<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-K
------------------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NUMBER
1-5365
HANDY & HARMAN
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
13-5129420
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
250 PARK AVENUE
NEW YORK, NY 10177
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 661-2400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NUMBER OUTSTANDING
AS OF MARCH 26, NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS 1997 WHICH REGISTERED
-------------------------------------- ------------------ -------------------------
<S> <C> <C>
Common Stock Par Value $1 Per Share... 11,993,344 New York Stock Exchange
Common Stock Purchase Rights.......... 11,993,344 New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock outstanding and held by
non-affiliates (as defined in Rule 405 under the Securities Act of 1933) of the
registrant, based upon the closing sale price of the Common Stock on the New
York Stock Exchange on March 26, 1997 was $185,334,000.
Certain portions of the respective documents listed below have been
incorporated by reference into the indicated Part of this Annual Report on Form
10-K.
<TABLE>
<S> <C>
(1) Annual Report to Shareholders for fiscal year ended Part I, Item 1
December 31, 1996 Part II, Items 5-8
(2) Notice of Annual Meeting of Shareholders and Proxy Part III,
Statement dated April 2, 1997 Items 10-13
</TABLE>
================================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Handy & Harman (hereinafter "H&H" or the "Company"), was incorporated in
the State of New York in 1905 as the successor to a partnership which commenced
business in 1867. Unless the context indicates otherwise, the terms, "H&H" and
the "Company," refer to Handy & Harman and its consolidated subsidiaries.
Historically, until commencing a diversification program in 1966, the
Company was engaged primarily in the manufacture of silver and gold alloys in
mill forms and the refining of precious metals from jewelry and industrial
scrap. The Company's markets were largely among silversmiths and manufacturing
jewelers, users of silver brazing alloys, and manufacturers who required silver
and gold primarily for the properties of those metals. The Company publishes a
daily New York price for its purchases of silver and gold and also publishes a
daily price for its fabricated silver and gold. The silver price is recognized,
relied on and used by others throughout the world. The diversification program
has added lines of precious metals products and various specialty manufacturing
operations, including stainless steel and specialty metal alloy products, for
industrial users in a wide range of applications which include the electric,
electronic, automotive original equipment, office equipment, oil and other
energy related, refrigeration, utility, telecommunications and medical
industries. In September 1994, the Company acquired Sumco Inc., a precision
electroplating firm, which does electroplating of electronic connector and
connector stock for the automotive, telecommunications, electronic and computer
industries and in June 1996, the Company acquired ele Corporation, which brings
a value-added reel-to-reel molding capability appropriate for the semiconductor
lead frame and sensors marketplace.
The Company's business segments are (a) manufacturing and selling of
non-precious metal wire, cable and tubing products primarily stainless steel and
specialty alloys; (b) manufacturing and selling precious metals products and
precision electroplated materials and stamped parts; and (c) manufacturing and
selling other specialty products supplied to natural gas, electric and water
utility companies. Three-year financial data for the Company's business segments
appear under the caption "The Company's Business" on pages 15 and 16 of the
Handy & Harman 1996 Annual Report to Shareholders (hereinafter referred to as
the "Annual Report") and are incorporated by reference herein.
Export sales and revenues are not significant in the total sales and
revenues of any of the Company's business segments.
MANUFACTURING OF SPECIALTY WIRE AND TUBING PRODUCTS
The Company, through several subsidiaries, manufactures a wide variety of
non-precious metal wire and tubing products. Small diameter precision drawn
tubing fabricated from stainless steel, nickel alloy and carbon and alloy steel
is produced in many sizes and shapes to critical specifications for use in the
semi-conductor, aircraft, petrochemical, automotive, appliance, refrigeration
and instrumentation industries. Additionally, tubular product is manufactured
for the medical industry for use as implants, surgical supplies and
instrumentation. Nickel alloy, galvanized, carbon steel and stainless steel wire
products redrawn from rods are produced for such diverse applications as
bearings, brushes, cable lashing, hose reinforcement, nails, knitted mesh, wire
rope and cloth, air bags and antennas in the aerospace, automotive, chemical,
communications, marine, medical, petrochemical, welding and other industries.
Raw Materials -- The raw materials used in this segment include stainless,
galvanized and carbon steels, nickel alloys and a variety of high performance
alloys. The Company purchases all such raw materials at open market prices from
domestic and foreign suppliers. The Company has not experienced any problem in
obtaining the necessary quantities of raw materials. Prices and availability,
particularly of raw materials purchased from foreign suppliers, will be affected
by world market conditions and governmental policies.
1
<PAGE> 3
Competition -- There are many companies, domestic and foreign, which
manufacture wire and tubing products of the types manufactured by this segment.
Competition is based on quality, service, price and new product introduction,
each of which is of equal importance.
Distribution -- Most of the products manufactured by this segment are sold
directly to customers through Company sales personnel and the remainder are sold
through manufacturer's representatives and distributors.
PRECIOUS METALS PRODUCTS
The operational structure of the parent company's precious metals
activities consists of the Products Operations. Within the precious metals
segment of the Company's business, two principal classes of products are
manufactured: wire products and rolled products. The Company's profits from the
products manufactured in this segment are derived from the "value added" of
processing and fabricating and not from the purchase and resale of precious
metals. In accordance with general practice in the industry, prices to customers
are a composite of two factors; namely, (1) the value of the precious metal
content of the product plus (2) an amount referred to as "fabrication values" to
cover the cost of base metals, labor, overhead, financing and profit.
Wire Products -- In the manufacture of the Company's wire products,
precious metal alloys are cast, extruded and then drawn into wire. The Company's
precious metal wire products consist of sterling and other alloys of silver, and
other precious metal alloys in drawn and coiled wire and rod forms of differing
diameters, ranging from seven thousandths of an inch to one fourth of an inch.
The Company also manufactures Easy-Flo(R), Sil-Fos(R) and other silver brazing
alloys in wire form for making permanent, strong, leak-tight joints of the
metals joined. Brazing alloy wire is also sold in preformed rings and special
shapes. The Company's precious metal alloy wire products are marketed for
electrical conductive and contact applications in a wide variety of industries,
including the aerospace, electronics and appliance industries. Manufacturing
jewelers use the Company's precious metal wire in a wide range of production
applications, including, for example, necklaces, bracelets, earring parts and
pins and clips.
Rolled Products -- The Company's rolled products are manufactured from
precious metals in sheets, strips and bars of varying thicknesses, widths and
lengths. These precious metal rolled products range in standard thickness from
foils five ten thousandths of an inch thick to strips or bars three eighths of
an inch thick and in standard widths from strips one eighth of an inch wide to
fifteen inches wide. Rolled products are shipped in lengths up to many hundred
feet. The Company's rolled products include precious metals bonded with other
metals in bimetallic and trimetallic strips which provide more versatile
industrial applications at a lower cost than would be possible if a solid
precious metal or a precious metal alloy were used.
Because of the physical properties of precious metals and precious metal
alloys, the Company's rolled products have a wide variety of applications by the
Company's industrial customers. The Company's rolled products are sold to
silversmiths for use as anodes in plating operations and for flatware and
hollowware, to manufacturing jewelers for a variety of jewelry, to mints and
others for coins, commemorative medals and ingots, to manufacturers of
electrical and electronic devices for electrical contacts and circuitry, to the
nuclear power industry for control assemblies, to the defense industry as foil
for batteries, and to the aerospace industry for use in guidance systems.
Powder Products -- The Company produces silver/tin alloy powders for use in
dental applications and silver/copper alloy powders, which are sold under the
names Easy-Flo(R) and Sil-Fos(R) for use in industrial brazing applications.
Precision Plating and Surface Finishing -- The Company produces precision
electroplated materials and stamped parts (often using gold, silver, palladium
and various base metals on such materials and stamped parts) for use in the
semiconductor, telecommunications, automotive electronics and computer
industries. It also participates in the medical plastics field.
2
<PAGE> 4
Other Precious Metals Products -- The Company produces grain beads of
various precious metal alloys by melting the metal and then pouring it through
water. Grain beads are distinguished from the Company's precious metals powders,
which are not as coarse and are produced by atomization spraying.
The Company exited the karat gold fabricated product business in 1995.
Karat gold was used in the production of wire products, rolled products and
grain beads stated above. See Note 1 to the Consolidated Financial Statements
included in the Annual Report.
Raw Materials -- The raw materials for the Company's precious metals
products consist principally of silver, gold, copper, cadmium, zinc, nickel, tin
and the platinum group metals in various forms. Silver and gold constitute the
major portion of the value of the raw materials involved. The Company purchases
all of its precious metals at free market prices from either customers, primary
producers or bullion dealers. The prices of silver and gold are subject to
fluctuations and are expected to continue to be affected by world market
conditions. Nonetheless, the Company has not experienced any problem in
obtaining the necessary quantities of raw materials required for this segment
and, in the normal course of business, receives precious metals from suppliers
and customers. These metals are returnable in fabricated or commercial bar form
under agreed upon terms. Since precious metals are fungible, the Company does
not physically segregate supplier and customer metals from its own inventories.
Therefore, to the extent that supplier or customer metals are used by the
Company, the amount of inventory which the Company must own is reduced. All raw
materials used in this segment are readily available from several sources. For a
discussion of the Company's inventory purchasing and pricing and of the
Company's practices to eliminate the economic risk of precious metal price
fluctuations, see "The Company's Business" on page 15 of the Annual Report.
Working Capital Items -- The Company maintains a level of inventory of fine
and fabricated precious metals in various stages of processing for customer
delivery requirements and for a continuous supply of raw materials. Such
inventories are carried under the Last-In, First-Out (LIFO) method of
accounting. The LIFO carrying values are substantially less than the market
values of the inventories. In the Notes to Consolidated Financial Statements,
commencing on page 26 of the Annual Report, see Note 2 for a comparison of the
cost and market values of the Company's precious metals inventories at December
31, 1996 and December 31, 1995 and Note 3 for a discussion of the effects of
fluctuations in precious metals prices on the Company's credit requirements.
Both Notes are incorporated by reference herein.
Product Development, Patents and Trademarks -- While the Company holds a
number of patents and trademarks related to its precious metals products and
processes, and is licensed under others, the precious metals business, as a
whole, is not dependent upon such patents. The Company's trademarks are
registered in the United States and in several foreign countries. The Company
maintains a technical laboratory and staff in connection with its precious
metals operations and a portion of the work of that staff is devoted to
metallurgical products and development.
Distribution Facilities -- The Company distributes precious metals products
directly to customers from its plants and service branches, except that certain
products, primarily brazing alloys, are distributed through independent
distributors throughout the United States and Canada. The Company has a
marketing organization trained to service its customers and dealers, to solicit
orders for its precious metal and related products. This organization markets
all of the Company's precious metals products and provides special technical
assistance with respect to precious metals through product engineers and other
technical personnel. The Company maintains customer service and sales offices at
its various manufacturing and processing plants. It also has warehouse
facilities to support sales and distribution at each of its manufacturing and
processing plants.
Competition -- The Company is one of the leading fabricators of precious
metals. The Company currently sells its precious metal fabricated products to
approximately 5,000 customers throughout the United States and Canada. Although
there are no companies in the precious metals field whose operations exactly
parallel those of H&H in every area, there are a number of competitors in each
of the classes of the Company's precious metals products. Many of these
competitors also carry on activities in other product lines in which the Company
is not involved. Competition is based on quality, service and price, each of
which is of equal importance.
3
<PAGE> 5
MANUFACTURING OF OTHER SPECIALTY PRODUCTS
A subsidiary of the Company manufactures plastic and steel fittings and
connections, plastic pipe and non-ferrous thermite welding powders for the
natural gas, electric and water distribution industries.
Distribution -- Most of the Company's products comprising this segment are
sold directly to customers through Company sales personnel. In particular, gas
distribution supplies and fittings, thermite welding powders and certain other
products are sold primarily through manufacturers' representatives to the
ultimate users, with the remaining sales made by agents and manufacturers'
representatives to distributors.
Raw Materials -- The raw materials used in this segment include various
steel alloys and various plastic compositions. The Company purchases all such
raw materials at open market prices primarily from domestic suppliers. The
Company has not experienced any problem in obtaining the necessary quantities of
raw materials. Prices and availability, particularly as to raw materials
purchased from foreign suppliers, will continue to be affected by world market
conditions and governmental policies.
Competition -- There are many companies, domestic and foreign, which
manufacture products of the type manufactured by this segment. Some are larger
than the Company and many are larger than the Company's operations with which
they compete. Competition is generally based on quality, service and price, each
of which is of equal importance.
RECENT DEVELOPMENTS
On February 28, 1997, the Company completed the acquisition of Olympic
Manufacturing Group, Inc., the leading domestic manufacturer and supplier of
fasteners for the commercial roofing industry. The Company purchased all of the
shares of capital stock of Olympic, which also sells other construction related
fasteners, from a group of investors led by Saugatuck Associates, a private
investment firm headquartered in Stamford, Connecticut, for approximately $53
million net of certain debt, stock option and warrant obligations, paid by the
Company at the closing of the transaction. In the twelve months ended December
30, 1996, Olympic, based in Agawam, Massachusetts, had sales of approximately
$42.5 million.
DISCONTINUED OPERATIONS
In August 1996 the Company sold its domestic refining business, which
recovered precious metals from waste and scrap generated by users of the
Company's precious metals products, by other industrial users of precious
metals, by non-manufacturing refining customers, and from high grade mining
concentrates and bullion. During 1995 the Company sold, in two phases, its
automotive segment which manufactured a wide variety of parts, cables,
components and assemblies for North American automotive original equipment
manufacturers. The cable operations were sold on July 20, 1995 and the remaining
operations on December 29, 1995. See Note 1 to the Consolidated Financial
Statements included in the Annual Report.
SHARE REPURCHASE
In addition to the Company's repurchase of 1.8 million shares via a "Dutch
Auction" completed in December 1996, the Company may, at the discretion of its
Board of Directors, elect to repurchase additional shares (up to an aggregate of
one and one-half million), of its currently outstanding Common Stock.
GOVERNMENT REGULATION
During the last fiscal year, the Company spent or committed approximately
$3,000,000 in complying with federal, state and local occupational safety and
health, environmental control and equal employment opportunity laws and
regulations. These expenditures included monies spent by the Company in the
clean-up of hazardous wastes and toxic substances under federal, state and local
laws and regulations relating to protection of the environment. Typical of large
domestic manufacturing concerns, the Company's operations may affect the
environment. These operations may produce, process and dispose of materials and
waste products which, under certain conditions, are toxic or hazardous under
such environmental laws and regulations. The Company expects to make comparable
expenditures and commitments during the current fiscal year, provided that no
further changes are made in such laws and regulations or in their application.
4
<PAGE> 6
Such expenditures are not material to the competitive position or financial
condition of the Company; however, such laws and regulations may require capital
expenditures not now contemplated and may result in increased operating costs.
See Item 3 Legal Proceedings.
ENERGY
The Company requires significant amounts of electricity, natural gas, fuel
oil and propane to operate its facilities. The Company has few contracts
covering natural gas or electricity, but has some one-year contracts for the
delivery of fuel oil and propane at some facilities. These contracts are the
result of competitive bidding.
In an attempt to minimize the effects of any fuel shortages, the Company
has made a number of process and equipment changes to allow use of alternate
fuels in key processes, and the Company has equipped certain plants with
alternate fuel reserves intended to reduce any curtailment upon a local
shortage. A general and continuing shortage of such fuels, however, or a
government allocation of supplies resulting in a general reduction in fuel
supplies, could cause some curtailment of production.
EMPLOYEES
The Company had 2,304 employees on December 31, 1996. Of these,
approximately 42 percent are covered by collective bargaining agreements, which
expire at various times during the next three years.
ITEM 2. PROPERTIES
The Company has 22 active operating plants in the United States, Canada,
England, Denmark and Singapore (50% owned) with a total area of approximately
1,730,000 square feet, including warehouse, office and laboratory space, but not
including the plants used by the Singapore operation. The Company owns or leases
sales, service and warehouse facilities at two other locations in the United
States, which, with the Company's executive and general offices, have a total
area of approximately 63,000 square feet and owns eleven non-operating or
discontinued locations with a total area of approximately 836,000 square feet.
The Company considers its manufacturing plants and service facilities to be well
maintained and efficiently equipped, and therefore suitable for the work being
done. The productive capacity and extent of utilization of the Company's
facilities is dependent in some cases on general business conditions and in
other cases on the seasonality of the utilization of its products. Productivity
can be expanded readily to meet additional demands. A description of the
Company's principal plants by industry segment is as follows:
WIRE AND TUBING
The headquarters of the wire portion of this segment is in Cockeysville,
Maryland, and the headquarters of the tubing portion of this segment is in
Norristown, Pennsylvania. Manufacturing facilities are located in: Cockeysville,
Maryland; Norristown, Pennsylvania; Willingboro and Middlesex, New Jersey;
Oriskany, New York; Camden, Delaware; Evansville, Indiana; Fort Smith, Arkansas;
Retford, Notts. and Liversedge, Yorkshire, England; and Kolding, Denmark. All
these plants are owned in fee except the Retford plant, which is leased.
PRECIOUS METALS
The Company's principal precious metal products operation is conducted in
Fairfield, Connecticut. Other precious metal operations are conducted in: North
Attleboro, Massachusetts; East Providence, Rhode Island; Cudahy, Wisconsin;
Carmel, Indiana; Indianapolis, Indiana; Fontana, California; Toronto, Canada and
Singapore (50 percent owned). The Company owns all these operating plants in
fee.
OTHER SPECIALTY PRODUCTS
The principal facilities currently engaged in the Company's other specialty
products businesses are located in Tulsa and Broken Arrow, Oklahoma. The
Oklahoma plants are owned in fee.
5
<PAGE> 7
COMPANY'S OFFICES
The Company's executive offices are in New York, New York and occupy 17,000
square feet under a lease. The Company has its general offices in leased
premises containing approximately 30,000 square feet located in Rye, New York.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company or any of its
subsidiaries is a party or which any of their property is the subject, other
than ordinary, routine litigation incidental to the business, none of which
individually or in the aggregate is material to the business or financial
condition of the Company, except as follows:
Montvale, New Jersey Facility
An action was commenced in April 1993 by the Borough of Park Ridge, New
Jersey against Handy & Harman Electronic Materials Corporation, a subsidiary
("HHEM"), Handy & Harman and other defendants, in the Superior Court of New
Jersey, Law Division, Bergen County, asserting that a chemical used at a
formerly owned facility in Montvale, New Jersey, an adjoining municipality, had
migrated and entered a drinking water supply of Park Ridge. This action seeks
recovery of the alleged cost of treatment and remediation of water wells of the
Borough of Park Ridge as a result of alleged contamination by the defendants.
Although the precise amount of the Borough's claims is not known, a settlement
demand of approximately $4.5 million has been made by the plaintiff.
