6.

Conditions Precedent.

6.01           Obligations to Extend Credit.  The obligation of any Bank to make any extension of credit hereunder (whether by making a Loan, creating and discounting an Acceptance or issuing a Letter of Credit) is subject to the conditions precedent that the Agent has received the following documents, each of which shall be reasonably satisfactory to the Agent (and to the extent specified below to each Bank) in form and substance on or before the Closing Date:

(a)           Executed Counterparts.  From each party hereto either (i) a counterpart of this Agreement signed and delivered on behalf of such party or (ii) written evidence (which may include telecopy or other electronic transmission of a signed signature page to this Agreement) that such party has signed and delivered a counterpart of this Agreement

(b)           JPMorgan Credit Agreement.  Evidence that the Indebtedness outstanding in connection with that certain Amended and Restated Credit Agreement dated as of June 13, 2006 among the Company the banks named therein and JPMorgan Chase Bank, N.A., as agent has been (or shall be simultaneously) paid in full, that any commitments to extend credit under the agreements or instruments relating to such Indebtedness has been cancelled or terminated and that all guarantees in respect of, and all Liens securing, any such Indebtedness has been released (the Company and each Bank that is also a bank under such Amended and Restated Credit Agreement agrees that effective on the Closing Date, all commitments to extend credit thereunder are terminated).

(c)           Corporate Documents.  Certified copies of the charter and by-laws (or equivalent documents) of each Obligor, and of all corporate authority for each Obligor (including board of director resolutions and evidence of the incumbency of officers) with respect to the execution, delivery and performance of the Basic Documents and each other document to be delivered by each Obligor from time to time in connection herewith and the extensions of credit hereunder (and the Agent and each Bank may conclusively rely on such certificates until it receives notice in writing from the Company to the contrary).

(d)           Good Standing.  Evidence of the existence, good standing and authority to transact business for (i) the Company from the Secretary of State of New Jersey and the jurisdiction of incorporation of the Company and (ii) each Obligor from the Secretary of State of the jurisdiction of incorporation of such Obligor.

(e)           Officer's Certificate.  A certificate of a senior officer of the Company, dated the Closing Date, to the effect set forth in clauses (a), (b) and (c) of Section 6.02 hereof.

(f)           Borrowing Base Certificate.  A Borrowing Base Certificate as of April 15, 2011, prepared on a pro forma basis, showing that, after giving effect to the initial Revolving Loans to be made, the initial Letters of Credit to be issued or outstanding on the Closing Date and the creation of any Acceptances on the Closing Date, the applicable Borrowing Base will not be less than the aggregate applicable outstanding credit.

(g)           Opinion of Counsel to the Company.  An opinion addressed to the Agent and each of the Banks and dated the Closing Date and covering the matters set forth in Section 7.01, 7.03 and 7.04 hereof, the creation and perfection of Liens on the Collateral and such matters as the Agent may reasonably request from such counsel to each Obligor.

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(h)           Security Documents.  Counterparts of the Subsidiary Guarantee executed by each Guarantor, counterparts of the Share Pledge Agreement and counterparts of the Security Agreement signed on behalf of the Obligors party thereto, together with the following:

(i)           certificates representing all the outstanding equity interests of each Subsidiary owned by or on behalf of any Obligor as of the Closing Date (except that certificates representing equity interests of any foreign Subsidiary may be limited to 65% of the outstanding equity interest of such foreign Subsidiary), and stock powers and instruments of transfer, endorsed in blank, with respect to such stock certificates;

(ii)           all documentation, including UCC financing statements, required by law or reasonably requested by the Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Agreement;

(iii)           the results of the search of the UCC (or equivalent) and tax Liens and judgment Liens made with respect to the Obligors and any predecessor company identified pursuant to the Security Agreement in each jurisdiction (A) in which each Obligor and each predecessor company is organized, (B) where each Obligor and each predecessor company has its chief executive office or has had its chief executive office within the last four months prior to the Closing Date and (C) in which any Collateral is located; and copies of the financing statements (or other documents) disclosed by such search and evidence that the Liens indicated by such financing statements (or similar documents) are permitted by Section 8.06 or have been released or, simultaneously with the initial extensions of credit hereunder, will be released; and

(iv)           Subject to the terms of the Security Agreement and Section 8.22, (A) such other executed documentation as the Agent may deem necessary to perfect and protect its Liens, including intellectual property assignments for all intellectual property pledged as Collateral, subordination agreements and control agreements with respect to all deposit, commodity and security account and (B) all other Collateral the possession of which is necessary to perfect the Lien therein.

(i)           Insurance.  Certificates of insurance summarizing the insurance policies of the Obligors required by the Basic Documents and reflecting the Agent as additional insured under all liability policies and all credit insurance policies and as loss payee with respect to all casualty policies covering Collateral.

(j)           No Material Adverse Effect.  Evidence that no Material Adverse Effect has occurred since December 31, 2010, through the Closing Date.

(k)           Fees and Expenses.  Evidence that the Company has paid to the Agent and the Banks all reasonable and documented costs, fees and expenses then due including such upfront and agency fees as the Company has agreed to pay to any Bank or the Agent in connection herewith and the reasonable and documented fees and expenses of Hunton & Williams LLP, counsel to the Agent, in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Basic Documents (to the extent that statements for such fees and expenses have been delivered to the Company).

(l)           Subordination Agreement.  From each party who is party to the Subordination Agreement, a counterpart of the Subordination Agreement signed and delivered on behalf of such party.

(m)           Other Documents.  Such other documents as the Agent or any Bank or their counsel may reasonably request.

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The Agent shall notify the Company and the Banks when all documents required to be delivered as a condition to the effectiveness of the obligations of the Bank have been delivered and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the obligations of the Bank to extend credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 11.01) on or prior to 3:00 p.m., New York City time, on May 31, 2011 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

6.02           Initial and Subsequent Extensions of Credit.  The obligation of any Bank to make any Loan or otherwise extend any credit to the Company upon the occasion of each borrowing or other extension of credit hereunder (including the initial borrowing or other extension of credit) is subject to the further conditions precedent that, both immediately prior to the making of such Loan or other extension of credit and also after giving effect thereto and to the intended use thereof:  (a) no Default exists; (b) the representations and warranties made by the Company in Section 7 hereof, and by each Obligor in each of the other Basic Documents to which it is a party, shall be true and complete on and as of the date of the making of such Loan or other extension of credit with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date); and (c) the aggregate outstanding principal amount of the Credit Exposure shall not exceed the lesser of (x) the Borrowing Base plus if applicable, with respect to any commercial Letter of Credit to be issued to secure the purchase price of Inventory, 80% of the cost of such Inventory that will be Eligible Inventory Ordered Under L/C once such Letter of Credit is issued that is not already included in the Borrowing Base and (y) the Revolving Loan Commitment.  Each Borrowing Request or request for the issuance of a Letter of Credit or for the creation and discount of Acceptances by the Company hereunder shall constitute a certification by the Company to the effect set forth in the preceding sentence (both as of the date of such notice or request and, unless the Company otherwise notifies the Agent prior to the date of such borrowing, issuance or creation and discount, as of the date of such borrowing, issuance or creation and discount).

SECTION 7.

Representations and Warranties.

The Company represents and warrants to the Agent and the Banks that:

7.01           Corporate Existence.  Each Obligor:  (a) is a corporation, limited liability company, partnership or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could (either individually or in the aggregate) have a Material Adverse Effect.

7.02           Financial Condition.  The Company has heretofore furnished to each of the Banks the balance sheet of the Company as at December 31, 2010 and the related statements of operation, change in stockholder's equity and cash flow for the fiscal year ended on said date, with the opinion thereon of EisnerAmper LLP.  Such financial statements fairly present the financial condition of the Company as at said dates and the results of its operations for the fiscal year ended on said date, all in accordance with GAAP applied on a consistent basis.  The Company does not have on the date hereof any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in said balance sheets as at said date.  Since December 31, 2010, there has been no material adverse change in the financial condition, operations, business or prospects of the Company and its Subsidiaries on a consolidated basis from that set forth in said financial statements as at said date.

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7.03           Litigation.  There are no legal or arbitral proceedings, or any proceedings by or before any governmental or regulatory authority or agency, now pending or (to the knowledge of the Company) threatened against the Company or any other Obligor that, if adversely determined could (either individually or in the aggregate) have a Material Adverse Effect.

7.04           No Breach.  None of the execution and delivery of this Agreement and the other Basic Documents, the consummation of the transactions herein and therein contemplated or compliance with the terms and provisions hereof and thereof will conflict with or result in a breach of, or require any consent under, the charter or by-laws (or similar governing documents) of any Obligor, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which any Obligor is a party or by which any of them or any of their Property is bound or to which any of them is subject, or constitute a default under any such agreement or instrument, or (except for the Liens created pursuant to the Security Documents) result in the creation or imposition of any Lien upon any Property of any Obligor pursuant to the terms of any such agreement or instrument.

7.05           Action.  Each Obligor has all necessary corporate power, authority and legal right to execute, deliver and perform its obligations under each of the Basic Documents to which it is a party; the execution, delivery and performance by each Obligor of each of the Basic Documents to which it is a party have been duly authorized by all necessary corporate action on its part (including any required shareholder approvals); and this Agreement, any Notes, the Subsidiary Guarantee and each other Basic Document has been duly and validly executed and delivered by each Obligor party thereto and constitutes its legal, valid and binding obligation, enforceable against each applicable Obligor in accordance with its terms.

7.06           Approvals.  No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency, or any securities exchange, are necessary for the execution, delivery or performance by any Obligor of the Basic Documents to which it is a party or for the legality, validity or enforceability hereof or thereof, except for filings and recordings in respect of the Liens created pursuant to the Security Documents.

7.07           Use of Credit.  The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock.

7.08           ERISA.  Each Plan, and, to the knowledge of the Company, each Multiemployer Plan, is in compliance in all material respects with, and has been administered in all material respects in compliance with, the applicable provisions of ERISA, the Code and any other Federal or State law, and no event or condition has occurred and is continuing as to which the Company would be under an obligation to furnish a report to the Banks under Section 8.01(c) hereof.

7.09           Taxes.  The Company has filed, or has valid extensions for the filing of, all Federal income tax returns and all other material tax returns that are required to be filed by it and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company.  The charges, accruals and reserves on the books of the Company in respect of taxes and other governmental charges are, in the opinion of the Company, adequate.  The Company has not given or been requested to give a waiver of the statute of limitations relating to the payment of Federal, state, local and foreign taxes or other impositions.

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7.10           Indebtedness and Investments.

(a)           Indebtedness.  Schedule I hereto is a complete and correct list, as of the date of this Agreement, of each credit agreement, loan agreement, indenture, purchase agreement, guarantee, letter of credit or other arrangement providing for or otherwise relating to any Indebtedness or any extension of credit (or commitment for any extension of credit) to, or guarantee by, the Company and any Subsidiary of the Company, and the aggregate principal or face amount outstanding or that may be outstanding under each such arrangement is correctly described in said Schedule I.

(b)           Investments.  Schedule II hereto is a complete and correct list, as of the date of this Agreement, of all Investments held by the Company and each Subsidiary in any Person and, for each such Investment, the nature of such Investment.

7.11           True and Complete Disclosure.  The information, reports, financial statements, exhibits and schedules furnished in writing by or on behalf of any Obligor to the Agent or any Bank in connection with the negotiation, preparation or delivery of this Agreement and the other Basic Documents or included herein or therein or delivered pursuant hereto or thereto, when taken as a whole do not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.  All written information furnished after the date hereof by the Company to the Agent and the Banks in connection with this Agreement and the other Basic Documents and the transactions contemplated hereby and thereby will be true, complete and accurate in every material respect, or (in the case of projections) based on reasonable estimates, on the date as of which such information is stated or certified.  There is no fact known to the Company that could have a Material Adverse Effect that has not been disclosed herein, in the other Basic Documents or in a report, financial statement, exhibit, schedule, disclosure letter or other writing furnished to the Banks for use in connection with the transactions contemplated hereby or thereby.

7.12           Subsidiaries.  Set forth on Schedule III is a complete and correct list of all of the Subsidiaries of the Company as of the date hereof, together with, for each such Subsidiary, (a) the jurisdiction of organization of such Subsidiary; (b) each Person holding equity interests in such Subsidiary; (b) the authorized, issued and outstanding equity interests issued by such Subsidiary; (c) the equity interests held by each such Person; (d) the percentage of ownership of such Subsidiary represented by such equity interests; and (e) whether such Subsidiary is a Dormant Subsidiary.  Each of the Company and the Subsidiaries owns, free and clear of Liens (other than Liens created pursuant to the Security Documents), and has the unencumbered right to vote, all outstanding equity interests in each Person shown to be held by it on Schedule III and all of the issued and outstanding capital stock of each such Person organized as a corporation or limited liability company is validly issued, fully paid and nonassessable.  As of the date hereof: (x) there are no outstanding equity rights with respect to any Subsidiary and (y) there are no outstanding obligations of any Subsidiary to repurchase, redeem, or otherwise acquire any equity interests or other equity rights of any Subsidiary nor are there any outstanding obligations of any Subsidiary to make payments to any Person, such as "phantom stock" payments, where the amount thereof is calculated with reference to the fair market value or equity value of any Subsidiary.

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7.13           Property.  The Company and each of its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, subject only to Liens permitted by Section 8.06 and except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.  The Company and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Company and the Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

7.14           Compliance with Laws and Agreements.  The Company and each of its Subsidiaries are each in compliance with all laws, regulations and orders of any governmental authority applicable to it or its property and all indentures, agreements and other documents binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

7.15           Investment Company Status.  Neither the Company nor any of its Subsidiaries is an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940.

7.16           OFAC Money Laundering Representations.  No Obligor nor any of its Affiliates is in violation of any laws relating to terrorism or money laundering ("Anti-Terrorism Laws"), including regulations administered by the United States Treasury Department's Office of Foreign Asset Control ("OFAC") and the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the "Executive Order"), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56.  No Obligor nor any of its Affiliates or their respective brokers or other agents acting or benefiting in any capacity in connection with the Loans, is any of the following:

(a)           a Person that is listed in the annex to, or is otherwise subject in the prohibitions contained in, the Executive Order or the OFAC regulations;

(b)           a Person owned or controlled by, or acting for or on the behalf of, any Person that is listed in the annex to, or is otherwise subject to the prohibitions contained in, the Executive Order or the OFAC regulations;

(c)           a Person with which the  Bank is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(d)           a Person that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order or the OFAC regulations; or

(e)           a Person that is named on the most current list of "Specially Designated Nationals and Blocked Persons" published by OFAC at its official website or any replacement website or other replacement official publication list.

No Obligor nor any of its brokers or other agents acting in any capacity in connection with the Loans (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in clause (b) above, (y) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or the OFAC regulations, or (z) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

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7.17           Insurance.  The Company and each of its Subsidiaries maintain with financially sound and reputable insurers, insurance with respect to its properties and business against such casualties and contingencies and in such amounts as are usually carried by businesses engaged in similar activities as the Company and such Subsidiaries and located in similar geographic areas in which the Company and such Subsidiaries operate.

7.18           Solvency.  On the Closing Date and immediately following the making of each Loan made on the Closing Date and after giving effect to the application of the proceeds of such Loans:  (a) the fair value of the assets of each Obligor, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Obligor will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Obligor will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Obligor will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Closing Date.  As used in this Section, the term "fair value" means the amount at which the applicable assets would change hands between a willing buyer and a willing seller within a reasonable time, each having reasonable knowledge of the relevant facts, neither being under any compulsion to act, with equity to both and "present fair saleable value" means the amount that may be realized if the applicable company's aggregate assets are sold with reasonable promptness in an arm's length transaction under present conditions for the sale of a comparable business enterprises.

SECTION 8.

Covenants of the Company.

The Company covenants and agrees with the Banks and the Agent that, so long as any Commitment, Loan, Letter of Credit Liability or Acceptance Liability is outstanding and until payment in full of all Loan Obligations:

8.01           Financial Statements Etc.  The Company shall deliver to each of the Banks:

(a)           Quarterly Financial Statements.  as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company, the following:  (i) statements of operation, change in stockholder's equity and cash flow of the Company for such period and for the period from the beginning of the respective fiscal year to the end of such period prepared on a consolidated basis, (ii) the related consolidated balance sheet of the Company as at the end of such period, (iii) statements of operation of the Company for such period and for the period from the beginning of the respective fiscal year to the end of such period prepared on a consolidating basis, and (iv) the related consolidating balance sheet of the Company as at the end of such period, all accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said financial statements fairly present the financial condition and results of operations of the Company, in each case in accordance with GAAP, as at the end of, and for, such period (subject to normal year-end audit adjustments);

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(b)           Annual Financial Statements.  as soon as available and in any event within 90 days after the end of each fiscal year of the Company the following: (i) statements of operation, change in stockholder's equity and cash flow of the Company for such fiscal year and the related balance sheet as at the end of such fiscal year prepared on a consolidated basis, and accompanied by an unqualified opinion thereon of independent certified public accountants acceptable to the Required Banks, which opinion shall state that said audited financial statements fairly present the financial condition and results of operations of the Company as at the end of, and for, such fiscal year in accordance with GAAP, (ii) statements of operation of the Company for such fiscal year prepared on a consolidating basis, and (iii) the related consolidating balance sheet of the Company as at the end of such fiscal year, all accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidating financial statements fairly present the financial condition and results of operations of the Company, in each case in accordance with GAAP, as at the end of, and for, such period;

(c)           ERISA Events.  as soon as possible, and in any event within ten days after the Company knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement signed by a senior financial officer of the Company setting forth details respecting such event or condition and the action, if any, that the Company or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Company or an ERISA Affiliate with respect to such event or condition):

(i)           any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, including the failure to make on or before its due date a required installment under Section 412(m) of the Code or Section 302(e) of ERISA, shall be a reportable event regardless of the issuance of any waivers in accordance with Section 412(d) of the Code); and any request for a waiver under Section 412(d) of the Code for any Plan;

(ii)           the distribution under Section 4041 of ERISA of a notice of intent to terminate any Plan or any action taken by the Company or an ERISA Affiliate to terminate any Plan;

(iii)           the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan;

(iv)           the complete or partial withdrawal from a Multiemployer Plan by the Company or any ERISA Affiliate that results in liability under Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary liability as a result of a purchaser default) or the receipt by the Company or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA;

(v)           the institution of a proceeding by a fiduciary of any Multiemployer Plan against the Company or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; and

(vi)           the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if the Company or an ERISA Affiliate fails to timely provide security to the Plan in accordance with the provisions of said Sections;

(d)           Borrowing Base Certificate.  as soon as available and in any event within 10 Business Days after:

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(i)           the end of each calendar month,

(ii)           the 15th day of each calendar month, and

(iii)           any other accounting period for which any Bank reasonably requests a Borrowing Base Certificate,

a Borrowing Base Certificate as at the last day of such accounting period, together with reports, as of the last day of such accounting period, setting forth the following: (A) the aging of the Receivables, specifying both the names of the respective account debtors and the period of time each such account has been past due, (B) a list of the Eligible Receivables and, on and after the Australian Effective Date, Australian Receivables, (C) a list of Tier I and Tier II Eligible Receivables showing insurance limits and aging, (D), if the Net Liquidating Value of Eligible Brokerage Accounts is included in the Borrowing Base, then such information as the Agent may request to support the value reported thereunder, (E) the amount of unsold metal and inventory in transit on a vessel that is included in Eligible Inventory, (F) the net market price risk of the Company that supports the hedging inventory, and (G) such other information as the Agent may reasonably request;

(e)           Collateral Audit.  from time to time at the request of the Agent (but, so long as no Default is continuing, no more than once in any fiscal year), a report as of the end of any fiscal quarter, in form and substance satisfactory to the Required Banks, of an independent collateral auditor satisfactory to the Required Banks (which may be, or be affiliated with, one of the Banks):

(i)           with respect to the Receivables and Inventory components included in the Borrowing Base as at the end of such fiscal quarter which report shall indicate that, based upon a review by such auditors of the Receivables (including verification with respect to the amount, aging, identity and credit of the respective account debtors and the billing practices of the Company) and Inventory (including verification as to the value, location and respective types), the information set forth in the Borrowing Base Certificate delivered by the Company as at the end of such fiscal quarter is accurate and complete in all material respects,

(ii)           with respect to the insurance policy or policies covering any of the Receivables or other Collateral, and

(iii)           with respect to the agreements entered into by the Company with its customers and its suppliers;

(f)           Shareholder Material.  promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed;

(g)           Notice of Default.  promptly after the Company knows or has reason to believe that any Default has occurred, a notice of such Default describing the same in reasonable detail and, together with such notice or as soon thereafter as possible, a description of the action that the Company has taken or proposes to take with respect thereto; and

(h)           Other Information.  from time to time such other information regarding the financial condition, operations, business or prospects of any Obligor (including any Plan or Multiemployer Plan, and any reports or other information required to be filed under ERISA) as any Bank or the Agent may reasonably request.

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The Company will furnish to each Bank, at the time it furnishes each set of financial statements pursuant to paragraph (a) or (b) above, a certificate of a senior financial officer of the Company in substantially the form of Exhibit G hereto (the "Compliance Certificate"): (i) to the effect that no Default exists (or, if any Default exists, describing the same in reasonable detail and describing the action that the Company has taken or proposes to take with respect thereto) and (ii) setting forth in reasonable detail the computations necessary to determine whether the Company is in compliance with Sections 8.07, 8.08(d), 8.09, 8.10 and 8.11 hereof as of the end of the respective quarterly fiscal period or fiscal year, and (iii) certifying that the Company has not been Australian Registered (or that it has been so registered and complied with its obligations under Section 8.18(a) hereof).

8.02           Litigation.  The Company will promptly (and in any event no later than five Business Days after the Company has notice of the same) give to each Bank notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect of such legal or other proceedings, affecting the Company or any of its Subsidiaries, except proceedings that, if adversely determined, would not (either individually or in the aggregate) have a Material Adverse Effect.  Without limiting the generality of the foregoing, the Company will give to each Bank notice of the assertion of any environmental matter by any Person against, or with respect to the activities of, the Company or any of its Subsidiaries and notice of any alleged violation of or non-compliance with any environmental laws or any permits, licenses or authorizations, other than any environmental matter or alleged violation that, if adversely determined, would not (either individually or in the aggregate) have a Material Adverse Effect.

8.03           Existence, Etc.  The Company will and will cause each Obligor to:

(a)           Existence.  preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises;

(b)           Compliance with Laws.  comply with the requirements of all applicable laws, rules, regulations and orders of governmental or regulatory authorities if failure to comply with such requirements could (either individually or in the aggregate) have a Material Adverse Effect;

(c)           Payment of Obligations.  pay and discharge its obligations, including all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such obligations the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained;

(d)           Maintain Property.  maintain all of its Properties used or useful in its business in good working order and condition, ordinary wear and tear excepted;

(e)           Books and Records.  keep adequate records and books of account, in which complete entries will be made in accordance with GAAP; and

(f)           Inspection.  permit representatives of any Bank or the Agent, during normal business hours and upon reasonable prior notice (which such notice shall not be required at any time an Event of Default exists), to examine, copy and make extracts from its books and records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Bank or the Agent (which notice shall specify the reasons (determined by such Bank or the Agent in its sole discretion) for such examination, inspections or discussions).

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8.04           Insurance.  The Company will, and will cause its Non-Dormant Subsidiaries to, maintain insurance with financially sound and reputable insurance companies, and with respect to Property and risks of a character usually maintained by corporations engaged in the same or similar business similarly situated, against loss, damage and liability of the kinds and in the amounts customarily maintained by such corporations, including, in any event, marine and credit insurance policies covering the Company's or its Non-Dormant Subsidiaries', as the case may be, inventory and accounts receivable, respectively, in amounts, pursuant to policies, and issued by insurers, acceptable to the Required Banks.  The Company shall (i) cause all such insurance (other than workers' compensation) to name the Agent as loss payee (to the extent covering risk of loss or damage to tangible property) and as an additional named insured as its interests may appear (to the extent covering any other risk), and furnish the Agent evidence of the same, and (ii) at least annually, furnish to the Agent certificates of insurance evidencing the existence of all insurance required to be maintained pursuant to this Section 8.04 and the designation of the Agent as the loss payee or additional named insured, as the case may be, thereunder to the extent required by this Section 8.04.

8.05           Prohibition of Fundamental Changes.  The Company will not and will not permit any Obligor to enter into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except that any Subsidiary of the Company may be merged with or into the Company or any other Obligor, provided that in the case of such merger, consolidation or amalgamation involving the Company, the Company shall be the continuing or surviving Person.  The Company will not and will not permit any Obligor to acquire any business or Property from, or capital stock of, or be a party to any acquisition of, any Person except for purchases of inventory and other Property to be sold or used in the ordinary course of business.  The Company will not and will not permit any Obligor to convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, any part of its business or Property, whether now owned or hereafter acquired (including receivables and leasehold interests, but excluding any inventory or other Property sold or disposed of in the ordinary course of business and on ordinary business terms).

8.06           Limitation on Liens.  The Company will not create, incur, assume or suffer to exist any Lien upon any of its Property and will not allow any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of their respective Property, whether now owned or hereafter acquired, except:

(a)           Liens created pursuant to the Security Documents;

(b)           Liens imposed by any governmental authority for taxes, assessments or charges not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company in accordance with GAAP;

(c)           carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings and Liens securing judgments but only to the extent for an amount and for a period not resulting in an Event of Default under Section 9(h) hereof;

(d)           pledges or deposits under worker's compensation, unemployment insurance and other social security legislation;

(e)           Liens on the warehouse facility in Baltimore, Maryland securing the Indebtedness permitted under Section 8.07(c) hereof;

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(f)           deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(g)           Liens securing Indebtedness permitted pursuant to Section 8.07(c) hereof;

(h)           the following:

(i)           Liens on Property of Imbali Metals Bvba securing the Imbali Facility, and

(ii)           Liens on Property of the Company securing the Imbali Guarantee, so long as such Liens are subject to the Subordination Agreement; and

(i)           Liens encumbering Inventory securing the Indebtedness permitted pursuant to Sections 8.07(f)(A) and (B).

8.07           Indebtedness.  The Company will not, and will not allow any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness except:

(a)           Indebtedness to the Banks hereunder;

(b)           Indebtedness of 6900 Quad Avenue, LLC under the Quad Avenue Loan Agreement in an aggregate amount not to exceed $2,000,000, the proceeds of which have been used to finance the acquisition of the warehouse facility in Baltimore, Maryland, and any Guarantee by the Company of such Indebtedness;

(c)           purchase money Indebtedness for capital equipment and/or capital leases in an aggregate outstanding principal amount not to exceed at any time $1,000,000;

(d)           other unsecured Indebtedness in an aggregate outstanding principal amount not to exceed at any time $250,000;

(e)           Indebtedness of Imbali Metals Bvba under the Imbali Facility and the Indebtedness of the Company under the Imbali Guarantee, so long as such Indebtedness is subject to the Subordination Agreement; and

(f)           the following Indebtedness; provided that (i) the aggregate amount of the Indebtedness permitted under this clause (f) outstanding at any time shall not exceed $25,000,000 (calculated without duplication of Indebtedness and a Guarantee of such Indebtedness), (ii) at the time of the incurrence of such Indebtedness no Default shall exist or result therefrom, and (iii) the Company shall have provided the Agent and each Bank a certificate of a financial officer of the Company showing the Company's compliance with the covenants set forth in Section 8.09 and 8.10 after giving effect to such Indebtedness and certifying that at the time of the incurrence thereof and after giving effect thereto, no Default shall exist:

(A)           Indebtedness of the Company which is incurred to finance the acquisition of Inventory in the ordinary course of business and is non-recourse to the Company and any of its Property other than the Inventory financed thereby, pursuant to customary non-recourse provisions (including normal and customary exceptions to the non-recourse nature thereof); provided that (1) no Inventory so financed is included in the Borrowing Base until the Liens securing such Indebtedness are released and (2) such Indebtedness does not exceed 100% of the cost of acquiring such Inventory;

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(B)           In addition to the Reimbursement Obligations, Indebtedness in the form of reimbursement obligations under letters of credit (which are not Letters of Credit hereunder) issued for the account of the Company to secure the purchase price of Inventory in the ordinary course of business to be acquired by the Company if (1) such reimbursement obligation is secured only by the Inventory the purchase price of which is secured by the applicable Letter of Credit; (2) no such Inventory is included in the Borrowing Base until the Liens securing such Indebtedness are released and (3) such Indebtedness does not exceed 100% of the cost of acquiring such Inventory;

(C)           Subordinated Debt; and

(D)           Guarantees by the Company of Indebtedness in the form of loans made under pre-export finance arrangements by third parties (which may include one or more of the Banks) to certain of the Company's suppliers; provided that (1) with respect to any one supplier, the amount of the Guarantee provided for the benefit of such supplier shall be limited to an amount not to exceed 20% of the aggregate amount of such loans to such supplier and (2) the aggregate amount of the Indebtedness Guaranteed pursuant to the Guarantees provided under this clause (D) shall not exceed $3,000,000.

8.08           Investments.  The Company will not, nor will it permit any of its Subsidiaries to, make or permit to remain outstanding any Investments except:

(a)           Investments outstanding on the date hereof and identified on Schedule II hereto (not including any Investments in Imbali Metals BVBA);

(b)           deposit accounts with banks;

(c)           Hedging Agreements entered into in the ordinary course of business and not for speculative purposes;

(d)           Investments by the Company in Imbali Metals BVBA in an aggregate amount not to exceed €4,000,000 or the dollar equivalent thereof (determined based on the amount initially advanced with respect thereto, giving effect to any repayments and including any amount outstanding on the Closing Date) and Investments by the Company under the Imbali Guarantee;

(e)           Investments of the type described in clause (a) and (b) of the definition thereof in third parties; provided, that such Investments are made with the proceeds of Subordinated Debt and the aggregate outstanding amount of such Investments (determined based on the amount initially advanced with respect thereto minus any repayment thereof) does not exceed $12,000,000; and

(f)           other Investments in an aggregate amount not to exceed at any time $500,000 (determined based on the amount initially advanced with respect thereto, giving effect to any repayments).

8.09           Leverage Ratio.  The Company will not permit the Leverage Ratio to exceed at any time 6.00 to 1.

8.10           Tangible Net Worth.  The Company will not permit its Tangible Net Worth to be less than the sum of $25,000,000 plus an aggregate amount equal to 25% of its net earnings (but, in each case, only if a positive number) for each fiscal year beginning with the fiscal year ending December 31, 2011.

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8.11           No Net Loss.  The Company will not permit any negative net operating earnings (calculated before taxes and extraordinary items in accordance with GAAP) to be more than $4,000,000 in the aggregate over two or more consecutive quarters.

8.12           Lines of Business.  The Company will not nor will it permit any Subsidiary to engage to any substantial extent in any line or lines of business activity other than the business of acquiring, selling, trading, extruding and otherwise dealing in aluminum and steel semi-finished products (or other similar metal products).

8.13           Dividend Payments.  The Company will not, nor will it permit any of its Subsidiaries to, declare or make any Dividend Payment at any time if (a) a Default exists or (b) immediately after giving effect to making such Dividend Payment any Default would be continuing.

8.14           Use of Proceeds.  The Company will use the proceeds of the extensions of credit hereunder to repay existing Indebtedness, for working capital and for its other general corporate purposes (in compliance with all applicable legal and regulatory requirements, including Regulations T, U and X and the Securities Act of 1933 and the Securities Act of 1934 and the regulations thereunder); provided that neither the Agent nor any Bank has any responsibility as to the use of any of such proceeds.

8.15           Subordinated Debt.  The Company will not purchase, redeem, retire or otherwise acquire for value, or set apart any money for any sinking, defeasance or other analogous fund for, the purchase, redemption, retirement or other acquisition of, or make any payment or prepayment of the principal of or interest on, or any other amount owing in respect of, any Subordinated Debt, except for regularly scheduled payments of principal and interest in respect thereof required pursuant to the instruments evidencing such Subordinated Debt.  The Company will not purchase, redeem, retire or otherwise acquire for value, or set apart any money for any sinking, defeasance, or other analogous fund for, the purchase, redemption, retirement or other acquisition of, or make any payment or repayment of the principal of or interest on, or any other amounts owing in respect of, the Imbali Guarantee.

8.16           Dormant Subsidiaries.  The Company will not (i) transfer any Property to, or make any Investments, in any of the Dormant Subsidiaries, and (ii) permit any Dormant Subsidiaries to acquire any Property or incur any liabilities.

8.17           Additional Guarantors; Pledge of Additional Subsidiaries.  The Company will take such action, and will cause each of its domestic Subsidiaries (other than the Quad Avenue Subsidiary) to take such action, from time to time as shall be necessary to ensure that all domestic Subsidiaries (other than the Quad Avenue Subsidiary) of the Company become "Guarantors" hereunder and grant Liens in all their respective personal property assets, including the following actions:

(a)           Subsidiary Guarantee.  duly executing and delivering a Supplement to the Subsidiary Guarantee in the form attached as Annex I thereto for each domestic Subsidiary formed or acquired following the Closing Date;

(b)           Secured Documents.  causing such domestic Subsidiary to take such action (including executing and delivering a Supplement to the Security Agreement in form attached as Annex I thereto properly completed and delivering such certificates, executing and delivering such UCC financing statements) as shall be necessary to create and perfect valid and enforceable first priority Liens on substantially all of the personal property assets of such domestic Subsidiary as collateral security for the Obligations; and

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(c)           Corporate Authorization.  delivering such proof of corporate action, incumbency of officers, opinions of counsel and other documents as is consistent with those delivered by each Obligor pursuant to Section 6.01 on the Closing Date or as the Agent shall have reasonably requested.

In the event that any Obligor shall form or acquire any new Subsidiary, the Company will promptly cause the equity interests issued by such Subsidiary to be pledged and delivered pursuant to the Security Documents promptly after such Subsidiary is formed or acquired (except that, if such Subsidiary is a foreign Subsidiary, the equity interests issued by such Subsidiary to be pledged pursuant to the Security Documents shall be limited to 65% of the outstanding Equity Interests issued by such Subsidiary).

8.18           Australian Matters.  The Company agrees that:

(a)           Registration of Floating Charge.  if it becomes, or takes steps towards becoming, Australian Registered, it will promptly notify the Agent and will do all things necessary (including the due execution (or re-execution as the case may be) of all required ASIC Forms 309 and 350 (or such other forms that are required by applicable law at that time)) to enable the Company or the Agent to immediately register each existing Floating Charge with ASIC or on such other relevant register as may be then in existence and required under applicable law (as contemplated by the definition of Australian Effective Date in Section 1.01 hereof) and, thereafter, do all things necessary to enable any new Floating Charge entered into by it (as so contemplated) to be immediately registered with the Australian Securities and Investment Commission or on such other register as may be then in existence and required under applicable law, and

(b)           Australian Registration.  it will, at the request of the Required Banks: (i) promptly become Australian Registered, (ii) furnish to the Agent evidence of such registration and (iii) thereafter, comply with the provisions of the foregoing clause (a).

8.19           Amendment to Organizational Documents.  The Company will not and will not permit any Subsidiary to consent to any modification, supplement or waiver of any of the provisions of any of their organic documents (e.g., certificate or articles of incorporation, organization or partnership and any partnership agreement) or other internal governing documents (e.g., bylaws, limited liability company agreement and regulations) in a manner materially adverse to the Banks.

8.20           Capital Expenditures.  During each fiscal year, the aggregate amount of all Capital Expenditures of the Company and its Subsidiaries will not exceed $500,000.

8.21           Transactions with Affiliates.  The Company will not, nor will it permit any of its Subsidiaries to, sell, lease or otherwise transfer any Property to, or purchase, lease or otherwise acquire any Property from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Company or such Subsidiary than could be obtained on an arm's length basis from unrelated third parties, (b) transactions between or among the Company and one or more Guarantors not involving any other Affiliate, (c) any Dividend Payments permitted by Section 8.13 and (d) Subordinated Debt permitted hereby.

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8.22           Post Closing Obligations.

(a)           Insurance.  On or before May 6, 2011, the Company agrees to deliver to Agent evidence of insurance acceptable to the Agent reflecting the Agent as loss payee with respect to marine and credit insurance policies covering the Collateral and evidence of the actual endorsements of such policies.

(b)           Imbali Corporate Documents.  On or before May 13, 2011, the Company agrees to deliver to Agent certified copies of the charter and by-laws (or equivalent documents) of Imbali Metals Bvba translated into English.

(c)           Pledge of Imbali Stock.  On or before May 31, 2011, the Company agrees to deliver to Agent the shareholder register of Imbali Metals Bvba revised to reflect that the Lien of JPMorgan noted thereon has been removed and the Lien of the Agent on the 65% of the equity interests issued by Imbali Metals Bvba has been placed thereon and such other documentation as may be required under the laws of Belgium to ensure that the Agent has a first priority perfected Lien on the equity interests issued by Imbali Metals Bvba that are pledged under the Share Pledge Agreement.

SECTION 9.

Events of Default.

9.01           Events of Default.  If one or more of the following events (herein called "Events of Default") shall occur and be continuing:

(a)           Payment Default.  The Company shall default in the payment when due (whether at stated maturity or upon mandatory or optional prepayment) of: (i) any principal of any Loan or any Acceptance or any Reimbursement Obligation, the amount necessary to provide cash collateral for any Letter of Credit or Acceptance as required thereby, any fee or any other amount payable by it hereunder (other than interest) or under any other Basic Document or (ii) any interest on any Loan or any Reimbursement Obligation or any payment in the nature of interest on any Acceptance and, in each case under this clause (ii) only, such default in the payment shall continue unremedied for three Business Days after notice thereof to the Company by the Agent; or

(b)           Cross Default.  The Company shall default in the payment when due of any principal of or interest on any of its other Material Indebtedness or any of its Subsidiaries shall default in the payment when due of any principal of or interest on any of its Material Indebtedness; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Material Indebtedness shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Material Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Material Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity (as used herein, the term "Material Indebtedness" means any Indebtedness (other than the Obligations) with an outstanding principal balance of $5,000,000 or more, in any individual case or in the aggregate) and with respect to Imbali Metals BVBA, the Imbali Facility; or

(c)           Representations and Warranties.  Any representation, warranty or certification made or deemed made herein or in any other Basic Document (or in any modification or supplement hereto or thereto) by the Company or any of its Subsidiaries, or any certificate furnished to any Bank or the Agent pursuant to the provisions hereof or thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or

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(d)           Covenant Defaults.  The Company shall default in the performance of any of its obligations under any of Sections 8.01(g), 8.03(a), 8.05, 8.06, 8.07, 8.08, 8.09, 8.10, 8.11, 8.12, 8.13, 8.15, 8.16, 8.18, 8.19, 8.20,8.21 or 8.22 hereof or any Obligor shall default in the performance of any of its obligations under the Security Agreement or (after the Australian Effective Date) the Floating Charge; the Company shall default in the performance of its obligations under Section 8.01(d) hereof and such default under Section 8.01(d) shall continue unremedied for a period of three Business Days after notice thereof to the Company by the Agent or any Bank (through the Agent); or the Company shall default in the performance of any of its obligations in this Agreement or any other Basic Document (other than those already specified above in this clause (d)) and such default shall continue unremedied for a period of thirty or more days after notice thereof to the Company by the Agent or any Bank (through the Agent); or

(e)           Failure to Pay Debts.  The Company or any of its Subsidiaries shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or

(f)           Voluntary Insolvency Proceedings.  The Company or any of its Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any corporate action for the purpose of effecting any of the foregoing; or

(g)           Involuntary Insolvency Proceedings.  A proceeding or case shall be commenced, without the application or consent of the Company or any of its Subsidiaries, in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of the Company or any of its Subsidiaries or of all or any substantial part of its Property, or (iii) similar relief in respect of the Company or any of its Subsidiaries under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Company or any of its Subsidiaries shall be entered in an involuntary case under the Bankruptcy Code; or

(h)           Judgment Default.  A final judgment or judgments for the payment of money in excess of $1,000,000 (exclusive of judgment amounts fully covered by insurance where the insurer has admitted liability in respect of such judgment) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against the Company or any of its Subsidiaries and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof and the Company or any of its Subsidiaries shall not, within said period of 30 days, or such longer period during which execution of the same has been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or

(i)           ERISA Events.  An event or condition specified in Section 8.01(c) hereof shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, the Company or any ERISA Affiliate shall incur or in the opinion of the Required Banks shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) that, in the determination of the Required Banks, would (either individually or in the aggregate) have a Material Adverse Effect; or

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(j)           Change of Control.  (i) The Principal Shareholders shall cease to own beneficially and of record at least 20% of the issued and outstanding capital stock having voting power to elect members of the board of directors of the Company, (ii) Nathan Kahn shall cease to be President of the Company and a successor acceptable to the Required Banks shall not have been appointed to such position within 90 days thereafter (such determination of acceptability by the Required Banks to be made for purposes of waiving any resulting Default only, the Company agreeing that it is solely responsible for selecting an appropriate replacement) or (iii) the Persons who were members of the board of directors of the Company on the Closing Date (together with any new directors whose election to such board of directors or whose nomination for election was approved by a vote of a majority of such members of the board of directors or members whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the board of directors of the Company;

(k)           Security Documents.  The Liens created by the Security Documents shall at any time not constitute a valid and perfected Lien on the Collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required herein or therein) in favor of the Banks, free and clear of all other Liens (other than Liens permitted under Section 8.06 hereof or under the respective Security Documents), or, except for expiration in accordance with its terms, any of the Basic Documents shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by any Obligor; or

(l)           Quad Avenue Loan Agreement.  6900 Quad Avenue, LLC shall default in the performance of its obligations under Section 4(a) of the Quad Avenue Loan Agreement;

THEREUPON:  (1) in the case of an Event of Default other than one referred to in clause (f) or (g) of this Section 9, the Agent may with the consent of the Required Banks, and, upon request of the Required Banks shall by notice to the Company, terminate the Commitments and/or declare the principal amount then outstanding of, and the accrued interest on, the Loans, the Acceptances, the Reimbursement Obligations and all other Loan Obligations (including any amounts payable under Section 5.04 or 5.05 hereof) to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company; and (2) in the case of the occurrence of an Event of Default referred to in clause (f) or (g) of this Section 9, the Commitments shall automatically be terminated and the principal amount then outstanding of, and the accrued interest on, the Loans, the Acceptances, the Reimbursement Obligations and all other Loan Obligations (including any amounts payable under Section 5.04 or 5.05 hereof) shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company.

9.02           Cover for Contingent Obligations.  In addition, upon the occurrence and during the continuance of any Event of Default (if the Agent has declared the principal amount then outstanding of, and accrued interest on, the Loans and all other Loan Obligations to be due and payable), the Company agrees that it shall, if requested by the Agent or the Required Banks through the Agent (and, in the case of any Event of Default referred to in clause (f) or (g) of this Section 9, forthwith, without any demand or the taking of any other action by the Agent or such Banks) provide cover for the Letter of Credit Liabilities by paying to the Agent immediately available funds in an amount equal to the then aggregate undrawn face amount of all Letters of Credit, which funds shall be held by the Agent in the Collateral Account as collateral security for the Obligations and be subject to withdrawal only as therein provided.

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SECTION 10.

The Agent.

10.01           Appointment, Powers and Immunities.  Each Bank hereby irrevocably appoints and authorizes Rabobank to act as agent on its behalf, and on behalf of each of its Affiliates who are owed Obligations (each such Affiliate by acceptance of the benefits of the Basic Documents hereby ratifying such appointment), hereunder and under the other Basic Documents with such powers as are specifically delegated to the Agent by the terms of this Agreement and of the other Basic Documents, together with such other powers as are reasonably incidental thereto.  The Agent (which term as used in this sentence and in Section 10.05 and the first sentence of Section 10.06 hereof shall include reference to its Affiliates and its own and its Affiliates' officers, directors, employees and agents):  (a) has no duties or responsibilities except those expressly set forth in this Agreement and in the other Basic Documents, and shall not by reason of this Agreement or any other Basic Document be a trustee for any Secured Party; (b) shall not be responsible to any Secured Party for any recitals, statements, representations or warranties contained in this Agreement or in any other Basic Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Basic Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Basic Document or any other document referred to or provided for herein or therein or for any failure by any Obligor or any other Person to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Basic Document, unless so directed by the Required Banks; (d) shall not be required to act as collateral agent hereunder or otherwise be responsible for any collateral security granted in connection herewith except with respect to any collateral that cannot be perfected by filing Uniform Commercial Code financing statements and is required to be delivered to the Agent under the Basic Documents; and (e) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Basic Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct.  The Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith.  The Agent may deem and treat the Banks named in the Register as the "Banks" hereunder for all purposes hereof unless and until a notice of the assignment or transfer thereof has been filed with the Agent.

10.02           Reliance by Agent.  The Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Agent.  As to any matters not expressly provided for by this Agreement or any other Basic Document, the Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Required Banks and such instructions of such Banks and any action taken or failure to act pursuant thereto shall be binding on all of the Banks.

10.03           Defaults.  The Agent shall not be deemed to have knowledge or notice of the occurrence of a Default (other than payment Defaults) unless the Agent has received notice from a Bank or the Company specifying such Default and stating that such notice is a "Notice of Default".  In the event that the Agent receives such a notice of the occurrence of a Default or becomes aware of a payment Default, the Agent shall give prompt notice thereof to the Banks.  The Agent shall (subject to Section 10.07 hereof) take such action with respect to such Default as shall be directed by the Required Banks, provided that, unless and until the Agent has received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Banks except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Required Banks.

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10.04           Rights as a Bank.  With respect to its Commitments and the Loans made by it, Rabobank (and any successor acting as Agent) in its capacity as a Bank hereunder has the same rights and powers hereunder as any other Bank and may exercise the same as though it were not acting as the Agent, and the term "Bank" or "Banks" shall, unless the context otherwise indicates, include the Agent in its individual capacity.  Rabobank (and any successor acting as Agent) and its affiliates may (without having to account therefor to any Bank) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, trust or other business with the Company (and any of its Subsidiaries or Affiliates) as if it were not acting as the Agent, and Rabobank and its affiliates may accept fees and other consideration from the Company for services in connection with this Agreement or otherwise without having to account for the same to the Banks.

10.05           Indemnification.  The Banks agree to indemnify the Agent (to the extent not reimbursed under Section 11.03 hereof, but without limiting the obligations of the Company under said Section 11.03), ratably in accordance with their respective Revolving Loan Commitments, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Agent in its capacity as Agent (including by any Secured Party) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Basic Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that the Company is obligated to pay under Section 11.03 hereof but excluding, unless a Default exists, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.  The Banks agree to indemnify each Fronting Bank and each of their respective officers, directors, employees and agents (to the extent not reimbursed under Section 11.03 hereof, but without limiting the obligations of the Company under said Section 11.03), ratably in accordance with their respective Revolving Loan Commitments, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against any of them in their capacity as a Fronting Bank arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Basic Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that the Company is obligated to pay under Section 11.03 hereof but excluding, unless a Default exists, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that no Bank shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.

10.06           Non-Reliance on Agent and Other Banks.  Each Bank agrees that it has, independently and without reliance on the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and decision to enter into this Agreement and that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or under any other Basic Document.  The Agent shall not be required to keep itself informed as to the performance or observance by any Obligor of this Agreement or any of the other Basic Documents or any other document referred to or provided for herein or therein or to inspect the Properties or books of the Company.  Except for notices, reports and other documents and information expressly required to be furnished to the Banks by the Agent hereunder or under the Security Documents, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the affairs, financial condition or business of the Company (or any of its Affiliates) that may come into the possession of the Agent or any of its Affiliates.

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10.07           Failure to Act.  Except for action expressly required of the Agent hereunder and under the other Basic Documents, the Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Banks of their indemnification obligations under Section 10.05 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

10.08           Resignation or Removal of Agent.  Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving notice thereof to the Banks and the Company, and the Agent may be removed at any time with or without cause by the Required Banks.  Upon any such resignation or removal, the Required Banks have the right to appoint a successor Agent, subject (in the case of any successor Agent that is not a Bank at such time) to the Company's approval of such successor Agent.  If no successor Agent has been so appointed by the Required Banks (or if the Company shall fail to approve such a successor Agent) and has accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation or the Required Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of the Banks, subject to the Company's approval, appoint a successor Agent, that shall be a bank that has an office in New York, New York.  Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder.  After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 10 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent.

10.09           Agency Fee.  So long as the Commitments are in effect and until payment in full of the Obligations, the Company will pay to the Agent an agency fee as mutually agreed upon.

10.10           Consents under Other Basic Documents.  Except as otherwise provided in Section 11.04 hereof, the Agent may, with the prior consent of the Required Banks (but not otherwise), consent to any modification, supplement or waiver under any of the Basic Documents, provided that, without the prior consent of each Bank, the Agent shall not (except as provided herein or in the Security Documents) release any Collateral or otherwise terminate any Lien under any Basic Document or agree to additional obligations being secured by such Collateral (unless the Lien for such additional obligations shall be junior and subordinate to the Lien in favor of the other obligations secured by such Basic Document).

10.11           Pendency of Insolvency.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Obligor, the Agent (irrespective of whether the principal of any Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Agent shall have made any demand on any Obligor) shall be entitled and empowered, by intervention in such proceeding or otherwise:

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(a)           Filing Claims.  to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Secured Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Banks and the Agent and their respective agents and counsel and all other amounts due the Banks and the Agent under Section 11.03) allowed in such judicial proceeding; and

(b)           Collection of Funds.  to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Bank to make such payments to the Agent and, in the event that the Agent shall consent to the making of such payments directly to the Secured Parties, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agent and its agents and counsel, and any other amounts due the Agent hereunder.  Nothing contained herein shall be deemed to authorize the Agent to authorize or consent to or accept or adopt on behalf of any Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Bank or to authorize the Agent to vote in respect of the claim of any Bank in any such proceeding.

10.12           Permitted Release of Collateral.

(a)           Automatic Release.  If any Obligor sells any Collateral which is permitted to be disposed of under Section 8.05, the Liens in the Collateral granted to the Agent under the Basic Document shall automatically terminate and the Collateral will be disposed of free and clear of all Liens of the Agent.

(b)           Written Release.  The Agent is authorized to release of record, and shall release of record, any Liens encumbering any Collateral that is permitted to be sold upon an authorized officer of the Company certifying in writing to the Agent that the proposed disposition of Collateral is permitted under Section 8.05.  To the extent the Agent is requested to execute any release documents or other documents evidencing the termination of Liens in accordance with the immediately preceding sentence, the Agent shall do so promptly upon request of the Company without the consent or further agreement of any Secured Party.  If the disposition of Collateral is not permitted under or pursuant to the Basic Document, the Liens encumbering the Collateral may only be released in accordance with the provisions of Section 11.04.

(c)           Other Authorized Release and Subordination.  The Agent is irrevocably authorized by the Secured Parties, without any consent or further agreement of any Secured Party to:  (i) subordinate or release the Liens granted to the Agent to secure the Obligations with respect to any property which is permitted to be subject to a Lien of the type described in paragraphs (g) or (i) of Section 8.06 and (ii) release the Agent's Liens when all the Commitments have terminated and all the Obligations have been irrevocably paid in full and otherwise satisfied.

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10.13           Powers and Immunities of Fronting Banks.  Neither any Fronting Bank nor any of their respective Affiliates, officers, directors, agents or employees shall be liable for any action taken or omitted to be taken by any of them hereunder or otherwise in connection with any Basic Document except for its or their own gross negligence or willful misconduct.  Without limiting the generality of the preceding sentence, no Fronting Bank (a) shall have any duties or responsibilities except those expressly set forth in the Basic Documents, and shall by reason of any Basic Document be a trustee or fiduciary for any Bank or for the Agent, (b) shall be required to initiate any litigation or collection proceedings under any Basic Document, and (c) shall be responsible to any Bank or the Agent for any recitals, statements, representations, or warranties contained in any Basic Document, or any certificate or other documentation referred to or provided for in, or received by any of them under, any Basic Document, or for the value, validity, effectiveness, enforceability, or sufficiency of any Basic Document or any other documentation referred to or provided for therein or for any failure by any Person to perform any of its obligations thereunder.  Each Fronting Bank: (a) may consult with legal counsel (including counsel for the Company or the Agent), independent public accountants, and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants, or experts, and (b) shall incur no liability under or in respect of any Basic Document by acting upon any notice, consent, certificate, or other instrument or writing believed by it to be genuine and signed or sent by the proper party or parties.  As to any matters not expressly provided for by any Basic Document, each Fronting Bank shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions signed by the Required Banks, and such instructions of the Required Banks and any action taken or failure to act pursuant thereto shall be binding on all of the Banks and the Agent; provided, however, that a Fronting Bank shall not be required to take any action which it reasonably believes exposes it to personal liability or which it reasonably believes is contrary to any Basic Document or applicable law.

10.14           Perfection by Possession and Control; Deposit Accounts.  The Agent hereby appoints each of the other Banks to serve as bailee to perfect Agent's Liens in any Collateral in the possession of any such other Bank.  Each Bank possessing any Collateral agrees to so act as bailee for the Agent in accordance with the terms and provisions hereof.  In furtherance of the forgoing, each Bank acknowledges that certain of the Obligors may maintain deposit accounts at one or more of the Banks (all such accounts, herein the "Obligor Accounts").  Unless a Bank has entered into a control agreement with the Agent with respect to the Obligor Accounts (in which event such control agreement has take precedent over the provisions of this Section 10.14 with respect to the Obligor Accounts covered thereby), each Bank agrees to hold its Obligor Accounts as bailee for the Agent to perfect the Agent's Liens therein.  Prior to the receipt by a Bank of a written notice of an Event of Default from the Agent, the Obligors are entitled to make withdrawals from the Obligor Accounts and make deposits into all the Obligor Accounts.  When a Bank has received a written notice of an Event of Default from the Agent and as long as such Event of Default exists, (a) the Agent shall be the only party entitled to make withdrawals from or otherwise give any direction with respect to the Obligor Accounts and each Bank agrees to comply with the instructions originated by the Agent directing deposition of the funds in or relating to the Obligor Accounts it holds without further consent by any Obligor, and (b) each Bank shall transfer, in immediately available funds by wire transfer to the Agent, the amount of the collected funds credited to the Obligor Accounts it holds and deliver to the Agent all moneys or instruments relating thereto or held therein and any other Collateral at any time the Agent demands payment or delivery thereof by such written notice to such Bank.  Each Obligor agrees that each Bank is authorized to immediately deliver all the Collateral to the Agent upon the Bank's receipt of such notice from the Agent.  No Bank (other than the Agent acting for the benefit of the Secured Parties) shall exercise any right of set–off or banker's lien against any Obligor Account for any obligations other than the Obligations; provided that a Bank shall be entitled to charge, or set–off against an Obligor Account and retain for its own account, any customary fees, costs, charges and expenses owed to it in connection with the opening, operating and maintaining such Obligor Account and for the amount of any item credited to the Obligor Account that is subsequently returned for any reason.

10.15           Bank Affiliates Rights.  By accepting the benefits of the Basic Documents, any Affiliate of a Bank that is owed any Obligation is bound by the terms of the Basic Documents.  But notwithstanding the foregoing:  (a) neither the Agent, any Bank nor any Obligor shall be obligated to deliver any notice or communication required to be delivered to any Bank under any Basic Document to any Affiliate of any Bank; and (b) no Affiliate of any Bank that is owed any Obligation shall be included in the determination of the Required Banks or entitled to consent to, reject, or participate in any manner in any amendment, waiver or other modification of any Basic Document.  The Agent shall not have any liabilities, obligations or responsibilities of any kind whatsoever to any Affiliate of any Bank who is owed any Obligation.  The Agent shall deal solely and directly with the related Bank of any such Affiliate in connection with all matters relating to the Basic Documents.  The Obligation owed to such Affiliate shall be considered the Obligation of its related Bank for all purposes under the Basic Documents and such Bank shall be solely responsible to the other parties hereto for all the obligations of such Affiliate under any Basic Document.

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10.16           Other Agents.  Certain of the Banks may have been designated as syndication agents, documentation agents or other similar designation in recognition of the level of their respective Revolving Loan Commitments.  No Bank, other than the Bank serving as Agent, is an agent for the Banks nor shall any such Bank have any obligation hereunder other than those existing in its capacity as a Bank.

SECTION 11.

Miscellaneous.

11.01           Waiver.  No failure on the part of the Agent or any Bank to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any other Basic Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any other Basic Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The remedies provided herein are cumulative and not exclusive of any remedies provided by law.  No waiver of any provision of any Basic Document or consent to any departure by any Obligor therefrom shall in any event be effective unless the same shall be permitted by Section 11.04, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan, issuance of a Letter of Credit or the creation and discount of an Acceptance shall not be construed as a waiver of any Default, regardless of whether the Agent or any Bank may have had notice or knowledge of such Default at the time.

11.02           Notices.

(a)           General Address for Notices.  All notices, requests and other communications ("Communications") provided for herein and under the other Basic Documents (including any modifications of, or waivers, requests or consents under, this Agreement) shall be given or made in writing (including by facsimile) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof; or, as to any party, at such other address as shall be designated by such party in a notice to each other party.  Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given (i) if transmitted by facsimile, when the confirmation of transmission thereof is received by the transmitter, (ii) when personally delivered or (iii) in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid.  The parties hereto agree that delivery of an executed counterpart of a signature page to this Agreement and each other Basic Document by facsimile (or electronic transmission) shall be effective as delivery of an original executed counterpart of this Agreement or such other Basic Document.

(b)           Electronic Communications.  Communications to the Banks under the Basic Documents may be delivered or furnished by electronic communications pursuant to procedures approved by the Agent; provided that the foregoing shall not apply to notices pursuant to Section 2.01 or 4.05 unless otherwise agreed by the Agent and the applicable Bank.  The Agent or the Company may, in its discretion, agree to accept notices and other communications to it under the Basic Documents by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or Communications.

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(c)           Electronic Transmission System.  The Company and the Banks agree that the Agent may make the Communications available to the Banks and the Company by posting the Communications on Intralinks or a substantially similar electronic transmission system (the "Platform").  THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE".  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES (COLLECTIVELY, THE "AGENT PARTIES") HAVE ANY LIABILITY TO ANY OBLIGOR, ANY BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY OBLIGOR'S OR THE AGENT'S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(d)           Communications Through the Platform.  Each Bank agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Bank for purposes hereof.  Each Bank agrees to provide to the Agent in writing (including by electronic communication), promptly after the date of this Agreement, an e-mail address to which the foregoing notice may be sent by electronic transmission and agrees that the foregoing notice may be sent to such e-mail address.

11.03           Expenses, etc.  The Company agrees to pay or reimburse each of the Banks and the Agent for:  (a) all reasonable and documented out-of-pocket costs and expenses of the Agent (including the reasonable and documented fees and expenses of Hunton & Williams LLP) in connection with (i) the negotiation, preparation, execution and delivery of this Agreement and the other Basic Documents and the extension of credit hereunder and (ii) the negotiation or preparation of any modification, supplement or waiver of any of the terms of this Agreement or any of the other Basic Documents (whether or not consummated); (b) all reasonable out-of-pocket costs and expenses of each Bank and the Agent (including the reasonable fees and expenses of legal counsel) in connection with (i) any Default and any enforcement or collection proceedings resulting therefrom, including all manner of participation in or other involvement with (x) bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation proceedings, (y) judicial or regulatory proceedings and (z) workout, restructuring or other negotiations or proceedings (whether or not the workout, restructuring or transaction contemplated thereby is consummated) and (ii) the enforcement of this Section 11.03; and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any of the other Basic Documents or any other document referred to herein or therein and all costs, expenses, taxes, assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Basic Document or any other document referred to therein.

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The Company hereby agrees to indemnify the Agent and each Bank and their respective directors, officers, employees, attorneys and agents from, and hold each of them harmless against, any and all losses, liabilities, claims, damages or expenses incurred by any of them arising out of or by reason of this Agreement, any other Basic Documents, any transactions contemplated hereby or any investigation or litigation or other proceedings (including any and all losses, liabilities, claims, damages or expenses incurred by the Agent to any Bank, whether or not the Agent or any Bank is a party thereto) relating thereto, including the reasonable fees and disbursements of counsel (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified).

11.04           Amendments, Etc.  Neither this Agreement nor any other Basic Document nor any provision hereof or thereof may be waived, amended or modified except, (x) pursuant to an Increased Commitment Supplement executed in accordance with Section 2.01 which only needs to be signed by the Company, the Agent and the Banks increasing or providing new Revolving Loan Commitments thereunder and (y) in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Company, the Agent and the Required Banks or, in the case of any other Basic Document, pursuant to an agreement or agreements in writing entered into by the Agent and the Obligor or Obligors that are parties thereto, in each case with the consent of the Required Banks; provided that no such agreement shall (i) increase any Commitment of any Bank without the written consent of such Bank, (ii) reduce the principal amount of any Loan, Reimbursement Obligations or Acceptance Liability or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Bank affected thereby, (iii) postpone the scheduled date or due date of the payment of the principal amount of any Loan (including any prepayment required by Section 2.11), Reimbursement Obligations or Acceptance Liabilities, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Bank affected thereby, (iv) alter the manner in which payments or prepayments of principal, interest or other Obligations shall be applied as among the Secured Parties, without the written consent of each Bank, (v) change any of the provisions of this Section, the definition of the term "Required Banks", the last sentence of Section 4.09 or any other provision hereof specifying the number or percentage of Banks required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Bank, (vi) alter the pro rata treatment in Section 4.03 without the consent of each Bank, (vii) amend the definition of the term "Borrowing Base" or any defined term used therein without the consent of each Bank (other than a Defaulting Bank), (viii) release any Guarantor from any of its guarantee obligations without the written consent of each Bank (other than a Defaulting Bank) or (ix) except as permitted by Section 10.12 or in connection with the exercise of its rights and remedies in therein after an Event of Default, release all or any substantial portion of the Collateral without the written consent of each Bank (other than a Defaulting Bank); and provided further, that no such agreement shall amend, modify or otherwise affect the rights or duties of the Agent or any Fronting Bank hereunder without the prior written consent of the Agent or the applicable Fronting Bank, as the case may be.

11.05           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any Affiliate of an Issuing Bank that issues any Letter of Credit, any Affiliate of a Bank who is otherwise owed any of the Obligations and any party entitled to indemnification hereunder), except that (i) no Obligor may assign or otherwise transfer any of its rights or obligations hereunder or under any other Basic Document without the prior written consent of each Bank (and any attempted assignment or transfer by any Obligor without such consent shall be null and void) and (ii) no Bank may assign or otherwise transfer any of its rights or obligations hereunder except in accordance with Section 11.06 (and any attempted assignment or transfer by any Bank that is not in accordance with this Section shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit and any Affiliate of a Bank who is otherwise owed any of the other Obligations), and, to the extent expressly contemplated hereby, officers, directors, attorneys, agents, and employees of each of the Agent and the Banks) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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11.06           Assignments and Participations.

(a)           Assignments by Banks.

(i)           Assignments Generally.  Subject to the conditions set forth in clause (ii) below, any Bank may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

(A)           the Company, provided that no consent of the Company shall be required for an assignment to a Bank, an Affiliate of a Bank or an Approved Fund or, if an Event of Default exists, any other assignee; and

(B)           the Agent, provided that no consent of the Agent shall be required for an assignment of any Commitment to an assignee that is a Bank with a Commitment immediately prior to giving effect to such assignment.

(ii)           Certain Conditions to Assignments.  Assignments by the Banks shall be subject to the following additional conditions:

(A)           except in the case of an assignment to a Bank or an Affiliate of a Bank or an assignment of the entire remaining amount of the assigning Bank's Commitment or Loans, the amount of the Commitment or Loans of the assigning Bank subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Agent) shall not be less than $5,000,000 unless each of the Company and the Agent otherwise consent, provided that no such consent of the Company shall be required if an Event of Default exists;

(B)           each partial assignment of any Commitment or Loans shall be made as an assignment of a proportionate part of all the assigning Bank's rights and obligations under this Agreement in respect of such Commitment and Loans;

(C)           the parties to each assignment shall execute and deliver to the Agent an Assignment and Assumption in substantially the form of Exhibit A hereto, together with a processing and recordation fee of $3,500; and

(D)           the assignee, if it shall not already be a Bank, shall deliver to the Agent an Administrative Questionnaire.

(iii)           Effectiveness of Assignments.  Subject to acceptance and recording thereof pursuant to paragraph (b) below, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Bank under this Agreement, and the assigning Bank thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Bank's rights and obligations under this Agreement, such Bank shall cease to be a party hereto but shall continue to be entitled to the rights referred to in Sections 5.01, 5.04, 5.05, 5.06 and 11.03).  Any assignment or transfer by a Bank of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Bank of a participation in such rights and obligations in accordance with paragraph (d) below.  Delivery of an executed counterpart of a signature page to an Assignment and Assumption by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of thereof.

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(b)           Maintenance of Register by the Agent.  The Agent, acting for this purpose as an agent of the Company, shall maintain at one of its offices in New Jersey a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Banks, and the Commitment of, and principal amount of the Loans owing to, each Bank pursuant to the terms hereof from time to time (the "Register").  The entries in the Register shall be conclusive, and the Company, the Agent and the Banks may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Company and any Bank, at any reasonable time and from time to time, upon reasonable prior notice.

(c)           Effectiveness of Assignments.  Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Bank and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Bank hereunder), the processing and recordation fee referred to in paragraph (a) above and any written consent to such assignment required by said paragraph (a), the Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph (b).

(d)           Participations.  Any Bank may, without the consent of the Company or the Agent, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Bank's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Bank's obligations under this Agreement shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Obligors, the Agent and the Banks shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Bank sells such a participation shall provide that such Bank shall retain the sole right to enforce this Agreement and to approve any amendment, waiver or other modification of any provision of this Agreement; provided that such agreement may provide that such Bank will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.04 that affects such Participant. Subject to paragraph (e) below, the Company agrees that each Participant shall be entitled to the benefits of Sections 5.01, 5.04 and 5.06, to the same extent as if it were a Bank and had acquired its interest by assignment pursuant to paragraph (a) above. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 4.07(a) as though it were a Bank, provided such Participant agrees to be subject to Section 4.07 (b) as though it were a Bank hereunder.

(e)           Limitations on Rights of Participants.  A Participant shall not be entitled to receive any greater payment under Section 5.01 or 5.06 than the applicable Bank would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Company's prior written consent. A Participant that would be a Foreign Bank if it were a Bank shall not be entitled to the benefits of Section 5.06 unless the Company is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Company, to comply with Section 5.06 as though it were a Bank.

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(f)           Certain Pledges.  Any Bank may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Bank, including any such pledge or assignment to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Bank from any of its obligations hereunder or substitute any such assignee for such Bank as a party hereto.

(g)           No Assignments to the Company or Affiliates.  Anything in this Section to the contrary notwithstanding, no Bank may assign or participate any interest in any Loan, Reimbursement Obligations or Acceptance Liability held by it hereunder to the Company or any of its Affiliates or Subsidiaries without the prior consent of each Bank.