There is no presently scheduled trial. The Court may schedule a trial date
at the Case Management Conference in May 1997.
The Handy & Harman defendants deny responsibility for the alleged
contamination of the Park Ridge wells and assert that if any such contamination
exists as a result of operation of the Montvale facility, damages arising
therefrom are the responsibility of the owner or operator thereof prior to the
purchase of the facility by HHEM from Plessey Incorporated (Plessey). The Handy
& Harman defendants have asserted substantial cross-claims against Plessey,
GEC-Marconi Materials Corp. and a vendor of the chemical involved. The Handy &
Harman defendants are seeking from the Plessey defendants, in the event that the
Handy & Harman defendants are held to be responsible for any damages asserted by
the Borough, return of the purchase price, repayment of amounts spent by HHEM in
remediation of the site, contribution and indemnity.
Plessey has asserted cross-claims for contribution and indemnity against
the Handy & Harman defendants, as have other parties.
Handy & Harman has filed a separate action, since consolidated with the
above Park Ridge action, against Twin Cities Fire Insurance Company and other
carriers, claiming coverage under various liability insurance policies.
Although the final outcome of this matter cannot be assured, the Company
believes that it will not have a materially adverse affect on the financial
position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the year ended December 31, 1996.
EXECUTIVE OFFICERS OF THE COMPANY
As of March 26, 1997, the executive officers of the Company, their ages,
their present positions and offices, and their recent business experience and
employment, are as follows:
Richard N. Daniel -- age 61; Chairman (since 1988) and Chief Executive
Officer of the Company (since 1983); a Director (since 1974).
6
<PAGE> 8
Frank E. Grzelecki -- age 59; President and Chief Operating Officer of
the Company (since 1992); prior thereto Vice Chairman of the Board (since
1989); a Director (since 1988).
Robert D. LeBlanc -- age 47; Executive Vice President (since 1996);
prior thereto Executive Vice President of Elf Atochem North America, Inc.
(since prior to 1996).
Robert F. Burlinson -- age 57; Vice President and Treasurer (since
1996); prior thereto Senior Vice President, Chief Financial Officer and
Treasurer of The National Guardian Corporation (since prior
to 1996).
Paul E. Dixon -- age 52; Vice President, General Counsel and Secretary
(since 1993); prior thereto Vice President and General Counsel (since
1992); prior thereto Senior Vice President and General Counsel of The
Warnaco Group (since prior to 1990).
Dennis C. Kelly -- age 45; Controller (since 1993) of the Company;
prior thereto Assistant Controller (since 1989).
Robert M. Thompson -- age 64; Vice President (since 1994); prior
thereto Group Vice President (since 1984).
There are no family relationships between any of the executive officers.
The regular term of office for all executive officers is one year, beginning on
May 1. There are no arrangements or understandings between any of the executive
officers and any other person pursuant to which such officer was elected to be
an officer.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The information for this Item is incorporated by reference to the section
entitled "Stock Trading and Dividends" on page 16 of the Annual Report and to
Note 6 of the Notes to Consolidated Financial Statements included in the Annual
Report.
ITEM 6. SELECTED FINANCIAL DATA
The information for this Item is incorporated by reference to the section
entitled "Five Year Selected Financial Data" on page 17 of the Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information for this Item is incorporated by reference to the section
entitled "Management's Discussion and Analysis" on pages 18 through 20 of the
Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information for this Item is incorporated by reference to the
Consolidated Financial Statements contained on pages 21 through 24 of the Annual
Report and by reference to the Summary of Significant Accounting Policies
contained on pages 25 and 26 of the Annual Report and the Notes to Consolidated
Financial Statements commencing on page 26 of the Annual Report and by reference
to the Independent Auditors' Report set forth on page 33 of the Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
7
<PAGE> 9
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information for this Item is incorporated by reference to the section
entitled "Election of Directors," on pages 3 and 4 of the Company's Proxy
Statement, dated April 2, 1997 (the "Proxy Statement"), for the 1997 Annual
Meeting of Shareholders and by reference to the item captioned "Executive
Officers of the Company" at the end of Part I of this Annual Report on Form
10-K. No person who was during the 1996 fiscal year a director, officer or
beneficial owner of more than ten percent of any class of equity securities of
the registrant failed to file on a timely basis reports required by Section
16(a) of the Exchange Act of 1934, as amended, except as set forth in the
Company's Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information for this Item is incorporated by reference to the sections
entitled "Executive Compensation," "Base Salaries," "Annual Incentive Awards for
1996," "Stock Options," "Long-Term Incentive Plan," "Compensation Committee
Report on Executive Compensation," "Pensions," "Compensation of Directors,"
"Employment Contracts and Termination of Employment and Change-in-Control
Agreements" on pages 5 to 12 of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information for this Item is incorporated by reference to the sections
entitled "Voting Rights and Principal Holders Thereof" and "Election of
Directors" on pages 1, 2, 3, and 4, respectively, of the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information for this Item is incorporated by reference to the section
entitled "Election of Directors" on pages 3 and 4 of the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS A PART OF THIS REPORT
1. FINANCIAL STATEMENTS
The Consolidated Financial Statements (pages 21 through 24 of the Annual
Report), the Summary of Significant Accounting Policies and Notes to
Consolidated Financial Statements (pages 25 through 32 of the Annual Report),
the Independent Auditors' Report (page 33 of the Annual Report) and the items of
Supplementary Information incorporated by reference in Part II, Item 8 of this
Report are incorporated by reference.
2. FINANCIAL STATEMENT SCHEDULE
The following Financial Statement Schedule is filed as a part of this
Report, beginning herein at the respective pages indicated:
(i) Report and Consent of Independent Auditors (page F-1).
(ii) Schedule II -- Valuation and Qualifying Accounts and Reserves (page
S-1).
All other Schedules are omitted because they are not applicable or not
required or because the required information is included in the Consolidated
Financial Statements or Notes thereto.
8
<PAGE> 10
3. EXHIBITS REQUIRED TO BE FILED
The following exhibits required to be filed as part of this Report have
been included:
(1) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION.
(a) Asset Purchase Agreement, dated as of July 8, 1996, by and between
Golden West Refining Corporation Limited and the Company.
(b) Stock Purchase Agreement, dated as of February 19, 1997, among
Saugatuck Capital Company Limited Partnership III, the other sellers named
therein and the Company.
With respect to (a) and (b), above, the disclosure schedules (relating to
certain factual matters concerning the Company and the other parties to the
respective agreements) and ancillary agreements (relating to the provision of
certain services by or to the Company with respect to (a) and (b), and the
consignment of certain precious metals to the other party to the agreement
described in (a) to such agreements have been omitted pursuant to Item 601(b)(2)
of Regulation S-K; the Company agrees to furnish such documents to the
Securities and Exchange Commission upon its request.
(2) CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) Restated Certificate of Incorporation of the Company (Filed as Exhibit
3(a) to the Company's 1989 Annual Report on Form 10-K and incorporated herein by
reference).
(b) By-Laws, as amended (Filed as Exhibit 3(b) to the Company's 1990 Annual
Report on Form 10-K and incorporated herein by reference).
(3) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES.
(a) Revolving Credit Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).
(b) Short Term Revolving Credit Agreement dated as of September 28, 1994
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent (Filed as Exhibit 10.4 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).
(c) Fee Consignment Agreement dated as of September 28, 1994 between the
Company and The Bank of Nova Scotia (Filed as Exhibit 10.5 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).
(d) Short Term Fee Consignment Agreement dated as of September 28, 1994
between the Company and The Bank of Nova Scotia, (Filed as Exhibit 10.6 to the
Company's Current Report on Form 8-K dated October 12, 1994 and incorporated
herein by reference).
(e) Dollar Supply Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.7 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).
(f) Short Term Dollar Supply Agreement dated as of September 28, 1994 among
the Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.8 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).
(g) First Amendment to Revolving Credit Agreement dated as of June 30, 1995
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent.
9
<PAGE> 11
(h) Second Amendment to Revolving Credit Agreement dated as of September
24, 1996 among the Company, certain financial institutions as lenders, The Bank
of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank
of Nova Scotia, as the Administrative Agent.
(i) Third Amendment to Revolving Credit Agreement dated as of October 11,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.
(j) Fourth Amendment to Revolving Credit Agreement dated as of January 15,
1997 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.
(k) First Amendment to Short Term Revolving Credit Agreement dated as of
June 30, 1995 among the Company, certain financial institutions as lenders, The
Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The
Bank of Nova Scotia, as the Administrative Agent.
(l) Second Amendment to Short Term Revolving Credit Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(m) Third Amendment to Short Term Revolving Credit Agreement dated as of
October 11, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(n) Fourth Amendment to Short Term Revolving Credit Agreement dated as of
January 15, 1997 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(o) First Amendment to Fee Consignment Agreement dated as of June 30, 1995
between the Company and The Bank of Nova Scotia.
(p) Second Amendment to Fee Consignment Agreement dated as of September 24,
1996 between the Company and The Bank of Nova Scotia.
(q) First Amendment to Short Term Fee Consignment Agreement dated as of
June 30, 1995 between the Company and The Bank of Nova Scotia.
(r) Second Amendment to Short Term Fee Consignment Agreement dated as of
September 24, 1996 between the Company and The Bank of Nova Scotia.
(s) First Amendment to Dollar Supply Agreement dated as of September 24,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.
(t) First Amendment to Short Term Dollar Supply Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(u) Rights Agreement, dated as of January 26, 1989, between the Company and
ChaseMellon Shareholder Services, L.L.C., (formerly known as Morgan Shareholder
Services Trust Company), as Rights Agent, including all exhibits thereto (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A dated February
3, 1989 and incorporated herein by reference).
(v) Amendment, dated as of April 25, 1996, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A/A dated May 21,
1996 and incorporated herein by reference).
(w) Amendment, dated as of October 22, 1996, to the Rights Agreement
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A/A
dated October 24, 1996 and incorporated herein by reference).
10
<PAGE> 12
The Company agrees to furnish to the Securities and Exchange Commission
upon its request therefor a copy of each instrument omitted pursuant to Item
601(b)(4)(iii) of Regulation S-K.
(10) MATERIAL CONTRACTS.
(a) 1982 Stock Option Plan (Filed as Exhibit 1 to the Company's
Registration Statement on Form S-8 (Registration No. 2-78264) under the
Securities Act of 1933 and incorporated herein by reference).
(b) Amendment to 1982 Stock Option Plan approved in December 1988 (Filed as
Exhibit 10(a) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(c) Handy & Harman Management Incentive Plan Corporate Group Participants,
as amended and restated on December 15, 1994.
(d) Subsidiary, Division, Group or Unit Management Incentive Plan, as
amended and restated on December 15, 1994.
(e) Handy & Harman Deferred Fee Plan For Directors, as amended and restated
on December 15, 1994, effective as of January 1, 1995.
(f) Form of Executive Agreement entered into with the Company's executive
officers in September 1986 (Filed as Exhibit 10(d) to the Company's 1986 Annual
Report on Form 10-K and incorporated herein by reference).
(g) Amendment to Executive Agreement approved in December 1988 (Filed as
Exhibit 10(b) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(h) 1988 Long-Term Incentive Plan (Filed as Exhibit 10(h) to the Company's
1988 Annual Report on Form 10-K and incorporated herein by reference).
(i) Amendment to 1988 Long-Term Incentive Plan approved in December 1988
(Filed as Exhibit 10(c) to the Company's Report on Form 8-K for December 1988
and incorporated herein by reference).
(j) Amendment to 1988 Long-Term Incentive Plan approved in June 1989 (Filed
as Exhibit 10(j) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).
(k) Agreement dated as of May 1, 1989, between the Company and R. N. Daniel
(Filed as Exhibit 10(k) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).
(l) Amendment to Agreement between the Company and R. N. Daniel approved by
the Company on May 11, 1993, (Filed as Exhibit 10(m) to the Company's 1993
Annual Report on Form 10-K and incorporated herein by reference).
(m) Supplemental Executive Retirement Plan approved and restated by the
Company in December 1994.
(n) Outside Directors' Stock Option Plan (Filed as Exhibit 10(m) to the
Company's 1990 Annual Report on Form 10-K and incorporated herein by reference).
(o) Amended and Restated Joint Venture Agreement dated as of June 1, 1990,
by and between Allen Heat Transfer Products Inc. and Handy & Harman Radiator
Corporation (Filed as Exhibit 2 to the Company's Report on Form 8-K for June
1990 and incorporated herein by reference).
(p) Handy & Harman Long-Term Incentive Stock Option Plan (Filed as Exhibit
10(p) to the Company's 1991 Annual Report on Form 10-K and incorporated herein
by reference).
(q) Handy & Harman Supplemental Executive Plan (Filed as Exhibit 10(q) to
the Company's 1992 Annual Report on Form 10-K and incorporated herein by
reference).
(r) Amended and Restated Agreement between the Company and Mr. Grzelecki
(Filed as Exhibit 10(r) to the Company's Annual Report on Form 10-K and
incorporated herein by reference).
(s) Press Release of the Company dated November 6, 1995 (Filed as Exhibit
10(s) to the Company's Annual Report on Form 10-K and incorporated herein by
reference).
11
<PAGE> 13
(t) 1995 Omnibus Stock Incentive Plan (Filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Registration No. 33-80803) on
December 22, 1995, under the Securities Act of 1933 and incorporated herein by
reference).
(11) Statement re computation of per share earnings. Incorporated by
reference to Item (h) of Summary of Significant Accounting Policies on page 25
of the Annual Report.
(13) Pages 15 through 32 of the Company's Annual Report to Shareholders for
1996. Except for those portions which are expressly incorporated by reference in
this Annual Report on Form 10-K, this exhibit is furnished for the information
of the Commission and is not deemed to be filed as part of this Annual Report on
Form 10-K.
(21) List of Subsidiaries of the Company. Filed as Exhibit 21 to this
Annual Report on Form 10-K.
(23) Report and Consent of Independent Auditors. Included as part of the
Report and Consent of Independent Auditors on page F-1 filed with the Financial
Statement Schedule as part of this Annual Report on Form 10-K pursuant to Part
IV hereof and incorporated herein by reference thereto.
(B) REPORTS ON FORM 8-K
The Company filed a current report on Form 8-K dated January 28, 1997 with
respect to the signing of a letter of intent regarding the acquisition of all of
the capital stock of Olympic Manufacturing Group, Inc. by the Company.
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into registrant's Registration Statements on Form S-8
Nos. 2-78264 (filed July 1, 1982), 33-37919 (filed November 21, 1990), 33-43709
(filed October 31, 1991) and 33-80803 (filed December 22, 1995):
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 Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by 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.
12
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Handy & Harman has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HANDY & HARMAN
Dated: March 27, 1997
By /s/ R. N. DANIEL
------------------------------------
(R. N. DANIEL)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company,
in the capacities and on the respective dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ ---------------
<C> <S> <C>
/s/ R. N. DANIEL Chairman and Director March 27, 1997
- --------------------------------------------- (Principal Executive Officer)
(R. N. DANIEL)
/s/ F. E. GRZELECKI President and Director March 27, 1997
- --------------------------------------------- (Chief Operating Officer)
(F. E. GRZELECKI)
/s/ R. F. BURLINSON Vice President and Treasurer March 27, 1997
- --------------------------------------------- (Principal Financial Officer)
(R. F. BURLINSON)
/s/ D. C. KELLY Controller March 27, 1997
- --------------------------------------------- (Principal Accounting Officer)
(D. C. KELLY)
/s/ C. A. ABRAMSON Director March 27, 1997
- ---------------------------------------------
(C. A. ABRAMSON)
/s/ R. E. CORNELIA Director March 27, 1997
- ---------------------------------------------
(R. E. CORNELIA)
Director March 27, 1997
- ---------------------------------------------
(G. G. GARBACZ)
/s/ G. M. NICHOLS Director March 27, 1997
- ---------------------------------------------
(G. M. NICHOLS)
/s/ H. P. SOTOS Director March 27, 1997
- ---------------------------------------------
(H. P. SOTOS)
/s/ E. J. SUSSMAN Director March 27, 1997
- ---------------------------------------------
(E. J. SUSSMAN)
/s/ R. E. TETRAULT Director March 27, 1997
- ---------------------------------------------
(R. E. TETRAULT)
</TABLE>
13
<PAGE> 15
F-1
REPORT AND CONSENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SHAREHOLDERS HANDY & HARMAN:
Under the date of February 28, 1997 we reported on the consolidated balance
sheet of Handy & Harman and Subsidiaries as of December 31, 1996 and 1995 and
the related consolidated statements of income, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1996, as
contained in the 1996 Annual Report to Shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
Annual Report on Form 10-K for the year 1996. In connection with our audit of
the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule on page S-1. This consolidated
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this consolidated financial
statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 2-78264, 33-37919, 33-43709 and
33-80803) of Handy & Harman of our report dated February 28, 1997.
KPMG PEAT MARWICK LLP
New York, New York
March 27, 1997
14-1
<PAGE> 16
S-1
HANDY & HARMAN AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
BALANCE, BALANCE,
BEGINNING ADDITIONS DEDUCTIONS CLOSE
DESCRIPTION OF PERIOD (A) FROM RESERVE OF PERIOD
- ---------------------------------------------------- ------------ ------------ ------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Allowance for doubtful accounts
receivable
(deducted from accounts receivable):
Year ended December 31, 1996....... $3,021 $1,052 $2,387(c) $1,686
Year ended December 31, 1995....... $3,597 $ 329 $ 905 $3,021
Year ended December 31, 1994....... $3,721 $ 906(b) $1,030 $3,597
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
------ ---- ----
<S> <C> <C> <C>
(a) Provision for doubtful accounts -- charged to costs and
expenses.................................................... $1,052 $329 $784
(b) Includes $122 acquired through business combination.
(c) Includes $694 of allowance for doubtful accounts
receivable
related to discontinued operations reclassed
accordingly.
</TABLE>
14-2
<PAGE> 17
Handy & Harman and Subsidiaries
The Company's Business
The Company's industry segments are: manufacturing of specialty wire and tubing,
manufacturing of precious metals products, and manufacturing of other
non-precious metal products. The table below presents information about the
segments with additional segment information for 1996, 1995 and 1994 found in
Note 7 of the Notes to Consolidated Financial Statements on page 30. A further
analysis of the industry segments can be found under "Management's Discussion
and Analysis" beginning on page 18.
The wire and tubing segment has two product groups. Stainless steel wire is
drawn from rod to a wide range of smaller diameters. Applications are widespread
and include springs, telecommunication networks, mobile antennas, brushes,
laparoscopic instruments, petroleum well screens and conveyor belts. Tubing is
manufactured from carbon steel, stainless steel and a variety of specialty
alloys. Applications are similarly numerous including semiconductor fabrication,
electronics, oil field services, petrochemicals, refrigeration, automotive,
hydraulic, medical and aerospace.