11.07           Survival.  The obligations of the Company under Sections 5.01, 5.04, 5.05, 5.06 and 11.03 and the obligations of the Banks under Section 10.05 hereof shall survive the repayment of the Loans, the Acceptance Liabilities and the Reimbursement Obligations and the termination of the Commitments.  In addition, each representation and warranty made, or deemed to be made by a notice of any extension of credit (whether by means of a Loan, an Acceptance or a Letter of Credit), herein or pursuant hereto shall survive the making of such representation and warranty, and no Bank shall be deemed to have waived, by reason of making any extension of credit hereunder (whether by means of a Loan, an Acceptance or a Letter of Credit), any Default that may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that such Bank or the Agent may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such extension of credit was made.

11.08           Captions.  The table of contents and captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

11.09           Counterparts.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement, the other Basic Documents and any separate letter agreements with respect to fees payable to the Agent and the Bank constitute the entire contract between and among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 6.01, this Agreement shall become effective when it shall have been executed by the Agent and when the Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page to this Agreement by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

11.10           Governing Law; Submission to Jurisdiction.  Each of this Agreement and each other Basic Documents will be governed by, and construed in accordance with, the internal laws of the state of New York (including for such purpose sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).  The Company hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement, any other Basic Document or the transactions contemplated hereby or thereby.  The Company irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  The Company hereby further irrevocably consents to the service of process in any such legal proceedings in said courts by the mailing thereof by the Agent or any Bank by registered or certified mail, postage prepaid, at its address set forth beneath its signature hereto.

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11.11           Waiver of Jury Trial.  EACH OF THE COMPANY, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER BASIC DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

11.12           Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

11.13           Independence of Covenants.  All covenants and other agreements contained in this Agreement or any other Basic Document shall be given independent effect so that, if a particular action or condition is not permitted by any of such covenants or other agreements, the fact that such action or condition would be permitted by an exception to, or otherwise be within the limitations of, another covenant or other agreement shall not avoid the occurrence of a Default or an Event of Default if such action is taken or such condition exists.

11.14           PATRIOT ACT PROVISION.  Each of the Agent, each Bank hereby notifies each Obligor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies each Obligor and other information that will allow the Agent, such Bank to identify each Obligor in accordance with the Act.

11.15           No Fiduciary Relationship.  The relationship between the Company and the other Obligors on the one hand and the Agent and each Bank on the other is solely that of debtor and creditor, and neither the Agent nor any Bank has any fiduciary or other special relationship with the Company or any other Obligors, and no term or condition of any of the Basic Documents shall be construed so as to deem the relationship between the Company and the other Obligors on the one hand and the Agent and each Bank on the other to be other than that of debtor and creditor.

11.16           Construction.  The Company, each other Obligor (by its execution of the Basic Documents to which its is a party), the Agent, each Bank acknowledges that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review the Basic Documents with its legal counsel and that the Basic Documents shall be construed as if jointly drafted by the parties thereto.

11.17           Interest Rate Limitation.

(a)           Limitation to Maximum Rate; Recapture.  No interest rate specified in any Basic Document shall at any time exceed the Maximum Rate.  If at any time the interest rate (the "Contract Rate") for any obligation under the Basic Documents shall exceed the Maximum Rate, thereby causing the interest accruing on such obligation to be limited to the Maximum Rate, then any subsequent reduction in the Contract Rate for such obligation shall not reduce the rate of interest on such obligation below the Maximum Rate until the aggregate amount of interest accrued on such obligation equals the aggregate amount of interest which would have accrued on such obligation if the Contract Rate for such obligation had at all times been in effect.  As used herein, the term "Maximum Rate" means, at any time with respect to any Bank, the maximum rate of nonusurious interest under applicable law that such Bank may charge the Company.  The Maximum Rate shall be calculated in a manner that takes into account any and all fees, payments, and other charges contracted for, charged, or received in connection with the Basic Documents that constitute interest under applicable law.  Each change in any interest rate provided for herein based upon the Maximum Rate resulting from a change in the Maximum Rate shall take effect without notice to the Company at the time of such change in the Maximum Rate.

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(b)           Cure Provisions.  No provision of any Basic Document shall require the payment or the collection of interest in excess of the maximum amount permitted by applicable law.  If any excess of interest in such respect is hereby provided for, or shall be adjudicated to be so provided, in any Basic Document or otherwise in connection with this loan transaction, the provisions of this Section shall govern and prevail and neither the Company nor the sureties, guarantors, successors, or assigns of the Company shall be obligated to pay the excess amount of such interest or any other excess sum paid for the use, forbearance, or detention of sums loaned pursuant hereto.  In the event any Bank ever receives, collects, or applies as interest any such sum, such amount which would be in excess of the maximum amount permitted by applicable law shall be applied as a payment and reduction of the principal of the obligations outstanding hereunder, and, if the principal of the obligations outstanding hereunder has been paid in full, any remaining excess shall forthwith be paid to the Company.  In determining whether or not the interest paid or payable exceeds the Maximum Rate, the Company and each Bank shall, to the extent permitted by applicable law, (i) characterize any non principal payment as an expense, fee, or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the entire contemplated term of the obligations outstanding hereunder so that interest for the entire term does not exceed the Maximum Rate.

11.18           Waiver of Consequential Damages, etc.  To the extent permitted by applicable law, no Obligor shall assert, and each Obligor hereby waives, any claim against Agent, any Bank and any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any other Basic Documents, the transactions contemplated hereby, any Loan or Letter of Credit or the use of the proceeds thereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

EMPIRE RESOURCES, INC.
By:	/s/ Sandra R. Kahn
	Sandra R. Kahn, Vice President
Address for Notices:
Empire Resources, Inc. One Parker Plaza Fort Lee, New Jersey 07024 Attention: Ms. Sandra R. Kahn Facsimile No.: (201) 944-2226 Telephone No.: (201) 944-2200

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COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent, Swing Line Bank, Acceptance Bank, Issuing Bank and as a Bank
By:	/s/ Kimberly Oates
	Kimberly Oates, Executive Director
By:	/s/ Brett Delfino
	Brett Delfino, Executive Director
Address for Notices as Agent:
c/o Rabo Support Services, Inc. 10 Exchange Place Jersey City, NJ 07302 Attention of Corporate Bank Services, Sui Price Telecopy No. 914.304.9327 Telephone No. 201.499.5436
Address for Notices as Bank:
245 Park Avenue New York, NY 10167 Attention: Kimberly Oates Facsimile No.: (212) 916-3731 Telephone No.: 212-916-3711 Email: kimberly.oates@rabobank.com

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JPMORGAN CHASE BANK, N.A.
By:	/s/ Raymond Darcy
	Raymond Darcy, Vice President
Address for Notices:
JPMorgan Chase Bank, N.A. 270 Park Avenue New York, New York 10017 Attention: Raymond Darcy Facsimile No.: (646) 534-2239 Telephone No.: (212) 270-1903 Email: raymond.p.darcy@jpmorgan.com

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BNP PARIBAS
By:	/s/ Tina Mehta
	Tina Mehta, Director
By:	/s/ Carlos Urquiaga
	Carlos Urquiaga, Director
Address for Notices:
BNP Paribas 787 Seventh Avenue New York, New York 10019 Attention: Tina Mehta Facsimile No.: (212) 471-6862 Telephone No.: (212) 841-3004 Email: tina.mehta@us.bnpparibas.com

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ABN AMRO CAPITAL LLC
By:	/s/ Stacey Judd
	Stacey Judd, Director
Address for Notices:
ABN AMRO Capital LLC 100 Park Avenue New York, New York 10017 Attention: Stacey Judd Facsimile No.: (917) 284-6683 Telephone No.: (917) 284-6906 Email: stacey.judd@abnamro.com

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RBS CITIZENS, NATIONAL ASSOCIATION
By:	/s/ Thomas Drake
	Thomas Drake, Vice President
Address for Notices:
RBS Citizens, National Association 600 Washington Boulevard Stamford, Connecticut 06901 Attention: Thomas Drake Facsimile No.: __________________ Telephone No.: (203) 897-4581 Email: thomas.s.drake@citizensbanks.com

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SOCIÉTÉ GÉNÉRALE
By:	/s/ Steven Silverstein
	Steven Silverstein, Director
Address for Notices:
Société Générale 1221 Avenue of the Americas New York, New York 10020 Attention: Steven Silverstein Facsimile No.: (212) 278-7953 Telephone No.: (212) 278-6961 Email: steven.silverstein@sgcib.com

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BROWN BROTHERS HARRIMAN & CO.
By:	/s/ Michael L. Vellucci
	Michael L. Vellucci, Senior Vice President
Address for Notices:
Brown Brothers Harriman & Co. 140 Broadway New York, New York 10005 Attention: Mark Williams Facsimile No.: (212) 493-7280 Telephone No.: (212) 493-7827 Email: mark.williams@bbh.com

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INDEX TO EXHIBITS AND SCHEDULES

EXHIBIT A	–	Form of Note
EXHIBIT B	–	Form of Borrowing Base Certificate
EXHIBIT C	–	Form of Security Agreement
EXHIBIT D	–	Form of Subsidiary Guarantee
EXHIBIT E	–	Form of Assignment and Assumption
EXHIBIT F	–	Form of Increased Commitment Supplement
EXHIBIT G	–	Form of Compliance Certificate
EXHIBIT H	–	Form of Subordination Agreement
EXHIBIT I	–	Form of Borrowing Request
EXHIBIT J	–	Form of Notice of Prepayment, Conversion and Continuation
EXHIBIT K	–	Subordination Terms
SCHEDULE A	–	Commitments
SCHEDULE I	–	Indebtedness
SCHEDULE II	–	Investments
SCHEDULE III	–	Subsidiaries
SCHEDULE IV	–	Existing Letters of Credit

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EXHIBIT A

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Note

PROMISSORY NOTE

$__________ __________, 20__ New York, New York

FOR VALUE RECEIVED, EMPIRE RESOURCES, INC., a Delaware corporation (the "Company"), hereby promises to pay to _____________________ (the "Bank"), for account of its respective Applicable Lending Offices provided for by the Credit Agreement referred to below, the principal sum of _______________ Dollars (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Bank to the Company under the Credit Agreement), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Loan made by the Bank to the Company, and each payment made on account of the principal thereof, shall be recorded by the Bank on its books, provided that the failure of the Bank to make any such recordation shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or hereunder in respect of the Loans made by the Bank.

This Note is one of the Notes referred to in the Credit Agreement and is entitled to the benefits thereof, dated as of April 28, 2011 (as amended, supplemented or otherwise modified and in effect from time to time, the "Credit Agreement") among the Company, the lenders named therein and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as Agent, and evidences Loans made by the Bank thereunder.  Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement.

The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of Loans upon the terms and conditions specified therein.

Except as permitted by Section 11.06 of the Credit Agreement, this Note may not be assigned by the Bank to any other Person.

This Note shall be governed by, and construed in accordance with, the law of the State of New York.

EMPIRE RESOURCES, INC.
By:
	Name:
	Title:

EXHIBIT B

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Borrowing Base Certificate

Borrowing Base Certificate

Coöperatieve Centrale

Raiffeisen-Boerenleenbank B.A.

"Rabobank Nederland",

New York Branch, as agent

c/o Rabo Support Services, Inc.

10 Exchange Place, 16th Floor

Jersey City, NJ 07302-3913

Phone No.:                 201.499.5436

Fax No.:                      914.304.9327

Attention:                  Sui Price

With a copy to:

Rabobank Nederland

245 Park Avenue

New York, NY  10167

Phone No.                  (212) 916-7933

Fax No.

Attention:                  Kimberly Oates

And each Bank

Ladies and Gentlemen:

This Borrowing Base Certificate as of _____________, 20__ (the "Computation Date") is executed and delivered by Empire Resources, Inc. (the "Company") to Coöperatieve Centrale Raiffeisen–Boerenleenbank B.A., "Rabobank Nederland", New York Branch (the "Agent"), pursuant to that certain Credit Agreement (as amended, restated or otherwise modified, the "Credit Agreement") dated as of April 28, 2010 among the Company, the Agent and the banks named therein.  All terms used herein shall have the meanings assigned to them in the Credit Agreement.

The Company represents and warrants to the Agent and the Banks that all information contained herein is true, correct, and complete, and that the property included in the calculations below represents the property that qualifies for purposes of determining the Borrowing Base under the Credit Agreement.  The Company also represents and warrants that all figures listed below or attached hereto have been calculated based on the provisions of the Credit Agreement.

The Company represents and warrants to the Agent and the Banks that the representations and warranties of the Obligors contained in the Basic Documents are true and complete on and as of the date of this Borrowing Base Certificate as if made on and as of the date hereof except to the extent that such representations and warranties relate specifically to another date, and that no Default exists.

BORROWING BASE SUMMARY:
A.	Borrowing Base (as detailed from schedule 1)		$__________
B.	Revolving Loan Commitments		$__________
C.	Lesser of Line A or Line B		$__________
D.	Revolving credit exposure:
	(i)           Loans	$__________
	(ii)          Letters of Credit	$__________
	(iii)         Acceptances	$__________
	(iv)         Total		($__________)
E.	Availability (Line C, less Line D(iv))		$__________
In the event of any conflict between this Borrowing Base Certificate and the Credit Agreement, the Credit Agreement shall control.

Date:           __________, 20__.

Borrower:
Empire Resources, Inc.
By:
	Sandra Kahn, Vice President and Chief Financial Officer

SCHEDULE 1

TO

BORROWING BASE CERTIFICATE

EMPIRE RESOURCES, INC.

	Amount	Advance Rate	Amount Times Advance Rate
1.      Assets
(a) Eligible Net Liquidating Value of Brokerage Accounts1	$__________	85%	$__________
(b) Tier I Eligible Receivables	$__________	90%	$__________
(c) Tier II Eligible Receivables	$__________	80%	$__________
(d) Lesser of line (c) or $15,000,000			$__________
(e) Australian Receivables	$__________	70%	$__________
(f) Lesser of line (e) or 10% of the total Borrowing Base			$__________
(g) Eligible Inventory Ordered Under L/C	$__________	80%	$__________
(h) Eligible Inventory	$__________	80%	$__________
(i) Lesser of line (h) or 65% of the total Borrowing Base			$__________
(j) Unsold and unhedged stainless steel Inventory	$__________	65%	$__________
(k) Lesser of line (j) or $5,000,000			$__________
(l) Other unsold and unhedged metal Inventory	$__________	65%	$__________
(m) Sum of line (k) and (l)			$__________
(n) Lesser of line (m) or $12,500,000			$__________
(o) Pledged Securities	$__________	80%	$__________
(p) Pledged Cash	$__________	100%	$__________
2.      Total Assets (sum of lines (a), (b), (d), (f), (g), (i), (n), (o) and (p)			$__________
3.      Deductions for Reserves	$__________	100%	($__________)
4.      Borrowing Base.  (line 2 minus line 3)			$

1 To be included in Borrowing Base calculation only if and to the extent requested by the Company.

EXHIBIT C

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

SECURITY AGREEMENT

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, this "Security Agreement"), is made by EMPIRE RESOURCES, INC., a Delaware corporation (the "Company"), and each Guarantor (terms used in the preamble and in the recitals have the definitions set forth in or incorporated by reference in Section 1) from time to time a party to this Security Agreement (each individually, a "Grantor" and collectively, the "Grantors"), in favor of COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent (together with its successor(s) thereto in such capacity, the "Agent") for each of the Secured Parties.

W I T N E S S E T H :

Pursuant to a Credit Agreement dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement") among the Company, the Banks and the Agent, the Banks have extended Commitments to make Loans to, issue Letters of Credit for the account of and create Acceptances to the Company.  As a condition precedent to the making of the extensions of credit secured hereby, each Grantor is required to execute and deliver this Security Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees, for the benefit of each Secured Party, as follows:

SECTION 1

DEFINITIONS

1.01           Certain Terms.  The following terms (whether or not underscored) when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

"Agent" is defined in the preamble.

"Capital Securities" means, with respect to any Person, all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's capital, whether now outstanding or issued after the Closing Date.

"Collateral" is defined in Section 2.1.

"Collateral Account" is defined in clause (b) of Section 4.03.

"Company" is defined in the preamble.

"Computer Hardware and Software Collateral" means:

(a)           all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware, including all operating system software, utilities and application programs in whatsoever form;

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(b)           all software programs (including both source code, object code and all related applications and data files), designed for use on the computers and electronic data processing hardware described in clause (a) above;

(c)           all firmware associated therewith;

(d)           all documentation (including flow charts, logic diagrams, manuals, guides, specifications, training materials, charts and pseudo codes) with respect to such hardware, software and firmware described in the preceding clauses (a) through (c); and

(e)           all rights with respect to all of the foregoing, including copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, improvements, error corrections, updates, additions or model conversions of any of the foregoing.

"Control Agreement" means an authenticated record in form and substance satisfactory to the Agent, that provides for the Agent to have "control" (as defined in the UCC) over certain Collateral.

"Copyright Collateral" means all copyrights of the Grantors, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of the Grantors' rights, titles and interests in and to all copyrights registered in the United States Copyright Office or anywhere else in the world and also including the copyrights referred to in Item A of Schedule V, and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, all copyright licenses, including each copyright license referred to in Item B of Schedule V, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all Proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit, which are owned or licensed by the Grantors.

"Credit Agreement" is defined in the first recital.

"Distributions" means all dividends paid on Capital Securities, liquidating dividends paid on Capital Securities, shares (or other designations) of Capital Securities resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, mergers, consolidations, and all other distributions (whether similar or dissimilar to the foregoing) on or with respect to any Capital Securities constituting Collateral.

"Filing Statement" is defined in Section 3.7.

"General Intangibles" means all "general intangibles" and all "payment intangibles", each as defined in the UCC, and shall include all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations and all Intellectual Property Collateral (in each case, regardless of whether characterized as general intangibles under the UCC).

"Grantor" and "Grantors" are defined in the preamble.

"Intellectual Property Collateral" means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.

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"Obligations" means, with respect to each Grantor:  (a) if such Grantor is the Company under the Credit Agreement, all "Obligations" (as such term is defined in the Credit Agreement); (b) with respect to each Grantor that is not the Company, all present and future indebtedness, liabilities, and obligations of such Grantor to the Agent and the other Secured Parties arising under the Basic Documents to which such Grantor is a party and all such Grantor's Deposit Obligations and Hedging Obligations; and (c) with respect to each Grantor, and without limiting the generality of the foregoing, all reasonable fees, costs and expenses (including reasonable attorneys' fees):  (i) of retaking, holding and preparing its Collateral for sale; (ii) arising in connection with the sale thereof and (iii) arising from the enforcement of any other right or remedy provided hereunder and/or under any other Basic Document; provided that with respect to each Subsidiary that is a Grantor, the obligations secured by this Security Agreement shall be limited, with respect to such Grantor, to an aggregate amount equal to the largest amount that would not render such Grantor's obligations hereunder and under the other Basic Documents subject to avoidance under Section 544 or 548 of the United States Bankruptcy Code or under any applicable state law relating to fraudulent transfers or conveyances.

"Organic Document" means, relative to any Obligor, as applicable, its certificate of incorporation, by-laws, certificate of partnership, partnership agreement, certificate of formation, limited liability agreement, operating agreement and all shareholder agreements, voting trusts and similar arrangements applicable to any of such Obligor's Capital Securities.

"Patent Collateral" means:

(1)           inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including all patent applications in preparation for filing and each patent and patent application referred to in Item A of Schedule III;

(2)           all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a);

(3)           all patent licenses, and other agreements providing such Grantor with the right to use any items of the type referred to in clauses (a) and (b) above, including each patent license referred to in Item B of Schedule III; and

(4)           all Proceeds of, and rights associated with, the foregoing (including licenses, royalties income, payments, claims, damages and Proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.

"Permitted Lien" means a Lien permitted under Section 8.06 of the Credit Agreement.

"Security Agreement" is defined in the preamble.

"Securities Act" is defined in clause (a) of Section 6.2.

"Specified Default" means the occurrence and continuance of an Event of Default under clauses (a), (b), (d), (f), (g) of (k) of Section 9.01 of the Credit Agreement.

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"Trademark Collateral" means :

(a)           (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired including those referred to in Item A of Schedule IV, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the "Trademark");

(b)           all trademark licenses for the grant by or to such Grantor of any right to use any trademark, including each trademark license referred to in Item B of Schedule IV; and

(c)           all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable clause (b);

(d)           the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b); and

(e)           all Proceeds of, and rights associated with, the foregoing, including any claim by such Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.

"Trade Secrets Collateral" means all common law and statutory trade secrets and all other confidential, proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of a Grantor (all of the foregoing being collectively called a "Trade Secret"), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all Documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, including each Trade Secret license referred to in Schedule VI, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.

1.02           Credit Agreement Definitions.  Unless otherwise defined herein or the context otherwise requires, terms used in this Security Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.

1.03           UCC Definitions.  When used herein the terms Accessions, Account, Certificated Securities, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity Contract, Deposit Account, Document, Electronic Chattel Paper, Equipment, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangible, Proceeds, Promissory Notes, Securities Account, Security Entitlement, Supporting Obligations and Uncertificated Securities have the meaning provided in Article 8 or Article 9, as applicable, of the Uniform Commercial Code as from time to time in effect in the State of New York (the "UCC").  Letter of Credit has the meaning provided in Section 5-102 of the UCC.

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SECTION 2

SECURITY INTEREST

2.01           Grant of Security Interest.  Each Grantor hereby grants to the Agent, for its benefit and the ratable benefit of each other Secured Party, a continuing security interest in all of such Grantor's following property, whether now or hereafter existing, owned or acquired by such Grantor, and wherever located, (collectively, the "Collateral"):

(a)           Accounts;

(b)           Chattel Paper;

(c)           Commercial Tort Claims listed on Item I of Schedule II (as such schedule may be amended or supplemented from time to time);

(d)           Deposit Accounts;

(e)           Documents;

(f)           General Intangibles;

(g)           Goods;

(h)           Inventory;

(i)           Equipment;

(j)           Instruments;

(k)           Investment Property;

(l)           Letter-of-Credit Rights and Letters of Credit;

(m)           Supporting Obligations;

(n)           all books, records, writings, databases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section;

(o)           all Accessions to and Proceeds of the foregoing and, to the extent not otherwise included, (i) all payments under insurance (whether or not the Agent is the loss payee thereof) and (ii) all tort claims; and

(p)           all other property and rights of every kind and description and interests therein.

Notwithstanding the foregoing, "Collateral" shall not include:

(i)           such Grantor's real property interests (including fee real estate, leasehold interests and fixtures);

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(ii)           any General Intangibles or other rights arising under any contracts (other than Accounts or the proceeds thereof), instruments, licenses or other documents as to which the grant of a security interest would (A) constitute a violation of a valid and enforceable restriction in favor of a third party on such grant, unless and until any required consents shall have been obtained (other than to the extent that any such restriction would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity) or (B) give any other party to such contract, instrument, license or other document the right to terminate its obligations thereunder (other than to the extent that any such right would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity); provided that such security interest shall attach immediately at such time as the condition causing such violation or termination shall be remedied and, to the extent severable, shall attach immediately to any portion of such Property that does not result in any of the consequences specified in clause (A) or (B) of this paragraph, including any Proceeds of such property;

(iii)           Investment Property consisting of Capital Securities of a foreign Subsidiary of such Grantor in excess of 65% of the total combined voting power of all Capital Securities of such foreign Subsidiary, except that such 65% limitation shall not apply to a foreign Subsidiary that (x) is treated as a partnership under the Code or (y) is not treated as an entity that is separate from (A) such Grantor, (B) any Person that is treated as a partnership under the Code or (C) any "United States person" (as defined in Section 7701(a)(30) of the Code);

(iv)           any asset, the granting of a security interest in which would be void or illegal under any applicable governmental law, rule or regulation, or pursuant thereto would result in, or permit the termination of, such asset (other than to the extent that any such law, rule or regulation would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity); provided that such security interest shall attach immediately at such time as the condition causing such illegality or unenforceability shall be remedied and, to the extent severable, shall attach immediately to any portion of such Property that does not result in any of such consequences, including any Proceeds of such property; and

(v)           such Grantor's interests in 6900 Quad Avenue, LLC, a Delaware limited liability company.

2.02           Security for Obligations.  This Security Agreement and the Collateral in which the Agent for the benefit of the Secured Parties is granted a security interest hereunder by the Grantors secure the payment and performance of all of the Obligations.

2.03           Grantors Remains Liable.  Anything herein to the contrary notwithstanding:

(a)           the Grantors will remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of their duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed;

(b)           the exercise by the Agent of any of its rights hereunder will not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral; and

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(c)           no Secured Party will have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor will any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

2.04           Distributions on Pledged Shares.  If any Distribution with respect to any Capital Securities pledged hereunder is paid (unless prohibited by Section 8.13 of the Credit Agreement), such Distribution or payment may be paid directly to the applicable Grantor.  If any Distribution is made in contravention of Section 8.13 of the Credit Agreement, such Grantor shall hold the same segregated and in trust for the Agent until paid to the Agent in accordance with Section 4.01(c).

2.05           Security Interest Absolute, etc.  This Security Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until the Revolving Credit Commitment Termination Date and the indefeasible payment in full of the Obligations.  All rights of the Secured Parties and the security interests granted to the Agent (for its benefit and the ratable benefit of each Secured Party) hereunder, and all obligations of the Grantors hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of:

(a)           any lack of validity, legality or enforceability of any Basic Document;

(b)           the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Obligor or any other Person (including any other Grantor) under the provisions of any Basic Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor (including any other Grantor) of, or collateral securing, any Obligations;

(c)           any change in the time, manner or place of payment of, or in any other term of, all or any part of the Obligations, or any other extension, compromise or renewal of any Obligations;

(d)           any reduction, limitation, impairment or termination of any Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations or otherwise;

(e)           any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Basic Document;

(f)           any addition, exchange or release of any Collateral or of any Person that is (or will become) a Grantor (including the Grantors hereunder) of the Obligations, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Obligations; or

(g)           any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Obligor, any surety or any guarantor.

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2.06           Postponement of Subrogation.  Each Grantor agrees that it will not exercise any rights against another Grantor which it may acquire by way of rights of subrogation under any Basic Document to which it is a party.  No Grantor shall seek or be entitled to seek any contribution or reimbursement from any Obligor, in respect of any payment made under any Basic Document or otherwise, until following the Revolving Credit Commitment Termination Date and the indefeasible payment in full of the Obligations.  Any amount paid to such Grantor on account of any such subrogation rights prior to the Revolving Credit Commitment Termination Date and the indefeasible payment in full of the Obligations shall be held in trust for the benefit of the Secured Parties and shall immediately be paid and turned over to the Agent for the benefit of the Secured Parties in the exact form received by such Grantor (duly endorsed in favor of the Agent, if required), to be credited and applied against the Obligations, whether matured or unmatured, in accordance with Section 6.01; provided that if such Grantor has made payment to the Secured Parties of all or any part of the Obligations and the Revolving Credit Commitment Termination Date has occurred and the Obligations have been indefeasibly paid in full, then at such Grantor's request, the Agent (on behalf of the Secured Parties) will, at the expense of such Grantor, execute and deliver to such Grantor appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to such Grantor of an interest in the Obligations resulting from such payment.  In furtherance of the foregoing, at all times prior to the Revolving Credit Commitment Termination Date and the indefeasible payment in full of the Obligations, such Grantor shall refrain from taking any action or commencing any proceeding against any Obligor (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in respect of payments made under this Security Agreement to any Secured Party.

SECTION 3

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to enter into the Credit Agreement and make credit extensions thereunder, and to induce the Secured Parties to make other financial accommodations secured by this Security Agreement, the Grantors represent and warrant to each Secured Party as set forth below.

3.01           As to Capital Securities of the Subsidiaries, Investment Property.

(a)           With respect to any direct Subsidiary of any Grantor that is:

(i)            a corporation, business trust, joint stock company or similar Person, all Capital Securities issued by such Subsidiary are duly authorized and validly issued, fully paid and non-assessable, and represented by a certificate; and

(ii)            a partnership or limited liability company, no Capital Securities issued by such Subsidiary (A) are dealt in or traded on securities exchanges or in securities markets, (B) expressly provide that such Capital Securities are a security governed by Article 8 of the UCC or (C) are held in a Securities Account, except, with respect to this clause (a)(ii), Capital Securities (x) for which the Agent is the registered owner or (y) with respect to which the issuer has agreed in an authenticated record with such Grantor and the Agent to comply with any instructions of the Agent without the consent of such Grantor.

(b)           The percentage of the issued and outstanding Capital Securities of each Subsidiary pledged by each Grantor hereunder is as set forth on Schedule I.

3.02           Grantors' Names, Locations, etc.

(a)           The jurisdiction in which each Grantor is located for purposes of Sections 9-301 and 9-307 of the UCC is set forth in Item A of Schedule II.

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(b)           Each location a secured party would have filed a UCC financing statement since July 1, 2006 to perfect a security interest in Equipment, Inventory and General Intangibles owned by each Grantor is set forth in Item B of Schedule II.

(c)           As of the Closing Date, the Grantors do not have any trade names other than those set forth in Item C of Schedule II hereto.

(d)           As of the Closing Date, during the four months preceding the date hereof, no Grantors have been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger or other corporate reorganization, except as set forth in Item D of Schedule II hereto.

(e)           Each Grantor's federal taxpayer identification number is (and, during the four months preceding the date hereof, such Grantor has not had a federal taxpayer identification number different from that) set forth in Item E of Schedule II hereto.

(f)           As of the Closing Date, no Grantor is a party to any federal, state or local government contract except as set forth in Item F of Schedule II hereto.

(g)           As of the Closing Date, no Grantor maintains any Deposit Accounts, Securities Accounts or Commodity Accounts with any Person, in each case, except as set forth on Item G of Schedule II.

(h)           As of the Closing Date, no Grantor is the beneficiary of any Letters of Credit, except as set forth on Item H of Schedule II.

(i)           As of the Closing Date, no Grantor has Commercial Tort Claims, except as set forth on Item I of Schedule II.

(j)           The name set forth on the signature page attached hereto is the true and correct legal name (as defined in the UCC) of each Grantor.

(k)           As of the Closing Date, no third party has possession of any Inventory or Equipment except for Inventory in transit and Inventory held by the Persons designated on Item J of Schedule II.

3.03           Ownership, No Liens, etc.  Each Grantor owns its Collateral free and clear of any Lien, except for any security interest (a) created by this Security Agreement and (b) in the case of Collateral other than the Capital Securities of each Subsidiary pledged hereunder, that is a Permitted Lien.  No effective UCC financing statement or other filing similar in effect covering all or any part of the Collateral is on file in any recording office, except those filed in favor of the Agent relating to this Security Agreement, Permitted Liens or as to which a duly authorized termination statement relating to such UCC financing statement or other instrument has been delivered to the Agent on or after the Closing Date.

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3.04           Possession of Inventory, Control; etc.

(a)           Each Grantor has, and agrees that it will maintain, exclusive possession of its Documents, Instruments, Promissory Notes, Goods, Equipment and Inventory, other than (i) Equipment and Inventory in transit in the ordinary course of business, (ii) Equipment and Inventory that is in the possession or control of a warehouseman, bailee, agent or other Person in the Grantor's ordinary course of business and (iii) Instruments or Promissory Notes that have been delivered to the Agent pursuant to Section 3.5.  In the case of Equipment or Inventory described in clause (ii) above, no lessor or warehouseman of any premises or warehouse upon or in which such Equipment or Inventory is located has: (i) issued any warehouse receipt, other receipt in the nature of a warehouse receipt or other Document in respect of any such Equipment or Inventory except non-negotiable Documents and except for negotiable Documents (which negotiable Documents, if the Inventory covered thereby is included in the Borrowing Base, have been delivered to the Agent or its agent or bailee), (ii) received notification of any secured party's interest (other than the security interest granted hereunder) in any such Equipment or Inventory or (iii) any Lien on any such Equipment or Inventory except, with respect to a lessor, contractual and statutory landlord liens securing rent that is not past due and with respect to a warehouseman, Liens securing storage obligations which are not past due.

(b)           Each Grantor is the sole entitlement holder of its Deposit, Commodity and Security Accounts and no other Person (other than the Agent pursuant to this Security Agreement or any other Person with respect to Permitted Liens) has control or possession of, or any other interest in, any of its Deposit, Commodity and Security Accounts or any other securities or property credited thereto.

(c)           As of the Closing Date, except for the Persons designated on Schedule II who hold Collateral in the capacity designated thereon and any other Person hereafter identified pursuant to Section 4.07, no Person other than Agent has possession or control of any of its Collateral.

3.05           Negotiable Documents, Instruments and Chattel Paper.  Except as permitted by Sections 4.03 and 4.07, each Grantor has delivered to the Agent possession of all originals of all Documents, Instruments, Promissory Notes, and tangible Chattel Paper owned or held by such Grantor on the Closing Date.

3.06           Intellectual Property Collateral. Except as disclosed on Schedules III through V, with respect to any Intellectual Property Collateral:

(a)           such Intellectual Property Collateral is valid, subsisting, unexpired and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part except as could not be expected to have a Material Adverse Effect;

(b)           such Grantor is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to such Intellectual Property Collateral and no claim has been made that the use of such Intellectual Property Collateral does or may, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate any of the rights of any third party;

(c)           such Grantor has made all necessary filings and recordations to protect its interest in such Intellectual Property Collateral material to its business, including recordations of all of its interests in the Patent Collateral and Trademark Collateral material to its business in the United States Patent and Trademark Office and in corresponding offices throughout the world, and its claims to the Copyright Collateral in the United States Copyright Office and in corresponding offices throughout the world;

(d)           such Grantor has taken all reasonable steps to safeguard its Trade Secrets and to its knowledge (A) none of the Trade Secrets of such Grantor has been used, divulged, disclosed or appropriated for the benefit of any other Person other than such Grantor; (B) no employee, independent contractor or agent of such Grantor has misappropriated any Trade Secrets of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of such Grantor; and (C) no employee, independent contractor or agent of such Grantor is in default or breach of any term of any employment agreement, non-disclosure agreement, assignment of inventions agreement or similar agreement or contract relating in any way to the protection, ownership, development, use or transfer of such Grantor's Intellectual Property Collateral;

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(e)           to such Grantor's knowledge, no third party is infringing upon any Intellectual Property owned or used by such Grantor in any material respect, or any of its respective licensees;

(f)           no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by such Grantor or to which such Grantor is bound that adversely affects its rights to own or use any Intellectual Property except as would not have a Material Adverse Effect;

(g)           such Grantor has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of any Intellectual Property for purposes of granting a security interest or as Collateral that has not been terminated or released;

(h)           such Grantor uses adequate standards of quality in the manufacture, distribution, and sale of all products sold and in the provision of all services rendered under or in connection with all Trademarks and has taken all commercially reasonable action necessary to insure that all licensees of the Trademarks owned by such Grantor use such adequate standards of quality;

(i)           the consummation of the transactions contemplated by the Credit Agreement and this Security Agreement will not result in the termination or material impairment of any of the Intellectual Property Collateral;

(j)           such Grantor owns directly or is entitled to use by license or otherwise, all Patents, Trademarks, Trade Secrets, Copyrights, mask works, licenses, technology, know-how, processes and rights with respect to any of the foregoing used in, necessary for or of importance to the conduct of such Grantor's business; and

(k)           the Intellectual Property Collateral disclosed on Schedules III through V is not material to the operations or business of any Grantor, is of negligible economic value to the Grantors and its value is otherwise not material.

3.07           Validity, etc.

(a)           This Security Agreement creates a valid security interest in the Collateral securing the payment of the Obligations.

(b)           Each Grantor has authenticated all UCC-1 financing statements in the filing office for such Grantor's jurisdiction of organization listed in Item A of Schedule II (collectively, the "Filing Statements") and, except as otherwise provided in Section 4.07, has taken all other:

(i)            actions necessary to obtain control of the Collateral as provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC; and

(ii)            actions necessary to perfect the Agent's security interest with respect to any Collateral evidenced by a certificate of ownership.

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(c)           Upon the filing of the Filing Statements with the appropriate agencies therefor the security interests created under this Security Agreement shall constitute a perfected security interest in the Collateral described on such Filing Statements in favor of the Agent on behalf of the Secured Parties to the extent that a security interest therein may be perfected by filing pursuant to the relevant UCC, prior to all other Liens, except for Permitted Liens (in which case such security interest shall be second in priority of right only to the Permitted Liens until the obligations secured by such Permitted Liens have been satisfied).

3.08           Authorization, Approval, etc.  Except as have been obtained or made and are in full force and effect, no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required either:

(a)           for the grant by the Grantors of the security interest granted hereby or for the execution, delivery and performance of this Security Agreement by the Grantors;

(b)           for the perfection or maintenance of the security interests hereunder including the first priority (subject to Permitted Liens) nature of such security interest (except with respect to the Filing Statements or, with respect to Intellectual Property Collateral material to any Grantor's business, the recordation of any agreements with the U.S. Patent and Trademark Office or the U.S. Copyright Office) or the exercise by the Agent of its rights and remedies hereunder; or

(c)           for the exercise by the Agent of the voting or other rights provided for in this Security Agreement, or, except (i) with respect to any securities issued by a Subsidiary of a Grantor, as may be required in connection with a disposition of such securities by laws affecting the offering and sale of securities generally, the remedies in respect of the Collateral pursuant to this Security Agreement and (ii) any "change of control" or similar filings required by state licensing agencies.

3.09           Best Interests.  It is in the best interests of each Grantor (other than the Company) to execute this Security Agreement inasmuch as such Grantor will, as a result of being a Subsidiary of the Company, derive substantial direct and indirect benefits from the Loans and other extensions of credit secured hereby and each Grantor agrees that the Secured Parties are relying on this representation in agreeing to make such Loans and other extensions of credit.

3.10           Titled Equipment, etc.  No Grantor owns any:  (i) Equipment for which a certificate of title has been issued, (ii) vessels documented under Chapter 121, Title 46, United States Code (the Ship Mortgage Act) or for which an application for documentation is pending; (iii) rail cars nor (iv) aircraft.

3.11           Value of Excluded Property.  The aggregate book value of the assets excluded from the Collateral under the provisions of clauses (ii) and (iv) of Section 2.01 does not exceed $500,000 as of the Closing Date.

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SECTION 4

COVENANTS

Each Grantor covenants and agrees that, until the Revolving Credit Commitment Termination Date and the indefeasible payment in full of the Obligations, such Grantor will perform, comply with and be bound by the obligations set forth below.

4.01           As to Investment Property, etc.

(a)           Capital Securities of Subsidiaries.  No Grantor will allow any of its Subsidiaries

(i)           that is a corporation, business trust, joint stock company or similar Person, to issue Uncertificated Securities;

(ii)           that is a partnership or limited liability company, to (A) issue Capital Securities that are to be dealt in or traded on securities exchanges or in securities markets, (B) expressly provide in its Organic Documents that its Capital Securities are securities governed by Article 8 of the UCC, or (C) place such Subsidiary's Capital Securities in a Securities Account; and

(iii)           to issue Capital Securities in addition to or in substitution for the Capital Securities pledged hereunder, except to such Grantor (and such Capital Securities are immediately pledged and delivered to the Agent pursuant to the terms of this Security Agreement).

(b)           Continuous Pledge.  Each Grantor will (subject to the terms of the Credit Agreement) deliver to the Agent and at all times keep pledged to the Agent pursuant hereto, on a first-priority, perfected basis all Payment Intangibles to the extent they are evidenced by a Document, Instrument, Promissory Note or Chattel Paper, and all interest and principal with respect to such Payment Intangibles, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral.  Each Grantor agrees that it will, promptly following receipt thereof, deliver to the Agent possession of all originals of negotiable Documents, Instruments, Promissory Notes and Chattel Paper that it acquires following the Closing Date.

(c)           Voting Rights; Dividends, etc.  Each Grantor agrees, promptly upon receipt of notice of the existence of a Specified Default from the Agent and without any request therefor by the Agent, so long as such Specified Default shall continue, to deliver (properly endorsed where required hereby or requested by the Agent) to the Agent interest, principal, and all Proceeds of the Collateral, in each case thereafter received by such Grantor, all of which shall be held by the Agent as additional Collateral.  All dividends, Distributions, interest, principal, cash payments, Payment Intangibles and Proceeds that may at any time and from time to time be held by such Grantor, but which such Grantor is then obligated to deliver to the Agent, shall, until delivery to the Agent, be held by such Grantor separate and apart from its other property in trust for the Agent.  The Agent agrees that unless a Specified Default shall exist and the Agent shall have given the notice referred to in clause (b), such Grantor will have the exclusive voting power with respect to any Investment Property constituting Collateral and the Agent will, upon the written request of such Grantor, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Grantor which are necessary to allow such Grantor to exercise that voting power; provided that no vote shall be cast, or consent, waiver, or ratification given, or action taken by such Grantor that would impair any such Collateral or be inconsistent with or violate any provision of any Basic Document.

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4.02           Change of Name, etc. No Grantor will change its name or place of incorporation or organization or federal taxpayer identification number except upon 30 days' prior written notice to the Agent.

4.03           As to Accounts.

(a)           Each Grantor shall have the right to collect all Accounts so long as no Specified Default exists.

(b)           Upon (i) the occurrence and continuance of a Specified Default and (ii) the delivery of notice by the Agent to each Grantor, all Proceeds of Collateral received by such Grantor shall be delivered in kind to the Agent for deposit in a Deposit Account of such Grantor maintained with the Agent (together with any other Accounts pursuant to which any portion of the Collateral is deposited with the Agent, the "Collateral Accounts"), and such Grantor shall not commingle any such Proceeds, and shall hold separate and apart from all other property, all such Proceeds in express trust for the  benefit of the Agent until delivery thereof is made to the Agent.

(c)           Following (i) the occurrence and continuance of a Specified Default and (ii) the delivery of notice pursuant to clause (b)(ii), the Agent shall have the right to apply any amount in the Collateral Account to the payment of any Obligations which are due and payable.

(d)           With respect to each of the Collateral Accounts after (i) the occurrence and continuance of a Specified Default and (ii) the delivery of notice pursuant to clause (b)(ii), it is hereby confirmed and agreed that (A) deposits in such Collateral Account are subject to a security interest as contemplated hereby, (B) such Collateral Account shall be under the control of the Agent and (C) the Agent shall have the sole right of withdrawal over such Collateral Account.

4.04           As to Grantors' Use of Collateral.

(a)           Subject to clause (b), each Grantor (i) may in the ordinary course of its business, at its own expense, sell, lease or furnish under the contracts of service any of the Inventory normally held by such Grantor for such purpose, and use and consume, in the ordinary course of its business, any raw materials, work in process or materials normally held by such Grantor for such purpose, (ii) will, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Collateral, including the taking of such action with respect to such collection as the Agent may request following the occurrence of a Specified Default or, in the absence of such request, as such Grantor may deem advisable, and (iii) may grant, in the ordinary course of business, to any party obligated on any of the Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Collateral.

(b)           At any time following the occurrence and during the continuance of  a Specified Default, whether before or after the maturity of any of the Obligations, the Agent may (i) revoke any or all of the rights of each Grantor set forth in clause (a), (ii) notify any parties obligated on any of the Collateral to make payment to the Agent of any amounts due or to become due thereunder and (iii) enforce collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby.

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(c)           Upon request of the Agent following the occurrence and during the continuance of a Specified Default, each Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to the Agent of any amounts due or to become due thereunder.

(d)           At any time following the occurrence and during the continuation of a Specified Default, the Agent may endorse, in the name of such Grantor, any item, howsoever received by the Agent, representing any payment on or other Proceeds of any of the Collateral.

4.05           As to Intellectual Property Collateral.  Each Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral material to the operations or business of such Grantor:

(a)           such Grantor will not (i) do or fail to perform any act whereby any of the Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable, (ii) permit any of its licensees to (A) fail to continue to use any of the Trademark Collateral in order to maintain all of the Trademark Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under all of the Trademark Collateral, (C) fail to employ all of the Trademark Collateral registered with any federal or state or foreign authority with an appropriate notice of such registration, (D) adopt or use any other Trademark which is confusingly similar or a colorable imitation of any of the Trademark Collateral, (E) use any of the Trademark Collateral registered with any federal, state or foreign authority except for the uses for which registration or application for registration of all of the Trademark Collateral has been made or (F) do or permit any act or knowingly omit to do any act whereby any of the Trademark Collateral may lapse or become invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do any act whereby any of the Copyright Collateral or any of the Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof, unless, in the case of any of the foregoing requirements in clauses (i), (ii) and (iii), such Grantor shall either (x) reasonably and in good faith determine that any of such Intellectual Property Collateral is of negligible economic value to such Grantor, or (y) the loss of the Intellectual Property Collateral would not have a Material Adverse Effect on the business;

(b)           such Grantor shall promptly notify the Agent if it knows, or has reason to know, that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any foreign counterpart thereof or any court) regarding such Grantor's ownership of any of the Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same;

(c)           in no event will such Grantor or any of its agents, employees, designees or licensees file an application for the registration of any Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, unless it promptly informs the Agent, and upon request of the Agent (subject to the terms of the Credit Agreement), executes and delivers all agreements, instruments and documents as the Agent may request to evidence the Agent's security interest in such Intellectual Property Collateral;

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(d)           such Grantor will take all necessary steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or (subject to the terms of the Credit Agreement) any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, the Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clause (a) or (b)); and

(e)           such Grantor will promptly execute and deliver to the Agent (as applicable) a Patent Security Agreement, Trademark Security Agreement and/or Copyright Security Agreement, as the case may be, in the forms of Exhibit A, Exhibit B and Exhibit C hereto following its obtaining an interest in any such Intellectual Property, and shall execute and deliver to the Agent any other document required to acknowledge or register or perfect the Agent's interest in any part of such item of Intellectual Property Collateral unless such Grantor shall determine in good faith (with the consent of the Agent) that any Intellectual Property Collateral is of negligible economic value to such Grantor.

4.06           As to Commercial Tort Claims.  Each Grantor covenants and agrees that, until the payment in full of the Obligations and termination of all Commitments, with respect to any Commercial Tort Claim in excess of $1,000,000 individually or in the aggregate hereafter arising, it shall deliver to the Agent a supplement in form and substance reasonably satisfactory to the Agent, together with all supplements to schedules thereto identifying such new Commercial Tort Claims.

4.07           Further Assurances; Exceptions to Perfection.  Each Grantor agrees that, from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Agent may request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, such Grantor will

(a)           from time to time upon the request of the Agent, promptly deliver to the Agent such stock powers, instruments and similar documents, satisfactory in form and substance to the Agent, with respect to such Collateral as the Agent may request and will, from time to time upon the request of the Agent, after the occurrence and during the continuance of any Specified Default, promptly transfer any securities constituting Collateral into the name of any nominee designated by the Agent; if any Collateral shall be evidenced by an Instrument, negotiable Document, Promissory Note or tangible Chattel Paper, deliver and pledge to the Agent hereunder such Instrument, negotiable Document, Promissory Note or tangible Chattel Paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Agent;

(b)           file (and hereby authorize the Agent to file) such Filing Statements or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary or that the Agent may request in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Agent hereby;

(c)           deliver to the Agent and at all times keep pledged to the Agent pursuant hereto, on a first-priority, perfected basis, at the request of the Agent, all Investment Property constituting Collateral and all interest and principal with respect to Promissory Notes, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral;

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(d)           not take or omit to take any action the taking or the omission of which would result in any impairment or alteration of any obligation of the maker of any Payment Intangible or other Instrument constituting Collateral;

(e)           not create any tangible Chattel Paper without placing a legend on such tangible Chattel Paper reasonably acceptable to the Agent indicating that the Agent has a security interest in such Chattel Paper;

(f)           furnish to the Agent, from time to time at the Agent's reasonable request, statements and schedules identifying the location of all Equipment and Inventory;

(g)           furnish to the Agent, from time to time at the Agent's reasonable request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may request, all in reasonable detail;

(h)           use commercially reasonable efforts to obtain a lien subordination or waiver agreement in a form reasonably approved by the Agent from the landlord of each location that it or any of its Subsidiaries leases and at which any Inventory is located and a mortgagee lien subordination or waiver in a form reasonably approved by the Agent from each location it or any of its Subsidiaries owns that is mortgaged to a third party;

(i)           use commercially reasonable efforts to obtain a lien acknowledgement in a form reasonably acceptable to the Agent from each third party warehouse at which any Inventory is customarily stored; and

(j)           do all things reasonably requested by the Agent in order to enable the Agent to have and maintain control over the Collateral consisting of Investment Property, Deposit Accounts, Letter-of-Credit-Rights and Electronic Chattel Paper.

With respect to the foregoing and the grant of the security interest hereunder, each Grantor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral.  Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any UCC financing statement covering the Collateral or any part thereof shall be sufficient as a UCC financing statement where permitted by law.  Each Grantor hereby authorizes the Agent to file financing statements describing as the collateral covered thereby "all of the debtor's personal property or assets" or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this Security Agreement.

Notwithstanding the foregoing however, if no Specified Default exists:

(i)            a Grantor may retain for collection in the ordinary course of business checks representing proceeds of Accounts received in the ordinary course of business;

(ii)            a Grantor may retain any letters of credit and money received or held in the ordinary course of business;

(iii)            a Grantor may retain and utilize in the ordinary course of business all dividends and interest paid in respect to any of the Capital Securities or any other Investment Property;

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(iv)            a Grantor may retain any Documents received and further negotiated in the ordinary course of business (except for Documents required to be delivered to the Agent with respect to Inventory included in the Borrowing Base); and

(v)            a Grantor shall not be required to:

(A)         cause the Agent's security interest to be noted on any certificate of title evidencing any Equipment;

(B)         grant the Agent control over any Chattel Paper or Letter of Credit Right;

(C)         grant the Agent control over any Deposit Account, Security Account or Commodity Account unless such Collateral is included in the Borrowing Base; or

(D)         take any action under the laws of any jurisdiction other than the United States of America or any jurisdiction located therein to create, perfect or protect the security interest of the Agent in any Intellectual Property registered outside the United States of America.

If a Specific Default occurs and the Agent requests, then the Grantors shall take such action as the Agent may reasonably request to perfect and protect the security interests of the Agent in all of the Collateral including any of the Collateral described in clauses (A) through (D) above.

4.08           Deposit Accounts, Securities Accounts and Commodities Accounts.  Following the occurrence and during the continuance of a Specified Default, at the request of the Agent or the Required Banks, each Grantor will maintain all of its Deposit Accounts only with JPMorgan, the Agent or with any depositary institution that has entered into a Control Agreement in favor of the Agent.  No Grantor will open any new Deposit, Commodity or Security Account or otherwise utilize any such account other than the accounts identified on the Schedules hereto unless such accounts are opened at the Agent or unless it shall have given the Agent thirty (30) days prior written notice thereof.  When no Specified Default exists, it may make purchases and sales of Investment Property in accordance with the restrictions on investment set out in the Credit Agreement and may make withdrawals from its Deposit Accounts.  When a Specified Default exists and the Agent provides the Company notice, no Grantor shall be authorized to make purchases and sales of the Investment Property, be authorized to make any withdrawals from any Deposit Account and it shall take such steps as Agent may reasonably request to give Agent control over all Investment Property and Deposit Accounts.  No Grantor will give any party control over any Investment Property or Deposit Account.

4.09           Equipment and Inventory.  Each Grantor shall keep its Equipment and Inventory in (or in transit to) to the United States of America or, upon thirty (30) days prior written notice to the Agent, at such other places where all action required to perfect and protect the Agent's security interest in such Collateral with the priority required by the Credit Agreement shall have been taken.  Each Grantor shall notify the Agent if it acquires after the Closing Date any vessel subject to the Ship Mortgage Act of 1920 or any aircraft and, subject to Section 4.07, shall take all action reasonably deemed necessary or desirable by the Agent to create, perfect and protect its interest in such Collateral with the priority required by the Credit Agreement.

4.10           Warehouse Receipts Non Negotiable.  Each Grantor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued in respect of any portion of the Collateral, such warehouse receipt or receipt in the nature thereof shall not be negotiable unless such warehouse receipt or receipt in the nature thereof is delivered to the Agent.

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4.11           Chattel Paper and Letters of Credit.  No Grantor will give any party control over any Letter of Credit Right or electronic Chattel Paper.

SECTION 5

THE AGENT

5.01           Agent Appointed Attorney-in-Fact.  Each Grantor hereby irrevocably appoints the Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Agent's discretion, following the occurrence and during the continuance of a Specified Default, to take any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including:

(a)           to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;

(b)           to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper, in connection with clause (a) above;

(c)           to file any claims or take any action or institute any proceedings which the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Agent with respect to any of the Collateral; and

(d)           to perform the affirmative obligations of such Grantor hereunder.

Each Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest.

5.02           Agent May Perform.  If any Grantor fails to perform any agreement contained herein or in any other Basic Document, the Agent may itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 11.03 of the Credit Agreement.

5.03           Agent Has No Duty.  The powers conferred on the Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers.  Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral or responsibility for

(a)           ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Investment Property, whether or not the Agent has or is deemed to have knowledge of such matters, or

(b)           taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

5.04           Reasonable Care.  The Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided that the Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral, if it takes such action for that purpose as each Grantor reasonably requests in writing at times other than upon the occurrence and during the continuance of any Specified Default, but failure of the Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.

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SECTION 6

REMEDIES

6.01           Certain Remedies.  If any Event of Default exists:

(a)           The Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a Secured Party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may

(i)            take possession of any Collateral not already in its possession without demand and without legal process;

(ii)            require each Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Agent forthwith, assemble all or part of the Collateral as directed by the Agent and make it available to the Agent at a place to be designated by the Agent that is reasonably convenient to both parties,

(iii)            enter onto the property where any Collateral is located and take possession thereof without demand and without legal process;

(iv)            without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially reasonable.  Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' prior notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given.  The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b)           All cash Proceeds received by the Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by the Agent as provided in the Credit Agreement.

(c)           The Agent may

(i)            transfer all or any part of the Collateral into the name of the Agent or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder,

(ii)            notify the parties obligated on any of the Collateral to make payment to the Agent of any amount due or to become due thereunder,

(iii)            withdraw, or cause or direct the withdrawal, of all funds with respect to the Collateral Account;

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(iv)            enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto,

(v)            endorse any checks, drafts, or other writings in any Grantor's name to allow collection of the Collateral,

(vi)            take control of any Proceeds of the Collateral, and

(vii)            execute (in the name, place and stead of any Grantor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral.

6.02           Securities Laws.

(a)           If the Agent shall determine to exercise its right to sell all or any portion of the Collateral pursuant to Section 6.01, each Grantor agrees that, upon request of the Agent, each Grantor will, at its own expense:

(i)            execute and deliver, and cause (or, with respect to any issuer which is not a Subsidiary of such Grantor, use its best efforts to cause) each issuer of the Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended (the "Securities Act"), and cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto;

(ii)            use its best efforts to exempt the Collateral under the state securities or "Blue Sky" laws and to obtain all necessary governmental approvals for the sale of the Collateral, as requested by the Agent;

(iii)            cause (or, with respect to any issuer that is not a Subsidiary of a Grantor, use its best efforts to cause) each such issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and

(iv)            do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

(b)           Each Grantor acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Agent or the Secured Parties by reason of the failure by such Grantor to perform any of the covenants contained in this Section and consequently agrees that, if such Grantor shall fail to perform any of such covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value (as determined by the Agent) of such Collateral on the date the Agent shall demand compliance with this Section.

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6.03           Compliance with Restrictions.  Each Grantor agrees that in any sale of any of the Collateral whenever an Event of Default exists, the Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and such Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

6.04           Protection of Collateral.  The Agent may from time to time, at its option, perform any act which any Grantor fails to perform with respect to the maintenance, preservation and protection of the Collateral after being requested in writing so to perform (it being understood that no such request need be given after the occurrence and during the continuance of an Event of Default) and the Agent may from time to time take any other action which the Agent deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein.

6.05           Standards for Exercising Remedies.  To the extent that applicable law imposes duties on Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for Agent: (a) to fail to incur expenses reasonably deemed significant by Agent to prepare any Collateral for disposition or otherwise to complete raw material for work-in-process into finished goods or other finished products for disposition; (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of the Collateral to be collected or disposed of; (c) to fail to exercise collection remedies against account Grantors or other persons obligated on Collateral or to remove Liens on or any adverse claims against the Collateral; (d) to exercise collection remedies against account Grantors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists; (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature; (f) to contact other persons, whether or not in the same business as Grantor, for expressions of interest in acquiring all or any portion of the Collateral; (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature; (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets; (i) to dispose of assets in wholesale rather than retail markets; (j) to disclaim disposition warranties; (k) to purchase insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of Collateral or to provide Agent a guaranteed return from the collection or disposition of Collateral; (l) to the extent deemed appropriate by Agent, to obtain the services of brokers, investment bankers, consultants and other professionals (including Agent and its affiliates) to assist Agent in the collection or disposition of any of the Collateral; or (m) to comply with any applicable state or federal law requirement in connection with the disposition or collection of the Collateral.  Each Grantor acknowledges that this Section is intended to provide non-exhaustive indications of what actions or omissions by Agent would not be commercially unreasonable in Agent's exercise of remedies against the Collateral and that other actions or omissions by Agent shall not be deemed commercially unreasonable solely by not being included in this Section.  Without limitation upon the foregoing, nothing contained in this Section shall be construed to grant any rights to any Grantor or to impose any duties upon Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

22

SECTION 7

MISCELLANEOUS PROVISIONS

7.01           Basic Document.  This Security Agreement is a Basic Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article XI thereof.

7.02           Binding on Successors, Transferees and Assigns; Assignment.  This Security Agreement shall remain in full force and effect until the Revolving Credit Commitment Termination Date has occurred and the Obligations have been indefeasibly paid in full, shall be binding upon the Grantors and their successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided that no Grantor may (unless otherwise permitted under the terms of the Credit Agreement or this Security Agreement) assign any of its obligations hereunder without the prior written consent of all Banks.

7.03           Amendments, etc.  Except as provided in Section 7.05, no amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Agent (on behalf of the Banks or the Required Banks, as the case may be, pursuant to Section 11.04 of the Credit Agreement) and the Grantors and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

7.04           Notices.  All notices and other communications provided for in this Security Agreement shall be given or made in accordance with the Credit Agreement and if to any Grantor, at the address for notices of the Company set forth therein.

7.05           Additional Grantors.  Upon the execution and delivery by any other Person of a supplement in the form of Annex I hereto, such Person shall become a "Grantor" hereunder with the same force and effect as if it were originally a party to this Security agreement and named as a "Grantor" hereunder.  The execution and delivery of such supplement shall not require the consent of any other Grantor hereunder, and the rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.

7.06           No Waiver; Remedies.  In addition to, and not in limitation of Section 2.4, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

7.07           Headings.  The various headings of this Security Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provisions thereof.

7.08           Severability.  Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

23

7.09           Governing Law, Entire Agreement, etc.  THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT THE PERFECTION, EFFECT OF PERFECTION OR NONPERFECTION, AND PRIORITY OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.  This Security Agreement and the other Basic Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect thereto.

7.10           Counterparts.  This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.  Delivery of an executed counterpart of a signature page to this Security Agreement by facsimile or other electronic communication shall be effective as delivery of a manually executed counterpart of this Security Agreement.

IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its Authorized Officer as of the date first above written.

EMPIRE RESOURCES, INC.
EMPIRE RESOURCES PACIFIC, LTD.
By:
	Sandra R. Kahn, Vice President of each Grantor
COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
By:
	Kimberly Oates, Executive Director
By:
	Brett D. Delfino, Executive Director

24

Schedules

to

Security Agreement

Schedule I

			Common Stock
Issuer (corporate)	Cert. #	# of Shares	Authorized Shares	Outstanding Shares	% of Shares Pledged
EMPIRE RESOURCES PACIFIC, LTD.	4	100	1,000	100	100%
IMBALI METALS BVBA (limited to 65%)	n/a	650	1,000	1,000	65%

Schedule II

Item A. Location of each Grantor.

Location for purposes of UCC:

1. EMPIRE RESOURCES, INC.: Delaware

2. EMPIRE RESOURCES PACIFIC, LTD. : Delaware

Item B. Filing locations last five years.

Filing Locations last five years:

1. EMPIRE RESOURCES, INC.: Delaware Secretary of State

2. EMPIRE RESOURCES PACIFIC, LTD. : Delaware Secretary of State

Item C. Trade names.

1. EMPIRE RESOURCES, INC.: PAM Metals, 4Metals.com

2. EMPIRE RESOURCES PACIFIC, LTD. : None

Item D. Merger or other corporate reorganization.

1. EMPIRE RESOURCES, INC.: None

2. EMPIRE RESOURCES PACIFIC, LTD. : None

Item E. Taxpayer ID numbers.

1. EMPIRE RESOURCES, INC.: 22-3136782

2. EMPIRE RESOURCES PACIFIC, LTD. : 22-3458576

Item F.  Government Contracts.

1. EMPIRE RESOURCES, INC.: None

2. EMPIRE RESOURCES PACIFIC, LTD. : None

Item G.  Deposit Accounts, Securities Accounts and/or Commodities Accounts.

Description of Deposit Account:

1. EMPIRE RESOURCES, INC.: JPMorgan Chase Bank deposit account number 9102535458

2. EMPIRE RESOURCES PACIFIC, LTD. : None

Description of Securities Account:

None

Description of Commodities Account:

1. Natixis Commodity Markets Ltd. – EMPRESS

2. J. P. Morgan Chase Bank – 70432

3. Marex Financial – 04216

4. Man Financial – 37510

Item H.  Letter of Credit Rights.

1. EMPIRE RESOURCES, INC.: None

2. EMPIRE RESOURCES PACIFIC, LTD. : None

Item I.  Commercial Tort Claims.

1. EMPIRE RESOURCES, INC.: None

2. EMPIRE RESOURCES PACIFIC, LTD. : None

Item J.  Third Parties in Possession

1. EMPIRE RESOURCES, INC.: As set forth in the table below:

2. EMPIRE RESOURCES PACIFIC, LTD. : None

Warehouse Name	Street Address	City	ST	ZIP
Third Party Locations:
ADS	6012 South 195th Street	Kent	WA	98032
Amerinox	2201 MT Ephriam Ace	Camden	NJ	08104
Bayou Processing and Storage	13925 Industrial Road	Houston	TX	77015
Dependable Warehousing and Dist	2900 NW 75th Street	Miami	FL	33147
EG Gray	100 Jameson Drive	Peterborough	ON	K9J6X6
Keep on Trucking	3025 East Dominguez Street	Carson	CA	90810
Main Steel	5821 Randolph Street	Commerce	CA	90040
Maryland Metals	4425A Northpoint Blvd.	Baltimore	MD	21224
Metal Processors	200 South Falkenburg Road	Tampa	FL	33619
Pacific Commodities	901 King Street	Oakland	CA	94606
Southern Worldwide	9649 West Wingfoot	Houston	TX	77041
TSA	1625 B West Sam Houston Parkway	Houston	TX	77043
Universal Trade Solutions	4000 Beachwood Road	Baltimore	MD	21221
Customer Locations:
Bomarko	1955 North Oak Road	Plymouth	IN	46563
Eastern Metal Supply	2925 Stewart Creek Blvd.	Charlotte	NC	28216
Illinois Tool Works	9505 Bamboo Road	Houston	TX	77041
Clayton Metals	16022 Carmenita Road	Cerritos	CA	90703

Schedule III

Item A.  Patents

Patent Title	Owner	Patent No.
Data Network/ Telephone Adaptor Device	Empire Resources, Inc.	5,838,665

Pending Patent Applications

NONE

Patent Applications In Preparation

NONE

Item B.  Patent Licenses

NONE

Schedule IV

Item A. Trademarks

Mark	Owner	Serial or Reg. No.
	Empire Resources, Inc.	3,265,785

Item B.  Trademark Licenses

NONE

Schedule V

Item A.  Copyrights/Mask Works

NONE

Item B.  Copyright/Mask Work Licenses

NONE

Schedule VI

Trade Secret or Know-How Licenses

NONE

EXHIBIT A

to Security Agreement

PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT, dated as of [_________], 20__ (this "Agreement"), is made by [NAME OF GRANTOR], a [_______________] (the "Grantor"), in favor of COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent (together with its successor(s) thereto in such capacity, the "Agent") for each of the Secured Parties.

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Company, the Banks and the Agent, the Banks have extended Commitments to make Loans to, issue Letters of Credit for the account of and create Acceptances to the Company;

WHEREAS, in connection with the Credit Agreement, the Grantor has executed and delivered a Security Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Security Agreement");

WHEREAS, pursuant to the Credit Agreement and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor is required to execute and deliver this Agreement and to grant to the Agent a continuing security interest in all of the Patent Collateral (as defined below) to secure all Obligations; and

WHEREAS, the Grantor has duly authorized the execution, delivery and performance of this Agreement; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees, for the benefit of each Secured Party, as follows:

SECTION 1.  Definitions.  Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Security Agreement.

SECTION 2.  Grant of Security Interest.  The Grantor hereby assigns, pledges, hypothecates, charges, mortgages, delivers, and transfers to the Agent, for its benefit and the ratable benefit of each other Secured Party, and hereby grants to the Agent, for its benefit and the ratable benefit of each other Secured Party, a continuing security interest in all of the following property, whether now or hereafter existing or acquired by the Grantor (the "Patent Collateral"):

(a)           all of its letters patent and applications for letters patent throughout the world, including all patent applications in preparation for filing and each patent and patent application referred to in Item A of Schedule I attached hereto;

(b)           all reissues, divisions, continuations, continuations in part, extensions, renewals and reexaminations of any of the items described in clause (a);

A-1

(c)           all of its patent licenses, and other agreements providing the Grantor with the right to use any items of the type referred to in clauses (a) and (b) above, including each patent license referred to in Item B of Schedule I attached hereto; and

(d)           all Proceeds of, and rights associated with, the foregoing (including license royalties and Proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.

SECTION 3.  Security Agreement.  This Agreement has been executed and delivered by the Grantor for the purpose of registering the security interest of the Agent in the Patent Collateral with the United States Patent and Trademark Office and corresponding offices in other countries of the world.  The security interest granted hereby has been granted as a supplement to, and not in limitation of, the security interest granted to the Agent for its benefit and the ratable benefit of each other Secured Party under the Security Agreement.  The Security Agreement (and all rights and remedies of the Agent and each Secured Party thereunder) shall remain in full force and effect in accordance with its terms.

SECTION 4.  Acknowledgment.  The Grantor does hereby further acknowledge and affirm that the rights and remedies of the Agent with respect to the security interest in the Patent Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which (including the remedies provided for therein) are incorporated by reference herein as if fully set forth herein.

SECTION 5.  Basic Document.  This Agreement is a Basic Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article XI thereof.

SECTION 6.  Counterparts.  This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered by its Authorized Officer as of the date first above written.

[NAME OF GRANTOR]
By:
	Name:
	Title:

A-2

SCHEDULE I

to Patent Security Agreement

Item A.  Patents

Issued Patents

Country Patent No. Issue Date Inventor(s) Title

Pending Patent Applications

Country Patent No. Issue Date Inventor(s) Title

Patent Applications in Preparation

Country Docket No. Expected Filing Date Inventor(s) Title

Item B.  Patent Licenses

Country Licensor Licensee Effective Date Expiration Date Subject Matter

A-3

EXHIBIT B

to Security Agreement

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT, dated as of [______________], 20__ (this "Agreement"), is made by [NAME OF GRANTOR], a [__________________] (the "Grantor"), in favor of COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent (together with its successor(s) thereto in such capacity, the "Agent") for each of the Secured Parties.