The precious metals segment is engaged in precision plating and surface
finishing for electronic and electrical components, the manufacturing of a
variety of products, generally in mill forms, containing silver, gold and other
precious metals in combination (alloys) with non-precious metals and the sale of
such products to users in a wide range of industries, including silverware and
jewelry, electrical and electronic, automotive, telecommunication, heating and
refrigeration components, aerospace and appliance.
It is the Company's operating policy to maintain constant precious metals
inventory levels under the last-in, first-out (LIFO) method of accounting.
Precious metals are purchased at the same prices and quantities as selling
commitments to customers. In the normal course of business, the Company accepts
precious metals from suppliers and customers, which quantities are returnable in
fabricated or commercial bar form under agreed upon terms. Since precious metals
are fungible, the Company does not physically segregate the supplier and
customer metals. Therefore, to the extent such metals are used by the Company to
meet its operating requirements, the amount of inventory which the Company must
own is reduced. The Company's inventory positions are sufficient to protect
against any losses in connection with these supplier and customer accounts. To
the extent that additional inventory is required to support operations, precious
metals are purchased and immediately sold for future delivery, eliminating the
economic risk of price fluctuations. Such purchases and sales are not included
in either sales or cost of sales. From time to time, management reviews the
appropriate inventory levels and may elect to make adjustments.
A high percentage of the selling price for precious metals products is the
cost of the precious metal content. Therefore, both sales and cost of sales are
influenced by fluctuations in the prices of precious metals. In addition,
certain customers choose to do business on a "toll" basis, that is, to furnish
bullion to Handy & Harman for fabrication. When the metals are returned to the
customer in fabricated form, the customer pays only a fabrication charge, and
the precious metal value of this consignment business is not included in sales
or cost of sales.
The business unit in the other non-precious metal businesses segment
manufactures products using steel and plastic which are sold principally to
water and natural gas distribution companies.
The following table provides details of sales from continuing operations,
as well as profit contribution by each reportable segment before general
corporate and interest expenses. See "Management's Discussion and Analysis"
beginning on page 18.
(Thousands of dollars) 1996 1995 1994
================================================================================
Sales:
Wire/Tubing $ 175,451 $ 175,092 $ 153,750
Precious metals 215,246 236,196 240,140
Other non-precious
metal businesses 16,410 15,900 15,078
- --------------------------------------------------------------------------------
$ 407,107 $ 427,188 $ 408,968
================================================================================
Profit contribution before
unallocated expenses:
Wire/Tubing $ 18,426 $ 17,870 $ 14,117
Precious metals 49,998* 8,588** 8,172
Other non-precious
metal businesses 2,031 2,226 1,900
- --------------------------------------------------------------------------------
70,455 28,684 24,189
General corporate expenses (1,800) (1,800) (1,850)
Interest expense (net) (9,682) (12,598) (10,772)
- --------------------------------------------------------------------------------
Income from continuing
operations before income
taxes and extraordinary item $ 58,973 $ 14,286 $ 11,567
================================================================================
* Includes a $33,630,000 gain in 1996 as a result of reduction in the
quantities of precious metal inventories valued under the LIFO method of
accounting.
** Includes a $9,549,000 charge in 1995 related to the restructuring and asset
writedowns for the Precious Metals Fabricated Products Division.
The following table segregates identifiable assets to the three reported
segments, corporate and discontinued operations.
Assets
================================================================================
(Thousands of dollars) 1996 1995 1994
- --------------------------------------------------------------------------------
Wire/Tubing $103,893 $103,939 $ 92,696
Precious metals 122,397 130,356 122,882
Other non-precious
metal businesses 9,802 10,568 8,901
Corporate 80,372 67,674 58,566
Discontinued operations -- 28,512 121,973
- --------------------------------------------------------------------------------
$316,464 $341,049 $405,018
================================================================================
15
<PAGE> 18
Handy & Harman and Subsidiaries
STOCK TRADING AND DIVIDENDS
Handy & Harman Common Stock is traded on the New York Stock Exchange. The
following table sets forth, for the quarterly periods indicated, the reported
high and low sales prices for the Common Stock on the New York Stock Exchange
and the dividends paid on the Common Stock during such periods.
At February 14, 1997, there were 2,816 holders of record of Common Stock of
Handy & Harman.
Common Stock Dividend Paid on
Sales Prices Common Stock
High Low Per Share
================================================================================
1996
January 1-March 31 $17 5/8 $15 3/8 6(cent)
April 1-June 30 18 3/4 16 6(cent)
July 1-September 30 18 1/8 16 1/4 6(cent)
October 1-December 31 19 1/4 15 7/8 6(cent)
- --------------------------------------------------------------------------------
1995
January 1-March 31 $16 1/2 $14 1/8 6(cent)
April 1-June 30 16 1/2 14 7/8 6(cent)
July 1-September 30 16 7/8 14 5/8 6(cent)
October 1-December 31 16 5/8 13 5/8 6(cent)
================================================================================
SELECTED QUARTERLY DATA
Summarized financial data for interim periods of 1996 and 1995 (expressed in
thousands of dollars, except per share data) are shown below.
1996 Quarter Ended
Mar. 31 June 30 Sept. 30 Dec. 31
================================================================================
Sales $ 108,340 $ 105,806 $ 95,890 $ 97,071
Gross profit 21,349 21,429 23,572 47,185
Earnings (loss):
Continuing operations 4,363 4,454 5,684 19,272
Extraordinary item -- -- -- (2,889)
Discontinued operations (9,654) -- -- (4,861)
- --------------------------------------------------------------------------------
Net income (loss) $ (5,291) $ 4,454 $ 5,684 $ 11,522
- --------------------------------------------------------------------------------
Earnings (loss) per share:
Continuing operations $ .31 $ .32 $ .41 $ 1.44
Extraordinary item -- -- -- (.22)
Discontinued operations (.69) -- -- (.36)
- --------------------------------------------------------------------------------
Net income (loss) $ (.38) $ .32 $ .41 $ .86
================================================================================
1995 Quarter Ended
Mar. 31 June 30 Sept. 30 Dec. 31
================================================================================
Sales $ 113,497 $ 114,593 $ 99,876 $ 99,222
Gross profit 22,749 21,613 18,092 15,997
Earnings (loss):
Continuing operations 4,021 (1,205) 2,380 2,313
Discontinued operations 1,167 84 (672) 10,552
- --------------------------------------------------------------------------------
Net income (loss) $ 5,188 $ (1,121) $ 1,708 $ 12,865
- --------------------------------------------------------------------------------
Earnings (loss) per share:
Continuing operations $ .28 $ (.08) $ .17 $ .16
Discontinued operations .09 -- (.05) .75
- --------------------------------------------------------------------------------
Net income (loss) $ .37 $ (.08) $ .12 $ .91
================================================================================
The 1996 continuing operations includes after-tax LIFO gains of $2,913,000 or
$.21 per share in the third quarter and $16,347,000 or $1.22 per share in the
fourth quarter.
The extraordinary item is attributable to the early retirement of debt.
The 1996 discontinued operations includes loss results and special charges
for the sale of the domestic refining business.
The 1995 continuing operations second quarter includes the after tax impact
of nonrecurring charges of $6,150,000 or $.44 per share related to restructuring
and asset writedowns for the Precious Metals Fabricated Products Division.
1995 discontinued operations totalling $11,131,000 or $.79 per share is for
the reclassified domestic refining business results and the automotive segment's
results and gain from its sale.
16
<PAGE> 19
Handy & Harman and Subsidiaries
Five Year Selected Financial Data
<TABLE>
<CAPTION>
Dollars in thousands
except per share figures 1996 1995 1994 1993 1992
======================================================================================================
OPERATIONS
<S> <C> <C> <C> <C> <C>
Sales $ 407,107 $427,188 $408,968 $372,571 $377,015
Income from continuing operations
before extraordinary item and
excluding net LIFO gains (b) 14,513 7,509 6,743 1,928(a) 3,532
Net LIFO gains (b) 19,260 -- -- -- --
Loss from extraordinary item (2,889) -- -- -- --
Income (loss) from discontinued operations (14,515) 11,131 9,768 7,548 8,165
Net income 16,369 18,640 16,511 9,476(a) 11,697
Dividends 3,341 3,383 2,811 2,803 2,801
PER SHARE DATA
Income from continuing operations
before extraordinary item and
excluding net LIFO gains (b) 1.05 .53 .48 .14(a) .26
Net LIFO gains (b) 1.40 -- -- -- --
Loss from extraordinary item (.21) -- -- -- --
Income (loss) from discontinued operations (1.05) .79 .70 .54 .58
Net income 1.19 1.32 1.18 .68(a) .84
Dividends .24 .24 .20 .20 .20
Average shares outstanding (thousands) 13,796 14,092 14,050 14,021 14,001
- ------------------------------------------------------------------------------------------------------
FINANCIAL POSITION (AT DECEMBER 31)
Current assets 138,674 163,101 187,336 226,441 200,613
Current liabilities 76,838 113,621 153,593 114,534 92,444
Working capital 61,836 49,480 33,743 111,907 108,169
Property, plant and equipment-net 83,205 91,406 117,200 106,220 109,605
Total assets 316,464 341,049 405,018 406,160 371,351
Long-term debt 127,500 93,500 131,750 188,750 186,287
Deferred income taxes 15,261 13,534 13,551 11,276 7,681
Shareholders' equity 95,606 120,394 106,124 91,600 84,939
LIFO reserve(c) 97,996 141,458 139,068 141,273 105,416
- ------------------------------------------------------------------------------------------------------
STATISTICAL DATA
Property, plant and equipment
acquired through capital expenditures 14,694 23,143 18,567 15,147 14,440
Depreciation and amortization 12,000 16,668 15,683 15,816 14,854
Interest expense (net)-continuing operations 9,682 12,598 10,772 10,977 12,411
Number of shareholders 2,816 3,096 2,259 2,238 3,046
Number of employees at December 31 2,304 2,567 4,826 4,246 4,478
- ------------------------------------------------------------------------------------------------------
FINANCIAL RATIOS
Return on average shareholders' equity 15.2% 16.5% 16.7% 10.7% 14.4%
Current ratio 1.8 1.4 1.2 2.0 2.2
======================================================================================================
</TABLE>
(a) Includes a benefit of $576,000 or $.04 per share, from cumulative effect of
accounting change.
(b) Net LIFO gains (after-tax) are due to change in levels of precious metal
inventories stated at LIFO cost.
(c) Excess of year-end market value of LIFO inventory over cost.
17
<PAGE> 20
Handy & Harman and Subsidiaries
Management's Discussion and Analysis
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
The Company's precious metal inventory, consisting principally of gold and
silver, is readily convertible to cash. Furthermore, these precious metal
inventories which are stated in the Balance Sheet at LIFO cost have a market
value of $97,996,000 in excess of such cost as of December 31, 1996.
It is the Company's policy to obtain funds necessary to finance inventories
and receivables from various banks under commercial credit facilities.
Fluctuations in the market prices of gold and silver have a direct effect on the
dollar volume of sales and the corresponding amount of customer receivables
resulting from sale of precious metal products. In addition, receivables
resulting from the sale of precious metal bullion for future delivery were also
financed by bank borrowings. The Company adjusts the level of its credit
facilities from time to time in accordance with its borrowing needs for
receivables and inventories and maintains bank credit facilities well in excess
of anticipated requirements.
Consistent with other precious metal fabricating companies, some of the
Company's gold and silver requirements are furnished by customers and suppliers
on a consignment basis. Title to the consigned gold and silver remains with the
Consignor. The value of consigned gold and silver held by the Company is not
included in the Company's Balance Sheet. The Company's gold and silver
requirements are provided from a combination of owned inventories, precious
metals which have been purchased and sold for future delivery, and gold and
silver received from suppliers and customers on a consignment basis.
The Company has a $200,000,000 Revolving Credit Facility which provides
$150,000,000 for a three year period and $50,000,000 for 364 days. As of
December 31, 1996 there were only borrowings of $120,000,000 under the long-term
facility. In addition to the Revolving Credit Facilities, banks also provide
$111,750,000 of Gold and Silver Fee Consignment Facilities. The Fee Consignment
Facility of $83,812,500 is for a three-year period and the short-term Fee
Consignment Facility of $27,937,500 is for 364 days. All gold and silver
consigned to the Company pursuant to these Consignment agreements is located at
the Company's plant in Fairfield, Connecticut. As of December 31, 1996, there
were 5,300 ounces of gold and 14,209,000 ounces of silver leased under these fee
consignment facilities.
In addition to the Revolving Credit Facilities the Company had arrangements
with four institutional lenders for $50,000,000 of long-term borrowing at a rate
of 8.83% maturing in 2002, which were prepaid on October 10, 1996 along with
other long-term debt of $14,500,000 at a rate of 9.37% maturing in 1999.
Prepayment penalties amounting to approximately $4.6 million relating to this
debt were incurred and are reported as an extraordinary item. Funds for the
prepayment of these long-term borrowings and related penalties were provided by
the Revolving Credit Facilities discussed above. The Company is currently in the
process of reviewing other new long-term debt opportunities.
On May 14, 1996, Handy & Harman announced that it had decided to exit the
precious metals refining business, exclusive of the Company's minor satellite
refining operations located in Singapore and Canada. The Company completed the
sale of the Handy & Harman Refining Division in the third quarter of 1996.
Accordingly, operations for this major division have been classified as
discontinued operations. A charge associated with exiting this business of
$22,350,000 ($13,161,000 after-tax) was recorded in 1996. The sale of this
division released a significant portion of the Company's owned precious metal
inventory position, making this potential liquidity, along with the Company's
credit facilities, available for deployment to continuing operations,
acquisition of new businesses and repurchase of 1.8 million shares of the
Company's common stock via a "Dutch Auction", completed in December 1996.
Subsequent to year end, on February 28, 1997, the Company acquired Olympic
Manufacturing Group, Inc. for $53,000,000 which was funded by the Revolving
Credit Facilities discussed above.
Over the past three years the Company's operating activities and investing
activities have provided net cash of $70,092,000 and $10,478,000, respectively,
which were used for financing activities amounting to $74,091,000.
OPERATING ACTIVITIES
Net cash provided by operating activities amounted to $41,198,000 in 1996,
$20,086,000 in 1995 and $8,808,000 in 1994. Net cash flow from operating
activities increased $21,112,000 from 1995 to 1996 primarily due to an increase
of $17,947,000 in net income adjusted for non-cash and non operating items. This
increase is primarily due to proceeds from the reduction of LIFO inventories
partially offset by expenditures associated with the disposal of the refining
business. The balance of the cash flow increase from operating activities was
due to a decrease of $3,165,000 in working capital requirements.
Net cash flow from operating activities increased $11,278,000 from 1994 to
1995 primarily due to a decrease in working capital requirements of $20,720,000,
an increase in net income of $2,129,000, non-cash restructuring and nonrecurring
charges of $8,369,000, partially offset by the gain on sale of business units of
$20,176,000. The decrease in working capital requirements was due primarily to a
decrease in accounts receivable caused by the exit from the karat gold business
as well as lower sales of the discontinued automotive segment.
18
<PAGE> 21
Handy & Harman and Subsidiaries
Management's Discussion and Analysis
INVESTING ACTIVITIES
Net cash (used)/provided in investing activities amounted to ($12,456,000) in
1996, $70,637,000 in 1995 and ($47,703,000) in 1994. Net cash provided by
investing activities decreased $83,093,000 in 1996 over 1995 primarily due to
net proceeds in 1995 of $68,032,000 from the sale of the automotive (OEM)
segment and $24,750,000 in net investing activities of discontinued operations
due to the realization of proceeds on the Company's investment in and receivable
from GO/DAN Industries, a joint venture, versus net proceeds in 1996 of
$5,074,000 for the sale of the refining division and use of cash for the
purchase of ele Corporation amounting to $3,700,000 (net). Cash outflows for
capital expenditures decreased by $8,449,000 in 1996 versus 1995 due to plant
expansion primarily experienced in the wire/tubing segment in 1995.
Net cash provided by investing activities increased $118,340,000 in 1995
over 1994 primarily due to net proceeds of $68,032,000 and $24,250,000, as
described in the preceding paragraph, payments in 1994 for the purchase of Sumco
Inc. in the amount of $26,000,000 and related acquired debt of $3,921,000,
offset partially by the 1995 increase in capital expenditures of $4,576,000,
primarily for plant expansion and machinery and equipment in the wire/tubing
segment.
FINANCING ACTIVITIES
During this past three year period the Company's net financing activities were
the repayment of $83,449,000 in debt, cash provided by the net decrease in
futures receivable of $62,333,000, dividend payments of $9,535,000, net
purchases of Company stock of $40,059,000, penalties paid on the early
retirement of debt of $4,640,000, and proceeds from a joint venture partner of
$1,259,000 for a total net cash usage of $74,091,000.
The net cash used in financing activities was $25,668,000 in 1996 due to
the purchase of company stock for $40,036,000 via a "Dutch Auction" in December
1996 and the plan to buyback up to 1.5 million shares of the Company's common
stock announced on November 6, 1995, penalties paid on the early retirement of
debt of $4,640,000 and the payment of dividends of $3,341,000. This was
partially offset by an increase in debt of $3,301,000, a decrease in futures
receivables of $7,681,000, an increase in futures payable of $9,246,000, funding
proceeds received from a joint venture partner of $1,259,000, and other treasury
stock transactions proceeds of $862,000.
The net cash used in financing activities was $86,558,000 in 1995 primarily
due to the decrease in futures payable of $37,772,000 and increase in futures
receivable of $7,681,000, repayment of debt of $36,500,000, payment of dividends
of $3,383,000 and purchase of the Company's common stock amounting to $1,505,000
(cash-settlement basis) which is part of a plan to buy back up to 1.5 million
shares of the Company's common stock announced on November 6, 1995.
The net cash provided by financing was $38,135,000 in 1994 primarily due to
the Company's ability to realize its futures receivable of $53,087,000 and
increase futures payable by $37,772,000, offset by the repayment of debt of
$50,250,000 and payment of dividends of $2,811,000.
The Company's program to expand productive capacity through acquisition of
new businesses and expenditures for new property, plant and equipment will
continue to be financed with internally generated funds and long-term debt, if
necessary.
The Company's foreign operations consist of four wholly owned subsidiaries,
(one in Canada, two in the United Kingdom, and one in Denmark), and one equity
investment in Asia. Substantially all unremitted earnings of such entities are
free from legal or contractual restrictions.
Statements contained in Management's Discussion and Analysis are
forward-looking statements and are made pursuant to the safe harbor provision of
the private securities litigation reform act of 1995. Forward-looking statements
involve a number of risks and uncertainties including, but not limited to,
product demand, pricing, market acceptance, precious metal and other raw
materials price fluctuations, intellectual property rights and litigation, risks
in product and technology development and other risk factors detailed in the
Company's Securities and Exchange Commission filings.