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Company, the Banks and the Agent, the Banks have extended Commitments to make Loans to, issue Letters of Credit for the account of and create Acceptances to the Company;

WHEREAS, in connection with the Credit Agreement, the Grantor has executed and delivered a Security Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Security Agreement");

WHEREAS, pursuant to the Credit Agreement and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor is required to execute and deliver this Agreement and to grant to the Agent a continuing security interest in all of the Trademark Collateral (as defined below) to secure all Obligations; and

WHEREAS, the Grantor has duly authorized the execution, delivery and performance of this Agreement; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees, for the benefit of each Secured Party, as follows:

SECTION 1.  Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Security Agreement.

SECTION 2.  Grant of Security Interest.  The Grantor hereby assigns, pledges, hypothecates, charges, mortgages, delivers, and transfers to the Agent, for its benefit and the ratable benefit of each other Secured Party, and hereby grants to the Agent, for its benefit and the ratable benefit of each other Secured Party, a continuing security interest in all of the following property, whether now or hereafter existing or acquired by the Grantor (the "Trademark Collateral"):

(a)  (i) all of its Trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired including those referred to in Item A of Schedule I hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America or any State thereof or any other country or political subdivision thereof or otherwise, and all common law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the "Trademark");

B-1

(b)  all Trademark licenses for the grant by or to the Grantor of any right to use any Trademark, including each Trademark license referred to in Item B of Schedule I hereto;

(c)  all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable clause (b);

(d)  the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b); and

(e)  all Proceeds of, and rights associated with, the foregoing, including any claim by the Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.

SECTION 3.  Security Agreement.  This Agreement has been executed and delivered by the Grantor for the purpose of registering the security interest of the Agent in the Trademark Collateral with the United States Patent and Trademark Office and corresponding offices in other countries of the world.  The security interest granted hereby has been granted as a supplement to, and not in limitation of, the security interest granted to the Agent for its benefit and the ratable benefit of each other Secured Party under the Security Agreement.  The Security Agreement (and all rights and remedies of the Agent and each Secured Party thereunder) shall remain in full force and effect in accordance with its terms.

SECTION 4.  Acknowledgment.  The Grantor does hereby further acknowledge and affirm that the rights and remedies of the Agent with respect to the security interest in the Trademark Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which (including the remedies provided for therein) are incorporated by reference herein as if fully set forth herein.

SECTION 5.  Basic Document.  This Agreement is a Basic Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article XI thereof.

B-2

SECTION 6.  Counterparts.  This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered by Authorized Officer as of the date first above written.

[NAME OF GRANTOR]
By:
	Name:
	Title:

B-3

SCHEDULE I

to Trademark Security Agreement

Item A.  Trademarks

Registered Trademarks

Country Trademark Registration No. Registration Date

Pending Trademark Applications

Country Trademark Serial No. Filing Date

Trademark Applications in Preparation

Country Trademark Docket No. Expected Filing Date Products/ Services

Item B.  Trademark Licenses

Country or Territory Trademark Licensor Licensee Effective Date Expiration Date

B-4

EXHIBIT C

to Security Agreement

COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT, dated as of [______________], 20__ (this "Agreement"), is made by [NAME OF GRANTOR], a [__________________] (the "Grantor"), in favor COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent (together with its successor(s) thereto in such capacity, the "Agent") for each of the Secured Parties.

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Company, the Banks and the Agent, the Banks have extended Commitments to make Loans to, issue Letters of Credit for the account of and create Acceptances to the Company;

WHEREAS, in connection with the Credit Agreement, the Grantor has executed and delivered a Security Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Security Agreement");

WHEREAS, pursuant to the Credit Agreement and pursuant to clause (e) of Section 4.5 of the Security Agreement, the Grantor is required to execute and deliver this Agreement and to grant to the Agent a continuing security interest in all of the Copyright Collateral (as defined below) to secure all Obligations; and

WHEREAS, the Grantor has duly authorized the execution, delivery and performance of this Agreement; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees, for the benefit of each Secured Party, as follows:

SECTION 1.  Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Security Agreement.

SECTION 2.  Grant of Security Interest.  The Grantor hereby assigns, pledges, hypothecates, charges, mortgages, delivers, and transfers to the Agent, for its benefit and the ratable benefit of each other Secured Party, and hereby grants to the Agent, for its benefit and the ratable benefit of each other Secured Party, a continuing security interest in all of the following (the "Copyright Collateral"), whether now or hereafter existing or acquired by the Grantor:  all copyrights of the Grantor, whether statutory or common law, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of the Grantor's right, title and interest in and to all copyrights registered in the United States Copyright Office or anywhere else in the world and also including the copyrights referred to in Item A of Schedule I hereto, and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, all copyright licenses, including each copyright license referred to in Item B of Schedule I hereto, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all Proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit.

C-1

SECTION 3.  Security Agreement.  This Agreement has been executed and delivered by the Grantor for the purpose of registering the security interest of the Agent in the Copyright Collateral with the United States Copyright Office and corresponding offices in other countries of the world.  The security interest granted hereby has been granted as a supplement to, and not in limitation of, the security interest granted to the Agent for its benefit and the ratable benefit of each other Secured Party under the Security Agreement.  The Security Agreement (and all rights and remedies of the Agent and each Secured Party thereunder) shall remain in full force and effect in accordance with its terms.

SECTION 4.  Acknowledgment.  The Grantor does hereby further acknowledge and affirm that the rights and remedies of the Agent with respect to the security interest in the Copyright Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which (including the remedies provided for therein) are incorporated by reference herein as if fully set forth herein.

SECTION 5.  Basic Document.  This Agreement is a Basic Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article XI thereof.

SECTION 6.  Counterparts.  This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered by its Authorized Officer as of the date first above written.

[NAME OF GRANTOR]
By:
	Name:
	Title:

C-2

SCHEDULE I

to Copyright Security Agreement

Item A.  Copyrights/Mask Works

Registered Copyright/Mask Works

Country Registration No. Registration Date Authors Title

Copyright/Mask Work Pending Registration Applications

Country Serial No. Filing Date Authors Title

Copyright/Mask Work Registration Applications in Preparation

Country Docket No. Expected Filing Date Authors Title

Item B.  Copyright/Mask Work Licenses

Country or Territory Licensor Licensee Effective Date Expiration Date

C-3

ANNEX I

to Security Agreement

SUPPLEMENT TO

SECURITY AGREEMENT

This SUPPLEMENT, dated as of ____________ ___, _____ (this "Supplement"), is to the Security Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Security Agreement"), among the Grantors (such term, and other terms used in this Supplement, to have the meanings set forth in Section I of the Security Agreement) from time to time party thereto, in favor of COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent (together with its successor(s) thereto in such capacity, the "Agent") for each of the Secured Parties.

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Company, the Banks and the Agent, the Banks have extended Commitments to make Loans to, issue Letters of Credit for the account of and create Acceptances to the Company; and

WHEREAS, pursuant to the provisions of Section 7.05 of the Security Agreement, each of the undersigned is becoming a Grantor under the Security Agreement; and

WHEREAS, each of the undersigned desires to become a "Grantor" under the Security Agreement in order to induce the Secured Parties to continue to make extensions of credit secured pursuant to the Security Agreement under the Credit Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the undersigned agrees, for the benefit of each Secured Party, as follows.

SECTION 1.  Party to Security Agreement, etc.  In accordance with the terms of the Security Agreement, by its signature below each of the undersigned hereby irrevocably agrees to become a Grantor under the Security Agreement with the same force and effect as if it were an original signatory thereto and each of the undersigned hereby (a) agrees to be bound by and comply with all of the terms and provisions of the Security Agreement applicable to it as a Grantor and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct as of the date hereof, unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date.  In furtherance of the foregoing, each of the undersigned hereby grants to the Agent, for its benefit and the ratable benefit of each other Secured Party, a continuing security interest in all of such undersigned's Collateral, whether now or hereafter existing, owned or acquired, and wherever located and agrees that each reference to a "Grantor" and/or "Grantors" in the Security Agreement shall be deemed to include each of the undersigned.

SECTION 2.  Representations.  Each of the undersigned Grantor hereby represents and warrants that this Supplement has been duly authorized, executed and delivered by it and that this Supplement and the Security Agreement constitute the legal, valid and binding obligation of each of the undersigned, enforceable against it in accordance with its terms.

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SECTION 3.  Full Force of Security Agreement.  Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect in accordance with its terms.

SECTION 4.  Severability.  Wherever possible each provision of this Supplement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Supplement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Supplement or the Security Agreement.

SECTION 5.  Governing Law, Entire Agreement, etc.  THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).  This Supplement and the other Basic Documents constitute the entire understanding among the parties hereto with respect to the subject matter thereof and supersede any prior agreements, written or oral, with respect thereto.

SECTION 6.  Counterparts.  This Supplement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered by its Authorized Officer as of the date first above written.

[NAME OF ADDITIONAL SUBSIDIARY]
By:
	Name:
	Title:

[NAME OF ADDITIONAL SUBSIDIARY]
By:
	Name:
	Title:

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ACCEPTED AND AGREED FOR ITSELF AND ON BEHALF OF THE SECURED PARTIES:

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
By:
	Kimberly Oates, Executive Director

By:
	Brett D. Delfino, Executive Director

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EXHIBIT D

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE

This SUBSIDIARY GUARANTEE, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, this "Guarantee"), is made by certain Subsidiaries of Empire Resources, Inc., a Delaware corporation (the "Borrower"), from time to time party hereto (each individually, a "Guarantor" and, collectively, the "Guarantors"), in favor of COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent (together with its successor(s) thereto in such capacity, the "Agent") for each of the Secured Parties (capitalized terms used herein have the meanings set forth in or incorporated by reference in Article 1).

W I T N E S S E T H:

WHEREAS, pursuant to a Credit Agreement, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Banks and the Agent, the Banks have extended Commitments to make Loans to, issue Letters of Credit for the account of, and create Acceptances to the Borrower; and

WHEREAS, as a condition precedent to the making of the credit extensions guaranteed hereby, each Guarantor is required to execute and deliver this Guarantee.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Secured Parties to make the credit extensions guaranteed hereby, each Guarantor jointly and severally agrees, for the benefit of each Secured Party, as follows:

SECTION 1

DEFINITIONS

1.01           Certain Terms.  The following terms (whether or not underscored) when used in this Guarantee, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

"Agent" is defined in the preamble.

"Borrower" is defined in the preamble.

"Credit Agreement" is defined in the first recital.

"Guarantee" is defined in the preamble.

"Guarantor" and "Guarantors" are defined in the preamble.

"Guaranteed Indebtedness" means, with respect to each Guarantor, all Obligations (including interest accruing during the pendency of any proceeding of the type described in clauses (f) or (g) of Section 9 of the Credit Agreement, whether or not allowed in such proceeding) of the Borrower and each of its Subsidiaries other than that Guarantor.

1.02           Credit Agreement Definitions.  Unless otherwise defined herein or the context otherwise requires, terms used in this Guarantee, including its preamble and recitals, have the meanings provided in the Credit Agreement.

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SECTION 2

GUARANTY PROVISIONS

2.01           Guarantee.  Each Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably

(a)           guarantees the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Guaranteed Indebtedness now or hereafter existing, whether for principal, interest (including interest accruing at the then applicable rate provided in the Credit Agreement after the occurrence of any Default set forth in clauses (f) or (g) of Section 9 of the Credit Agreement, whether or not a claim for post-filing or post-petition interest is allowed under applicable law following the institution of a proceeding under bankruptcy, insolvency or similar laws), fees, Reimbursement Obligations, expenses or otherwise (including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b)); and

(b)           indemnifies and holds harmless each Secured Party for any and all costs and expenses (including reasonable attorney's fees and expenses) incurred by such Secured Party (i) in enforcing any rights under this Guarantee and (ii) in connection with any reinstatement, invalidation or rescission of any payment of any Guaranteed Indebtedness as set forth in Section 2.02, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under bankruptcy, insolvency or similar law.

provided, however, that each Guarantor shall only be liable under this Guarantee for the maximum amount of such liability that can be hereby incurred without rendering this Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount.  This Guarantee constitutes a guaranty of payment when due and not of collection, and each Guarantor specifically agrees that it shall not be necessary or required that any Secured Party exercise any right, assert any claim or demand or enforce any remedy whatsoever against any Obligor or any other Person before or as a condition to the obligations of such Guarantor hereunder.

2.02           Reinstatement, etc.  Each Guarantor hereby jointly and severally agrees that this Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Guaranteed Indebtedness is invalidated, declared to be fraudulent or preferential, set aside, rescinded or must otherwise be restored by any Secured Party, including upon the occurrence of any Default set forth in clauses (f) or (g) of Section 9 of the Credit Agreement or otherwise, all as though such payment had not been made.

2.03           Guarantee Absolute, etc.  This Guarantee shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until the later of (x) the Revolving Credit Commitment Termination Date has occurred and (y) the indefeasible payment in full of the Obligations and the termination of all Commitments.  Each Guarantor jointly and severally guarantees that the Guaranteed Indebtedness will be paid strictly in accordance with the terms of each Basic Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto.  The liability of each Guarantor under this Guarantee shall be joint and several, absolute, unconditional and irrevocable irrespective of:

(a)           any lack of validity, legality or enforceability of any Basic Document;

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(b)           the failure of any Secured Party

(i)           to assert any claim or demand or to enforce any right or remedy against any Obligor or any other Person (including any other guarantor) under the provisions of any Basic Document or otherwise, or

(ii)           to exercise any right or remedy against any other guarantor (including any Guarantor) of, or collateral securing, any Guaranteed Indebtedness;

(c)           any change in the time, manner or place of payment of, or in any other term of, all or any part of the Guaranteed Indebtedness, or any other extension, compromise or renewal of any Obligation;

(d)           any reduction, limitation, impairment or termination of any Guaranteed Indebtedness for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Guaranteed Indebtedness or otherwise;

(e)           any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Basic Document;

(f)           any addition, exchange or release of any collateral or of any Person that is (or will become) a guarantor (including a Guarantor hereunder) of the Guaranteed Indebtedness, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Guaranteed Indebtedness; or

(g)           any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Obligor, any surety or any guarantor.

2.04           Setoff.  Each Guarantor hereby irrevocably authorizes the Agent and each Bank, without the requirement that any notice be given to such Guarantor (such notice being expressly waived by each Guarantor), upon the occurrence and during the continuance of any Default described in Section 9 of the Credit Agreement or, with the consent of the Required Banks, upon the occurrence and during the continuance of any other Event of Default, to setoff and appropriate and apply to the payment of the Guaranteed Indebtedness (whether or not then due, and whether or not any Secured Party has made any demand for payment of the Guaranteed Indebtedness), and such Guarantor hereby grants to each Secured Party a security interest in, any and all balances, claims, credits, deposits (general or special, time or demand, provisional or final), accounts or money of such Guarantor then or thereafter maintained with such Secured Party; provided, however, that any such appropriation and application shall be subject to the provisions of Section 4.07 of the Credit Agreement.  Each Secured Party agrees to notify the applicable Guarantor and the Agent after any such setoff and application made by such Secured Party; providedfurther, however, that the failure to give such notice shall not affect the validity of such setoff and application.  The rights of each Secured Party under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Secured Party may have.

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2.05           Waiver, etc.  Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Indebtedness and this Guarantee and any requirement that any Secured Party protect, secure, perfect or insure any Lien, or any property subject thereto, or exhaust any right or take any action against any Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Guaranteed Indebtedness, as the case may be.

2.06           Postponement of Subrogation, etc.  Each Guarantor agrees that it will not exercise any rights which it may acquire by way of rights of subrogation under any Basic Document to which it is a party, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from any Obligor, in respect of any payment made under any Basic Document or otherwise, until following the later of (x) the Revolving Credit Commitment Termination Date and (y) the indefeasible payment in full of the Obligations and the termination of all Commitments.  Any amount paid to any Guarantor on account of any such subrogation rights prior to such date shall be held in trust for the benefit of the Secured Parties and shall immediately be paid and turned over to the Agent for the benefit of the Secured Parties in the exact form received by such Guarantor (duly endorsed in favor of the Agent, if required), to be credited and applied against the Guaranteed Indebtedness, whether matured or unmatured, in accordance with Section 2.07; provided, however, that if any Guarantor has made payment to the Secured Parties of all or any part of the Guaranteed Indebtedness and the later of (x) the Revolving Credit Commitment Termination Date and (y) the indefeasible payment in full of the Obligations and the termination of all Commitments has occurred, then at such Guarantor's request, the Agent (on behalf of the Secured Parties) will, at the expense of such Guarantor, execute and deliver to such Guarantor appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Indebtedness resulting from such payment.  In furtherance of the foregoing, at all times prior to the later of (x) the Revolving Credit Commitment Termination Date and (y) the indefeasible payment in full of the Obligations and the termination of all Commitments, each Guarantor shall refrain from taking any action or commencing any proceeding against any Obligor (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in respect of payments made under this Guarantee to any Secured Party.

2.07           Payments; Application.  Each Guarantor hereby agrees with each Secured Party as follows:

(a)           Each Guarantor agrees that all payments made by such Guarantor hereunder will be made in Dollars to the Agent, without setoff, counterclaim or other defense and in accordance with Section 5 of the Credit Agreement, free and clear of and without deduction for any Taxes, each Guarantor hereby agreeing to comply with and be bound by the provisions of Section 5 of the Credit Agreement in respect of all payments made by it hereunder and the provisions of which Sections are hereby incorporated into and made a part of this Guarantee by this reference as if set forth herein.

(b)           All payments made hereunder shall be applied upon receipt in accordance with the applicable provisions of the Credit Agreement.

SECTION 3

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to enter into the Credit Agreement and make the credit extensions guaranteed hereby, each Guarantor represents and warrants to each Secured Party as set forth below.

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3.01           Credit Agreement Representations and Warranties.  The representations and warranties contained in Article VII of the Credit Agreement, insofar as the representations and warranties contained therein are applicable to any Guarantor and its properties, are true and correct in all material respects, each such representation and warranty set forth in such Article (insofar as applicable as aforesaid) and all other terms of the Credit Agreement to which reference is made therein, together with all related definitions and ancillary provisions, being hereby incorporated into this Guarantee by reference as though specifically set forth in this Article.

3.02           Financial Condition, etc.  Each Guarantor has knowledge of each other Obligor's financial condition and affairs and that it has adequate means to obtain from each such Obligor on an ongoing basis information relating thereto and to such Obligor's ability to pay and perform the Guaranteed Indebtedness, and agrees to assume the responsibility for keeping, and to keep, so informed for so long as this Guarantee is in effect.  Each Guarantor acknowledges and agrees that the Secured Parties shall have no obligation to investigate the financial condition or affairs of any Obligor for the benefit of such Guarantor nor to advise such Guarantor of any fact respecting, or any change in, the financial condition or affairs of any other Obligor that might become known to any Secured Party at any time, whether or not such Secured Party knows or believes or has reason to know or believe that any such fact or change is unknown to such Guarantor, or might (or does) materially increase the risk of such Guarantor as guarantor, or might (or would) affect the willingness of such Guarantor to continue as a guarantor of the Guaranteed Indebtedness.

3.03           Best Interests.  It is in the best interests of each Guarantor to execute this Guarantee inasmuch as such Guarantor will, as a result of being a Subsidiary of the Borrower, derive substantial direct and indirect benefits from the credit extensions guaranteed hereby and each Guarantor agrees that the Secured Parties are relying on this representation in agreeing to make such credit extensions.

SECTION 4

COVENANTS, ETC.

Each Guarantor covenants and agrees that, at all times prior to the later of (x) the Revolving Credit Commitment Termination Date and (y) the indefeasible payment in full of the Obligations and the termination of all Commitments, it will perform, comply with and be bound by all of the agreements, covenants and obligations contained in the Credit Agreement (including Sections 8 and 9 of the Credit Agreement) which are applicable to such Guarantor or its properties, each such agreement, covenant and obligation contained in the Credit Agreement and all other terms of the Credit Agreement to which reference is made in this Article, together with all related definitions and ancillary provisions, being hereby incorporated into this Guarantee by this reference as though specifically set forth in this Article.

4.01           Intercompany Subordination.

(a)           Debt Subordination.  Each Guarantor hereby agrees that the Subordinated Indebtedness (as defined below) shall be subordinate and junior in right of payment to the full satisfaction of the Obligations.  The Subordinated Indebtedness shall not be payable, and no payment of principal, interest or other amounts on account thereof, and no property or guarantee of any nature to secure or pay the Subordinated Indebtedness shall be made or given, directly or indirectly by or on behalf of any Subordination Party (as defined below) or received, accepted, retained or applied by any Guarantor unless and until the Obligations shall have been fully satisfied; except that when no Specified Default (as defined in the Security Agreement) exists, each Subordination Party shall have the right to make payments (including, without limitation, interest payments) and a Guarantor shall have the right to receive payments on the Subordinated Indebtedness from time to time in the ordinary course of business.  When a Specified Default exists, no payments may be made or given on the Subordinated Indebtedness, directly or indirectly, by or on behalf of any Subordination Party or received, accepted, retained or applied by any Guarantor unless and until the Obligations shall have been fully satisfied.  If any sums shall be paid to a Guarantor by any Subordination Party or any other Person on account of the Subordinated Indebtedness when such payment is not permitted hereunder, such sums shall be held in trust by such Guarantor for the benefit of Agent and the other Secured Parties and shall forthwith be paid to Agent and applied by Agent against the Guaranteed Indebtedness in accordance with this Guarantee.  For purposes of this Guarantee and with respect to a Guarantor, the term "Subordinated Indebtedness" means all indebtedness, liabilities, and obligations of Borrower or any other Guarantor (Borrower and such other Guarantor herein the "Subordination Party") to such Guarantor, whether such indebtedness, liabilities, and obligations now exist or are hereafter incurred or arise, or are direct, indirect, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such indebtedness, liabilities, or obligations are evidenced by a note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such indebtedness, obligations, or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by such Guarantor.

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(b)           Lien Subordination.  Each Guarantor agrees that any and all Liens (including any judgment liens), upon any Subordination Party's assets securing payment of any Subordinated Indebtedness shall be and remain junior and subordinate to any and all Liens upon any Subordination Party's assets securing payment of the Guaranteed Indebtedness or any part thereof, regardless of whether such Liens in favor of a Guarantor, Agent or any other Secured Party presently exist or are hereafter created or attached.  Without the prior written consent of Agent, no Guarantor shall (i) file suit against any Subordination Party or exercise or enforce any other creditor's right it may have against any Subordination Party, or (ii) foreclose, repossess, sequester, or otherwise take steps or institute any action or proceedings (judicial or otherwise, including the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any obligations of any Subordination Party to such Guarantor or any Liens held by such Guarantor on assets of any Subordination Party.

(c)           Insolvency Proceeding.  In the event of any receivership, bankruptcy, reorganization, rearrangement, debtor's relief, or other insolvency proceeding involving any Subordination Party as debtor, Agent shall have the right to prove and vote any claim under the Subordinated Indebtedness and to receive directly from the receiver, trustee or other court custodian all dividends, distributions, and payments made in respect of the Subordinated Indebtedness until the Obligations have been fully satisfied.  The Agent may apply any such dividends, distributions, and payments against the Guaranteed Indebtedness in accordance with the Credit Agreement.

SECTION 5

MISCELLANEOUS PROVISIONS

5.01           Basic Document.  This Guarantee is a Basic Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article XI thereof.

5.02           Binding on Successors, Transferees and Assigns; Assignment.  This Guarantee shall remain in full force and effect until the later of (x) the Revolving Credit Commitment Termination Date and (y) the indefeasible payment in full of the Obligations and the termination of all Commitments has occurred, shall be jointly and severally binding upon each Guarantor and its successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided, however, that no Guarantor may (unless otherwise permitted under the terms of the Credit Agreement) assign any of its obligations hereunder without the prior written consent of all Banks.

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5.03           Amendments, Waivers, etc.  No amendment to or waiver of any provision of this Guarantee, nor consent to any departure by any Guarantor from its obligations under this Guarantee, shall in any event be effective unless the same shall be in writing and signed by the Agent (on behalf of the Banks or the Required Banks, as the case may be, pursuant to Section 11.04 of the Credit Agreement) and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

5.04           Notices.  Any notice or demand to any Guarantor under or in connection with this Guarantee or any other Basic Document to which it is a party shall be deemed effective if given to the Guarantor, care of the Borrower in accordance with the notice provisions in the Credit Agreement or at such other address of facsimile number as may be designated by such Guarantor in a notice to the other party.

5.05           Additional Guarantors.  Upon the execution and delivery by any other Person of a supplement in the form of Annex I hereto, such Person shall become a "Guarantor" hereunder with the same force and effect as if it were originally a party to this Guarantee and named as a "Guarantor" hereunder.  The execution and delivery of such supplement shall not require the consent of any other Guarantor hereunder, and the rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Guarantee.

5.06           Release of Guarantor.  Upon the occurrence of the Revolving Credit Commitment Termination Date and the indefeasible payment in full of the Obligations and the termination of all Commitments, this Guarantee and all Guaranteed Indebtedness of each Guarantor hereunder shall terminate, without delivery of any instrument or performance of any act by any party.  In addition, at the request of the Borrower, and at the sole expense of the Borrower, a Guarantor shall be released from its obligations hereunder in the event that the capital securities of such Guarantor are disposed of in a transaction permitted by the Credit Agreement; provided, that the Borrower shall have delivered to the Agent, at least three Business Days prior to the date of the proposed release, a written request for release identifying the relevant Guarantor and a certification by the Borrower stating that such transaction is in compliance with the Basic Documents

5.07           No Waiver; Remedies.  In addition to, and not in limitation of, Sections 2.03 and 2.05, no failure on the part of any Secured Party to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

5.08           Section Captions.  Section captions used in this Guarantee are for convenience of reference only, and shall not affect the construction of this Guarantee.

5.09           Severability.  Wherever possible each provision of this Guarantee shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guarantee shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guarantee.

5.10           Governing Law, Entire Agreement, etc.  THIS GUARANTY WILL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).  This Guarantee and the other Basic Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect thereto.

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5.11           Submission to Jurisdiction.  Each Guarantor hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Guarantee, any other Basic Document or the transactions contemplated hereby or thereby.  Each Guarantor irrevocably waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  Each Guarantor hereby further irrevocably consents to the service of process in any such legal proceedings in said courts by the mailing thereof by the Agent or any Bank by registered or certified mail, postage prepaid, at the Borrower's address set forth in the Credit Agreement.

5.12           Waiver of Jury Trial.  EACH OF EACH GUARANTOR, THE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTEE, ANY OF THE OTHER BASIC DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

5.13           Counterparts.  This Guarantee may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.  Delivery of an executed counterpart of a signature page to this Guarantee by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Guarantee.

IN WITNESS WHEREOF, each Guarantor has caused this Guarantee to be duly executed and delivered by its Authorized Officer as of the date first above written.

EMPIRE RESOURCES PACIFIC, LTD.
By:
	Sandra R. Kahn, Vice President

ACCEPTED AND AGREED FOR ITSELF AND ON BEHALF OF THE SECURED PARTIES:

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
By:
	Kimberly Oates, Executive Director
By:
	Brett D. Delfino, Executive Director

8

ANNEX I to

the Subsidiary Guarantee

THIS SUPPLEMENT, dated as of ____________ ___, ____ (this "Supplement"), is to the Subsidiary Guarantee, dated as of April 28, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Guarantee"), among the Guarantors (such capitalized term, and other terms used in this Supplement, to have the meanings set forth in Article I of the Guarantee) from time to time party thereto, in favor of COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as agent (together with its successor(s) thereto in such capacity, the "Agent") for each of the Secured Parties.

W I T N E S S E T H :

WHEREAS, pursuant to the provisions of Section 5.05 of the Guarantee, each of the undersigned is becoming a Guarantor under the Guarantee; and

WHEREAS, each of the undersigned desires to become a "Guarantor" under the Guarantee in order to induce the Secured Parties to continue to extend credit under the Credit Agreement;

NOW, THEREFORE, in consideration of the premises, and for other valuable consideration the receipt and sufficiency of which is hereby acknowledged, each of the undersigned agrees, for the benefit of each Secured Party, as follows.

SECTION 1.  Party to Guarantee, etc.  In accordance with the terms of the Guarantee, by its signature below, each of the undersigned hereby irrevocably agrees to become a Guarantor under the Guarantee with the same force and effect as if it were an original signatory thereto and each of the undersigned hereby (a) agrees to be bound by and comply with all of the terms and provisions of the Guarantee applicable to it as a Guarantor, (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct as of the date hereof, and (c) jointly and severally absolutely, unconditionally and irrevocably guarantees the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Guaranteed Indebtedness in accordance with the terms of the Guarantee.  In furtherance of the foregoing, each reference to a "Guarantor" and/or "Guarantors" in the Guarantee shall be deemed to include each of the undersigned.

SECTION 2.  Representations.  Each of the undersigned hereby represents and warrants that this Supplement has been duly authorized, executed and delivered by it and that this Supplement and the Guarantee constitute the legal, valid and binding obligation of each of the undersigned, enforceable against it in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally and by principles of equity).

SECTION 3.  Full Force of Guarantee.  Except as expressly supplemented hereby, the Guarantee shall remain in full force and effect in accordance with its terms.

SECTION 4.  Severability.  Wherever possible each provision of this Supplement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Supplement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Supplement or the Guarantee.

1

SECTION 5.  Indemnity; Fees and Expenses, etc.  Without limiting the provisions of any other Basic Document, each of the undersigned agrees to reimburse the Agent for its reasonable out-of-pocket costs and expenses incurred in connection with this Supplement, including reasonable attorney's fees and expenses of the Agent's counsel.

SECTION 6.  Governing Law, Entire Agreement, etc.  THIS SUPPLEMENT WILL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).  This Supplement and the other Basic Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede any prior agreements, written or oral, with respect thereto.

SECTION 7.  Counterparts.  This Supplement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be duly executed and delivered by its Authorized Officer as of the date first above written.

[NAME OF ADDITIONAL SUBSIDIARY]
By:
	Name:
	Title:

[NAME OF ADDITIONAL SUBSIDIARY]
By:
	Name:
	Title:

[NAME OF ADDITIONAL SUBSIDIARY]
By:
	Name:
	Title:

2

ACCEPTED AND AGREED FOR ITSELF AND ON BEHALF OF THE SECURED PARTIES:

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
By:
	Kimberly Oates, Executive Director

By:
	Brett D. Delfino, Executive Director

3

EXHIBIT E

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

ASSIGNMENT AND ASSUMPTION

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the "Assignment and Assumption") is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the "Assignee").  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below (i) all of the Assignor's rights and obligations in its capacity as a Bank under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit, guarantees, acceptances and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Bank) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the right and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "Assigned Interest").  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.       Assignor:
2.       Assignee:
	[and is an Affiliate/Approved Fund of [identify Bank]1]
3.       Borrower:	Empire Resources, Inc.
4.       Agent:	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as the agent under the Credit Agreement
5.       Credit Agreement:	Credit Agreement dated as of April 28, 2011 among Empire Resources, Inc., the banks party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as Agent.
6.       Assigned Interest:

1 Select as applicable.

1

Aggregate Amount of Commitment/Loans for all Banks	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/Loans
$	$	%

[7.       Trade Date:	______________]4
Effective Date:                                , 20           [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR
[NAME OF ASSIGNOR]
By:
	Name:
	Title:

ASSIGNEE
[NAME OF ASSIGNEE]
By:
	Name:
	Title:

4 To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

2

[Consented to and]5 Accepted: Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch, as Agent
By:
	Name:
	Title:

By:
	Name:
	Title:

[Consented to:]6 EMPIRE RESOURCES, INC.
By:
	Name:
	Title:

5 To be added only if the consent of the Agent is required by the terms of the Credit Agreement.

6 To be added only if the consent of the Company and/or other parties (e.g. Swing Line Bank, Issuing Bank) is required by the term of the Credit Agreement.

3

ANNEX I

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.           Representations and Warranties

1.1           Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver the Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Basic Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of any Basic Documents or any collateral thereunder, (iii) the financial condition of the Company, any of the Subsidiaries or Affiliates or any other Person obligated in respect of any Basic Document or (iv) the performance or observance by the Company, any of the Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Basic Document.

1.2           Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Bank under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Bank thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Bank thereunder, (iii) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Agent or any other Bank, and (iv) if it is a Foreign Bank, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Agent, the Assignor or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under Basic Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Basic Documents are required to be performed by it as a Bank.

2.           Payments.  From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts which have accrued prior to or after the Effective Date.The Assignor and the Assignee shall make all appropriate adjustments in payments by the Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.

3.           General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of a signature page of this Assignment and Assumption.  This Assignment and Assumption shall be governed by and construed in accordance with, the law of the State of New York, other than those conflict of law provisions that would defer to the substantive laws of another jurisdiction.  This governing law election has been made by the parties in reliance (at least in part) on Section 5-1401 of the General Obligations Law of the State of New York, as amended (as and to the extent applicable), and other applicable law.

EXHIBIT F

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

INCREASED COMMITMENT SUPPLEMENT

INCREASED COMMITMENT SUPPLEMENT

This INCREASED COMMITMENT SUPPLEMENT (this "Supplement") is dated as of ____________, ___ and entered into by and among EMPIRE RESOURCES, INC. (the "Company"), each of the banks or other lending institutions which is a signatory hereto or any successor or assignee thereof (individually, a "Bank" and, collectively, the "Banks"), and COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH ("Rabobank"), as agent for itself and certain other parties (in its capacity as agent, together with its successors in such capacity, the "Agent") and is made with reference to that certain Credit Agreement dated as of April 28, 2011 (as amended, the "Credit Agreement"), by and among the Company, the banks party thereto and the Agent.  Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement.