COMPARISON OF 1996 VERSUS 1995
Sales for the wire/tubing segment increased $359,000 and profit contribution
(pre-tax income before deducting interest and corporate expenses) increased
$556,000 (3%) due to a strong increase in demand for stainless steel tubing
brought about by rapid growth in the semiconductor fabrication industry
experienced during the first half of 1996. This was partially offset by a
decrease in sales destined for the automotive market experienced by one of the
segment's wire units. Although this segment's 1997 beginning performance is not
as robust as the previous year's due to the semiconductor fabrication industry's
slowdown, other operating units have improved due to their numerous niche
products, especially in the medical field. As the semiconductor fabrication
industry improves, additional contribution from and further investment in this
segment is anticipated.
Sales for the precious metal segment decreased $20,950,000 (9%) due
primarily to the elimination of the karat gold fabricated product line in 1995.
The average price of gold in 1996 was $387.70 per ounce and in 1995 was $384.19
per ounce. The average price of silver in 1996 was $5.18 per ounce and in 1995
was $5.19 per ounce. The profit contribution increased $41,410,000 (482%)
primarily due to the reductions in the quantities of
19
<PAGE> 22
Handy & Harman and Subsidiaries
Management's Discussion and Analysis
precious metal inventories valued at LIFO cost which produced a gain of
$33,630,000. Also, in 1995 there was a nonrecurring charge of $5,342,000 for
severance costs and asset write-downs related to the decision to exit the karat
gold fabricated product line in East Providence, Rhode Island and $4,207,000 of
additional costs, primarily asset write-downs, related to the Company's ongoing
operation in Fairfield, Connecticut. Excluding the gain on LIFO inventory and
the nonrecurring charges in 1995 described above, the profit contribution
decreased $1,769,000 (10%) due to product mix changes experienced in fabricated
precious metals and a decrease in sales due to the higher demand in the first
half of 1995 from the electronic components sector of the automotive industry
experienced by the Company's precision surface finishing business. The addition
of ele Corporation in 1996, the major modernization program at our product
fabrication facility in Fairfield, Connecticut and the retro-fitting of the
former karat gold facility in East Providence, Rhode Island by the Electronics
Materials Group should enhance this segment's contribution in 1997.
In the other non-precious metal segment, sales increased $510,000 (3%) due
primarily to growth of the thermOweld(R) product line, particularly in foreign
markets, partially offset by decreased steel fitting sales. Profit contribution
decreased $195,000 (9%) due to low production volume of steel fittings, and the
related expense of unabsorbed production costs partially offset by increased
thermOweld(R) sales discussed above. Accelerated new product flow in 1996 should
improve earnings in 1997.
Interest expense decreased $2,916,000 (23%) due to decreased levels of
borrowings as a result of proceeds from the completion of the sales of the
Company's automotive segment and investment in GO/DAN Industries in the latter
part of 1995.
The effective income tax rate for 1996 was 42.7% and 1995 was 47.4%. The
reason for the lower effective income tax rate for 1996 compared to 1995 is due
to decreased foreign losses, for which a valuation allowance has been provided,
as a percentage of income before taxes.
COMPARISON OF 1995 VERSUS 1994
Sales for the wire/tubing segment increased $21,342,000 (14%) due to the strong
demand for wire products, most notably in Europe through the Company's U.K.
business unit and also a strong increase in demand for seamless stainless steel
tubing brought about by rapid growth in the semiconductor fabrication industry.
Profit contribution increased $3,753,000 (27%) due to the increased sales noted
above, reduced production costs stemming from new and/or improved manufacturing
equipment and facilities, and reduced raw material costs all of which were
partially offset by start up costs of the new tubing facility in Europe.
Sales for the precious metal segment decreased $3,944,000 (2%). The average
price of gold in 1995 was $384.19 per ounce and in 1994 was $384.13 per ounce.
The average price of silver in 1995 was $5.19 per ounce and in 1994 was $5.29
per ounce. Decreased product sales due to exiting the karat gold fabricated
product line, previously discussed, were primarily offset by increased sales of
the precision surface finishing businesses. The profit contribution increased
$416,000 (5%). In 1995 nonrecurring charges of $5,342,000 and $4,207,000 of
additional costs, as described in the 1996 versus 1995 comparison, were
recorded. Excluding these nonrecurring charges the profit contribution increased
$9,965,000 (122%) due to the increased sales of the precision surface finishing
businesses as well as controlling operating costs.
In the other non-precious metal segment, sales increased $822,000 (5%) and
profit contribution increased $326,000 (17%) primarily due to substantial growth
of this business unit's thermOweld(R) product line.
Interest expense increased $1,826,000 (17%) primarily due to higher
interest rates on borrowings and leased metal during the year.
The effective income tax rate for 1995 was 47.4% and 1994 was 41.7%. The
higher effective income tax rate for 1995 over 1994 is attributable to the
valuation allowance for the deferred tax asset on foreign losses as well as
goodwill amortization associated with the acquisition of Sumco Inc. in September
1994.
20
<PAGE> 23
Handy & Harman and Subsidiaries
Consolidated Statement of Income
<TABLE>
<CAPTION>
Year ended December 31 1996 1995 1994
==============================================================================================================
<S> <C> <C> <C>
Sales $ 407,107,000 $ 427,188,000 $408,968,000
Cost of sales 293,572,000 348,737,000 340,664,000
- --------------------------------------------------------------------------------------------------------------
Gross profit 113,535,000 78,451,000 68,304,000
Selling, general, and administrative expenses 44,504,000 45,524,000 43,351,000
Restructuring charge -- 5,342,000 --
- --------------------------------------------------------------------------------------------------------------
Income from operations 69,031,000 27,585,000 24,953,000
- --------------------------------------------------------------------------------------------------------------
Other deductions:
Interest expense (net) 9,682,000 12,598,000 10,772,000
Other (net) 376,000 701,000 2,614,000
- --------------------------------------------------------------------------------------------------------------
10,058,000 13,299,000 13,386,000
- --------------------------------------------------------------------------------------------------------------
Income from continuing operations before
income taxes and extraordinary item 58,973,000 14,286,000 11,567,000
Income tax provision 25,200,000 6,777,000 4,824,000
- --------------------------------------------------------------------------------------------------------------
Income from continuing operations
before extraordinary item 33,773,000 7,509,000 6,743,000
Extraordinary loss on early retirement of
debt (net of $2,030,000 income tax benefit) (2,889,000) -- --
Discontinued operations:
Income/(loss) from operations, net of
income taxes/(benefit)($1,026,000), ($252,000), $6,986,000 (1,354,000) (365,000) 9,768,000
Gain/(loss) on disposal, net of
income taxes/(benefit) - ($9,190,000), $8,220,000 (13,161,000) 11,496,000 --
- --------------------------------------------------------------------------------------------------------------
(14,515,000) 11,131,000 9,768,000
- --------------------------------------------------------------------------------------------------------------
Net income $ 16,369,000 $ 18,640,000 $ 16,511,000
==============================================================================================================
Earnings per share:
Income from continuing operations
before extraordinary item $ 2.45 $ .53 $ .48
Extraordinary loss on early retirement of debt (.21) -- --
Discontinued operations (1.05) .79 .70
- --------------------------------------------------------------------------------------------------------------
Net income $ 1.19 $ 1.32 $ 1.18
==============================================================================================================
Average number of shares outstanding 13,796,000 14,092,000 14,050,000
==============================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
21
<PAGE> 24
Handy & Harman and Subsidiaries
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31 1996 1995
==============================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash $ 9,701,000 $ 6,637,000
Accounts receivable, less allowance for doubtful accounts of
$1,686,000 in 1996 and $3,021,000 in 1995 51,572,000 61,036,000
Futures receivable -- 7,681,000
Inventories 70,357,000 84,422,000
Prepaid expenses, deposits and other current assets 7,044,000 3,325,000
- ----------------------------------------------------------------------------------------------
Total current assets 138,674,000 163,101,000
- ----------------------------------------------------------------------------------------------
Investments in affiliates, at equity 3,122,000 2,686,000
Property, plant and equipment 195,623,000 214,345,000
Less accumulated depreciation and amortization 112,418,000 122,939,000
- ----------------------------------------------------------------------------------------------
83,205,000 91,406,000
Prepaid retirement costs (net) 54,566,000 51,152,000
Intangibles, net of amortization 24,818,000 22,141,000
Other assets 12,079,000 10,563,000
- ----------------------------------------------------------------------------------------------
$ 316,464,000 $ 341,049,000
==============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 15,000,000 $ 40,000,000
Current maturities of long-term debt -- 3,500,000
Accounts payable 30,163,000 32,899,000
Futures payable 9,246,000 --
Federal and foreign taxes on income 792,000 8,072,000
Other current liabilities 21,637,000 29,150,000
- ----------------------------------------------------------------------------------------------
Total current liabilities 76,838,000 113,621,000
- ----------------------------------------------------------------------------------------------
Long-term debt, less current maturities 127,500,000 93,500,000
Minority interest 1,259,000 --
Deferred income taxes 15,261,000 13,534,000
Commitments
- ----------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock - par value $1; 60,000,000
shares authorized; 14,611,432 shares issued 14,611,000 14,611,000
Capital surplus 13,432,000 12,033,000
Retained earnings 112,399,000 99,371,000
Foreign currency translation adjustment (61,000) (748,000)
- ----------------------------------------------------------------------------------------------
140,381,000 125,267,000
- ----------------------------------------------------------------------------------------------
Less: Treasury stock 1996 - 2,618,421 shares;
1995 - 603,800 shares - at cost 44,308,000 4,873,000
Unearned compensation 467,000 --
- ----------------------------------------------------------------------------------------------
Total shareholders' equity 95,606,000 120,394,000
- ----------------------------------------------------------------------------------------------
$ 316,464,000 $ 341,049,000
==============================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
22
<PAGE> 25
Handy & Harman and Subsidiaries
Consolidated Statement of Shareholders' Equity
Three Years Ended December 31, 1996
<TABLE>
<CAPTION>
Foreign
Par Value $1 Currency Total
Common Capital Retained Translation Treasury Unearned Shareholders'
Stock Surplus Earnings Adjustment Stock Compensation Equity
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1994 $14,611,000 $11,296,000 $70,414,000 ($951,000) ($3,770,000) -- $91,600,000
Net income 16,511,000 16,511,000
Cash dividends on common
stock-$.20 per share (2,811,000) (2,811,000)
Stock issued under 1988
long-term incentive plan
(28,600 shares) 296,000 144,000 ($220,000) 220,000
Stock awarded under
outside director
stock option plan
(awarded 4,110 shares) 36,000 36,000
Stock issued under the
incentive stock option
plan (27,000 shares) 202,000 135,000 337,000
Translation adjustment 231,000 231,000
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1994 14,611,000 11,830,000 84,114,000 (720,000) (3,491,000) (220,000) 106,124,000
Net income 18,640,000 18,640,000
Cash dividends on common
stock-$.24 per share (3,383,000) (3,383,000)
Remeasurement and
amortization of
stock issued under 1988
long-term incentive plan 4,000 (6,000) 220,000 218,000
Stock awarded under
outside director stock
option plan (awarded
3,290 - issued 2,852 shares) 34,000 14,000 48,000
Stock issued under the
incentive stock option
plan (22,800 shares) 165,000 115,000 280,000
Shares purchased by Company
for treasury (95,500 shares) (1,505,000) (1,505,000)
Translation adjustment (28,000) (28,000)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1995 14,611,000 12,033,000 99,371,000 (748,000) (4,873,000) -- 120,394,000
Net income 16,369,000 16,369,000
Cash dividends on common
stock-$.24 per share (3,341,000) (3,341,000)
Stock issued under
1988 long-term incentive
plan (62,750 shares) 735,000 315,000 (467,000) 583,000
Stock awarded under
outside director stock
option plan (awarded
4,194 - issued 8,640 shares) 54,000 43,000 97,000
Stock issued under the
incentive stock option
plan - net (69,889 shares) 610,000 243,000 853,000
Shares purchased by Company
for treasury (2,155,900 shares) (40,036,000) (40,036,000)
Translation adjustment 687,000 687,000
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1996 $14,611,000 $13,432,000 $112,399,000 ($61,000) ($44,308,000) ($467,000) $95,606,000
===================================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
23
<PAGE> 26
Handy & Harman and Subsidiaries
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Increase (Decrease) in Cash
------------------------------------------
Year Ended December 31, 1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 16,369,000 $ 18,640,000 $ 16,511,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Extraordinary loss on debt retirement 4,919,000 -- --
Depreciation and amortization 12,000,000 16,668,000 15,683,000
Provision for doubtful accounts 1,052,000 329,000 784,000
Gain on disposal of property, plant and equipment 68,000 91,000 454,000
(Gain)/loss on disposal of business units 8,704,000 (20,176,000) 1,300,000
Restructuring and nonrecurring charges -- 8,369,000 --
Net prepaid retirement costs (3,995,000) (2,339,000) (3,832,000)
Equity in earnings of affiliates (421,000) (451,000) (338,000)
Earned compensation-1988 long-term incentive
and outside director stock option plans 648,000 266,000 277,000
Changes in assets and liabilities, net of effects
from acquisitions and divestitures:
Accounts receivable 3,659,000 3,369,000 (12,813,000)
Inventories 13,227,000 (7,877,000) (459,000)
Prepaid expenses (3,767,000) 1,210,000 (1,425,000)
Deferred charges and other assets (1,050,000) (2,951,000) (2,883,000)
Accounts payable and other current liabilities (4,662,000) (1,775,000) (7,813,000)
Federal and foreign taxes on income (5,279,000) 6,730,000 1,342,000
Deferred income taxes (274,000) (17,000) 2,020,000
- ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 41,198,000 20,086,000 8,808,000
- ---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 864,000 520,000 307,000
Capital expenditures (14,694,000) (23,143,000) (18,567,000)
Acquisition, net of cash and debt acquired (3,700,000) -- (29,943,000)
Divestitures, net of cash sold 5,074,000 68,032,000 --
Investment in affiliates - net -- 478,000 --
Net investing activities of discontinued operations -- 24,750,000 500,000
- ---------------------------------------------------------------------------------------------------
Net cash provided/(used) in investing activities (12,456,000) 70,637,000 (47,703,000)
- ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Short-term borrowings (27,199,000) 5,250,000 6,750,000
Repayment of other long-term debt (64,500,000) (11,750,000) (7,000,000)
Long-term revolving credit facilities 95,000,000 (30,000,000) (50,000,000)
Net (increase)/decrease in futures receivable 7,681,000 (7,681,000) 53,087,000
Net increase/(decrease) in futures payable 9,246,000 (37,772,000) 37,772,000
Dividends paid (3,341,000) (3,383,000) (2,811,000)
Purchase of treasury stock (net) (39,174,000) (1,222,000) 337,000
Penalties paid on early retirement of debt (4,640,000) -- --
Funding proceeds from joint venture partner 1,259,000 -- --
- ---------------------------------------------------------------------------------------------------
Net cash provided/(used) in financing activities (25,668,000) (86,558,000) 38,135,000
- ---------------------------------------------------------------------------------------------------
Effect of exchange rate changes on net cash (10,000) (87,000) (1,000)
- ---------------------------------------------------------------------------------------------------
Net change in cash 3,064,000 4,078,000 (761,000)
Cash at beginning of year 6,637,000 2,559,000 3,320,000
- ---------------------------------------------------------------------------------------------------
Cash at end of year $ 9,701,000 $ 6,637,000 $ 2,559,000
===================================================================================================
Cash paid during the year for:
Interest, net of contango on futures and
forward contracts $ 12,886,000 $ 20,979,000 $ 15,721,000
Income taxes $ 20,678,000 $ 6,365,000 $ 8,709,000
===================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
24
<PAGE> 27
Handy & Harman and Subsidiaries
Summary of Significant Accounting Policies
A -- PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany items have been
eliminated. Investments in affiliates, which are 20%-50% owned companies, are
accounted for by the equity basis of accounting.
B -- INVENTORIES
Precious metals inventories are valued at cost as computed under the last-in,
first-out (LIFO) method, which is lower than market. Non-precious metals
inventories are stated at the lower of cost (principally average) or market. For
precious metals inventories no segregation among raw materials, work in process
and finished goods is practicable.
C -- PROPERTY, PLANT AND EQUIPMENT, AND DEPRECIATION
Property, plant and equipment are stated at cost. Depreciation and amortization
are provided principally on the straight-line method for financial reporting
purposes and on accelerated methods for tax purposes.
D -- INTANGIBLES AND AMORTIZATION
Purchased patents are stated at cost, which is amortized over the respective
remaining lives of the patents. The excess of purchase price over net assets
acquired in business combinations is being amortized on the straight-line method
over 40 years. The Company uses undiscounted cash flows when evaluating annually
the recoverability of the unamortized balance for the excess of purchase price
over net assets acquired in a business combination. The assessment of the
recoverability of goodwill will be impacted if estimated future operating cash
flows are not achieved.
E -- FUTURES CONTRACTS
Consistent with the Company's policy of maintaining constant inventory levels
under the last-in, first-out (LIFO) method of accounting, precious metals are
purchased at the same prices and quantities as shipments to customers.
Additionally, to the extent that an increase in inventory is required to support
operations, precious metals are purchased and immediately sold for future
delivery, creating a futures receivable and eliminating the economic risk of
price fluctuations. Also to the extent there is a decrease in the inventory
required to support operations, precious metals are sold and immediately
purchased for future receipt, creating a futures payable and also eliminating
the economic risk of price fluctuations.
Future sales and purchases of precious metals are excluded from sales and
cost of sales in the accompanying income statement. The related margin deposits
are included with the futures receivable/payable. The income/expense from future
sales/purchases of precious metals is amortized over the contract period and is
included in interest expense.
F -- SALES
A high percentage of the sales prices for the Company's precious metals products
is the value of the precious metals content. Changes in the unit sales price of
such precious metals result in corresponding changes in sales and cost of sales.
The Company includes in both sales and cost of sales the precious metal value of
sales of fabricated products if the customer purchased the precious metal from
the Company, whether or not the precious metal is sold at the same time as the
fabricated product. In addition, certain customers choose to do business on a
"toll" basis, that is, to furnish bullion to Handy & Harman for fabrication.
When the metals are returned to the customer in fabricated form, the customer
pays only a fabrication charge, and the precious metal value of this consignment
business is not included in sales or cost of sales.
G -- TAXES ON INCOME
The Company accounts for certain income and expense items differently for
financial reporting and income tax purposes. In accordance with SFAS No. 109
"Accounting for Income Taxes" deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets
and liabilities applying enacted statutory tax rates in effect for the year in
which the differences are expected to reverse.