RECITALS

WHEREAS, pursuant to Section 2.01(b) of the Credit Agreement, the Company and the Banks are entering into this Increased Commitment Supplement to provide for the increase of the aggregate Revolving Loan Commitments;

WHEREAS, each Bank [party hereto and already a party to the Credit Agreement] wishes to increase its Revolving Credit Commitment [, and each Bank, to the extent not already a Bank party to the Credit Agreement (herein a "New Bank"), wishes to become a Bank party to the Credit Agreement];2

WHEREAS,the Banks are willing to agree to supplement the Credit Agreement in the manner provided herein.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Section 1.                      Increase in Commitments.  Subject to the terms and conditions hereof, each Bank severally agrees that its Revolving Loan Commitment shall be increased to [or in the case of a New Bank, shall be] the amount set forth opposite its name on the signature pages hereof.

Section 2.                      [New Banks.  Each New Bank (i) confirms that it has received a copy of the Credit Agreement and the other Basic Documents, together with copies of the most recent financial statements of the Company delivered under Section 8.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (ii) agrees that it has, independently and without reliance upon the Agent, any other Bank or any of their Affiliates, officers, directors, agents or employees and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Supplement; (iii) agrees that it will, independently and without reliance upon the Agent, any other Bank or any of such Affiliates, officers, directors, agents or employees and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Basic Documents; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Basic Documents as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; and (v) agrees that it is a "Bank" under the Basic Documents and will perform in accordance with their terms all of the obligations that by the terms of the Basic Documents are required to be performed by it as a Bank.]

2Bracketed alternatives should be included if there are New Banks.

1

Section 3.                      Representations and Warranties.  In order to induce the Banks to enter into this Supplement and to supplement the Credit Agreement in the manner provided herein, Company represents and warrants to Agent and each Bank that:  (a) the representations and warranties contained in Section 7 of the Credit Agreement are and will be true, correct and complete on and as of the effective date hereof to the same extent as though made on and as of that date (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date) and for that purpose; (b) this Supplement shall be deemed to be included as part of the Agreement referred to therein; and (c) no event exists or will result from the consummation of the transactions contemplated by this Supplement that would constitute a Default.

Section 4.                      Effect of Supplement.  The terms and provisions set forth in this Supplement shall modify and supersede all inconsistent terms and provisions set forth in the Credit Agreement and except as expressly modified and superseded by this Supplement, the terms and provisions of the Credit Agreement are ratified and confirmed and shall continue in full force and effect.  The Company, the Agent, and the Banks party hereto agree that the Credit Agreement as supplemented hereby and the other Basic Documents shall continue to be legal, valid, binding and enforceable in accordance with their respective terms.  Any and all agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Credit Agreement as supplemented hereby, are hereby amended so that any reference in such documents to the Credit Agreement means a reference to the Credit Agreement as supplemented hereby.

Section 5.                      Applicable Law.  This Supplement shall be governed by and construed in accordance with the laws of the State of New York (other than those conflict of law provisions that would defer to the substantive laws of another jurisdiction) and the applicable laws of the United States of America.  Without in any way limiting the preceding choice of law, the parties elect to be governed by New York law in accordance with, and are relying (at least in part) on, Section 5–1401 of the General Obligations Law of the State of New York, as amended.

Section 6.                      Counterparts, Effectiveness.  This Supplement may be executed in any number of counterparts, by different parties hereto in separate counterparts and on telecopy counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.  This Supplement shall become effective upon the execution of a counterpart hereof by the Company, the Banks and receipt by the Company and the Agent of written or telephonic notification of such execution and authorization of delivery thereof.

Section 7.                      Entire Agreement. This Supplement embodies the final, entire agreement among the parties relating to the subject matter hereof and supersedes any and all previous commitments, agreements, representations and understandings, whether oral or written, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

By:
	Name:
	Title:

New Revolving Loan Commitment: $__________________	COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK NEDERLAND", NEW YORK BRANCH, as individually and as the Agent
	By:
		Name:
		Title:

By:
	Name:
	Title:

$______________________	[BANK]
	By:
		Name:
		Title:

$______________________	[NEW BANK]
	By:
		Name:
		Title:

3

Obligor Consent

Each Obligor:  (i) consents and agrees to this Supplement; (ii) agrees that the Basic Documents to which it is a party are in full force and effect and continue to be its legal, valid and binding obligations enforceable in accordance with their respective terms; and (iii) agrees that the obligations, indebtedness and liabilities of the Company arising as a result of the increase in the Revolving Loan Commitments contemplated hereby are "Obligations" guaranteed and secured by the Security Documents.

OBLIGORS: EMPIRE RESOURCES PACIFIC, LTD
By:
	Name:
	Title:

4

EXHIBIT G

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Compliance Certificate

COMPLIANCE CERTIFICATE

for the

quarter/fiscal year ending __________ __, _____

Coöperatieve Centrale

Raiffeisen-Boerenleenbank B.A.

"Rabobank Nederland",

New York Branch, as agent

c/o Rabo Support Service, Inc.

10 Exchange Place, 16th Floor

Jersey City, NJ  07302-3913

Phone No.:                    201.499.5436

Fax No.:                         914.304.9327

Attention:                     Sui Price

With a copy to:

Rabobank Nederland

245 Park Avenue

New York, NY  10167

Phone No.                     (212) 916-7933

Fax No.

Attention:                     Kimberly Oates

and each Bank

Ladies and Gentlemen:

This Compliance Certificate (the "Certificate") is being delivered pursuant to Section 8.01 of that certain Credit Agreement (as amended, the "Agreement") dated as of April 28, 2011 among Empire Resources (the "Company"), the banks named therein and Coöperatieve Centrale Raiffeisen–Boerenleenbank B.A., "Rabobank Nederland", New York Branch (the "Agent").  All terms used herein shall have the meanings assigned to them in the Agreement.  All the calculations set forth below shall be made pursuant to the terms of the Agreement.

The undersigned, an authorized financial officer of the Company in his or her capacity as such financial officer and not in his or her individual capacity, does hereby certify to the Agent and the Banks that:

1.         DEFAULT

No Default exists or has occurred or, if a Default exists, I have described on the attached Exhibit "A" the nature thereof and the steps taken or proposed to remedy such Default.

2.         Australian Registration

Company ___ has or ___ has not been Australian Registered and if its has been so registered, it has complied with its obligations under Section 8.18(a) of the Agreement.

1

		Compliance
2.         SECTION 8.01 - Financial Statements and Records
(a)           Annual audited financial statements of the Company on a consolidated basis within 90 days after the end of each fiscal year end (together with Compliance Certificate).		Yes	No	N/A
(b)           quarterly unaudited financial statements of the Company on a consolidated basis within 45 days after each of the first three fiscal quarter ends (together with Compliance Certificate).		Yes	No	N/A
(c)           Bi-Monthly Borrowing Base Certificate		Yes	No	N/A
(d)           Annual Evidence of Insurance on anniversary of the Effective Date.		Yes	No	N/A
3.         SECTION 8.17 - Additional Domestic Subsidiaries
Joinder of new Domestic Subsidiaries promptly after the Domestic Subsidiary is formed or acquired.		Yes	No	N/A
Pledge of new equity interests in Domestic Subsidiaries and 65% of Foreign Subsidiaries		Yes	No	N/A
4.         SECTION 8.07 - Indebtedness
No additional Indebtedness except:
(a)           Purchase money not to exceed:	$1,000,000
Actual outstanding:	$_______	Yes	No
(b)           Other unsecured Indebtedness of the Company	$250,000
Actual outstanding:	$_______	Yes	No
(c)           Imbali Facility not to exceed:	€10,000,000
Actual € amount outstanding:	€_______	Yes	No
Actual $ equivalent amount outstanding:	$_______
(d)           Non recourse Inventory financing amount outstanding	$_______
(e)           Reimbursement obligations in respect of letters of credit issued outside of the Credit Agreement	$_______
(f)            Subordinated Debt	$_______
(g)           Pre- export financing Guarantees not to exceed:	$3,000,000
Actual outstanding:	$_______	Yes	No
(h)           Aggregate $ equivalent amount of actual outstanding under the Indebtedness under lines (d), (e) (f), and (g) not to exceed:	$25,000,000
Actual aggregate $ equivalent amount of actual outstanding under the Indebtedness under lines (d), (e) (f), and (g):	$_______	Yes	No

2

5.         SECTION 8.08 - Investments
(a)           Investments in Imbali Metals BVBA not to exceed:	€4,000,000
(b)           Actual Imbali Investments	€_______	Yes	No
(c)           investments in Persons with Sub Debt proceeds not to exceed:	$12,00,000
(d)           Actual investments with Sub Debt proceeds:	$_______	Yes	No
(e)           Additional investments not to exceed:	$500,000
(f)            Actual additional investments	$_______	Yes	No
6.     SECTION 8.09 – Leverage Ratio
(a)       Total Liabilities (including letters of credit)	$_________
(b)       Tangible Net Worth
(i)    amount of common stock;	$_________
(ii)   amount of surplus and retained earnings (minus any deficit);	$_________
(iii)  accumulated other comprehensive income;	$_________
(iv)  Subordinated Debt	$_________
(v)   Investments (other the permitted), treasury shares and all assets classified as intangibles	($_________)
(vi)  Sum of (i) through (iv) minus (v)	$_________
(c)       12(a)  ¸ 12(b)(vi)	___ to 1.00
(d)       Maximum Leverage Ratio	6.00 to 1.00		Yes	No
7.     SECTION 8.10 – Tangible Net Worth
(a)               Base Amount	$25,000,000
(b)               25% of Company's consolidated net earnings Income since December 31, 2011.	$_________
(c)               Total minimum required Tangible Net Worth (7(a) plus 7(b))	$_________
(e)               Actual Tangible Net Worth (from 6(b)(vi))	$_________	Yes	No
8.     SECTION 8.11 – No Net Loss
Net operating earnings (calculated before taxes and extraordinary items in accordance with GAAP) to be more than a negative $4,000,000 in the aggregate over two or more consecutive quarters		Yes	No

3

9.     SECTION 8.20– Capital Expenditure Limit
(a)               fiscal year limit	$500,000
(b)              Actual Capital Expenditures for current fiscal year	$_________
(c)               Compliance: (line 9 (b) must be less than Line 9 (a))		Yes	No

IN WITNESS WHEREOF, the undersigned has executed this Certificate effective as of the date first written above.

Empire Resources, Inc.
By:
	Name:
	Title:

4

EXHIBIT H

TO

CREDIT AGREEMENT

Form of Subordination Agreement

SUBORDINATION AGREEMENT

SUBORDINATION AGREEMENT, dated as of April 28, 2011, among ING BELGIUM S.A./N.V. (the "Subordinated Creditor"), EMPIRE RESOURCES, INC., a Delaware corporation (the "Company"); and COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as agent for the Secured Parties as that term is defined in the Empire Credit Agreement referred to below (in such capacity, together with its successors in such capacity, the "Agent").

To induce said Banks to enter into the Empire Credit Agreement referred to below and to extend credit from time to time to and for the benefit of the Company and its Subsidiaries, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Subordinated Creditor has agreed to subordinate the Subordinated Debt (as hereinafter defined) to the Senior Debt (as so defined), and the Liens (as so defined) of the Subordinated Creditor on the Collateral (as so defined) to the Liens of the Agent on the Collateral, all in the manner and to the extent hereinafter provided.  Accordingly, the parties hereto agree as follows:

SECTION 1

DEFINITIONS.

1.01           As used herein the following terms shall have the following respective meanings:

"Bank" shall mean a "Bank" under the Empire Credit Agreement.

"Collateral" shall have the meaning given to that term in the Security Agreement.

"Empire Credit Agreement" shall mean the Credit Agreement, dated as of April 28, 2011, among the Company, the Banks referred to therein and the Agent, as the same may be modified and supplemented and in effect from time to time.

"Empire Guarantee" shall mean a Guarantee by the Company of the obligations of Imbali under the Imbali Credit Agreement.

"Imbali" shall mean Imbali Metals Bvba, a Belgian corporation.

"Imbali Credit Agreement" shall mean each agreement or instrument evidencing or governing any indebtedness of Imbali to the Subordinated Creditor.

"Insolvency Proceeding" shall mean any proceeding against the Company under any bankruptcy, reorganization, readjustment or arrangement of debt, suspension of payments, receivership, liquidation or insolvency or similar law or statute now or hereafter in effect.

"Lien" shall mean any lien, mortgage, pledge, collateral assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest) and any option or trust having the practical effect of any of the foregoing.

"Permitted Refinancing" shall mean any extension, renewal, refunding or refinancing, or any restructuring, or any other modification (collectively, a "Refinancing"), of any Senior Debt at any time outstanding under the Empire Credit Agreement or of any Refinancing.

1

"Person" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).

"Reorganization Debt Securities" shall mean debt securities of the Company as reorganized or readjusted or debt securities of the Company or any other company, trust or organization provided for by a plan of reorganization or readjustment that are subordinated, to at least the same extent as the Subordinated Debt, to the payment of all Senior Debt that will be outstanding after giving effect to such plan of reorganization or readjustment.

"Security Agreement" shall mean the Security Agreement referred to in the Empire Credit Agreement.

"Senior Debt" shall mean, collectively, the following indebtedness and obligations of the Company:

(a)           all indebtedness and other obligations of the Company under the Empire Credit Agreement and the other Senior Debt Documents, including all interest, expenses, indemnities, penalties, fees and other amounts payable from time to time under or in connection with the Empire Credit Agreement,

(b)           all obligations of the Company to any of the Banks (or any affiliate of any Bank) under currency exchange agreements, interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect the Company against fluctuations in interest rates, currency exchange rates or commodity prices,

(c)           all other obligations of the Company (whether arising in respect of extensions of credit or otherwise) to any Bank or any affiliate of any Bank, other than the following:

(i)           Subordinated Debt;

(ii)           indebtedness of the Company secured by mortgages on real property;

(iii)           Capital Lease Obligations (as defined in the Empire Credit Agreement); and

(iv)           all purchase money indebtedness with original stated tenor in excess of one year, and

(d)           any Permitted Refinancing.

The term "Senior Debt" shall include any interest accruing after the date of any filing by the Company of any petition in, or other commencement of, any Insolvency Proceeding, whether or not such interest is allowable as a claim in any such proceeding.  Without limiting the generality of the foregoing, the term "Senior Debt" shall include all obligations under the Empire Credit Agreement to pay fees, in respect of indemnification and to reimburse the Agent and the Banks for expenses.

"Senior Debt Documents" means the Empire Credit Agreement and the other Basic Documents referred to in the Empire Credit Agreement.

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"Subordinated Debt" shall mean all obligations of the Company under the Empire Guarantee in respect of (i) the principal of, and interest and premium (if any) on, the loans made under the Imbali Credit Agreement, and (ii) any other amounts owing under the Subordinated Debt Documents, including any amounts owing in respect of a breach of the representations, warranties or covenants thereunder by the Company, but shall exclude obligations of Imbali Metals Bvba in respect thereof.

"Subordinated Debt Documents" shall mean the Imbali Credit Agreement and each other agreement or instrument entered into in connection therewith.

"UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

SECTION 2

SUBORDINATION.

2.01           Subordination of Subordinated Debt.  The Company, for itself and its successors and assigns, covenants and agrees, and the Subordinated Creditor, for itself and its successors and assigns, likewise covenants and agrees, that, to the extent and in the manner set forth in this Agreement, the Subordinated Debt, is hereby expressly made subordinate and subject in right of payment to the prior payment in full in cash of all Senior Debt.

2.02           Payment of Proceeds Upon Dissolution.  In the event of any of the following (a "Dissolution Event"):  (a) any Insolvency Proceeding, or (b) any liquidation, dissolution or other winding up of the Company, whether voluntary or involuntary and whether or not involving an Insolvency Proceeding, or (c) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Company, then and in any such event:

(1)           the Banks shall be entitled to receive payment in full in cash of all amounts due or to become due on or in respect of all Senior Debt before the Subordinated Creditor shall be entitled to receive any payment on account of principal of or interest or premium (if any) on, the Subordinated Debt;

(2)           any payment or distribution of assets of the Company (other than assets of Imbali) of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the Subordinated Creditor would be entitled in respect of the Subordinated Debt but for the provisions of this Agreement, including any such payment or distribution that may be payable or deliverable by reason of the payment of any indebtedness subordinated to the Subordinated Debt (other than Reorganization Debt Securities), shall be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the Agent (and the Subordinated Creditor hereby authorizes each such payor to pay over to the Agent, upon demand by the Agent, all such payments or distributions without the necessity of any inquiry as to the status or balance of the Senior Debt, and without further notice to or consent of the Subordinated Creditor), with the Agent to promptly remit to the Subordinated Creditor any amounts remaining after payment in full in cash of all Senior Debt, giving effect to any concurrent payment or distribution to the Agent, the Banks or both (and in furtherance of the foregoing and of the following clause (3), but not by way of limitation thereof, in the event the Company is subject to any Insolvency Proceeding, with the result that the Company is excused from the obligation to pay all or part of the interest otherwise payable in respect of the Senior Debt during the period subsequent to the commencement of such Insolvency Proceeding, the Subordinated Creditor agrees that all or such part of such interest, as the case may be, shall be payable out of, and to that extent diminish and be at the expense of, reorganization dividends or distributions in respect of the Subordinated Debt);

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(3)           in the event that, notwithstanding the foregoing provisions of this Section 2.02, the Subordinated Creditor shall have received, before all Senior Debt is paid in full in cash, any such payment or distribution of assets of the Company (other than the assets of Imbali) of any kind or character, whether in cash, property or securities in respect of the Subordinated Debt (other than Reorganization Debt Securities), including any such payment or distribution arising out of the exercise by the Subordinated Creditor of a right of set-off or counterclaim and any such payment or distribution in respect of the Subordinated Debt received by reason of any indebtedness subordinated to the Subordinated Debt, then, and in such event, such payment or distribution shall not be commingled with other funds of the Subordinated Creditor and shall be held in trust for the benefit of, and shall be immediately paid over or delivered to, the Agent, in precisely the form received (except for the endorsement or assignment of the Subordinated Creditor where necessary), with the Agent to promptly remit to the Subordinated Creditor any amounts remaining after payment in full in cash of all Senior Debt, giving effect to any concurrent payment or distribution to the Agent, the Banks or both; and

(4)           the Subordinated Creditor hereby irrevocably authorizes and empowers the Agent to demand, sue for, collect and receive every such payment or distribution and give acquittance therefor, to execute, sign, endorse, transfer and deliver any and all receipts and instruments, and to file claims and take such other actions, all in the name of the Subordinated Creditor, or otherwise, as the Agent may deem necessary or advisable for the enforcement of this Agreement, but the Agent has no obligation to do so.  The Subordinated Creditor hereby (A) agrees to file appropriate proofs of claim in respect of the Subordinated Debt; and (B) agrees to execute and deliver to the Agent or its representatives on demand such powers of attorney, proofs of claim and other instruments as may be requested by the Agent or its representatives in order to enable the Agent to (x) enforce any and all claims upon or with respect to the Subordinated Debt; and (y) collect and receive all such payments or distributions which may be payable or deliverable at any time upon or with respect to the Subordinated Debt.

2.03           Actions When Senior Debt Outstanding.

(a)           Actions Prohibited.  No payment on account of the principal of, or interest or premium (if any) on, the Subordinated Debt or any judgment with respect thereto (and no payment on account of the purchase or redemption or other acquisition of the Subordinated Debt) shall be made by the Company at any time prior to the payment in full in cash of the Senior Debt.

(b)           Payments Over.  In the event that, notwithstanding the foregoing provisions of this Section, the Subordinated Creditor shall have received any payment prohibited by the foregoing provisions of this Section, then, and in any such event, such payment shall not be commingled with other funds of the Subordinated Creditor and shall be held in trust for the benefit of, and shall be immediately paid over or delivered to, the Agent, in precisely the form received (except for the endorsement or assignment of the Subordinated Creditor where necessary), with the Agent to promptly remit to the Subordinated Creditor any amounts remaining after payment in full in cash of all Senior Debt, giving effect to any concurrent payment or distribution to the Agent, the Banks or both.

(c)           Payments by Imbali.  Nothing in this Agreement shall limit or restrict the rights or obligations of Imbali Metals Bvba to make payments under the Imbali Credit Agreement.

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2.04           Subordination of Liens.

(a)           Priority of Liens.  Notwithstanding the date, manner or order of grant, attachment or perfection of any Liens securing the Subordinated Debt granted on the Collateral or of any Liens securing the Senior Debt granted on the Collateral and notwithstanding any provision of the UCC or any applicable law or the Subordinated Debt Documents or any other circumstance whatsoever, the Subordinated Creditor hereby agrees that:  (a) any Lien on the Collateral securing any Senior Debt now or hereafter held by or on behalf of the Agent, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects and before any Lien on the Collateral securing any of the Subordinated Debt; and (b) any Lien on the Collateral now or hereafter held by or on behalf of the Subordinated Creditor regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Collateral securing any Senior Debt.  All Liens on the Collateral securing any Senior Debt shall be and remain senior in all respects and before all Liens on the Collateral securing any Subordinated Debt for all purposes, whether or not such Liens securing any Senior Debt are subordinated to any Lien securing any other obligation of the Company.

(b)           Contesting Claims and Liens.  The Subordinated Creditor and the Agent, for itself and on behalf of each Bank, agrees that it shall not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Dissolution Event), the validity or enforceability of any Senior Debt or any Subordinated Debt, respectively, or the priority, validity or enforceability of a Lien held by or on behalf of any of the Agent in the Collateral or by or on behalf of any of the Subordinated Creditor in the Collateral, respectively.

2.05           Subrogation.  Subject to the payment in full in cash of all Senior Debt and the termination of all obligations (if any) of the Agent or any Bank to extend credit to the Company pursuant to the Senior Debt Documents, the Subordinated Creditor shall be subrogated to the rights of the Banks to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of, and interest and premium (if any) on, the Subordinated Debt shall be paid in full in cash.  For purposes of such subrogation, no payments or distributions to the Banks of any cash, property or securities to which the Subordinated Creditor would be entitled except for the provisions of this Section 2, and no payments over pursuant to the provisions of this Section 2, to the Banks by the Subordinated Creditor, shall, as between the Company, its creditors other than the Banks, and the Subordinated Creditor, be deemed to be a payment or distribution by the Company to or on account of the Subordinated Debt.

2.06           No Waiver of Subordination Provisions.  No right of the Agent or any Bank to enforce the subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by the Agent or any Bank (except to the extent required herein), or by any non-compliance by the Company with the terms, provisions and covenants of this Agreement, regardless of any knowledge thereof the Agent or any Bank may have or be otherwise charged with.

2.07           Enforcement.

(a)           So long as any Senior Debt shall be outstanding or any Bank has any obligation to extend credit to the Company under the Empire Credit Agreement:

(i)            the Subordinated Creditor shall not, except as expressly otherwise provided in this Agreement, (A) ask, demand, sue for, take or receive, or retain, from the Company by setoff or in any other manner, payment or prepayment of all or any part of the Subordinated Debt; (B) sell, assign, pledge, encumber or otherwise dispose of any of the Subordinated Debt; (C) forgive, cancel or discharge, or permit to be converted into any evidence of equity or ownership, any of the Subordinated Debt; (D) subordinate all or any part of the Subordinated Debt to any indebtedness other than the Senior Debt; (E) subordinate all or any part of the Liens securing all or any part of the Subordinated Debt to the Liens securing any indebtedness other than the Senior Debt; (F) ask, demand or receive any security (other than the Collateral) for the Subordinated Debt; (G) exercise or seek to exercise any rights or remedies (including setoff) with respect to any Collateral (including the exercise of any right under any lockbox agreement, control account agreement, landlord waiver or bailee's letter or similar agreement or arrangement to which the Subordinated Creditor is a party) or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure); (H) amend any agreement or instrument governing the Empire Guaranty or any collateral security therefor; (I) declare the Subordinated Debt due and payable by reason of any default or for any other reason; (J) contest, protest or object to any foreclosure proceeding or action brought by the Agent or any other exercise by the Agent of any rights and remedies relating to the Collateral or otherwise; (K) commence, or participate with others in commencing, any Insolvency Proceeding with respect to the Company; or (L) object to the forbearance by the Agent from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral;

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(ii)            the Company shall not, except as expressly otherwise provided in this Agreement, (A) make any payment or prepayment of all or any part of the Subordinated Debt; (B) accept any forgiveness, cancellation of or discharge of, or permit to be converted into any evidence of equity or ownership, any of the Subordinated Debt; (C) grant any security (other than the Collateral) for the Subordinated Debt; (D) amend any agreement or instrument governing the Empire Guaranty or any collateral security therefor; or (E) take any other action in contravention of this Agreement; and

(iii)            the Agent shall, except as otherwise expressly provided herein, have the exclusive right to enforce rights, exercise remedies (including setoff and the right to credit bid their debt) and make determinations regarding the release, disposition, or restrictions with respect to the Collateral without any consultation with or the consent of the Subordinated Creditor.

(b)           The Subordinated Creditor agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection with the exercise of any right or remedy (including setoff) with respect to any Collateral, unless and until the Senior Debt shall have been paid in cash in full.  Without limiting the generality of the foregoing, unless and until the Senior Debt shall have been paid in cash in full the sole right of the Subordinated Creditor with respect to the Collateral is to hold a Lien on the Collateral pursuant to the Subordinated Debt Documents for the period and to the extent granted therein and after the payment in full of the Senior Debt, to receive a share of the proceeds thereof, if any, in accordance with the terms of the Subordinated Debt Documents.

(c)           The Subordinated Creditor (i) agrees that it will not take any action that would hinder any exercise of remedies under the Senior Debt Documents, including any sale, lease, exchange, transfer or other disposition of the Collateral, whether by foreclosure or otherwise, and (ii) hereby waives any and all rights it may have as a junior lien creditor (other than the right to receive the proceeds of such sale, lease, exchange, transfer or other disposition after the payment in full in cash of the Senior Debt) or otherwise to object to the manner in which the Agent seeks to enforce or collect the Senior Debt or the Liens granted in any of the Collateral, regardless of whether any action or failure to act by or on behalf of the Agent is adverse to the interest of the Subordinated Creditor.

(d)           The Subordinated Creditor hereby acknowledges and agrees that no covenant, agreement or restriction contained in the Subordinated Debt Documents shall be deemed to restrict in any way the rights and remedies of the Agent with respect to the Collateral as set forth in this Agreement and the Senior Debt Documents.

(e)           The Subordinated Creditor agrees that any Lien that it has on any inventory held by Imbali Metals Bvba on consignment for the Company is subordinated to the Lien on such inventory securing the Senior Debt as provided in this Agreement.

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2.08           Plan of Reorganization.  The Agent and the Banks, on the one hand, and the Subordinated Creditor, on the other hand, shall be entitled to vote as separate classes with respect to any plan of reorganization in connection with any Insolvency Proceeding; provided that the Subordinated Creditor agrees that it will not take any action or vote in any way which supports any plan of reorganization that is inconsistent with the terms of this Agreement.

2.09           Subordinated Debt Remedies.  Notwithstanding the foregoing, the Subordinated Creditor may:

(a)           file a proof of claim with respect to the Subordinated Debt if an Insolvency Proceeding has been commenced by or against the Company;

(b)           take any action (not adverse to the priority status of the Liens on the Collateral securing the Senior Debt, or the rights of the Agent or the holders of the Senior Debt to exercise remedies in respect thereof) in order to create, perfect, preserve or protect its Lien on the Collateral;

(c)           file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowances of the claims of the Subordinated Creditor, including any claims secured by Collateral, if any, in each case in accordance with the terms of this Agreement;

(d)           file any pleadings, objections, motions or agreements which assert rights or interests available to unsecured creditors of the Company in connection with any Insolvency Proceeding, but only if such pleading, objection, motion or agreement is not inconsistent with the terms of this Agreement; and

(e)           vote on any plan of reorganization, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Agreement, with respect to the Subordinated Debt and Collateral.

2.10           Adequate Protection.  If, in any Insolvency Proceeding, the holders of the Senior Debt (or any subset thereof) are granted adequate protection in the form of additional collateral in connection with any use of cash collateral, then the Subordinated Creditor may seek or request adequate protection in the form of a Lien on such additional Collateral (and may not in any other circumstance seek or request adequate protection in the form of a Lien), which Lien will be subordinated to the Liens securing the Senior Debt and such cash collateral use on the same basis as the other Liens securing the Subordinated Debt are so subordinated to the Senior Debt under this Agreement.

SECTION 3

REPRESENTATIONS AND WARRANTIES.

The Subordinated Creditor represents and warrants to the Banks and the Agent that:

3.01           Corporate Existence.  The Subordinated Creditor is a bank duly organized and validly existing under the laws of the Kingdom of Belgium.

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3.02           No Breach.  None of the execution and delivery of this Agreement, the consummation of the transactions herein contemplated or compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent under, the organization documents of the Subordinated Creditor, any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Subordinated Creditor is a party or by which the Subordinated Creditor is bound or to which the Subordinated Creditor is subject, or constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien upon any of the revenues or assets of the Subordinated Creditor pursuant to the terms of any such agreement or instrument.

3.03           Action; Execution and Delivery.  The Subordinated Creditor has all necessary power and authority to execute, deliver and perform its obligations under this Agreement; the execution, delivery and performance by the Subordinated Creditor of this Agreement have been duly authorized by all necessary action on its part; and this Agreement has been duly and validly executed and delivered by the Subordinated Creditor and constitutes the legal, valid and binding obligation of the Subordinated Creditor, enforceable in accordance with its terms.  The Subordinated Creditor has, independently and without reliance on the Agent or any Bank and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.

3.04           Approvals.  No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency are necessary for the execution, delivery or performance by the Subordinated Creditor of this Agreement or for the validity or enforceability hereof.

3.05           Collateral.  Other than Collateral, no Liens exist to secure any of the Subordinated Debt.

3.06           Note.  The Subordinated Creditor has delivered to the Agent a true, correct and complete copy of the Subordinated Debt Documents (including all amendments and supplements thereto) as in effect on the date hereof.  The Empire Guarantee bears a legend that it is subject to this Agreement.

SECTION 4

AGREEMENTS.

The Company and the Subordinated Creditor hereby agree that, until the payment of the Subordinated Debt in cash in full and the termination of all obligations (if any) of the Banks to extend credit to the Company under the Credit Agreements:

4.01           Legend.  The Empire Guarantee, including any replacement thereof or substitution therefor, shall bear a legend that it is subject to this Agreement.

4.02           Actions by Agent and Banks.  The Agent and the Banks may, at any time and from time to time, without the consent of or notice to the Subordinated Creditor, (a) change the manner, place or terms of payment or change or extend the time of payment of, or renew or alter, the Senior Debt or the security therefor, or otherwise amend in any manner any Senior Debt Document; (b) exercise or refrain from exercising any rights against the Company and others; (c) apply any sums by whomsoever paid or however realized to the Senior Debt; (d) sell, exchange, release, surrender, realize upon or otherwise deal in any manner and in any order any property whatsoever and by whomsoever at any time subject to a Lien to secure the Senior Debt; (e) release any Person liable in any manner for the payment or collection of any part of the Senior Debt, and (f) sell or compromise all or any part of the Senior Debt, and subordinate the payment of any part of the Senior Debt to the payment of any other indebtedness (including any other part of the Senior Debt).  No invalidity, irregularity or unenforceability of all or any part of the Senior Debt or any Lien securing the Senior Debt shall affect, impair or be a defense to this Agreement.

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4.03           Collateral.  No Lien (other than on the Collateral) will arise or will be taken in the future to secure any Subordinated Debt.

4.04           Recovery of Funds.  If at any time all or any part of any payment previously applied by the Agent or the Banks to the Senior Debt must be returned by the Agent or any Bank, or recovered from the Agent or any Bank, for any reason (including the order of any bankruptcy court), this Agreement shall automatically be reinstated to the same effect as if the prior application had not been made, and, in addition, the Company agrees to indemnify the Agent and each Bank against, and to same and hold each of them harmless from any required return by it, or recovery from it, of any such payments because of its being deemed preferential under applicable bankruptcy, receivership or insolvency laws, or for any other reason.

4.05           Further Assurances.  Each of the Company and the Subordinated Creditor agrees that it will, and its expense and at any time and from time to time, promptly execute, acknowledge and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Agent may reasonably request, in order to protect any right or interest granted or purported to be granted hereby.

4.06           Expenses.  The Company agrees upon demand to pay to the Agent the amount of any and all expenses, including the reasonable fees and expenses of its counsel and of any experts or agents, that the Agent or any Bank may incur in connection with (a) the administration of this Agreement; (b) the exercise or enforcement of any of the rights of the Agent or the Banks hereunder, or (c) the failure by the Subordinated Creditor or the Company to perform or observe any of the provisions of this Agreement.

SECTION 5

MISCELLANEOUS.

5.01           No Waiver.  No failure on the part of the Agent or any Bank to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Agent or any Bank of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies herein are cumulative and are not exclusive of any remedies provided by law.

5.02           Governing Law.  this Agreement will be deemed to be a contract made under and governed by the internal laws of the state of New York (including for such purpose sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).

5.03           Notices.  All notices, requests, consents and demands hereunder shall be in writing and telecopied or delivered to the intended recipient at the "Address for Notices" specified beneath its (or his or her, as the case may be) name on the signature pages hereof or, as to any party, at such other address as shall be designated by such party in a notice to each other party.  Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid.