H -- INCOME PER SHARE
Per share amounts are based on the weighted average number of shares outstanding
during the year. Outstanding stock options are considered common stock
equivalents using the treasury stock method and are included in the calculation
when their effect would be dilutive; however they had no dilutive effect in
1996, 1995 and 1994.
I -- FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been recorded as a separate component of
shareholders' equity.
J -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value amounts for cash, receivables (net), and short-term borrowings
approximate carrying amounts due to the short maturities of these instruments.
The fair value of long-term debt was estimated based on the current rates
offered to the Company for debt of the same remaining maturities. The difference
between the fair value and the carrying value is not material and the Company
has no plans to retire significant portions of its long-term debt prior to
scheduled maturity.
K -- LONG-LIVED ASSETS
In 1995 the Financial Accounting Standards Board issued SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of". SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used or disposed of by an entity be reviewed for
impairment whenever events or changes in circumstances
25
<PAGE> 28
Handy & Harman and Subsidiaries
indicate that the carrying amount of an asset may not be recoverable. During
1996, the Company adopted this statement and determined that no impairment loss
need be recognized for applicable assets of continuing operations.
L -- STOCK BASED COMPENSATION
In 1995 the Financial Accounting Standard Board issued SFAS No. 123 "Accounting
for Stock-Based Compensation". SFAS No. 123 encourages, but does not require
companies to record compensation cost for stock-based employee compensation
plans at fair value. The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of
Company's stock at the date of the grant over the amount an employee must pay to
acquire stock. Refer to Note 6.
M -- USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and related
notes to financial statements. Changes in such estimates may affect amounts
reported in future periods.
N -- RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 and 1994 consolidated
financial statements to conform to the 1996 presentation.
================================================================================
Notes to Consolidated Financial Statements
NOTE 1: ACQUISITIONS, DIVESTITURES, RESTRUCTURING AND OTHER CHARGES
On June 27, 1996 the Company acquired 100% of ele Corporation's outstanding
shares for $4,341,000. The acquisition has been accounted for as a purchase;
accordingly, the purchase price has been allocated to the underlying assets and
liabilities based on their respective estimated fair values at the date of
acquisition. The estimated fair value of assets acquired is $4,314,000 and
liabilities assumed is $3,254,000 (inclusive of $2,199,000 of debt). The excess
of the purchase price over the fair value of the assets acquired and liabilities
assumed was $3,281,000 and is being amortized over a period of 40 years. This
business is not material to the revenues of the Company.
The Company sold the Handy & Harman Refining Division in August 1996 for
which the Company received $5,074,000. Accordingly, operations for this major
division have been classified as discontinued operations. A charge associated
with exiting this business of $22,350,000 was recorded in 1996. Revenues from
this division for 1996, 1995 and 1994 were $98,934,000, $168,309,000, and
$194,531,000, respectively. The net property, plant and equipment of this
discontinued operation included in the consolidated balance sheet for 1995 was
$12,773,000.
The Company sold its automotive (OEM) segment in two phases during 1995 and
recorded a net gain on its sale amounting to $19,716,000. The first phase was
the sale of this segment's cable operations on July 20, 1995 for which the
Company received cash of $3,211,000. The cable operations' working capital
retained by the Company also generated approximately $3,000,000 in cash. The
second phase was the sale of this segment's remaining operations on December 29,
1995 for which the Company received $64,821,000 (net of cash sold) with an
additional amount due of $5,246,000. Accordingly, the results of this segment
for all years presented are reported in the accompanying consolidated statement
of income as discontinued operations. Revenues from this segment for 1995, 1994,
and 1993 were $150,629,000, $181,866,000 and $156,607,000, respectively. The
assets and liabilities of this discontinued operation included in the
consolidated balance sheet for 1994 are as follows: Working capital -
$25,582,000, Net property, plant and equipment - $24,813,000, Other assets -
$318,000.
With the sale of GO/DAN Industries, a joint venture, and the related
receipt of $24,750,000 in September 1995, the previously discontinued operations
net assets, primarily composed of the Company's investment in and receivable
from GO/DAN Industries, were realized.
During 1995 the Company exited the karat gold fabricated product line
located in its East Providence, Rhode Island facility. A restructuring charge to
exit the business amounting to $5,342,000 was recorded as follows: employee
separation (155 employees) - $733,000, asset write-downs -$3,819,000, and other
exit costs - $790,000. This action was substantially completed at December 31,
1995. In addition to this restructuring charge, a charge of $4,207,000,
primarily asset write-downs, was recorded relating to the Company's ongoing
operation in Fairfield, Connecticut.
26
<PAGE> 29
Handy & Harman and Subsidiaries
Notes to Consolidated Financial Statements
Included in other deductions for 1995 is a gain on the sale of the
Company's joint venture in Brazil amounting to $460,000.
On September 9, 1994 the Company acquired 100% of Sumco Inc.'s outstanding
shares for $26,000,000. The acquisition has been accounted for as a purchase;
accordingly, the purchase price has been allocated to the underlying assets and
liabilities based on their respective estimated fair values at the date of
acquisition. The estimated fair value of assets acquired was $11,100,000 and
liabilities assumed was $7,100,000 (inclusive of $3,921,000 of debt). The excess
of the purchase price over the fair value of the assets acquired and liabilities
assumed was $22,000,000 and is being amortized over a period of 40 years. This
business was not material to the revenues of the Company.
Included in Other Deductions are provisions for the disposals of the
Company's interest in a Mexican joint venture of $1,300,000 and land and
building of $400,000.
NOTE 2: INVENTORIES AND FEE CONSIGNMENT FACILITIES
The components of inventories at December 31, 1996 and 1995 are as follows:
1996 1995
================================================================================
Precious Metals:
Fine and Fabricated metals in
various stages of completion $26,569,000 $ 34,230,000
Non-Precious Metals:
Base metals, factory supplies
and raw materials 20,993,000 21,797,000
Work in process 15,192,000 19,384,000
Finished goods 7,603,000 9,011,000
- --------------------------------------------------------------------------------
$70,357,000 $ 84,422,000
================================================================================
Other inventory information at December 31, 1996 and 1995:
1996 1995
================================================================================
Precious metals stated at LIFO cost $24,763,000 $ 28,870,000
================================================================================
LIFO inventory-excess of year-end
market value over LIFO cost $97,996,000 $141,458,000
================================================================================
Dec. 31 market value per ounce:
Silver $ 4.73 $ 5.11
Gold $ 369.00 $ 386.95
================================================================================
Consigned precious metal ounces due to/(from) customers and suppliers:
1996 1995
================================================================================
Silver ounces
Net open account 500,000 4,375,000
Leased/Futures 9,419,000 13,742,000
- --------------------------------------------------------------------------------
Total 9,919,000 18,117,000
================================================================================
Gold ounces
Net open account 14,600 21,000
Leased/Futures 5,700 101,000
- --------------------------------------------------------------------------------
Total 20,300 122,000
================================================================================
In 1994 the Company was provided a Gold and Silver Fee Consignment Facility
amounting to $250,750,000 of which $111,750,000 remains after exiting the karat
gold business in 1995 and refining business in 1996. The Fee Consignment
Facility of $83,812,500 is for a three-year period and the short-term Fee
Consignment Facility of $27,937,500 is for 364 days. As of December 31, 1996,
14,209,000 ounces of silver and 5,300 ounces of gold were leased to the Company
and are included in leased amounts above. The fee rates at December 31, 1996 for
gold and silver were 2.2% and .92%, respectively.
Included in continuing operations for 1996 are profits before taxes of
$33,630,000 resulting from reduction in the quantities of precious metal
inventories valued under the LIFO method. The effect on continuing operations
amounted to $19,260,000 or $1.40 per share in 1996.
NOTE 3: DEBT AND CREDIT AGREEMENTS
The Company's borrowing requirements are primarily related to the level of
inventories, the market value of precious metals, and changes in the Company's
receivables. The Company adjusts the level of its credit facilities from time to
time in accordance with its borrowing needs. At December 31, 1996, the Company
had short-term credit facilities of $50,000,000; (see discussion below regarding
revolving credit facilities) short-term bank borrowing amounted to $15,000,000.
The corresponding amounts for December 31, 1995 were: credit
facilities--$53,750,000 and short-term bank borrowings-$40,000,000.
At December 31, 1996, 1995, and 1994 the average interest rate for
outstanding short-term borrowing was 6.0%, 6.0%, and 6.9%, respectively. During
1996, the average month-end short-term borrowing was $40,979,000; the weighted
average interest rate of 5.8% was computed on the basis of the number of days
the borrowings were outstanding; and the maximum month-end short-term borrowing
was $66,600,000. The corresponding amounts for the years ended December 31, 1995
and 1994 were: average month-end borrowing-$54,300,000 and $53,777,000 weighted
average interest rate 6.5% and 5.4%, and maximum month-end borrowing-$75,500,000
and $117,000,000.
Long-term debt at December 31, 1996 and 1995 is summarized as follows:
1996 1995
================================================================================
Credit facility $120,000,000 $25,000,000
8.83% notes due 2002* -- 50,000,000
9.37% note due 1999* -- 14,500,000
Industrial revenue bonds,
floating rate, due 2004-2005 7,500,000 7,500,000
- --------------------------------------------------------------------------------
127,500,000 97,000,000
Less installments due within year -- 3,500,000
- --------------------------------------------------------------------------------
Total long-term debt $127,500,000 $93,500,000
================================================================================
* Prepaid on October 10, 1996
27
<PAGE> 30
Handy & Harman and Subsidiaries
Notes to Consolidated Financial Statements
The $120,000,000 credit facility matures in 1999. During the third quarter of
1994, the Company finalized $215,000,000 of Revolving Credit Facilities with
twenty banks. These Credit Facilities provided both $161,250,000 for a three
year period and $53,750,000 for 364 days. Due to the sale of the Company's
automotive segment, the three year portion of the credit facility was reduced to
$96,250,000. On September 24, 1996 the Revolving Credit Facilities were amended
to increase the three year portion to $150,000,000 and reduce the short-term
portion to $50,000,000 for a total of $200,000,000. Under both of these credit
facilities interest is payable at the prime rate or LIBOR plus a margin varying
from .45% to 1% depending upon certain financial ratios. At December 31, 1996
the margin over LIBOR was .6%.
All the above loans have restrictive covenants. At December 31, 1996 the
Company was in compliance with all covenants.
NOTE 4: INCOME TAXES
The components of pre-tax income are as follows (in thousands):
1996 1995 1994
================================================================================
Continuing operations - domestic $ 59,090 $12,906 $10,178
Continuing operations - foreign (117) 1,380 1,389
Extraordinary item (4,919) -- --
- --------------------------------------------------------------------------------
54,054 14,286 11,567
Discontinued operations - domestic (24,731) 19,099 16,754
- --------------------------------------------------------------------------------
Total $ 29,323 $33,385 $28,321
================================================================================
The provision for taxes on income was comprised of the following (in thousands):
1996
Current Deferred Total
================================================================================
CONTINUING OPERATIONS
Federal $ 18,260 $ 764 $ 19,024
Foreign 676 -- 676
State and local 5,443 57 5,500
- --------------------------------------------------------------------------------
24,379 821 25,200
- --------------------------------------------------------------------------------
EXTRAORDINARY ITEM
Federal (1,557) -- (1,557)
State and local (473) -- (473)
- --------------------------------------------------------------------------------
(2,030) -- (2,030)
- --------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Federal (8,709) 843 (7,866)
State and local (2,413) 63 (2,350)
- --------------------------------------------------------------------------------
(11,122) 906 (10,216)
- --------------------------------------------------------------------------------
Total $ 11,227 $ 1,727 $ 12,954
================================================================================
1996
================================================================================
Current Deferred Total
================================================================================
CONTINUING OPERATIONS
Federal $ 2,653 $ 1,913 $ 4,566
Foreign 1,594 (386) 1,208
State and local 223 780 1,003
- --------------------------------------------------------------------------------
4,470 2,307 6,777
- --------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Federal 7,847 (1,776) 6,071
State and local 2,445 (548) 1,897
- --------------------------------------------------------------------------------
10,292 (2,324) 7,968
- --------------------------------------------------------------------------------
Total $ 14,762 ($ 17) $ 14,745
================================================================================
1994
================================================================================
Current Deferred Total
================================================================================
CONTINUING OPERATIONS
Federal $ 602 $ 2,379 $ 2,981
Foreign 748 (25) 723
State and local 1,120 -- 1,120
- --------------------------------------------------------------------------------
2,470 2,354 4,824
- --------------------------------------------------------------------------------
DISCONTINUED OPERATIONS
Federal 5,492 (79) 5,413
State and local 1,573 -- 1,573
- --------------------------------------------------------------------------------
7,065 (79) 6,986
- --------------------------------------------------------------------------------
Total $ 9,535 $ 2,275 $ 11,810
================================================================================
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1996 and 1995 follow (in thousands):
1996
================================================================================
Deferred Tax Deferred Tax Net Deferred
Assets Liabilities Liability
================================================================================
Prepaid retirement costs -- $19,098 ($19,098)
Property, plant and equipment -- 3,442 (3,442)
Discontinued operations $ 3,312 -- 3,312
Foreign losses 1,625 -- 1,625
All other 7,168 3,201 3,967
Valuation allowance (1,625) -- (1,625)
- --------------------------------------------------------------------------------
Total $ 10,480 $25,741 ($15,261)
================================================================================
1995
Deferred Tax Deferred Tax Net Deferred
Assets Liabilities Liability
================================================================================
Prepaid retirement costs -- $17,903 ($17,903)
Property, plant and equipment -- 5,054 (5,054)
Restructuring and discontinued
operations $ 5,972 -- 5,972
Foreign losses 890 -- 890
All other 5,364 1,913 3,451
Valuation allowance (890) -- (890)
- --------------------------------------------------------------------------------
Total $ 11,336 $24,870 ($13,534)
================================================================================
28
<PAGE> 31
Handy & Harman and Subsidiaries
Notes to Consolidated Financial Statements
Due to the Company's current taxable income and expected future taxable
income, management believes it is more likely than not that the Company will
realize the benefit of the existing deferred tax assets other than the deferred
tax asset on foreign losses for which a valuation allowance has been provided.
Principal items making up the change in the net deferred tax liability
follow (in thousands):
1996 1995 1994
================================================================================
Prepaid retirement costs $ 1,195 $ 1,293 $ 1,340
Property, plant and equipment (1,612) (4,175) (257)
Restructuring and
discontinued operations 2,660 825 558
Foreign tax credit carryforwards -- 495 689
Investment tax credit carryforwards -- -- 1,502
All other (516) 1,545 (1,557)
- --------------------------------------------------------------------------------
$ 1,727 ($ 17) $ 2,275
================================================================================
Deferred income taxes have not been provided on the undistributed earnings of
foreign subsidiaries and other foreign investments carried at equity. These
earnings have been substantially reinvested and the Company does not plan to
initiate any action that would precipitate the payment of income taxes thereon.
The major elements contributing to the difference between the U.S. Federal
statutory tax rate and the consolidated effective tax rate for continuing
operations are as follows:
1996 1995 1994
==============================================================================
U.S. Federal effective statutory tax rate 35.0% 35.0% 35.0%
State and local income taxes, net
of Federal income tax benefit 6.1 4.6 6.3
Valuation allowance 1.3 4.8 1.6
Net effect of foreign tax rates (0.1) 0.1 0.4
Other 0.4 2.9 (1.6)
- --------------------------------------------------------------------------------
42.7% 47.4% 41.7%
================================================================================
NOTE 5: COMMITMENTS
Commitments at December 31, 1996 for the purchase of additional property, plant
and equipment approximated $5,925,000. Rent expense for 1996, 1995, and 1994 was
$2,885,000, $3,591,000 and $3,460,000 respectively. Operating lease and rental
commitments for future years are as follows:
================================================================================
1997 $ 1,538,000
1998 1,622,000
1999 1,135,000
2000 975,000
2001 918,000
2002 and beyond 6,047,000
- --------------------------------------------------------------------------------
Total lease and rental commitments $12,235,000
================================================================================
NOTE 6: INCENTIVE PLANS
HANDY & HARMAN 1995 OMNIBUS STOCK INCENTIVE PLAN (SUCCESSOR TO THE HANDY &
HARMAN LONG-TERM INCENTIVE STOCK OPTION PLAN ADOPTED IN 1991)
After incorporating 1994's remaining "shares available for option" of the
predecessor plan the combined number of shares subject to award under this
succeeding plan adopted in 1995 shall not exceed 1,000,000 shares of Common
Stock. The compensation committee of the Board of Directors may grant options,
stock appreciation rights (tandem or stand alone), shares of restricted or
phantom stock, and stock bonuses, in such amounts and with such terms and
conditions as the compensation committee shall determine, subject to the
provisions of the plan. Through 1996 only options have been awarded under the
successor and predecessor plans and, commencing one year after the date of
grant, each option becomes exercisable cumulatively at the rate of 25% per year
(20% for predecessor plan awarded options). These options will expire ten years
from the date such options were granted.
Successor and predecessor plans' transactions are as follows:
Shares under option Weighted
Shares -------------------------- Average
Available Range of Exercise
for Option Shares Price Price
================================================================================
Balance,
January 1, 1994 348,200 648,000 $ 9.625-15.3125 13.15
Options granted (118,000) 118,000 $13.75-16.625 16.45
Options exercised -- (27,000) $ 9.625-12.625 12.51
Options expired 23,000 (23,000) $12.625 12.62
- --------------------------------------------------------------------------------
Balance,
December 31, 1994 253,200 716,000 $ 9.625-16.625 13.74
Increase in shares
subject to award 746,800
Options granted (162,000) 162,000 $15.125-15.438 15.13
Options exercised -- (22,800) $ 9.625-12.937 12.25
Options expired 28,200 (28,200) $11.313-16.625 13.67
- --------------------------------------------------------------------------------
Balance,
December 31, 1995 866,200 827,000 $ 9.625-16.625 14.06
Options granted (260,000) 260,000 $17.75-18.625 17.92
Options exercised -- (78,500) $ 9.625-16.625 12.80
Options expired 48,800 (48,800) $12.625-16.625 13.20
- --------------------------------------------------------------------------------
Balance,
December 31, 1996 655,000 959,700 $ 9.625-18.625 15.25
================================================================================
29
<PAGE> 32
Handy & Harman and Subsidiaries
Notes to Consolidated Financial Statements
Additional information on options outstanding and options exercisable at
December 31, 1996 is as follows:
Options Outstanding Options Excercisable
- --------------------------------------------------------------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Outstanding Contractual Excercise Excercisable Excercise
at 12/31/96 Life Price at 12/31/96 Price
================================================================================
$9.625 to $14.125 292,500 4 years $13.64 292,500 $13.64
$12.0625 to $12.5625 14,000 6 years 12.21 11,200 12.21
$12.937 125,200 7 years 12.94 75,120 12.94
$13.75 to $16.625 107,000 8 years 16.44 42,800 16.44
$15.125 to $15.438 161,000 9 years 15.13 40,000 15.13
$17.75-18.625 260,000 10 years 17.92 -- --
- --------------------------------------------------------------------------------
959,700 461,620
================================================================================
The disclosure-only method described in SFAS No.123 "Accounting for
Stock-Based Compensation" is being used by the Company, therefore the proforma
effect of recognizing compensation cost for the above plan on net income and
earnings per share is as follows:
1996 1995
================================================================================
Net income - as reported $16,369,000 $18,640,000
Net income - proforma $15,980,000 $18,277,000
Net income per share - as reported $1.19 $1.32
Net income per share - proforma $1.14 $1.29
The fair value of each option grant is estimated using the Black-Scholes
option-pricing model with the following assumptions used for options granted in
1996 and 1995, respectively: expected dividend yield - 1.34% and 1.58%; expected
stock price volatility - 27.05% and 25.94%; risk-free interest rate - 6.42% and
6.41%; and expected life of options - 6 years and 6 years. Additionally, 100% of
the stock options granted in 1995 were assumed vested as a baseline for proforma
calculations.
The effects of applying SFAS No. 123 in this proforma disclosure are not
indicative of future proforma amounts. SFAS No. 123 does not apply to awards
prior to 1995 and additional awards in future years are anticipated.
OUTSIDE DIRECTOR STOCK OPTION PLAN
Under the Outside Director Stock Option Plan each outside director is awarded
fully and immediately exercisable options, on an annual basis, to purchase
Common Stock at an option price of $1. The market value of the Company's shares
at date of grant less the option price is amortized to compensation expense
during the year. Transactions under this Plan are summarized below:
1996 1995 1994
================================================================================
Options outstanding January 1 9,977 9,539 7,810
Options awarded 4,194 3,290 4,110
Options expired -- -- (2,381)
Options exercised (8,640) (2,852) --
- --------------------------------------------------------------------------------
Options outstanding December 31 5,531 9,977 9,539
================================================================================
Shares subject to award December 31 67,741 71,935 75,225
================================================================================
All options outstanding under the Outside Director Stock Option Plan are
exercisable at December 31, 1996.
1988 LONG-TERM INCENTIVE PLAN
Shares issued under the 1988 Long-Term Incentive Plan are in the name of the
employee, who has all the rights of a shareholder, subject to certain
restrictions or forfeitures. Of the 400,000 shares which may be awarded under
this Plan cumulative shares amounting to 79,500 were issued as of December 31,
1995, of which 4,000 shares were forfeited. Additional awards of 62,750 shares
were made in 1996. The market value of shares issued under the Plan is recorded
as unearned compensation and shown as a separate component of shareholders'
equity. This compensation is amortized to expense over the period the employees
become vested.
Compensation expense for both the Outside Director Stock Option Plan and
the 1988 Long-Term Incentive Plan amounted to $648,000, $266,000 and $277,000,
in 1996, 1995 and 1994, respectively.
NOTE 7: SEGMENT INFORMATION
Information regarding the Company's industry segments and discontinued
operations is contained on page 15 under the heading "The Company's Business"
and is incorporated herein by reference.
Additional information concerning industry segments, corporate and
discontinued operations is as follows:
1996 1995 1994
================================================================================
Depreciation and
amortization expense:
Wire/Tubing $ 5,461,000 $ 5,029,000 $ 4,355,000
Precious metals 4,560,000 4,545,000 3,609,000
Other non-precious
metal businesses 442,000 543,000 504,000
Corporate 1,136,000 1,053,000 1,072,000
Discontinued operations 401,000 5,498,000 6,143,000
- --------------------------------------------------------------------------------
$12,000,000 $16,668,000 $15,683,000
================================================================================
Property, plant and equipment additions:
Wire/Tubing $ 3,881,000 $11,378,000 $ 8,017,000
Precious Metals 9,315,000 7,738,000 4,537,000
Other non-precious
metal businesses 419,000 929,000 1,069,000
Corporate 31,000 47,000 56,000
- --------------------------------------------------------------------------------
13,646,000 20,092,000 13,679,000
- --------------------------------------------------------------------------------
Discontinued operations 1,048,000 3,051,000 4,888,000
- --------------------------------------------------------------------------------
$14,694,000 $23,143,000 $18,567,000
================================================================================
30
<PAGE> 33
Handy & Harman and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 8: SUPPLEMENTAL INFORMATION
Life/
Years 1996 1995
================================================================================
a-Property, plant and equipment:
Land $ 3,355,000 $ 3,872,000
Buildings and improvements 10-50 43,642,000 48,594,000
Machinery and equipment 3-20 130,573,000 140,107,000
Furniture and fixtures 2-20 11,932,000 11,974,000
Automotive 4-8 566,000 515,000
Leasehold improvements Lease Life 1,684,000 2,269,000
Construction in progress -- 3,871,000 7,014,000
- --------------------------------------------------------------------------------
$195,623,000 $214,345,000
================================================================================
Depreciation and amortization of property, plant and equipment charged to
operations for 1996, 1995 and 1994 was $10,816,000, $15,066,000 and $14,633,000,
respectively.
1996 1995
================================================================================
b-Intangibles (net of amortization):
Patents and other $ 515,000 $ 455,000
Excess of purchase price over
net assets acquired in business
combinations 24,303,000 21,686,000
- --------------------------------------------------------------------------------
$24,818,000 $22,141,000
================================================================================
NOTE 9: RETIREMENT PLANS AND OTHER BENEFITS
RETIREMENT PLANS
The Company and substantially all of its subsidiaries have noncontributory
defined benefit plans covering most of their employees. The benefits are based
on years of service and the employee's compensation at the time of retirement.
Contributions are made by the Company as necessary to provide assets sufficient
to meet the benefits payable to plan participants, and are determined in
accordance with applicable minimum funding standard requirements as promulgated
by the Internal Revenue Service. Such contributions are based on actuarial
computations of the amount sufficient to fund normal (current service) cost plus
an amortization of the unfunded actuarial accrued liability over periods of up
to 30 years.
The components of net periodic pension cost (credit) for 1996, 1995 and
1994 are as follows:
1996 1995 1994
================================================================================
Service cost-benefits earned
during the period $ 2,678,000 $ 3,582,000 $ 3,858,000
Interest cost on the
projected benefits
obligation 7,784,000 7,974,000 7,530,000
Return on plan assets (26,000,000) (37,283,000) 43,000
Net amortization
and deferral 11,202,000 21,399,000 (15,540,000)
- --------------------------------------------------------------------------------
Net periodic pension
cost (credit) ($ 4,336,000) ($ 4,328,000) ($ 4,109,000)
================================================================================
Assumptions used in the accounting at December 31 are:
1996 1995 1994
================================================================================
Discount rate:
Beginning of year 6.5% 7.0% 6.5%
End of year 6.5% 6.5% 7.0%
Compensation increase 5.0% 5.0% 5.0%
Expected asset return 8.0% 8.0% 8.5%
================================================================================
The plans' funded status as of December 31 and the amounts recognized in
the accompanying financial statements are as follows:
1996 1995
================================================================================
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 107,909,000 $ 106,422,000
- --------------------------------------------------------------------------------
Accumulated benefit
obligation $ 113,260,000 $ 111,635,000
- --------------------------------------------------------------------------------
Projected benefit obligation $ 119,544,000 $ 122,555,000
Plan assets at fair value 196,253,000 181,835,000
- --------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 76,709,000 59,280,000
Unrecognized net (gain)/loss (10,974,000) 4,032,000
Unrecognized prior service cost (925,000) (1,467,000)
Unrecognized net asset (4,553,000) (6,403,000)
- --------------------------------------------------------------------------------
Prepaid pension cost $ 60,257,000 $ 55,442,000
================================================================================
The plans' assets are invested primarily in stocks and insurance contracts.
The Company incurred pension curtailment gains from discontinued operations
amounting to $287,000 in 1996 and $1,354,000 in 1995.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Certain operations of the Company provide postretirement medical benefits to
current and retired employees. Certain employees of these operations become
eligible for postretirement medical benefits after fulfilling minimum age and
service requirements.
Postretirement benefit costs were determined assuming discount rates of
6.5%, 7% and 6.5% for the years ended 1996, 1995 and 1994, respectively. The
components of net periodic postretirement benefit cost are as follows:
1996 1995 1994
================================================================================
Service cost $ 134,000 $ 174,000 $ 207,000
Interest cost 539,000 596,000 577,000
Amortization of transition
obligation 311,000 371,000 433,000
- --------------------------------------------------------------------------------
$ 984,000 $1,141,000 $1,217,000
================================================================================
In addition, a curtailment loss of $868,000 incurred on the 1996 sale of the
refining business is included in discontinued operations.
The Company's funding policy with respect to these benefits is to pay the
amounts required to provide the benefits during each year. The following table
presents the Company's postretirement medical benefits funded status as of
December 31, 1996 and 1995.
31
<PAGE> 34
Handy & Harman and Subsidiaries
Notes to Consolidated Financial Statements
Accumulated Postretirement Benefit Obligation:
1996 1995
================================================================================
Retirees $ 4,414,000 $ 4,272,000
Future retirees 4,041,000 4,856,000
- --------------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 8,455,000 9,128,000
Unrecognized transition obligation (3,762,000) (5,432,000)
Unrecognized actuarial gain (loss) 998,000 594,000
- --------------------------------------------------------------------------------
Net postretirement benefit liability -
classified with prepaid retirement costs $ 5,691,000 $ 4,290,000
================================================================================
The assumed discount rate used to measure the accumulated postretirement benefit
obligation was 6.5% for 1996 and 1995. The unrecognized transition obligation
amortization period is 20 years beginning on January 1, 1991, the implementation
date.
For measurement purposes, a 15% annual rate of increase in the health care
cost trend rate was assumed for 1992 through 1994; the rate was assumed to
decrease gradually to 6% by the year 2003 and remain at that level thereafter. A
1% increase in the assumed health care trend rate would not have a significant
impact on the accumulated postretirement benefit obligation as of December 31,
1996 and 1995.
SAVINGS PLAN
The Company has a savings plan which qualifies under Section 401(k) of the
Internal Revenue Code. This savings plan allows eligible employees to contribute
from 1% to 15% of their income on a pretax basis to this savings plan. The
Company matches 50% of the first 3% of the employee's contribution. Such
matching Company contributions are invested in shares of the Company's common
stock and become immediately vested. The charge to operations for the Company's
matching contribution amounted to $570,000, $932,000 and $900,000 for 1996, 1995
and 1994, respectively.
NOTE 10: COMMON STOCK PURCHASE RIGHTS
In 1989, the Board of Directors declared a dividend of one Common Stock Purchase
Right on each outstanding share of Handy & Harman Common Stock to holders of
record on February 6, 1989.
If the rights become exercisable, the rights will separate from the common
stock and each right will entitle the holder to purchase from the Company a
share of common stock at a predefined price. The rights are not exercisable
until either ten days after certain changes in ownership of the Company occurs
or ten days following the commencement of a tender offer for at least 20% of the
Company's common stock.
The rights are redeemable by the Company at a fixed price after certain
defined events or at any time prior to the expiration of the rights on January
26, 1999, if such events do not occur.
Through December 31, 1996, the Company had reserved common shares as
issuable pursuant to these rights. At the present time, the rights have no
dilutive effects on the earnings per share calculation.
NOTE 11: ACQUISITION OF OLYMPIC
MANUFACTURING GROUP, INC.
On February 28, 1997 the Company acquired 100% of the outstanding shares of
Olympic Manufacturing Group, Inc. Olympic, which has annual sales of
approximately $42.5 million, is the leading domestic manufacturer and supplier
of fasteners for the commercial roofing industry. The purchase price of
approximately $53 million was financed by utilizing existing unused credit
facilities. The acquisition will be accounted for as a purchase; accordingly,
the purchase price will be allocated to the underlying assets and liabilities
based on their respective estimated fair values at the date of the acquisition.
The estimated value of assets acquired was $16,000,000 and the liabilities
assumed was $5,800,000. Olympic will operate as part of the other non-precious
metals business segment.
32
<PAGE> 35
Handy & Harman and Subsidiaries
Independent Auditors' Report
TO THE BOARD OF DIRECTORS AND
SHAREHOLDERS OF HANDY & HARMAN:
We have audited the consolidated balance sheets of Handy & Harman and
Subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Handy &
Harman and Subsidiaries as of December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
February 28, 1997
Responsibility for Financial Statements
The financial statements presented in this Annual Report were prepared by Handy
& Harman which is responsible for their fairness. Such statements include, in
some instances, judgments as to those amounts which are estimates and
approximations and such amounts could differ from actual results. The Company
believes that the consolidated financial statements are in conformity with
generally accepted accounting principles.
The Company depends upon an accounting system, including internal
accounting controls, administered by a staff of corporate accountants. The
controls are designed to provide reasonable assurance that the Company's
financial records are reliable, that the corporate assets are safeguarded and
that transactions are executed in accordance with the appropriate corporate
authorizations and recorded properly to permit the preparation of financial
statements in accordance with generally accepted accounting principles. It must
be recognized, however, that errors and irregularities may nevertheless occur,
so the effectiveness of such a financial system depends to a great extent upon
the careful selection of financial and other responsible managers. Also,
estimates and judgments are required to assess and balance the relative cost and
expected benefits of the Company's controls. The Company believes that its
accounting controls provide reasonable assurance that errors or irregularities
which could be material to the financial statements are prevented or would be
detected within a timely period by employees in the normal course of performing
their assigned functions. KPMG Peat Marwick LLP, independent certified public
accountants, has been engaged by the Company to conduct quarterly reviews and an
audit of the Company's financial statements in accordance with generally
accepted auditing standards.
Such standards provide for numerous procedures, including obtaining an
understanding of the Company's accounting systems and performing reviews of
internal accounting control systems and tests of transactions deemed appropriate
by the auditors. KPMG Peat Marwick LLP is a member of the SEC Practice Section
of the AICPA Division of CPA firms.
For many years the Company has had an Audit Committee of the Board of
Directors consisting exclusively of outside Directors of the Company. The
Committee meets periodically with the independent auditors, internal auditors,
management and corporate staff accountants to review and evaluate their
accounting, auditing and financial reporting activities and responsibilities.
The independent auditors as well as the internal auditors and the Corporate
Controller have full and free access to the Audit Committee. The independent
auditors meet with the Audit Committee, with and without Company employees
present, to discuss their audit plan and at a later date the results of their
audits.
33
<PAGE> 36
Handy & Harman and Subsidiaries
Directors and Officers
Listed at right are the members of the
Board of Directors of the Company and
its officers, together with their
principal business occupations or
employment and the principal business
of the organizations by which they are
employed. In the case of each of the
officers, the principal occupation is
employment with the Company.
BOARD OF DIRECTORS
Clarence A. Abramson++
Former Vice President and Secretary
Merck & Co., Inc.
(a pharmaceutical company)
Active consultant to the health care industry.
Robert E. Cornelia++
Management Consultant
Richard N. Daniel*
Chairman of the Board
of the Company
Gerald G. Garbacz+
Chairman, President and Chief Executive
Officer, Nashua Corporation (an interna-
tional provider of coated products, office
supplies and photofinishing services)
Frank E. Grzelecki*
President of the Company
Gouverneur M. Nichols*+
Business Consultant
Hercules P. Sotos++
Retired 1995 as Vice Chairman and
a Director of Playtex Products, Inc.
(a manufacturer of health and beauty
aid products)
Dr. Elliot J. Sussman+
President and Chief Executive Officer
of Lehigh Valley Health Network, Inc.
and Lehigh Valley Hospital, Inc.
Roger E. Tetrault+
Vice Chairman of the Board
and Chief Executive Officer
McDermott International, Inc.
(a manufacturer and supplier of power
generation systems and equipment and
also marine construction services)
* Member of Executive Committee
+ Member of Audit Committee
++ Member of Compensation Committee
OFFICERS
Richard N. Daniel
Chairman of the Board and
Chief Executive Officer
Frank E. Grzelecki
President and Chief Operating Officer
Robert D. LeBlanc
Executive Vice President
Robert F. Burlinson
Vice President and Treasurer
Paul E. Dixon
Vice President, General Counsel and
Secretary
Dennis C. Kelly
Controller
Robert M. Thompson
Vice President
International
<PAGE> 37
EXHIBIT INDEX
-------------
(1) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION.
(a) Asset Purchase Agreement, dated as of July 8, 1996, by and between
Golden West Refining Corporation Limited and the Company.
(b) Stock Purchase Agreement, dated as of February 19, 1997, among
Saugatuck Capital Company Limited Partnership III, the other sellers named
therein and the Company.
With respect to (a) and (b), above, the disclosure schedules (relating to
certain factual matters concerning the Company and the other parties to the
respective agreements) and ancillary agreements (relating to the provision of
certain services by or to the Company with respect to (a) and (b), and the
consignment of certain precious metals to the other party to the agreement
described in (a) to such agreements have been omitted pursuant to Item 601(b)(2)
of Regulation S-K; the Company agrees to furnish such documents to the
Securities and Exchange Commission upon its request.
(2) CERTIFICATE OF INCORPORATION AND BY-LAWS.
(a) Restated Certificate of Incorporation of the Company (Filed as Exhibit
3(a) to the Company's 1989 Annual Report on Form 10-K and incorporated herein by
reference).
(b) By-Laws, as amended (Filed as Exhibit 3(b) to the Company's 1990 Annual
Report on Form 10-K and incorporated herein by reference).
(3) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES.
(a) Revolving Credit Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).
(b) Short Term Revolving Credit Agreement dated as of September 28, 1994
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent (Filed as Exhibit 10.4 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).
(c) Fee Consignment Agreement dated as of September 28, 1994 between the
Company and The Bank of Nova Scotia (Filed as Exhibit 10.5 to the Company's
Current Report on Form 8-K dated October 12, 1994 and incorporated herein by
reference).
(d) Short Term Fee Consignment Agreement dated as of September 28, 1994
between the Company and The Bank of Nova Scotia, (Filed as Exhibit 10.6 to the
Company's Current Report on Form 8-K dated October 12, 1994 and incorporated
herein by reference).
(e) Dollar Supply Agreement dated as of September 28, 1994 among the
Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.7 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).
(f) Short Term Dollar Supply Agreement dated as of September 28, 1994 among
the Company, certain financial institutions as lenders, The Bank of Nova Scotia,
Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova Scotia,
as the Administrative Agent (Filed as Exhibit 10.8 to the Company's Current
Report on Form 8-K dated October 12, 1994 and incorporated herein by reference).
(g) First Amendment to Revolving Credit Agreement dated as of June 30, 1995
among the Company, certain financial institutions as lenders, The Bank of Nova
Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of Nova
Scotia, as the Administrative Agent.