5.04           Waivers, Etc.  The terms of this Agreement may be waived, altered or amended (as to the Subordinated Creditor) only by an instrument in writing duly executed by the Subordinated Creditor and (as to the Agent and the Banks) by the Agent.  Any such amendment or waiver shall be binding upon the Agent and each Bank (and each other holder of Senior Debt) and the Subordinated Creditor.

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5.05           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Subordinated Creditor, the Agent and each Bank.

5.06           Captions.  The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

5.07           Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.  Delivery of an executed counterpart of a signature page to this Agreement by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

5.08           Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby, and this Agreement shall be liberally construed so as to carry out the intent of the parties to it.

IN WITNESS WHEREOF, the parties hereto have caused this Subordination Agreement to be duly executed and delivered as of the day and year first above written.

SUBORDINATED CREDITOR ING BELGIUM S.A./N.V.
By:
	Name:
	Title:

By:
	Name:
	Title:

COMPANY EMPIRE RESOURCES, INC.
By:
	Sandra R. Kahn, Vice President

10

AGENT COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, as Agent
By:
	Kimberly Oates, Executive Director

By:
	Brett D. Delfino, Executive Director

11

EXHIBIT I

TO

EMPIRE RESOURCES INC.

CREDIT AGREEMENT

Borrowing Request

Borrowing Request

Coöperatieve Centrale

Raiffeisen-Boerenleenbank B.A.

"Rabobank Nederland",

New York Branch, as agent

c/o Rabo Support Service, Inc.

10 Exchange Place, 16th Floor

Jersey City, NJ  07302-3913

Phone No.:              201.499.5436

Fax No.:                   914.304.9327

Attention:               Sui Price

With a copy to:

Rabobank Nederland

245 Park Avenue

New York, NY  10167

Phone No.               (212) 916-7933

Fax No.

Attention:               Kimberly Oates

and each Bank

Ladies and Gentlemen:

The undersigned is an authorized officer of Empire Resources, Inc. (the "Company") and is authorized to make and deliver this Borrowing Request pursuant to that certain Credit Agreement (as amended, the "Agreement") dated as of April 28, 2011 among Company, the banks named therein and Coöperatieve Centrale Raiffeisen–Boerenleenbank B.A., "Rabobank Nederland", New York Branch (the "Agent").  All terms defined in the Credit Agreement shall have the same meaning herein.  In accordance with the Credit Agreement, the Company hereby (check which ever is applicable):

___           1.           Requests that the Banks make an advance under the Revolving Loan Commitments which shall be a Base Rate Loans in the amount of $ _________ on __________.

___           2.           Requests that the Banks make an advance on __________under the Revolving Loan Commitments as Eurodollar Loans with the amount of each Eurodollar Loans and duration of the Interest Periods with respect thereto to be as follows:

Amount	Interest Period	Maturity Date
1.	_____ Month(s)
2.	_____ Month(s)
3.	_____ Month(s)
4.	_____ Month(s)

1

___         3.           Requests that the Banks make an advance on __________under the Revolving Loan Commitments as Money Market Loans with the amount of each Money Market Loan and duration of the Interest Periods with respect thereto to be as follows:

Amount	Interest Period	Maturity Date
1.	_____ days
2.	_____ days
3.	_____ days
4.	_____ days

___         4.           Requests that the Swing Line Bank make an advance under the Swing Line Commitment in the amount of $__________ on __________.

5.           Requests that _________ issue a Letter of Credit in the form attached hereto as Exhibit A with an original face amount of $__________ on __________.

6.           Requests that the Acceptance Bank create an acceptance in the amount of $__________ on __________ and on the terms described on Exhibit B hereto (Exhibit B to set forth the tenor, type and CIF value of the goods, date of shipment of goods, city and country of origin and city and state of destination).

In connection with the foregoing and pursuant to the terms and provisions of the Credit Agreement, the undersigned hereby certifies to the Agent and the Banks that the following statements are true and correct:

(i)           The representations and warranties contained in Section 7 of the Credit Agreement and in each of the other Basic Documents are true and complete in all material respects on and as of the date hereof with the same force and effect as if made on and as of such date except for any representation or warranty limited by its terms to a specific date.

(ii)           No Default exists or would result from the extension of credit requested hereunder.

(iii)           After giving effect to the credit extended pursuant to this request, the aggregate amount of Credit Exposure does not exceed the lesser of the Borrowing Base (plus if applicable, with respect to any commercial Letter of Credit requested hereby to be issued to secure the purchase price of Inventory, 80% the cost of such Inventory that will be Eligible Inventory Ordered Under L/C once such Letter of Credit is issued)or the Revolving Loans Commitments;

2

Obligations	Totals
a.         Current Revolving Loans	$
b.         Requested Revolving Loans	$
c.         Total Revolving Loans	$
d.         Current Swing Line Loans	$
e.         Requested Swing Line Loans	$
f.          Total Swing Line Loans	$
g.         Current Letter of Credit Liabilities	$
h          .Requested Letter of Credit Liabilities	$
i.          Total Letter of Credit Liabilities	$
j.          Current Acceptance Liabilities	$
k.         Requested Acceptance Liabilities	$
l.          Total Acceptance Liabilities	$
m.        Total Current Obligations (Sum of Lines a., d., g. and j.)	$
n.         Total Requested Obligations (Sum of Lines b., e,. h and k)	$
o.         Total Obligations After Request (Sum of Lines c., f., i. and l)	$
p.         Aggregate Borrowing Base (from most recent Borrowing Base Report)	$
q.         Plus with respect to any commercial Letter of Credit requested hereby to be issued to secure the purchase price of Inventory, 80% the cost of such Inventory that will be Eligible Inventory Ordered Under L/C once such Letter of Credit is issued	$
r.          Total Aggregate Availability (sum of p plus q).
s.         Availability after request (sum of r minus 0)

All information supplied hereon is true, correct, and complete as of the date hereof.

Company: EMPIRE RESOURCES, INC.
By:
	Name:
	Title:

Dated as of:  _______________

(insert proposed date of the

requested extension of credit)

3

EXHIBIT J

TO

EMPIRE RESOURCES INC.

CREDIT AGREEMENT

Notice of Prepayment, Continuation or Conversion

Notice of Prepayment, Continuation or Conversion

Coöperatieve Centrale

Raiffeisen-Boerenleenbank B.A.

"Rabobank Nederland",

New York Branch, as agent

c/o Rabo Support Service, Inc.

10 Exchange Place, 16th Floor

Jersey City, NJ  07302-3913

Phone No.:              201.499.5436

Fax No.:                   914.304.9327

Attention:               Sui Price

With a copy to:

Rabobank Nederland

245 Park Avenue

New York, NY  10167

Phone No.               (212) 916-7933

Fax No.

Attention:               Kimberly Oates

and each Bank

Ladies and Gentlemen:

The undersigned is an authorized officer of Empire Resources, Inc. (the "Company") and is authorized to make and deliver this notice pursuant to that certain Credit Agreement (as amended, the "Agreement") dated as of April 28, 2011 among Company, the banks named therein and Coöperatieve Centrale Raiffeisen–Boerenleenbank B.A., "Rabobank Nederland", New York Branch (the "Agent").  All terms defined in the Credit Agreement shall have the same meaning herein.

____           The Company hereby gives Agent notice of prepayment of a Loan. Details of this prepayment are set forth on Schedule 1 hereto.

____           The Company hereby gives Agent notice of the continuation of a Eurodollar Loan.  Details of this Continuation are set forth on Schedule 2 hereto.

____           The Company hereby gives Agent notice of the continuation of a Money Market Loan.  Details of this Continuation are set forth on Schedule 2 hereto.

____           The Company hereby gives Agent notice of the conversion of a Loan from one Type to another Type.  Details of this Conversion are set forth on Schedule 3 hereto.

In connection with the foregoing and pursuant to the terms and provisions of the Credit Agreement, the undersigned hereby certifies to the Agent and the Banks that the following statements are true and correct:

1

(a)           The representations and warranties contained in Section 7 of the Credit Agreement and in each of the other Basic Documents are true and complete in all material respects on and as of the date hereof with the same force and effect as if made on and as of such date except to the extent that such representations and warranties relate specifically to another date.

(b)           No Default exists or would result from the request made hereunder.

Company: EMPIRE RESOURCES INC.
By:
	Name:
	Title:

Dated as of:  _________________

2

SCHEDULE 1

NOTICE OF PREPAYMENT

1. The date of prepayment is ______________ __, 20__.3

2. The aggregate amount of the prepayment is $_____________.

3. The prepayment should be applied as follows:

___Revolving Loan in the amount of $___________ (minimum amount of $1,000,000 and $250,000 increments for all Eurodollar Loans; minimum of $250,000 or multiples of $50,000 in excess thereof in the case of Base Rate Loans and $1,250,000 or multiples of $50,000 in excess there of in the case of Money Market Loans)

___Swing line Loan in the amount of $___________ (minimum amount of $500,000 and $25,000 increments)

3 Notice by 12:00 noon on the Business Day of the proposed prepayment is required for prepayments of Base Rate Loans, Swing Line Loans and Money Market Loans. Three Business Days notice is required for prepayments of Eurodollar Loans.

SCHEDULE 2

NOTICE OF CONTINUATION

1. The Continuation Date is ______ __, 20__.4

2. The aggregate amount of the Eurodollar Loans to be continued is $__________.

3. The Eurodollar Loans to be continued  should be continued as a Eurodollar Loans in the amounts and with the Interest Period specified below:

Amount	Interest Period	Maturity Date
1.	_____ Month(s)
2.	_____ Month(s)
3.	_____ Month(s)
4.	_____ Month(s)

4. The aggregate amount of the Money Market Loans to be continued is $__________.

3. The Money Market Account to be continued should be continued as a Money Market Loan in the amounts and with the Interest Period specified below:

Amount	Interest Period	Maturity Date
1.	_____  days
2.	_____  days
3.	_____  days
4.	_____  days

4 Notice by 1:00 P.M. on the Business Day of the proposed continuation is required for Base Rate Accounts and three Business Days notice is required for a continuation of a Libor Account.

SCHEDULE 3

NOTICE OF CONVERSION

1. The Conversion Date is ______ __, 20__.5

2. The aggregate amount of the Loans to be converted is $__________.

3. The Account to be converted is currently a:

____ [Base Rate Loan] [Eurodollar Loan] [Money Market Loan] and should be converted into:

___ Base Rate Loans in the amount of $ _________;

___ Eurodollar Loans with the amount of each Eurodollar Loan and duration of the Interest Periods with respect thereto to be as follows:

Amount	Interest Period	Maturity Date
1.	_____ Month(s)
2.	_____ Month(s)
3.	_____ Month(s)
4.	_____ Month(s)

___ Money Market Loans with the amount of each Money Market Loan and duration of the Interest Periods with respect thereto to be as follows:

Amount	Interest Period	Maturity Date
1.	_____ days
2.	_____  days
3.	_____  days
4.	_____  days

5 A Conversion can only occur on the last day of the Interest Period applicable to a Eurodollar Loan or a Money Market Loan. Notice by 12:00 noon on the Business Day of the proposed conversion is required for Base Rate Loans or Money Market Loans and three Business Days notice is required for a conversion into a Eurodollar Loans.

EXHIBIT K

TO

EMPIRE RESOURCES INC.

CREDIT AGREEMENT

Subordination Terms

Pre-approved terms of the unsecured and un-guaranteed Subordinated Debt:

1.           Maturity Date.  Maturity date of the Subordinated Debt must be at least six months after the Revolving Credit Commitment Termination Date.

2.           Principal Payments.  No payment of principal on the Subordinated Debt will be permitted until all the Loan Obligations have been paid in full and all Commitments terminated.

3.           Interest Payments.  Payments of interest on the Subordinated Debt will be permitted subject to the subordination provisions described below.  Interest payment will be due under the Subordinated Debt quarterly or semi-annually, but in any event, not more frequently than at least 30 days after each Quarterly Date.

4.           Covenants.  The covenants governing the Subordinated Debt will be less restrictive than the covenants governing the Loan Obligations, will permit the Agent to obtain Liens on the assets of the Obligors and their Subsidiaries without the consent or approval of the holders of the Subordinated Debt and will not place any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of the Company to (a) pay dividends or make any other distribution; (b) subject to subordination provisions, pay any Indebtedness owed to the Company or any Subsidiary; (c) make loans or advances to the Company or any Subsidiary; or (d) transfer any of its property or assets to Company or any Subsidiary.

5.           Event of Default.  The Subordinated Debt cannot be cross defaulted to the Basic Documents, but it can contain a cross-acceleration.  The events of default will not be more onerous or restrictive than the Events of Default.

6.           Subordination Provisions.

(a)           Senior Debt.  For purposes of the subordination provisions, the senior debt will be defined to include all Obligations (including any post petition interest, fees and expenses whether or not allowed under applicable insolvency laws).

(b)           Payments on Subordinated Debt.  No payments may be made on the Subordinated Debt prior to the payment in full in cash of the senior debt; except that prior to the occurrence of a payment default on the senior debt or the occurrence of an insolvency event or prior to subordinated creditor's receipt of a notice from Agent that a covenant default has occurred under the senior debt, cash payments in respect of interest which accrues on the Subordinated Debt may be made.

(c)           Senior Debt Payment Defaults and Insolvency Events.  When a payment default on the senior debt or an insolvency event has occurred, no payments may be made on the Subordinated Debt until the senior debt is paid in full in cash or such payment default is cured or waived.

1

(d)           Senior Debt Covenant Default.  When the subordinated creditor has received a notice that a senior debt covenant default has occurred, no payments may be made or accepted on the Subordinated Debt unless or until: (i) the senior covenant default has been cured or waived, (ii) the senior debt shall have been paid in full in cash, or (iii) 180 days shall have elapsed from the date the default notice shall have been given and no payment default nor any insolvency event exists.

(e)           Limitation on Sub Debt Actions.  The subordinated creditor will not commence or join in any enforcement actions against the Company or any property of the Company to recover all or any part of the Subordinated Debt unless the following conditions are satisfied: (i) the Agent shall have commenced enforcement actions against the Company or its property; and (ii) the subordinated creditor shall have provided the Agent 30 days prior notice; provided that the subordinated creditor shall not be prohibited as a result of the forgoing provisions from filing proofs of debt or claim in bankruptcy proceedings initiated by others.

(f)           Subordination of Liens.  The Subordinated Debt shall not be secured.  However, to the extent that the subordinated creditor obtains any liens or other interest in any assets of the Company, such liens or other interests shall be subject and subordinate to the Liens and interest of the Agent and the Banks in such assets.

(g)           Senior Creditor Rights.  The Agent will have the power to file proofs of claim with respect to the Subordinated Debt and vote any such claim if the subordinated creditor fails to do so prior to the applicable bar date.

(h)           Subordinated Debt Limitations.  The subordinated creditor shall be permitted to change the terms of the Subordinated Debt without the consent of the Agent and the Banks provided that the subordinated creditor will be prohibited from: (i) increasing the interest rate on the Subordinated Debt; (ii) amending the dates that principal or interest is due if the effect of the amendment is to accelerate the due dates; and (iii) changing or adding covenants or events of default that are more onerous and restrictive than those in the Basic Documents or imposing redemption, prepayment or similar provisions.

2

SCHEDULE A

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Commitments

Banks	Commitment	Revolving Loan Commitment Percentage
Rabobank	$45,000,000.00	22.5000%
JPMorgan	$40,000,000.00	20.0000%
BNP Paribas	$25,000,000.00	12.5000%
ABN AMRO Capital LLC	$25,000,000.00	12.5000%
RBS Citizens, National Association	$25,000,000.00	12.5000%
Société Générale	$25,000,000.00	12.5000%
Brown Brothers Harriman & Co.	$15,000,000.00	7.5000%
Total	$200,000,000.00	100.0000%

SCHEDULE I

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Indebtedness

1.           The Imbali Facility and the Imbali Guaranty.

2.           The Quad Avenue Loan Agreement and any Guarantee by the Company of the Indebtedness outstanding thereunder.  The principal amount outstanding thereunder does not exceed $2,000,000.

SCHEDULE II

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Investments

1.           Imbali Guaranty.

2.           The Company's Guarantee of the Quad Avenue Loan Agreement.

SCHEDULE III

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Subsidiaries

Subsidiary Name	Jurisdiction of Organization	Persons Holding Equity Interest	Authorized Equity Interest	Outstanding Equity Interest	Percentage of Ownership	Dormant Subsidiary?
Empire Resources Pacific, Ltd.	Delaware	Empire Resources, Inc.	1,000 shares of common stock	100 shares of common stock	100%	No
Imbali Metals Bvba	Belgium	Empire Resources, Inc.	1,000 shares	1,000 shares	100%	No
6900 Quad Avenue, LLC	Delaware	Empire Resources, Inc.	n/a	n/a	100%	No

SCHEDULE IV

TO

EMPIRE RESOURCES, INC.

CREDIT AGREEMENT

Existing Letters of Credit

JP Morgan Ref	Empire Ref	Beneficiary Name	Open Date	Expiry Date	Ship Date		Outstanding	USD Equivalent
IRII-476320	476320		03/09/11	04/30/11	04/15/11	USD	300,150.00	300,150.00
IRII-476901	476901		04/14/11	06/14/11	05/31/11	USD	5,750,000.00	5,750,000.00
							USD Total:	6,050,150.00
EMPIRE RESOURCES INC.
IRII-476160	476160	ZHENGZHOU MINGTAI INDUSTRY CO., LTD	02/09/11	04/14/11	03/31/11	USD	356,749.25	356,749.25
IRII-476162	476162	HENAN FOUNDER BEYOND INDUSTRYCO,LTD	02/15/11	05/31/11	05/15/11	USD	9,830,030.10	9,830,030.10
IRII-476163	476163	PT.ALUMINDO LIGHT METAL	02/18/11	04/19/11	04/05/11	USD	439,063.59	439,063.59
IRII-476164	476164	EVER LASTING STAINLESS STEEL	03/01/11	05/14/11	04/30/11	USD	192,350.07	192,350.07
IRII-476215	476215	PT.ALUMINDO LIGHT METAL	03/01/11	05/14/11	04/30/11	USD	96,566.25	96,566.25
IRII-476216	476216	POSCO VST CO., LTD	03/03/11	04/14/11	03/31/11	USD	589,875.00	589,875.00
IRII-476217	476217	THE ALUMINIUM CO. OF EGYPT	03/03/11	03/10/11	02/28/11	USD	1,862,038.47	1,862,038.47
IRII-476218	476218	THE ALUMINIUM CO. OF EGYPT	03/11/11	04/14/11	03/31/11	USD	71,555.00	71,555.00
IRII-476219	476219	ZENITH BIRLA (INDIA) LIMITED	03/01/11	06/30/11	06/15/11	USD	82,709.94	82,709.94
IRII-476321	476321	HUAXI ALUMINIUM CO., LTD	03/03/11	04/14/11	03/31/11	USD	37,477.25	37,477.25
IRII-476322	476322	LU QIN (HONG KONG) COMPANY LIMITED	03/10/11	06/09/11	05/15/11	USD	5,126,489.09	5,126,489.09
IRII-476323	476323	CHALCO HENAN ALUMINIUM FABRICATION	03/15/11	06/20/11	05/30/11	USD	5,894,513.86	5,894,513.86
IRII-476420	476420	HENAN FOUNDER BEYOND INDUSTRYCO,LTD	03/28/11	05/14/11	04/30/11	USD	181,125.00	181,125.00
IRII-476423	476423	LU QIN (HONG KONG) COMPANY LIMITED	03/10/11	06/09/11	05/15/11	USD	873,912.60	873,912.60
IRII-476424	476424	ZHENGZHOU MINGTAI INDUSTRY CO., LTD	03/14/11	05/31/11	05/20/11	USD	378,703.05	378,703.05
IRII-476500	476500	POSCO VST CO., LTD	03/22/11	05/14/11	04/30/11	USD	182,600.00	182,600.00
IRII-476501	476501	HUAXI ALUMINIUM CO., LTD	03/21/11	05/14/11	04/30/11	USD	349,891.87	349,891.87
IRII-476502	476502	NOVELIS KOREA LIMITED ULSAN PLANT	03/23/11	04/30/11	04/15/11	USD	55,924.27	55,924.27
IRII-476503	476503	HENAN FOUNDER BEYOND INDUSTRYCO,LTD	04/26/11	05/30/11	05/10/11	USD	6,285,278.67	6,285,278.67
IRII-476504	476504	PT.ALUMINDO LIGHT METAL	03/18/11	05/14/11	04/30/11	USD	2,071,354.57	2,071,354.57

1

JP Morgan Ref	Empire Ref	Beneficiary Name	Open Date	Expiry Date	Ship Date		Outstanding	USD Equivalent
IRII-476575	476575	PT.ALUMINDO LIGHT METAL	03/28/11	05/14/11	04/30/11	USD	60,700.20	60,700.20
IRII-476576	476576	FENG HSIN IRON AND STEEL CO., LTD	03/24/11	06/14/11	05/31/11	USD	102,487.00	102,487.00
IRII-476578	476578	HENAN FOUNDER BEYOND INDUSTRYCO,LTD	04/07/11	06/14/11	05/31/11	USD	73,920.00	73,920.00
IRII-476579	476579	LU QIN (HONG KONG) COMPANY LIMITED	04/07/11	06/25/11	05/31/11	USD	1,077,639.70	1,077,639.70
IRII-476827	476827	YIEH CORPORATION LIMITED	04/12/11	06/14/11	05/31/11	USD	163,020.00	163,020.00
IRII-476828	476828	EVER LASTING STAINLESS STEEL	04/13/11	07/14/11	06/30/11	USD	97,038.30	97,038.30
IRII-477085	477085	PT.ALUMINDO LIGHT METAL	04/22/11	05/20/11	05/06/11	USD	4,600,000.00	4,600,000.00
IRII-516236	516236	PT.ALUMINDO LIGHT METAL	11/15/10	04/14/11	03/31/11	USD	45,317.83	45,317.83
IRII-520995	520995	ZENITH BIRLA (INDIA) LIMITED	12/09/10	05/14/11	04/23/11	USD	143,653.98	143,653.98
IRII-521131	521131	PT.ALUMINDO LIGHT METAL	12/17/10	05/14/11	04/30/11	USD	56,505.82	56,505.82
IRII-521265	521265	PROSPERITY TIEH ENTERPRISE CO., LTD	01/04/11	04/14/11	03/31/11	USD	4,597.30	4,597.30
IRII-521266	521266	DK CORPORATION	01/10/11	04/30/11	04/21/11	USD	419,127.91	419,127.91
IRII-521268	521268	TIANJIN FUREN STEEL TUBE CO., LTD.	01/04/11	04/14/11	03/31/11	USD	86,576.50	86,576.50
IRII-521313	521313	ZENITH BIRLA (INDIA) LIMITED	01/04/11	05/02/11	04/18/11	USD	89,270.34	89,270.34
IRII-521314	521314	DK CORPORATION	01/14/11	04/30/11	04/21/11	USD	450,620.72	450,620.72
IRII-521370	521370	PT.ALUMINDO LIGHT METAL	01/11/11	04/14/11	03/31/11	USD	94,108.23	94,108.23
IRII-521518	521518	PT.ALUMINDO LIGHT METAL	01/24/11	04/14/11	03/31/11	USD	20,942.27	20,942.27
IRII-521519	521519	PT.ALUMINDO LIGHT METAL	02/25/11	04/20/11	04/06/11	USD	7,394.97	7,394.97
IRII-521525	521525	PT.ALUMINDO LIGHT METAL	03/24/11	05/14/11	05/03/11	USD	1,946,531.40	1,946,531.40
IRII-521526	521526	PT.ALUMINDO LIGHT METAL	03/28/11	05/14/11	05/03/11	USD	678,573.82	678,573.82
IRII-521527	521527	PT.ALUMINDO LIGHT METAL	04/18/11	05/20/11	05/05/11	USD	3,162,500.00	3,162,500.00
IRII-521528	521528	PT.ALUMINDO LIGHT METAL	02/02/11	05/14/11	04/30/11	USD	61,299.92	61,299.92
IRII-521539	521539	HUAXI ALUMINIUM CO., LTD	03/01/11	04/14/11	03/31/11	USD	119,730.76	119,730.76
IRII-521600	521600	NIPPON STEEL TRADING CO., LTD.	01/31/11	05/14/11	04/30/11	USD	1,000,983.12	1,000,983.12
IRII-521601	521601	YIEH CORPORATION LIMITED	01/28/11	04/28/11	04/14/11	USD	5,323.69	5,323.69
IRII-521603	521603	THAINOX STAINLESS PUBLIC CO. LTD	02/03/11	04/21/11	03/31/11	USD	7,506.62	7,506.62
IRII-521604	521604	LU QIN (HONG KONG) COMPANY LIMITED	02/17/11	04/25/11	03/31/11	USD	496,996.50	496,996.50
RRRI-520465	520465	PT.ALUMINDO LIGHT METAL	10/22/10	04/14/11	03/31/11	USD	33,726.17	33,726.17
							USD Total :	50,064,300.97
							USD Grand Total:	56,114,450.97

2

EX-10.10

Exhibit 10.10

SUPPLY AGREEMENT

BY AND BETWEEN

EMPIRE RESOURCES, INC., having a principle place of business at 1 Parker Plaza, Fort Lee, New Jersey, 07024, USA, on the one hand,

AND

SOUTHERN ALUMINUM INDUSTRY (CHINA) CO., LTD, established in the People’s Republic of China with limited liability

AND

PT. ALUMINDO LIGHT METAL INDUSTRY, TBK, an Indonesia Limited Liability Company

AND

FUNG LAM TRADING COMPANY LTD, a Hong Kong Limited Liability Company,

on the other hand

This Agreement is entered this 27th day of May, 2011, (the “Effective Date”) by and among Empire Resources, Inc., a USA corporation (hereinafter “Empire”), on the one hand, and Southern Aluminum Industry (China) Co., Ltd, established in the People’s Republic of China with limited liability (hereinafter “SAIC”), PT. Alumindo Light Metal Industry TBK, an Indonesian Limited Liability Company, (hereinafter “Alumindo”), and Fung Lam Trading Company Ltd, a Hong Kong Limited Liability Company (hereinafter, “FLH” and collectively with SAIC and Alumindo, the “Manufacturers”), on the other hand.

WHEREAS, the Manufacturers are in the business of manufacturing aluminum products for sale;

WHEREAS, Empire is in the business of importing and distributing aluminum products;

WHEREAS, Empire and the Manufacturers have a pre-existing supply and purchase relationship, and desire to continue and expand their existing business collaboration;

WHEREAS, contemporaneously with the execution of this Agreement, Empire shall enter into that certain Pre-Payment Advance Agreement, by and among Empire, Alumindo, SAIC and  FLH, dated even date herewith (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Pre-Payment Advance Agreement”), pursuant to which Empire agrees to provide to the Manufacturers a pre-payment advance of US$ 10,000,000, (the “Pre-Payment Advance”) payable in two (2) installments, as set forth therein;

NOW, THEREFORE, in consideration of the promises, agreements and covenants herein contained, the parties mutually agree as follows:

1.           Acknowledgment.

1.1           Minimum Commitment.  It is agreed and understood that, on and after July 1, 2011, the Manufacturers shall produce in Indonesia and deliver to Empire from Indonesia an amount equal to 3500 Metric Tons (“MT”) (plus or minus fifteen (15) percent upon Empire’s written consent) of prime aluminum hot/cold rolled coil (the “Product”) (i.e., not “continuous cast”) per month (the “Existing Minimum Commitment”), produced from hot rolled coiled aluminum which is  wholly the product of Indonesia.  Notwithstanding the foregoing, the Manufacturers hereby agree to use commercially reasonable efforts to produce and deliver to Empire an amount of Product equal to 4000 MT per month (plus or minus fifteen (15) percent upon Empire’s written consent).

1.2           Use of the Pre-Payment Advance.  The Pre-Payment Advance by Empire to the Manufacturers shall be used by Manufacturers in order to augment its manufacturing capabilities as set forth herein, so that the Manufacturers may provide Empire with additional Product (as defined below).  It is agreed and understood that the obligations hereunder shall be undertaken in accordance with the terms of the Pre-Payment Advance Agreement.

1.3           Increased Supply; Minimum.  It is agreed and understood that in addition to the Existing Minimum Commitment set forth in Section 1.1, above, on or prior to January 1, 2013, the Manufacturers shall produce and deliver to Empire an additional 1500 MT amount of Product per month (plus or minus fifteen (15) percent upon Empire’s written consent) (the “Increased Supply”) (the Existing Minimum Commitment plus the Increased Supply, the “New Minimum Commitment”).  Upon mutual agreement of the parties, Empire may order, and the Manufacturers shall, if so ordered, supply to Empire an amount greater than the New Minimum Commitment in any given month.  For the avoidance of doubt, beginning on January 1, 2013, Manufacturers agree to produce and deliver to Empire an amount of Product equal to or greater 5000 MT per month (plus or minus fifteen (15) percent upon Empire’s written consent).

2.           Pre-Payment Advance; Equipment.

2.1           Pre-Payment Advance.  Empire shall provide to the Manufacturers the Pre-Payment Advance as described in the Pre-Payment Advance Agreement as set forth on Exhibit A.  The Manufacturers agree to use the Pre-Payment Advance to purchase the equipment as set forth on Exhibit B (the “New Equipment”) for use by SAIC in the People’s Republic of China.

2.2           Product.  As a material inducement of Empire entering into this Agreement, the Manufacturers agree to increase the supply of Product meeting the Specifications (as defined below) from Alumindo to Empire.  It is agreed and understood that the Manufacturers’ obligation to supply similar Products to third parties shall at all times be subject to the condition that the Manufacturers are able to produce a sufficient supply of Products for Empire.

2

2.3           Launch Date.

2.3.1           The Manufacturers shall use their best efforts to procure, install and launch the New Equipment as soon as reasonably practicable.  During the period between the Effective Date and such time as the New Equipment is put into production, the Manufacturers shall provide quarterly written updates (including photographs) of the progress of the installation and implementation, in form and substance as requested by Empire.

2.3.2           The Manufacturers shall deliver Product to Empire no later than January 1, 2013, or as mutually agreed upon by the parties (or, if the parties are unable to agree, then the provisions of Section 3.1, below, shall apply).

2.4           Title.  SAIC agrees to maintain title to, possession and operation of the New Equipment throughout the Term (as defined below) of this Agreement and will not voluntarily or involuntarily transfer, sell, assign, encumber or otherwise dispose of the New Equipment, or any part thereof, without the prior written signed consent of Empire.  As additional consideration for the Pre-Payment Advance, SAIC further agrees and warrants that it will reserve priority manufacturing time at SAIC’s premises located at Rong Qiao Economic and Technological Development Zone, Hong Lu Town, Fuqing, Fujian 350301, The People’s Republic of China, for all Empire Purchase Orders (as defined below) after the addition of the New Equipment.   The parties shall agree on terms and conditions for Purchase Orders for Products from SAIC’s premises, once such premise and New Equipment is operational.

3.           Order; Delivery.

3.1           Purchase Order.  Empire shall have the right to order Product during the Term by issuing to the Manufacturers Empire’s form of written purchase order (each, a “Purchase Order”).   In the event of a conflict between the terms of a Purchase Order and the terms of this Agreement, the terms of this Agreement shall control.  The parties agree that the Increased Supply shall be delivered from the Manufacturer’s plant located at Surabaya, Indonesia.

3.2           Delivery.  Empire shall be obligated to deliver to Manufacturers a Letter of Credit promptly after providing Manufacturers with required Product dimensions in accordance with Section 3.4, below.  The Manufacturers shall, jointly and severally, use their best efforts to manufacture, supply and deliver to Empire all Products ordered by Empire within forty-five (45) days after the contractual month of production, unless otherwise agreed upon in writing and mutually executed by the parties.  Prior to delivery of any Product to Empire, each Product shall be finished and inspected by Manufacturer at Manufacturer’s Indonesia plant located at Surabaya, Indonesia, unless the parties otherwise agree in writing.

3.3           Risk of Loss.   Unless otherwise agreed in writing, the Products shall be delivered F.O.B.  Surabaya, Indonesia.  The Manufacturers shall arrange for insurance (through the carrier or otherwise) to protect against loss during shipment up to and including delivery to Empire’s nominated shipping carrier at the port of Surabaya, with such insurance to be Manufacturers’ sole cost and expense.  Empire shall have no liability in respect of any damage to the Products during transit.  The Manufacturers shall deliver the Products in due time, as set forth in the Specifications or in the applicable Purchase Order.

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3.4           Compliance with Specifications.  The Products shall be manufactured by the Manufacturers with all of the necessary skill and expertise using properly qualified and experienced personnel, so that the Products shall comply with the industry standards of The Aluminum Association based in Arlington, Virginia (the “Specifications”) as well as other specifications as may be required by Empire and as may be agreed between the parties from time to time.  Notwithstanding the foregoing, Empire shall provide the required dimensions of such Product to Manufacturers no later than thirty (30) days prior to the first day of the scheduled month of the commencement of the manufacture of such Product.

3.5           Non-Conformity.  In the event Empire conducts inspections of Product delivered and discovers any non-conformity with the relevant Purchase Order of Empire or the Specifications (a “Non-Conformity”), whether with respect to the quantity or quality of the Products delivered, or otherwise, Empire shall notify the Manufacturers of such Non-Conformity, and the Manufacturers shall, at its own expense and without delay, at Empire’s option, promptly replace such non-conforming Products, or provide Empire with reimbursement or a credit equal to the costs incurred by Empire by recalling, replacing, reworking and disposing of non-conforming Products or the finished goods or work-in-process in accordance with applicable laws (including without limitation, environmental laws, rules and regulations) if the Products are a component of such finished goods or work-in-process.