<PAGE> 38
(h) Second Amendment to Revolving Credit Agreement dated as of September
24, 1996 among the Company, certain financial institutions as lenders, The Bank
of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank
of Nova Scotia, as the Administrative Agent.
(i) Third Amendment to Revolving Credit Agreement dated as of October 11,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.
(j) Fourth Amendment to Revolving Credit Agreement dated as of January 15,
1997 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.
(k) First Amendment to Short Term Revolving Credit Agreement dated as of
June 30, 1995 among the Company, certain financial institutions as lenders, The
Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The
Bank of Nova Scotia, as the Administrative Agent.
(l) Second Amendment to Short Term Revolving Credit Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(m) Third Amendment to Short Term Revolving Credit Agreement dated as of
October 11, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(n) Fourth Amendment to Short Term Revolving Credit Agreement dated as of
January 15, 1997 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(o) First Amendment to Fee Consignment Agreement dated as of June 30, 1995
between the Company and The Bank of Nova Scotia.
(p) Second Amendment to Fee Consignment Agreement dated as of September 24,
1996 between the Company and The Bank of Nova Scotia.
(q) First Amendment to Short Term Fee Consignment Agreement dated as of
June 30, 1995 between the Company and The Bank of Nova Scotia.
(r) Second Amendment to Short Term Fee Consignment Agreement dated as of
September 24, 1996 between the Company and The Bank of Nova Scotia.
(s) First Amendment to Dollar Supply Agreement dated as of September 24,
1996 among the Company, certain financial institutions as lenders, The Bank of
Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and The Bank of
Nova Scotia, as the Administrative Agent.
(t) First Amendment to Short Term Dollar Supply Agreement dated as of
September 24, 1996 among the Company, certain financial institutions as lenders,
The Bank of Nova Scotia, Chemical Bank and The Bank of New York as Co-Agents and
The Bank of Nova Scotia, as the Administrative Agent.
(u) Rights Agreement, dated as of January 26, 1989, between the Company and
ChaseMellon Shareholder Services, L.L.C., (formerly known as Morgan Shareholder
Services Trust Company), as Rights Agent, including all exhibits thereto (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A dated February
3, 1989 and incorporated herein by reference).
(v) Amendment, dated as of April 25, 1996, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A/A dated May 21,
1996 and incorporated herein by reference).
(w) Amendment, dated as of October 22, 1996, to the Rights Agreement
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A/A
dated October 24, 1996 and incorporated herein by reference).
<PAGE> 39
The Company agrees to furnish to the Securities and Exchange Commission
upon its request therefor a copy of each instrument omitted pursuant to Item
601(b)(4)(iii) of Regulation S-K.
(10) MATERIAL CONTRACTS.
(a) 1982 Stock Option Plan (Filed as Exhibit 1 to the Company's
Registration Statement on Form S-8 (Registration No. 2-78264) under the
Securities Act of 1933 and incorporated herein by reference).
(b) Amendment to 1982 Stock Option Plan approved in December 1988 (Filed as
Exhibit 10(a) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(c) Handy & Harman Management Incentive Plan Corporate Group Participants,
as amended and restated on December 15, 1994.
(d) Subsidiary, Division, Group or Unit Management Incentive Plan, as
amended and restated on December 15, 1994.
(e) Handy & Harman Deferred Fee Plan For Directors, as amended and restated
on December 15, 1994, effective as of January 1, 1995.
(f) Form of Executive Agreement entered into with the Company's executive
officers in September 1986 (Filed as Exhibit 10(d) to the Company's 1986 Annual
Report on Form 10-K and incorporated herein by reference).
(g) Amendment to Executive Agreement approved in December 1988 (Filed as
Exhibit 10(b) to the Company's Report on Form 8-K for December 1988 and
incorporated herein by reference).
(h) 1988 Long-Term Incentive Plan (Filed as Exhibit 10(h) to the Company's
1988 Annual Report on Form 10-K and incorporated herein by reference).
(i) Amendment to 1988 Long-Term Incentive Plan approved in December 1988
(Filed as Exhibit 10(c) to the Company's Report on Form 8-K for December 1988
and incorporated herein by reference).
(j) Amendment to 1988 Long-Term Incentive Plan approved in June 1989 (Filed
as Exhibit 10(j) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).
(k) Agreement dated as of May 1, 1989, between the Company and R. N. Daniel
(Filed as Exhibit 10(k) to the Company's 1989 Annual Report on Form 10-K and
incorporated herein by reference).
(l) Amendment to Agreement between the Company and R. N. Daniel approved by
the Company on May 11, 1993, (Filed as Exhibit 10(m) to the Company's 1993
Annual Report on Form 10-K and incorporated herein by reference).
(m) Supplemental Executive Retirement Plan approved and restated by the
Company in December 1994.
(n) Outside Directors' Stock Option Plan (Filed as Exhibit 10(m) to the
Company's 1990 Annual Report on Form 10-K and incorporated herein by reference).
(o) Amended and Restated Joint Venture Agreement dated as of June 1, 1990,
by and between Allen Heat Transfer Products Inc. and Handy & Harman Radiator
Corporation (Filed as Exhibit 2 to the Company's Report on Form 8-K for June
1990 and incorporated herein by reference).
(p) Handy & Harman Long-Term Incentive Stock Option Plan (Filed as Exhibit
10(p) to the Company's 1991 Annual Report on Form 10-K and incorporated herein
by reference).
(q) Handy & Harman Supplemental Executive Plan (Filed as Exhibit 10(q) to
the Company's 1992 Annual Report on Form 10-K and incorporated herein by
reference).
(r) Amended and Restated Agreement between the Company and Mr. Grzelecki
(Filed as Exhibit 10(r) to the Company's Annual Report on Form 10-K and
incorporated herein by reference).
(s) Press Release of the Company dated November 6, 1995 (Filed as Exhibit
10(s) to the Company's Annual Report on Form 10-K and incorporated herein by
reference).
<PAGE> 40
(t) 1995 Omnibus Stock Incentive Plan (Filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-8 (Registration No. 33-80803) on
December 22, 1995, under the Securities Act of 1933 and incorporated herein by
reference).
(11) Statement re computation of per share earnings. Incorporated by
reference to Item (h) of Summary of Significant Accounting Policies on page 25
of the Annual Report.
(13) Pages 15 through 32 of the Company's Annual Report to Shareholders for
1996. Except for those portions which are expressly incorporated by reference in
this Annual Report on Form 10-K, this exhibit is furnished for the information
of the Commission and is not deemed to be filed as part of this Annual Report on
Form 10-K.
(21) List of Subsidiaries of the Company. Filed as Exhibit 21 to this
Annual Report on Form 10-K.
(23) Report and Consent of Independent Auditors. Included as part of the
Report and Consent of Independent Auditors on page F-1 filed with the Financial
Statement Schedule as part of this Annual Report on Form 10-K pursuant to Part
IV hereof and incorporated herein by reference thereto.
<PAGE> 1
ASSET PURCHASE AGREEMENT
DATED AS OF JULY 8, 1996
BY AND BETWEEN
GOLDEN WEST REFINING CORPORATION LIMITED
("BUYER")
AND
HANDY & HARMAN
("SELLER")
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
PURCHASE AND SALE OF ASSETS .............. 1
1.1 Purchase and Sale........................................... 1
1.2 Closing..................................................... 2
1.3 Deliveries at the Closing................................... 3
1.4 Purchase Price Adjustment................................... 5
ARTICLE II
RELATED MATTERS .................... 6
2.1 Books and Records of Seller................................. 6
2.2 Ongoing and Transition Services............................. 6
2.3 Allocation of Purchase Price/Tax Filings.................... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER ........ 7
3.1 Organization................................................ 7
3.2 Authorization............................................... 8
3.3 Consents and Approvals; No Violations....................... 8
3.4 Financial Statements........................................ 9
3.5 Absence of Material Adverse Effect.......................... 10
3.6 Title, Ownership and Related Matters........................ 11
3.7 Intellectual Property....................................... 14
3.8 Litigation.................................................. 15
3.9 Compliance with Applicable Law.............................. 15
3.10 Certain Contracts and Arrangements.......................... 16
3.11 Employee Benefit Plans; ERISA............................... 17
3.12 Certain Fees................................................ 18
3.13 Environmental Protection.................................... 18
3.14 Absence of Undisclosed Liabilities.......................... 20
3.15 License, Permits, Etc....................................... 20
3.16 Labor Matters............................................... 20
3.17 Employees................................................... 21
3.18 Intercompany Transactions................................... 21
3.19 Customers and Sales......................................... 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER ........ 22
A-1
<PAGE> 3
4.1 Organization and Authority of Buyer......................... 22
4.2 Consents and Approvals; No Violations....................... 22
4.3 Litigation.................................................. 23
4.4 Approval of Rothschild Australia Limited.................... 23
4.5 Certain Fees................................................ 23
ARTICLE V
COVENANTS ....................... 24
5.1 Conduct of the Business..................................... 24
5.2 Access to Information....................................... 26
5.3 Consents; Assignment of Certain Contracts................... 26
5.4 Best Efforts................................................ 27
5.5 Public Announcements........................................ 27
5.6 Covenant to Satisfy Conditions.............................. 28
5.7 Financing................................................... 28
5.8 Employees; Employee Benefits................................ 29
5.9 Replacement Precious Metals Agreement....................... 34
5.10 Seller Gold Leasing Agreement............................... 35
5.11 Sales Agreement............................................. 35
5.12 Interim Services Agreement.................................. 36
5.13 Supplemental Disclosure..................................... 36
5.14 Closing Date Schedule of Liabilities........................ 36
5.15 Silver Price Quotation Services............................. 37
5.16 Precious Metals Inventory................................... 37
5.17 Completion of Work-in-Process Inventory..................... 38
5.18 Transfer of Environmental Permits........................... 38
5.19 Covenant Not to Compete..................................... 39
5.20 Buyer's Covenants........................................... 42
5.21 Nondisclosure............................................... 43
5.22 Trademark Registrations, Corporate Names.................... 44
5.23 Certain Major Customers..................................... 44
5.24 Real Property Covenants..................................... 44
5.25 Connecticut Transfer Act.................................... 46
5.26 Estimated Assumed Liabilities............................... 46
5.27 Handy & Harman Canada, Limited.............................. 46
5.28 The CIT Group Equipment Lease............................... 47
5.29 Third Party Precious Metal.................................. 47
5.30 Phase II Environmental Study................................ 48
5.31 Environmental Consent Order................................. 49
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES ........ 50
A-2
<PAGE> 4
6.1 Conditions to Each Party's Obligation....................... 50
6.2 Conditions to Obligations of Seller......................... 51
6.3 Conditions to Obligations of Buyer.......................... 51
6.4 Materiality of Conditions................................... 52
ARTICLE VII
ASSUMPTION OF CERTAIN LIABILITIES AND OBLIGATIONS ... 53
7.1 Assumed Liabilities......................................... 53
7.2 Non-Assumed Liabilities..................................... 54
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER ............. 55
8.1 Termination................................................. 55
8.2 Procedure and Effect of Termination......................... 56
8.3 Amendment, Modification and Waiver.......................... 57
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION ...... 57
9.1 Survival of Representations, Warranties
and Agreements.............................................. 57
9.2 Seller's Agreement to Indemnify............................. 57
9.3 Third Party Indemnification................................. 60
ARTICLE X
MISCELLANEOUS ..................... 61
10.1 Sales and Transfer Taxes.................................... 61
10.2 Property Taxes.............................................. 61
10.3 Fees and Expenses........................................... 61
10.4 Further Assurances.......................................... 62
10.5 Notices..................................................... 62
10.6 Severability................................................ 63
10.7 Binding Effect; Assignment.................................. 64
10.8 No Third Party Beneficiaries................................ 64
10.9 Interpretation.............................................. 64
10.10 Jurisdiction and Consent to Service......................... 65
10.11 Entire Agreement............................................ 65
10.12 Governing Law............................................... 65
10.13 Specific Performance........................................ 65
A-3
<PAGE> 5
10.14 Counterparts................................................ 65
10.15 Waivers..................................................... 66
A-4
<PAGE> 6
INDEX OF DEFINED TERMS
Acquired Entity....................................................... 40
Act................................................................... 45
Adjustment Items...................................................... 44
Affected Employees.................................................... 29
Affiliates............................................................ 29
Agreement............................................................. 1
Arrow................................................................. 23
Assets................................................................ 2
Assigned Contracts.................................................... 27
Assumed Liabilities................................................... 51
Bank.................................................................. 28
Bank Financing........................................................ 28
Business.............................................................. 2
Buyer................................................................. 1
Buyer Damages......................................................... 56
Buyer Indemnitees..................................................... 56
Buyer Pension Plan.................................................... 30
Buyer's Notice........................................................ 40
Cases................................................................. 15
CIT................................................................... 46
Claim................................................................. 58
Closing............................................................... 2
Closing Date.......................................................... 2
Closing Date Schedule of Liabilities.................................. 36
Closing Payment....................................................... 2
Code.................................................................. 17
Commitment Letter..................................................... 28
Competing Business.................................................... 40
Confidentiality Agreement............................................. 26
Defects............................................................... 12
Disclosure Schedule................................................... 8
Disclosure Statement.................................................. 42
Environmental Condition............................................... 20
Environmental Indemnification Cap..................................... 57
Environmental Laws.................................................... 19
Environmental Permits................................................. 18
ERISA................................................................. 17
ERISA Affiliate....................................................... 17
Estimated Assumed Liabilities......................................... 45
Estimated Precious Metals Inventory................................... 34
A-5
<PAGE> 7
Excluded Assets....................................................... 2
Excluded Liabilities.................................................. 52
Existing Customers.................................................... 45
Facilities............................................................ 35
FAS No. 87............................................................ 31
Final Precious Metals Inventory....................................... 37
H&H Canada............................................................ 45
H&H Canada Agreement.................................................. 45
Indemnity Period...................................................... 55
Independent Accounting Firm........................................... 37
Instrument of Transfer................................................ 2
Intellectual Property................................................. 14
IRS................................................................... 7
Lease................................................................. 13
Legal Requirements.................................................... 16
License Agreement..................................................... 4
Liens................................................................. 9
Major Customers....................................................... 43
Market Interest Rate.................................................. 5
Master Lease.......................................................... 46
Material Adverse Effect............................................... 7
Net Customer Consigned Precious Metals................................ 35
Notice................................................................ 36
Offer Notice.......................................................... 40
PBGC.................................................................. 31
Permitted Liens....................................................... 12
Phase II Studies...................................................... 47
Plans................................................................. 17
Precious Metals....................................................... 34
Press Release......................................................... 27
Purchase Offer........................................................ 40
Purchase Price........................................................ 1
Purchase Price Cap.................................................... 57
Replacement Precious Metals........................................... 35
Replacement Precious Metals Agreement................................. 34
Replacement Precious Metals Institution............................... 34
Rothschild Letter Agreement........................................... 23
Security Interest..................................................... 11
Seller................................................................ 1
Seller Actuary........................................................ 30
Seller Financial Statements........................................... 9
Seller Leased Gold.................................................... 3
Seller Pension Plans.................................................. 30
A-6
<PAGE> 8
Special Meeting....................................................... 42
Third Party Precious Metals........................................... 46
Transfer Taxes........................................................ 59
A-7
<PAGE> 9
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 8,
1996, is made by and between Golden West Refining Corporation Limited, an
Australian company ("Buyer"), and Handy & Harman, a New York corporation
("Seller").
Buyer desires to purchase certain assets of Seller, and Seller
desires to sell such assets to Buyer on the terms and conditions hereinafter set
forth.
A cross-reference table of certain defined terms used herein is set
forth following the Table of Contents.
Accordingly, in consideration of the premises and of the respective
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Purchase and Sale. On the terms and subject to the
conditions set forth in this Agreement
(a) Seller shall sell to Buyer, and Buyer shall purchase from
Seller, all of the fixed assets and certain inventory and other assets, as set
forth in Section 1.1(b) hereof, of the United States domestic refinery business
carried on by the Precious Metal Refining Division of Seller for an aggregate
unadjusted purchase price of $9,000,000 less the amount of any liabilities and
obligations expressly assumed under Section 7.1(a) here-
1
<PAGE> 10
of, subject to adjustment as provided in Section 1.4 hereof (the "Purchase
Price"), and
(b) at the Closing referred to in Section 1.2 hereof:
(i) Seller shall sell, assign, transfer and deliver to
Buyer the assets, business, properties and rights of the Precious Metals
Refining Division of Seller (which shall include the names "South
Windsor Metallurgical, Inc." and "American Chemical Refining, Inc.") of
every kind and nature, tangible and intangible, wherever located and
whether or not on the books of the Division, as set forth on the
instrument of transfer (the "Instrument of Transfer") in the form attached
hereto as Exhibit A and made a part hereof, all as shall exist as of the
Closing Date as referred to in Section 1.2 hereof (collectively, the
"Assets", and the business carried on using the Assets, the "Business");
provided, that the Assets shall not include any assets specifically
described on Schedule 1.1 hereof as excluded assets (the "Excluded
Assets"); and
(ii) Buyer shall accept and purchase the Assets and the
Business from Seller and in payment therefor shall assume only the
liabilities and obligations specified in Section 7.1 hereof and shall
deliver to Seller (by intrabank or wire transfer to a bank account
designated by Seller upon two days' prior written notice to Buyer or by
certified or official bank check in federal or other immediately available
funds) an amount equal to $9,000,000 less the amount of the Estimated
Assumed Liabilities (as set forth in Section 5.26 hereof) to be paid in
cash for the Assets and the Business under this Agreement to Seller at the
Closing (the "Closing Payment").
2
<PAGE> 11
Section 1.2 Closing. Subject to the conditions set forth in this
Agreement, the purchase and sale of the Assets and the Business pursuant to this
Agreement (the "Closing") shall take place at the offices of Seller, 555
Theodore Fremd Avenue, Rye, New York at 10 a.m. on (a) August 5, 1996 subject to
the satisfaction (or, if permissible, waiver) of the conditions set forth in
Article VI hereof, or (b) such other date, time and place which is agreed to by
Buyer and the Seller. The date on which the Closing is to occur is herein
referred to as the "Closing Date" and the Closing shall be deemed to be
effective as of the opening of business on the Closing Date.