4.           Pricing and Payment.

4.1           Pre-Payment Advance Repayment.  Beginning on January 1, 2013, the Manufacturers shall pay to Empire the sum of $277,777.78 per month (by no later than the first day of each month), as repayment for the Pre-Payment Advance (the “Monthly Repayment”).  Such Monthly Repayment shall be made by the Manufacturers until such time as the Pre-Payment Advance has been repaid in full.

4.2           Price of Product.  At least sixty (60) days prior to the commencement of the quarter in which such Product is being manufactured, the price per MT of Product as ordered in a Purchase Order shall be agreed upon by the parties on the basis of the then prevailing international market conditions for similar quality and quantity.  Pricing shall be based upon the sum of (i) the price per MT of aluminum on the London Metal Exchange (“LME”), in United States Dollars, for a period agreed between the parties plus (ii) a premium for the Manufacturers’ services (the “Product Price”).

4.2.1           Empire and the Manufacturers agree to use best efforts to arrive upon a mutually agreeable Product Price for each Product being ordered.  In determining the Product Price, each party must take into consideration concurrent sales prices received by Manufacturers from other customers resulting from similar bona fide sales in North America of similar qualities and quantities, and concurrent offers and purchase prices received and/or paid by Empire to other suppliers.  Each party shall also take into account the prices quoted by CRU and/or Metal Bulletin for material imported into North America for similar grades and from suppliers of similar standing as the Manufacturers.  Notwithstanding the foregoing, the Manufacturers shall at all times during the Term provide the Products to Empire at the lowest price that such Products are offered to any third party in North America in equal or smaller quantities.  In the event the Manufacturers offers a lower price for any Products (or other products substantially the same as the Products) to any third party in North America, then Manufacturers agree to immediately lower the price to Empire, to such lowest price offered to any third party.

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4.2.2           In the unlikely event that following such efforts Empire and the Manufacturers are unable to mutually agree upon a Product Price for a Product being ordered, the Manufacturers hereby agree to pay Empire $555,555.56 per month (the Monthly Repayment plus an additional payment of $277,777.78), for each month during which the parties fail to agree upon such Product Price.  In addition, until Empire and Manufacturers achieve a resolution on the Product Price of such Product, interest shall accrue on the remaining balance of the Pre-Payment Advance at the rate of one month Libor USD (the rate per annum at which Eurodollar deposits are offered in the interbank Eurodollar market for such interest period, as quoted on Reuters Screen LIBOR01 Page (or any successor page or service)) +3.5% per annum per month.

4.3           Final Acceleration. Notwithstanding anything to the contrary in this Agreement or in the Pre-Payment Advance Agreement, if any portion of the Pre-Payment Advance remains unpaid on January 1, 2016, the entire remaining Pre-Payment Advance shall become immediately due and owing to Empire.

5.           Term and Termination.

5.1           Term.  Unless terminated as set forth below pursuant to Section 5.2, this Agreement shall continue in full force and effect for an initial term commencing on the Effective Date and terminating at such time as the Pre-Payment Advance has been fully repaid in accordance with the terms of the Pre-Payment Advance Agreement (the “Initial Term”).  Thereafter, this Agreement shall automatically renew for one year terms (each, a “Successive Term”) unless terminated by (i) mutual written consent of the parties, which consent may be withheld by either party at its sole discretion or (ii) either party upon at least sixty (60) days’ written notice prior to the expiration of any Successive Term, in which case termination shall be effective as of the end of such then-current term.  The Initial Term and all Successive Terms shall be collectively referred to as the “Term”.

5.2           Termination.  Empire may terminate this Agreement, in whole or in part, effective immediately upon delivery to the Manufacturers of written notice to such effect on or prior to June 30, 2011, and thereafter, upon the occurrence of the following (any of the events meeting the criteria of Sections 5.2.1 – 5.2.6 is an “Event of Default”):

5.2.1           If Manufacturers default in the performance of, or materially breach any agreement, condition or covenant of this Agreement and such default, breach or non-compliance shall not have been remedied within thirty (30) days after receipt by Manufacturers of written notice thereof from Empire of such default, Empire may terminate this Agreement.

5.2.2           If the Manufacturers fail to timely deliver the full amount of Products ordered by Empire as required pursuant to any Purchase Order for any reason in accordance with Section 3.2, above.

5.2.3           If the Manufacturers are the subject of any governmental demand, inquiry, investigation or determination with respect to any illegal and/or trade related acts (including, but not limited to, import/export laws, dumping or failure to pay duties or other taxes).

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5.2.4           If none of the Manufacturers are able to fulfill any Purchase Order by the date set forth therein which failure is directly attributable to a force majeure event (i.e., acts of God, war, strikes, embargoes and severe weather), the Manufacturers shall notify Empire of the occurrence of such force majeure event as promptly as possible and diligently work to cure such force majeure event and, provided, further that if the Manufacturers’ performance is delayed as the result of a force majeure event for a period of 90 days or more, Empire shall have the right to terminate this Agreement pursuant to Section 5.2.  For the avoidance of doubt, in no event shall a force majeure event excuse payment of the minimum Monthly Repayment as set for in Section 4.1, above.

5.2.5           If the Manufacturers shall become insolvent, or shall cease to carry on business in the normal course, or shall make or seek to make or arrange an assignment for the benefit of creditors, or if proceedings in voluntary or involuntary bankruptcy shall be initiated by, on behalf of the Manufacturers, or if a receiver or similar officer is appointed to take charge of all or part of Manufacturers’ assets.

5.2.6           If the Manufacturers (i) commit an event of default under any loan or indebtedness commitment, or (ii) experience a material adverse change in its financial or other condition, or ability to perform under this Agreement.

5.3           Rights and Obligations upon Expiration or Termination.

5.3.1           Upon the occurrence of an Event of Default, the full amount of the outstanding Pre-Payment Advance shall immediately become due and payable upon demand, and Empire shall be under no obligation to fund any remaining advances. Repayment of the Pre-Payment Advance in the event of an acceleration due to an Event of Default is set forth in the Pre-Payment Advance Agreement.

5.3.2           Termination of this Agreement will not affect any pre-termination obligations of either party under this Agreement, and any termination is without prejudice to the enforcement of any undischarged obligations existing at the time of termination.  Upon the termination or expiration of this Agreement, the Manufacturers shall promptly tender to Empire all finished and semi-finished Products.  The provisions of Sections 5.3 and 6 through 8 shall survive termination of this Agreement.

6.           Representations and Warranties; Indemnity.

6.1           Manufacturers’ Representations and Warranties.  Each of the Manufacturers, jointly and severally, represent, warrant and covenant that:

6.1.1           It has the corporate power and authority, and has received all required corporate and other approvals, to permit it to enter into this Agreement and to carry out the provisions hereof.

6.1.2           The Products shall conform in all respects to the Specifications, and U.S. Customs regulations (including, but not limited to, a certificate of origin), all as then in effect.

6.1.3           The Products are and will be of the highest quality and free from all manufacturing defects (including defects arising out of materials and workmanship and latent defects) and encumbrances.

6.1.4           It will comply with all applicable laws in connection with the manufacture and sale of the Products.

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6.1.5           It has fully complied with, and shall continue to fully comply with the highest quality standards promulgated by the Aluminum Association and other standards as may be reasonably required by Empire from time to time, and it shall provide to Empire the appropriate registration and/or certification.

6.1.6           The services performed under this Agreement shall be performed in a timely and professional manner in accordance with the highest professional standards applicable to the Manufacturers’ industry.

6.2           Manufacturers’ Covenants.  Each of the Manufacturers acknowledge that Empire will rely on the Manufacturers in fulfilling its obligations under this Agreement to the fullest extent, which will be necessary for Empire to remain competitive.  In furtherance of the foregoing, each of the Manufacturers covenant that it shall use its best efforts to maintain “state of the art” product and process technology and will use such advances to reduce costs sufficiently to offset inflation, create economies of scale and to accommodate competitive pricing.

6.3            By Empire.  Empire represents, warrants and covenants that it has the corporate power and authority, and has received all required corporate and other approvals, to permit it to enter into this Agreement and to carry out the provisions hereof.

6.4           Manufacturers’ Indemnity.  The Manufacturers, jointly and severally, agree to defend, indemnify, and hold harmless Empire and its directors, officers, employees, agents, and customers from and against all claims, costs (including reasonable attorneys’ fees), judgments and other expenses arising out of or in connection with (i) the Manufacturers’ performance of its obligations under this Agreement; (ii) breaches of the Manufacturers’ representations and warranties set forth herein; or (iii) the production, sale or commercial utilization of the Products and infringement or misappropriation of third party intellectual property rights which infringement or misappropriation is not caused by the Manufacturers’ compliance with the Specifications. Empire shall notify the Manufacturers of such claim; and (i) give the Manufacturers sole control over the defense and settlement thereof, including all negotiations related thereto; and (ii) provide the Manufacturers with full authority, information and assistance necessary to defend such claim.

7.           Confidentiality.

7.1           Confidential Information. Empire and the Manufacturers agree that all information provided by one party to the other party in connection with this Agreement shall be maintained by such other party in the strictest confidence and shall not be used, or disclosed to any third party (nor to employees, agents, or representatives of such other party), except as necessary to carry out such other party’s obligations under this Agreement and except to the extent disclosure is required by law or order of a court of law having the power and jurisdiction to order such disclosure. In the event such disclosure is requested or demanded of a party, that party shall notify the other party in writing and provide all related details, and allow the other party a reasonable opportunity to intervene or contest such disclosure.  The foregoing obligations of confidentiality and nondisclosure shall not apply to information which a party can demonstrate: (i) was generally known to the public, or publicly available, at the time of disclosure; (ii) was already in the party’s possession at the time of disclosure; (iii) was received by the party from another person having no obligation of confidentiality to the other party; (iv) was approved for release in writing by the other party without any restriction; or (v) was independently discovered or developed by the party as evidenced by written record.

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7.2           Permitted Disclosures.   Notwithstanding anything in this Section 7 to the contrary:

7.2.1           Either party to this Agreement may disclose to such persons and entities as may be reasonably required for the purpose of compliance with legal and regulatory responsibilities.  Such disclosures, however, shall be in such manner as to have the relevant confidential information maintained in confidence by such authorities to the extent possible under applicable laws and regulations.

7.2.2           Upon execution of this Agreement, the parties shall issue the mutually agreeable press release attached hereto as Schedule 7.2.2.  Thereafter, neither party shall issue a press release, third party communication or other public disclosure disclosing the relationship of the parties hereunder or related information without the prior written approval of the other party.

7.3           Return of Confidential Information. Upon either party’s written request, the other party shall promptly return to the requesting party any and all documents and materials and copies thereof (in all formats, including without limitation, hard copy, electronic, and otherwise) containing information received from the requesting party that is deemed by the requesting party to be confidential.

8.           General.

8.1           Governing Law; Dispute Resolution.  This Agreement shall be governed by the laws of the State of New York, United States, without regard to conflicts of laws principles.  All disputes arising out of, relating to, or in connection with this Agreement, including any question regarding its existence, validity, or termination, and any question as to whether a particular dispute is arbitrable hereunder, shall be referred to and finally resolved by binding arbitration administered by the International Chamber of Commerce and conducted pursuant to its Rules of Arbitration by three arbitrators appointed in accordance with said Rules, with the two co-arbitrators having 30 days from the appointment of the second arbitrator to nominate the chair.  The arbitration shall be conducted in the English language in Singapore, and shall be governed by and interpreted according to the laws of Singapore.  Judgment upon the award may be entered by any court having jurisdiction thereof.  The parties herein agree that the prevailing party of any arbitration proceeding will be entitled to an award of its attorney’s fees and costs.

8.2           Entire Agreement; Modification.  This Agreement and the Pre-Payment Advance Agreement constitute the only agreements between the parties relating to the subject matter hereof.  Any modifications or amendments must be in writing and mutually executed by the parties herein.  The waiver of any term, breach, default, or right under this Agreement by any party shall not be deemed to be a waiver or release of such term, breach, default or right or any subsequent breach of the same or any other term contained herein.

8.3           Liability.  The Manufacturers shall be jointly and severally liable for all obligations hereunder.  For the avoidance of doubt, if any of the Manufacturers is unable to perform any of its obligations hereunder for any reason whatsoever, including, without limitation, a force majeure event, the other shall automatically be responsible for the performance of such obligation; provided, however, that upon the occurrence of a force majeure event, Empire shall have the right, in its sole discretion, to waive performance of any obligation hereunder by the party subject to such force majeure event.  For the avoidance of doubt, in no event shall a force majeure event excuse payment of the minimum Monthly Repayment as set for in Section 4.1, above.

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8.4           Notices.  All notices to each party to this Agreement shall be in writing and delivered via overnight carrier or by fax to the following addresses and/or fax numbers.  Notice shall be deemed received on the third (3rd) day from delivery by the noticing party to the overnight carrier and on the next day if notice is sent by fax.  The parties may change the address, fax number or person to whom notice must be made to the attention of by providing the other party written notice of any such change pursuant to this section.

If to Empire Resources, Inc.: If to Southern Aluminum Industry (China) Co. Ltd

One Parker Plaza Rong Qiao Economic and Technological Development Zone

Fort Lee, NJ 07024 Hong Lu Town, Fuqing,

Fujian 350301, The People of Republic of China

Attn: Mr. Nathan Kahn Attn: Mr. Alim Satria

President President Director

+ 1 (201) 944-2226 fax +86 (591) 8538 7530 fax

+ 1 (201) 944-2200 phone +86 (591) 8538 8010 phone

If to PT. Alumindo Aluminum Industry TBK:

38-40, Kembang Jepun,

Surabaya 60162

Indonesia

Attn: Mr. Alim Satria

Executive Managing Director

+ 62 (31) 353-3055 fax

+ 62 (31) 353-1445 phone

If to Fung Lam Trading Company Ltd:

Rm 1501, Wing On House,

71 Des Voeux Rd, Central,

Hong Kong

Attn: Mr. Alim Satria

Director

+852-2868 0204 fax

+852-2521 6551 phone

8.5           Counterparts.  This Agreement may be executed by the parties in counterparts, all of which, taken together, constitutes the original Agreement.  The parties further agree that the signatures hereto may be evidenced by facsimile telecopy, or by scanned copy delivered via e-mail transmission.

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8.6           Waiver.  Each Manufacturer waives (a) any defense arising by reason of any disability or other defense of any other Manufacturer, or the cessation from any cause whatsoever (including any act or omission of Empire) of the liability of any other Manufacturer, (b) any defense based on any claim that any Manufacturer’s obligations exceed or are more burdensome than those of any other Manufacturer’s obligations; (c) the benefit of any statute of limitations affecting the Manufacturers’ liability hereunder; (d) any right to require Empire to proceed against any Manufacturer or pursue any other remedy in Empire’s power whatsoever; and (e) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties.  Each Manufacturer expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the obligations hereunder, and all notices of acceptance of this Agreement or of the existence, creation or incurrence of new or additional obligations of the Manufacturers hereunder or under the Pre-Payment Advance Agreement.

8.7           Invalidity.  Any provision of this Agreement which shall prove to be invalid, void or illegal shall in  no way affect, impair or invalidate any other provision hereof and such other provisions shall remain in full force and effect.

8.8           Remedies.  No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative with all other remedies at law or equity.

8.9           Assignment.  This Agreement is not assignable by either party without the prior written and executed mutual consent of both parties, which consent shall be at each party’s sole discretion.

8.10           Language.  This Agreement shall initially be executed in English.Where required by any governmental authority having jurisdiction over this Agreement, the parties hereof or the Pre-Payment Advance and/or security interest therein, the parties may arrange to translate this Agreement into certain other language(s) or execute this Agreement in such other language(s) as required by such governmental authority. In that case, to the extent permitted by the governmental authority so requiring, the parties agree that in case of any discrepancy between the English version and other language version of this Agreement, the English version shall prevail.

Southern Aluminum Industry (China) Co., Ltd.                   Empire Resources, Inc.

/s/Alim Satria                                                                             /s/Nathan Kahn

Alim Satria                                                                                  Nathan Kahn

President Director                                                                     President

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PT. Alumindo Aluminum Industry TBK

/s/Alim Satria

Alim Satria

Executive Managing  Director

Fung Lam Trading Company Ltd

/s/Alim Satria

Alim Satria

Director

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EXHIBIT A

PRE-PAYMENT ADVANCE AGREEMENT

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EXHIBIT B

NEW EQUIPMENT

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SCHEDULE 7.2.2

PRESS RELEASE

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EX-10.11

Exhibit 10.11

PRE-PAYMENT

ADVANCE AGREEMENT

BY AND BETWEEN

EMPIRE RESOURCES, INC., having a principle place of business at 1 Parker Plaza, Fort Lee, New Jersey, 07024, USA, on the one hand,

AND

SOUTHERN ALUMINUM INDUSTRY (CHINA) CO., LTD, established in the People’s Republic of China with limited liability,

PT. ALUMINDO LIGHT METAL INDUSTRY, TBK, an Indonesia

Limited Liability Company,

AND

FUNG LAM TRADING COMPANY LTD, a Hong Kong Limited Liability Company,

on the other hand

This Agreement is entered this 27th day of May, 2011 (as amended, supplemented, amended and restated or otherwise modified from time to time, this “Pre-Payment Advance Agreement”), by and among (a) Empire Resources, Inc., a USA corporation (hereinafter “EMPIRE”), on the one hand, and (b) Southern Aluminum Industry (China) Co., Ltd, established in the People’s Republic of China with limited liability (hereinafter “SAIC”), PT. Alumindo Light Metal Industry, Tbk, an Indonesian corporation, (hereinafter “Alumindo”, together with SAIC, the “Manufacturers”), and Fung Lam Holdings, a Hong Kong Limited Liability Company (hereinafter, “FLH” and, collectively with the Manufacturers, the “Companies”), on the other hand.

WHEREAS, contemporaneously with the execution of this Pre-Payment Advance Agreement, the parties hereto will enter into a Supply Agreement (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Supply Agreement”).  Capitalized terms used herein for which no meanings are provided in this Pre-Payment Advance Agreement shall have the meanings provided in the Supply Agreement.

1.           Pre-Payment Advances.  Subject to the conditions set forth in Section 2 below, Empire (or one or more of its affiliates) shall provide to FLH a Pre-Payment Advance of US$ 10,000,000 (the “Pre-Payment Advance”) payable in 2 (two) installments (each an “Installment”).  Each installment shall be made on the following dates, in the following amounts and to the following account by wire transfer:

First Payment

Due Date: Within 10 (ten) business days of the signing of this agreement

US$ 5,000,000

Second Payment

Due Date: 3 January 2012

US$ 5,000,000

Account Information:

Beneficiary : Fung Lam Trading Co., Ltd.

Beneficiary's Bank : Bank of China (HK) Ltd.

Beneficiary's A/C No.: 01291692006001

Advising Bank : Bank of China, New York Branch

                              410 Madison Avenue, New York NY 10017, U.S.A.

                              UID No. 101779

2.           Conditions Precedent.  EMPIRE shall not be required to make any Installment unless each of the following conditions has been satisfied at the time such Installment is required to be made: (a) no Event of Default has occurred and is continuing,  no material breach under this Pre-Payment Advance Agreement has occurred and is continuing and no breach under any other supply agreement that EMPIRE and Alumindo or EMPIRE and SAIC is party to has occurred and is continuing and (b) each of the representations and warranties set forth in Section 3 below are true and correct as of the date of each Pre-Payment Advance.

3.           Representations and Warranties.  Each Company hereby represents and warrants as of the date first written above and on the date of each Pre-Payment Advance as follows:

(a)           it is duly organized and in good standing under the laws of the jurisdiction of its organization and has full capacity and right to enter into and perform this Pre-Payment Advance Agreement and the Supply Agreement, and all necessary authority has been obtained;

(b)           each of this Pre-Payment Advance Agreement and the Supply Agreement constitutes its legal, valid and binding obligation enforceable against the Companies in accordance with its terms;

(c)           the entering into and performance of this Pre-Payment Advance Agreement and the Supply Agreement does not and will not violate any applicable law, regulation or order, and does not and will not result in the breach of, or constitute a default or require any consent under, any material agreement, instrument, or document to which it is a party or by which it or any of its property may be bound or affected;

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(d)           all consents, approvals, licenses and authorizations of, and filings and registrations with, any governmental authority required under applicable law and regulations for the entering into and performance of this Pre-Payment Advance Agreement and the Supply Agreement have been obtained or made and are in full force and effect (including, without limitation, any applicable foreign exchange related authorization necessary for receiving each installment of the Pre-Payment Advance);

(e)           it is in the best interests of each Company to execute this Pre-Payment Advance Agreement inasmuch as such Company will derive substantial direct and indirect benefits from the Pre-Payment Advances made from time to time hereunder, and each Company acknowledges and agrees that EMPIRE is relying on this representation in agreeing to make Pre-Payment Advances hereunder;

(f)           no other sources of financing have been obtained, directly or indirectly, by the Companies to fund the Production Capacity Expansion, other than cash on hand of the Companies and the Pre-Payment Advance; and

(g)           since December 31, 2009, there has been no event or circumstance that, individually or in the aggregate, could reasonably be expected to have a material adverse effect on (x) the business, assets, liabilities (actual or contingent), condition (financial or otherwise), operations, performance, properties or prospects of any of the Companies, (y) the ability of any of the Companies to perform its obligations under this Pre-Payment Advance Agreement or under the Supply Agreement or (z) the legality, validity, binding effect or enforceability against any Company of this Pre-Payment Advance Agreement or the Supply Agreement.

4.           Use of Proceeds.  The proceeds of the Pre-Payment Advance will only be used to finance the expansion of SAIC’s production capacity (the “Production Capacity Expansion”) at its premises located at Rong Qiao Economic and Technological Development Zone, Hong Lu Town, Fuqing City, Fujian, The People’s of Republic of China, including the purchase of New Equipment.

5.           Receipts.  Promptly following receipt of each Installment FLH shall deliver to Empire a receipt executed by FLH in form and substance as set forth in the form Receipt attached hereto as Exhibit “A”; provided that any failure of Empire to produce such receipt shall not limit or otherwise affect the obligations owed by the Companies to Empire hereunder.

6.           Repayment.  The Pre-Payment Advance shall be repaid by the Manufacturers on the first day of each month starting from January 1, 2013 in the amount of (a) in the case that the parties to the Supply Agreement have agreed to a Purchase Price for such month as contemplated by Section 4 of the Supply Agreement, $277,777.78 and (b) in the case that the parties to the Supply Agreement have not agreed to a Purchase Price for such month as contemplated by Section 4 of the Supply Agreement, $555,555.56.  In addition, interest shall accrue on the remaining balance of the Pre-Payment Advance at the rate of One Month Libor USD (the rate per annum at which Eurodollar deposits are offered in the interbank Eurodollar market for such interest period, as quoted on Reuters Screen LIBOR01 Page (or any successor page or service)) +3.5% per annum during each month for which the parties to the Supply Agreement do not agree to a Purchase Price prior to such month as contemplated by Section 4 of the Supply Agreement.  It being understood that the minimum required amount to be delivered under the Supply Agreement on or after January 1, 2013 is the New Minimum Commitment.

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To the extent that the Pre-Payment Advance is not repaid as set forth in the foregoing paragraph, EMPIRE shall have the right to require that the Pre-Payment Advance be repaid by any or all of the Companies in immediately available funds in U.S. dollars upon demand therefor.   The Companies and Empire shall each maintain a record of the amounts deducted from the Pre-Payment Advance and a running balance of the outstanding Pre-Payment Advance amounts.  The Companies and Empire shall mutually reconcile their record of outstanding Pre-Payment Advance amounts each calendar quarter as set forth in detail within Section 3 of the Supply Agreement.

7.           Acceleration; Termination.

(a)           Notwithstanding anything contained to the contrary in this Pre-Payment Advance Agreement or the Supply Agreement, upon or after the occurrence of any Event of Default, upon or after the occurrence of any material breach of this Pre-Payment Advance Agreement or upon or after any  representation or warranty hereunder not being true and correct in all material respects when made the full amount of the outstanding Pre-Payment Advances shall become due and payable by the Companies in immediately available funds in U.S. dollars on demand and EMPIRE shall be under no obligation to fund any remaining Installments.

(b)           Notwithstanding anything to the contrary in this Pre-Payment Advance Agreement or in the Supply Agreement, if any portion of the Pre-Payment Advance or any interest accrued thereon remains unpaid on January 01, 2016, the entire remaining Pre-Payment Advance shall become immediately due and owing to Empire and shall be immediately paid by Companies.

(c)           EMPIRE may in its sole and absolute discretion terminate its obligations hereunder at any time prior to June 30, 2011 by providing written notice thereof to any Company.  Upon such termination, the EMPIRE shall have no further obligations hereunder and Companies shall not be obligated to repay the first Installment of the Pre-Payment Advance.

8.           Taxes.  The obligations owed to EMPIRE under this Pre-Payment Advance Agreement shall be paid and otherwise satisfied without set-off or counterclaim, and with any and all gross-ups with respect to taxes, duties or other similar amounts required to cause the amounts received by EMPIRE to be equal to the outstanding Pre-Payment Advances made by EMPIRE.

9.           Information.  Each Company agrees to provide EMPIRE with information about the financial condition of such Company and each of the other Companies and SAIC’s progress in the Production Capacity Expansion, in each case at such times and with such detail as reasonably requested by EMPIRE.

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10.           Governing Law; Dispute Resolution.  This Pre-Payment Advance Agreement shall be governed by the laws of the State of New York, United States, without regard to conflicts of laws principles.  All disputes arising out of, relating to, or in connection with this Pre-Payment Advance Agreement, including any question regarding its existence, validity, or termination, and any question as to whether a particular dispute is arbitrable hereunder, shall be referred to and finally resolved by binding arbitration administered by the International Chamber of Commerce and conducted pursuant to its Rules of Arbitration by three arbitrators appointed in accordance with said Rules, with the two co-arbitrators having 30 days from the appointment of the second arbitrator to nominate the chair.  The arbitration shall be conducted in the English language in Singapore, and shall be governed by and interpreted according to the laws of Singapore.  Judgment upon the award may be entered by any court having jurisdiction thereof.  The parties herein agree that the prevailing party of any arbitration proceeding will be entitled to an award of its attorney’s fees and costs.

11.           Entire Agreement; Modification.  This Pre-Payment Advance Agreement and the Supply Agreement constitute the only agreements between the parties relating to the subject matter hereof.  The parties hereto agree to amend, supplement, amend and restate or otherwise modify this Pre-Payment Advance Agreement and the Supply Agreement to the extent necessary to facilitate the actions described in Section 14; provided that, if any such amendment, supplement, amendment and restatement or other modification shall adversely affect the rights or obligations of any party hereto, such amendment, supplement, amendment and restatement or other modification shall be in form and substance reasonably satisfactory to such party.  All other amendments, supplements, amendment and restatements and other modifications must be in writing and mutually executed by the parties hereto.  The waiver of any term, breach, default, or right under this Pre-Payment Advance Agreement by any party shall not be deemed to be a waiver or release of such term, breach, default or right or any subsequent breach of the same or any other term contained herein.

12.           Notices.  All notices to each party to this Pre-Payment Advance Agreement shall be in writing and delivered via overnight carrier or by fax to the addresses and/or fax numbers set forth on Schedule I.  Notice shall be deemed received on the third (3rd) day from delivery by the noticing party to the overnight carrier and on the next day if notice is sent by fax.  The parties may change the address, fax number or person to whom notice must be made to the attention of by providing the other party written notice of any such change pursuant to this section.

13.           Cooperation.  Upon the request of EMPIRE and at the sole expense of the Companies, each Company shall take all necessary action (including, without limitation, obtaining all consents, approvals, licenses and authorizations of, and filings and registrations with, governmental authorities) to cause this Pre-Payment Advance Agreement, the Supply Agreement, the transactions contemplated hereby and thereby to be the legal, valid, binding and enforceable obligations and actions of the parties hereto under the applicable laws of the jurisdictions indicated by EMPIRE.

14.           Applicable Law.  When used in this Pre-Payment Advance Agreement and in the Supply Agreement the terms “applicable law”, “regulation”, “order” and “governmental authorities” shall include, without limitation, the laws, regulations, orders and governmental authorities applicable to the transactions contemplated by the Pre-Payment Advance Agreement and Supply Agreement, including, without limitation, those of each national and local jurisdiction where each party hereto is located and/or organized and/or conducts business related to such transactions.

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15.           Counterparts.  This Pre-Payment Advance Agreement may be executed by the parties in counterparts, all of which, taken together, constitutes the original Pre-Payment Advance Agreement.  The parties further agree that the signatures hereto may be evidenced by facsimile telecopy, or by scanned copy delivered via e-mail transmission.

16.           Waiver.  Each Company waives (a) any defense arising by reason of any disability or other defense of any other Company, or the cessation from any cause whatsoever (including any act or omission of EMPIRE) of the liability of any other Company, (b) any defense based on any claim that any Company’s obligations exceed or are more burdensome than those of any other Company’s obligations; (c) the benefit of any statute of limitations affecting the Companies’ liability hereunder; (d) any right to require EMPIRE  to proceed against any Company or pursue any other remedy in EMPIRE’s power whatsoever; and (e) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties.  Each Company expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the obligations hereunder, and all notices of acceptance of this Pre-Payment Agreement or of the existence, creation or incurrence of new or additional obligations of the Companies hereunder or under the Supply Agreement.

17.           Invalidity.  Any provision of this Pre-Payment Advance Agreement which shall prove to be invalid, void or illegal shall in  no way affect, impair or invalidate any other provision hereof and such other provisions shall remain in full force and effect.

18.           Remedies.  No remedy or election hereunder shall be deemed exclusive but shall, whenever possible, be cumulative with all other remedies at law or equity.

19.           Assignment.  This Pre-Payment Advance Agreement is not assignable by either party without the prior written and executed mutual consent of both parties, which consent shall be at each party’s sole discretion.

20.           Joint and Several.  The obligations of the Companies hereunder shall be joint and several.  For the avoidance of doubt, if either Manufacturer is unable to perform any of its obligations to provide Product or any Company is unable to perform any other of its obligation hereunder for any reason whatsoever, including, without limitation, a force majeure event, each of the other Manufacturers or Companies, as the case may be, shall automatically be responsible for the performance of such obligation; provided, however, that upon the occurrence of a force majeure event, Empire shall have the right, in its sole discretion, to waive performance of any obligation hereunder by the party subject to such force majeure event.

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21.           Language.  This Pre-Payment Advance Agreement shall initially be executed in English.To the extent requested by any governmental authority having jurisdiction over this Pre-Payment Advance Agreement, the parties hereto, the Pre-Payment Advance or the Collateral, the parties may arrange to translate this Prepayment Pre-Payment Advance Agreement into certain other language(s) or execute this Pre-Payment Advance Agreement in such other language(s) as requested by such governmental authority. In that case, to the extent permitted by the relevant governmental authority, the parties should procure that in case of any discrepancy between the English version and other language version of this Pre-Payment Advance Agreement, the English version shall prevail.

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Southern Aluminum Industry (China) Co., Ltd                       Empire Resources, Inc.

/s/Alim Satria                                                                                /s/Nathan Kahn

Alim Satria                                                                                     Nathan Kahn

President Director                                                                        President

PT. Alumindo Light Metal Industry, Tbk

.

/s/Alim Satria

Alim Satria

Executive Managing Director

Fung Lam Trading Company Ltd.

.

/s/Alim Satria

Alim Satria

Director

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SCHEDULE I

Notice Information

If to Empire Resources, Inc.:

One Parker Plaza

Fort Lee, NJ 07024

United States of America

Attn: Mr. Nathan Kahn

President

+ 1 (201) 944-2226 fax

+ 1 (201) 944-2200 phone

If to Southern Aluminium Industry (China) Co. Ltd:

Rong Qiao Economic and Technological Development Zone ,

Hong Lu Town, Fuqing,

Fujian 350301, The People’s of Republic of China

Attn:           Mr. Alim Satria

President Director

+86 (591) 8538 7530 fax

+86 (591) 8538 8010 phone

If to PT. Alumindo Aluminum Industry, [Tbk]:

38-40, Kembang Jepun

Surabaya 60162

Indonesia

Attn:           Mr. Alim Satria

Executive Managing Director

+ 62 (31) 353-3055 fax

+ 62 (31) 353-1445 phone

If to Fung Lam Trading Company Ltd.:

Rm 1501, Wing On House

71 Des Voeux Rd, Central

Hong Kong

Attn:           Mr. Alim Satria

Director

+852-2868 0204 fax

+852-2521 6551phone

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EXHIBIT “A”

Fung Lam Trading Company Ltd. (“Fung Lam”) , herein acknowledge receipt of __________________, from Empire International, Inc, on this ___, day of _______, 2011, pursuant to the Pre-Payment Advance Agreement executed by and between Fung Lam, Southern Aluminum Industry (China) Co., Ltd., PT. Alumindo Light Metal Industry, Tbk, and Empire International, Inc., dated ______________________, 2011

Fung Lam Trading Company Ltd.

.

___________________________

Alim Satria

Director

Acknowledged by:

Southern Aluminum Industry (China) Co., Ltd. (SAIC)

___________________________

Alim Satria

President Director

PT. Alumindo Light Metal Industry Tbk

Alim Satria

Executive Managing Director

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EX-21.1

Exhibit 21.1

List of Subsidiaries

Name of subsidiary	Jurisdiction
Empire Resources Pacific Ltd.	Delaware
I.T.I. Innovative Technology, Ltd. Inactive	Israel
CompuPrint Ltd.inactive	Israel
6900 Quad Avenue LLC	Delaware
Empire Resources Extrusions LLC inactive	Delaware
Imbali Metals BVBA	Belgium

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated March 28, 2011 in this Registration Statement on Form S-1 and the related prospectus of Empire Resources, Inc.

/s/ EISNERAMPER LLP

New York, New York

January 27, 2012