Section 1.3 Deliveries at the Closing. Subject to the conditions set
forth in this Agreement, at the Closing:
(a) Seller shall deliver to Buyer:
(i) The Instrument of Transfer, a form of which is
attached hereto as Exhibit A;
(ii) the Seller Gold Leasing Agreement, a form of which
is attached hereto as Exhibit B, pursuant to which Seller shall lease to
Buyer up to 25,000 fine ounces of "good delivery bullion" gold (the
"Seller Leased Gold");
(iii) the Sales Agreement, a form of which is attached
hereto as Exhibit C, pursuant to which Seller and its domestic
subsidiaries shall agree to continue as customers of the Business in
accordance with historical practice and Buyer shall provide certain
services to Seller and its domestic subsidiaries after the Closing at the
lower of (A) the rates set forth in Schedule A attached to the Sales
Agreement, or (B) the lowest rates charged for the items or services set
forth on Schedule A to
3
<PAGE> 12
buyers of a size similar to Seller, and in annual volumes similar to that
of Seller. Buyer agrees that any rate reduction made in items or services
of the type set forth on Schedule A made subsequent to the Closing shall
be made available to Seller on such terms and conditions as are made to
unaffiliated third parties of a size similar to Seller by Buyer;
(iv) the Interim Services Agreement, a form of which is
attached hereto as Exhibit D, pursuant to which Seller shall provide to
Buyer certain services as set forth therein for a period not to exceed
three-months from the Closing Date, which shall be extended at the option
of Buyer for an additional period not to exceed three months;
(v) any documents that are necessary to transfer to
Buyer good title to all the Assets, including, without limiting the
foregoing, limited warranty deeds (with covenants against grantor's acts)
for real property and assignments of leases (together with landlord's
consents, if required by the respective lease, and estoppels, if Seller is
entitled to obtain an estoppel from the landlord under the terms of the
applicable lease, each in a form as is required under such lease)
constituting a part of the Assets, affidavits required by Buyer's title
insurer and an affidavit affirming that Seller is not a "foreign person"
in accordance with Section 1445 of the Internal Revenue Code of 1986, as
amended; and
(vi) the Trademark License Agreement (the "License
Agreement"), a form of which is attached hereto as Exhibit E, pursuant to
which the right to use a form of the "Handy & Harman" name and an "H&H"
logo shall be licensed to Buyer, subject to the terms and conditions set
forth therein;
4
<PAGE> 13
(vii) all opinions, certificates, undertakings and other
instruments and documents required to be delivered by Seller at or prior
to the Closing or otherwise required in connection herewith.
(b) Buyer shall deliver and pay, or cause to be delivered or
paid, to the Seller:
(i) the Closing Payment as required by Section 1.1(b)
hereof;
(ii) the Replacement Precious Metals, as defined in
Section 5.9 hereof;
(iii) the Seller Gold Leasing Agreement;
(iv) the Sales Agreement;
(v) the Interim Services Agreement;
(vi) the License Agreement;
(vii) the Undertaking, a form of which is attached
hereto as Exhibit J, pursuant to which Buyer shall assume certain
liabilities of the Business as set forth in Section 7.1 hereof; and
(viii) all opinions, certificates, undertakings and
other instruments and documents required to be delivered by Buyer at or
prior to the Closing or otherwise required in connection herewith.
Section 1.4 Purchase Price Adjustment.
(a) Promptly after the Closing Date Schedule of Liabilities
(as defined in Section 5.14 hereof) is determined pursuant to Section 5.14
here-
5
<PAGE> 14
of, the parties shall make payment by wire transfer to a single account as
designated by the payee as follows:
(A) if the amount of the total liabilities (expressed as
an absolute number) reflected on the Closing Date Schedule of Liabilities
is greater than the amount of the Estimated Assumed Liabilities (expressed
as an absolute number), the Seller shall pay to Buyer the amount of such
difference, or
(B) if the amount of the total liabilities (expressed as
an absolute number) reflected on the Closing Date Schedule of Liabilities
is less than the amount of the Estimated Assumed Liabilities (expressed as
an absolute number), the Buyer shall pay to Seller the amount of such
difference;
provided, however, that any payment made pursuant to this Section 1.4 shall be
accompanied by interest from the Closing Date at the Market Interest Rate and;
provided, further, that Buyer or Seller, as the case may be, shall pay on the
second business day following delivery of the Notice (as defined in Section
5.14(c)) any amount that is in agreement; and
(b) For purposes of this Agreement, the term "Market Interest Rate"
means a rate of interest per annum equal to the lower of (i) the rate publicly
announced by The Bank of New York as its "reference" or "base" rate of interest
as in effect on the Closing Date and (ii) the maximum rate of interest allowable
under applicable law. The Purchase Price (including the liabilities expressly
assumed by Buyer under this Agreement) shall be allocated as set forth in
Exhibit F and made a part hereof.
6
<PAGE> 15
ARTICLE II
RELATED MATTERS
Section 2.1 Books and Records of Seller. Seller agrees to make
available to Buyer at or prior to the Closing, as requested by Buyer, all books
and records of Seller (including, but not limited to, correspondence, memoranda,
books of account, personnel and payroll records and the like) relating to the
Business, and copies, as requested by Buyer, of any income tax forms or tax
returns. Any books, records, forms and returns of Seller relating to the
Business which are not delivered to Buyer hereunder will be preserved by Seller
for a period of at least four (4) years following the Closing and Seller will
permit Buyer and its authorized representatives to have reasonable access to,
and examine and make copies of, all such books, records, forms and returns as
reasonably requested by Buyer. All books, records, forms and returns delivered
by Seller to Buyer will be preserved by Buyer for a period of at least four (4)
years following the Closing and Buyer will permit Seller and its authorized
representatives to have reasonable access to, and examine and make copies of,
all such books, records, forms and returns as reasonably requested by Seller.
Section 2.2 Ongoing and Transition Services. Except (a) as provided
in the Seller Gold Leasing Agreement, (b) as provided in the Sales Agreement,
(c) as provided in the Interim Services Agreement, (d) as provided in Section
5.15 hereof, or (e) as otherwise agreed to in writing by Seller and Buyer, on
the Closing Date all data processing, accounting, insurance, banking, personnel,
legal, communications and other products or services provided to the Business by
Seller or any of its affiliates, including any agreements or understandings
(written or oral) with respect thereto, will terminate.
7
<PAGE> 16
Section 2.3 Allocation of Purchase Price/Tax Filings. The Purchase
Price (including the liabilities expressly assumed by Buyer under this
Agreement) shall be allocated among the Assets as set forth in Exhibit F hereto
in the manner required on Internal Revenue Service ("IRS") Form 8594 in
compliance with Section 1060 of the Code (as hereinafter defined). Any
post-Closing adjustment to the Purchase Price shall be reflected proportionately
in the final allocation of the Purchase Price among the Assets. Buyer and Seller
agree to timely file all forms and tax returns required to be filed in
connection with such purchase price allocation and to take no position
inconsistent with such forms or tax returns. Buyer agrees to permit Seller to
have reasonable access to any records required in order for Seller to prepare
any tax returns or forms to be filed by Seller after the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
Section 3.1 Organization. The Seller is a corporation duly
organized, validly existing and in good standing under the law of the State of
New York and, with respect to the Business, Seller has all requisite corporate
and other power and corporate authority to own, lease and operate its properties
and to carry on its business and operations as now being conducted, except where
any such failure to be so organized, existing and in good standing or to have
such power and authority would not have a material adverse effect (taken in the
aggregate) on the business, operations, Assets, liabilities, results of
operations or financial condition of the Business (a "Material Adverse Effect");
provided, that,
8
<PAGE> 17
to the extent that results of operations of the Business are reported at a loss,
a Material Adverse Effect shall mean a material increase in such loss from the
prior financial reporting period or date. With respect to the Business, Seller
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification necessary, except in
any such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a Material Adverse Effect. Seller has heretofore
delivered to Buyer complete and correct copies of Seller's Certificate of
Incorporation and By-laws, as currently in effect.
Section 3.2 Authorization. Seller has the corporate power and
corporate authority to execute and deliver this Agreement and consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Seller and no other corporate
proceedings on the part of Seller are necessary to authorize the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Seller and constitutes, and, when executed and delivered, each of
the other agreements, documents and instruments to be executed and delivered by
Seller pursuant hereto will constitute, a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the
9
<PAGE> 18
discretion of the court before which any proceeding therefor may be brought.
Section 3.3 Consents and Approvals; No Violations. Except as set
forth in Section 3.3 of the Disclosure Schedule being delivered by Seller to
Buyer herewith (the "Disclosure Schedule"), neither the execution, delivery or
performance of this Agreement nor the consummation by Seller of the transactions
contemplated hereby will (a) conflict with or result in any breach or violation
of any provision of the Certificate of Incorporation or By-Laws of Seller; (b)
require any filing or registration with, or notice or declaration to, or the
obtaining of any permit, license, authorization, consent or approval of, any
federal or state governmental or regulatory authority whether within or outside
the United States; (c) violate, conflict with or result in a default (or any
event which, with notice or lapse of time or both, would constitute a default)
under, or result in any termination, cancellation or acceleration or give rise
to any such right of termination, cancellation or acceleration under, any of the
terms, conditions or provisions of any note, mortgage, other evidence of
indebtedness or guarantee to which Seller is a party or by which the Business,
Seller or any of its assets, so far as they relate to the Assets or the
Business, is subject or by which any of them may be bound; (d) violate any
order, injunction, decree, statute, rule or regulation applicable to the
Business, Seller, or any of its respective assets or properties, or (e) result
in the creation or imposition of any liens, pledges, mortgages, charges, claims
or other encumbrances ("Liens") upon any properties, assets or business, so far
as they relate to the Assets or the Business, of Seller or the Business,
excluding from the foregoing clauses (b), (c), (d) and (e) such requirements,
conflicts, defaults, rights, Security Interests (as defined in Section 3.6
hereof), Liens or violations which would not have a Material Adverse Effect and
would not materially adversely affect the ability of Seller to
10
<PAGE> 19
consummate the transactions contemplated by this Agreement, or which become
applicable as a result of the business or activities (other than the business
currently conducted by the Business) in which the Buyer is or proposes to be
engaged or as a result of any acts or omissions by, or the status of or any
facts pertaining to, the Buyer.
Section 3.4 Financial Statements. Seller previously has delivered to
Buyer true and complete copies of the audited balance sheets of the Business as
of December 31, 1994 and 1995 and the related audited statements of income for
the fiscal years then ended, and a balance sheet of the Business as of March 31,
1996 and the related statement of income for the quarter ended on such date
(collectively, the "Seller Financial Statements"). The Seller Financial
Statements have been prepared from the books and records of the Seller in
conformity with Section 3.4 of the Disclosure Schedule and fairly present the
financial position and results of operations of the Business as of the date and
for the period indicated. The statements of income included in the Seller
Financial Statements do not contain any special or nonrecurring items except as
expressly specified therein, and the balance sheets included in the Seller
Financial Statements do not reflect any write-up or revaluation increasing the
book value of any assets. The books and accounts of the Business are complete
and correct and fully and fairly reflect all of the transactions of the Business
and, except as set forth in Section 3.5 of the Disclosure Schedule (relating to
Material Adverse Effects on the Business), there is no condition, development or
contingency of any kind existing which, so far as can be foreseen at this time,
would be reasonably likely to result in a Material Adverse Effect on the
Business. Except as set forth on Section 3.4 of the Disclosure Schedule and
except for annual audit adjustments, the information included in the Seller
Financial Statements is consistent with the financial information for the
Business used by
11
<PAGE> 20
Seller in the preparation of its annual and quarterly financial statements filed
with the Securities and Exchange Commission.
Section 3.5 Absence of Material Adverse Effect. Except to the extent
set forth in Section 3.5 of the Disclosure Schedule, and except to the extent
reflected or reserved against in the Seller Financial Statements, since March
31, 1996, there has not been (i) any Material Adverse Effect with respect to the
Business or the Assets, properties, financial position or results of operations
of the Business; (ii) any damage or destruction or property loss not covered by
insurance constituting a Material Adverse Effect on the Assets or the operation
of the Business; (iii) any increase in the compensation or bonus, incentive
compensation, profit sharing, retirement, insurance, medical reimbursement or
other employee benefit plan or arrangement payable or owed or to become payable
or owed by Seller, other than increases made in the ordinary course of business
consistent with past practice, compensation increases attendant to promotions
and falling within the normal range for the new position and scheduled
increases; (iv) any sale or other disposition of any capital asset of the
Business having net book value in excess of $100,000, other than sales or
dispositions of Excluded Assets; (v) any entry by Seller into any material
contract, lease, license, obligation, indebtedness, commitment, purchase or
sale, or transaction (including, without limitation, any borrowing or capital
expenditure), other than those commitments and transactions entered into in the
ordinary course of business, or those contemplated by or within the limits
permitted by this Agreement; (vi) any release or waiver of any material right or
claim of Seller with respect to any contract, lease, license or permit relating
to the Business or the Assets or the Intellectual Property (as defined in
Section 3.7 hereof) or the "Handy & Harman Refining Group, Inc." name; (vii) any
material mortgage or pledge or imposition of a material lien or other material
encum-
12
<PAGE> 21
brance on any of the Assets; or (viii) any material change by Seller in
accounting principles or methods.
Section 3.6 Title, Ownership and Related Matters.
(a) Except as set forth in Section 3.6 of the Disclosure
Schedule, the properties and the Assets owned by or leased to Seller in
connection with the Business are in satisfactory condition and repair for their
continued use as they have been used and adequate for the continued conduct of
the Business as presently conducted. The assets, properties and rights included
in the Assets or granted under the License Agreement comprise substantially all
of the assets, properties, and rights of every type and description, real,
personal and mixed, tangible and intangible, used by Seller solely in, and
necessary to, the conduct and operation of all of the Business as presently
conducted and operated in view of the fact that the Business has been heretofore
operated as a division of Seller. The sale of the Assets by Seller pursuant
hereto will effectively convey to Buyer the Business other than the Excluded
Assets, including all tangible and intangible assets and properties, related to
the Business, free and clear of any security interest, pledge, lien, charge,
option or restriction on transfer ("Security Interest"), except for such
Security Interests which would not have a Material Adverse Effect on the
Business, would not adversely affect the ability of Seller to consummate the
transactions contemplated by this Agreement and are not substantial in
character, amount or extent and which do not materially detract from the value,
or materially interfere with the present or contemplated use, of the Assets and
do not materially impair the operations of the Business or the marketability
of any Asset; provided, that all rights to the Licensed Trademarks and the
Licensed Bar Logo, as those terms are defined in the License Agreement, shall
only be
13
<PAGE> 22
conveyed to Buyer to the extent set forth in the License Agreement.
(b) Set forth in Section 3.6 of the Disclosure Schedule is (i)
a list of all interests in real property, including improvements thereon, owned
by Seller with respect to the Business and (ii) a description of all leasehold
interests in real property of Seller with respect to the Business and of all
options or other contracts to acquire any such interest, specifying the location
of each such property.
(c) To the knowledge of Seller, with regard to each and every
material piece, parcel or tract of real property owned by Seller included in the
Assets as described in Section 3.6 of the Disclosure Schedule, Seller agrees
that title to the real property and improvements that make up such owned real
property Assets shall be marketable, good of record and in fact, insurable by a
recognized title insurance company at standard rates, and free and clear of all
liens, except for Permitted Liens, as hereinafter defined. Buyer shall promptly
after the date hereof obtain an update of Seller's as-built surveys and current
preliminary reports of title, including copies of all recorded or filed items
noted therein as objections (or exceptions) to Seller's title in the owned real
property Assets at Buyer's sole cost and expense. In the event the as-built
survey and/or title to the owned real property Assets are subject to any defect
other than Permitted Liens, immaterial judgements or immaterial pending
litigation, then Buyer shall waive such ("Defects"), or if Buyer is unwilling to
do so, then Seller shall then have the option to cure any or all of the Defects
prior to Closing. Notwithstanding anything herein to the contrary, (i) Seller
shall have the right to adjourn the Closing Date for such reasonable period (not
to exceed 30 days) as shall be necessary to cure any such Defect and (ii) Seller
shall have the right, subject to the terms and conditions hereof, to
14
<PAGE> 23
cause the Closing to take place with respect to the other real property Assets
and then to cause the Closing to take place with respect to the affected real
property Asset within such reasonable period as shall be necessary to cure any
such Defect unless the inability to convey the affected real property Asset
would have a Material Adverse Effect on the Business. As used in this Agreement,
the term "Permitted Liens" shall mean, collectively: liens for current taxes or
assessments not delinquent and for which no mechanic's liens are recorded on the
land records; builder, mechanic, warehousemen, mate-rialmen, contractor,
workmen, repairmen and carrier liens, or other similar liens arising and
continuing in the ordinary course of business for obligations which are not
delinquent; the rights, if any, of vendors having possession of tooling of the
Business; other similar common law or statutory liens which do not materially
affect the value of the real property Assets so subject, or the usefulness
thereof, to the Business; and easements, rights of way, restrictions,
encumbrances, covenants, conditions, encroachments or any other matters
affecting title to real property Assets which do not render such real property
Assets uninsurable by a reputable title insurance company at its standard
premium rates or reduce the fair market value of the real property Asset to
which they relate and which do not have a Material Adverse Effect on the
Business or the Assets.
(d) Seller represents, as of the date of this Agreement, that
it has no knowledge of any default or breach of any terms, covenants or
conditions of any lease of, or leasehold interest in, real property of Seller
included in the Assets as described in Section 3.6 of the Disclosure Schedule
(each, a "Lease"), or of any actions which would be reasonably likely to, with
the passage of time or the giving of notice by the respective landlord, result
in any default or breach which would give rise to a right in the landlord to
terminate such Lease.
15
<PAGE> 24
(e) Permits and Compliance. To Seller's knowledge, there are
no pending, threatened or contemplated condemnation proceedings or litigation
which would be reasonably likely to affect Seller's interests in the real
property Assets or any part thereof. Further, to Seller's knowledge, all
necessary and material certificates of occupancy, site plans, signs and other
permits, licenses and governmental approvals for the operation of the real
property Assets as part of the Business are in full force and effect and will be
maintained until Closing. To Seller's knowledge, the real property Assets and
the operations thereof comply in all material respects with all applicable
federal, state and local laws, regulations, rules, ordinances and orders,
including (without limitations) those relating to zoning, building, site plan,
boiler, safety, fire, health, signs, parking, or flood control, or protection of
the environment, such as sewage treatment, water quality, asbestos-containing
and presumed asbestos-containing rules, and air pollution.
(f) Physical Condition. To Seller's knowledge, there are no
material defects in the structural walls, foundations, roofs, common area
improvements, mechanical, electrical, plumbing, heating, ventilating or air
conditioning systems of the real property Assets, other than as a result of
ordinary wear and tear. Except as is otherwise explicitly provided herein with
respect to a casualty loss, all equipment in or on the real property Assets is
now and will at Closing be in operating condition and materially in compliance
with all applicable local, state, federal and insurance requirements. Each real
property Asset is serviced by public utilities in a sufficient quantity to
operate the real property Asset as it is currently constructed and Seller has no
responsibility for maintenance of off-site lines, pumps, lift stations, or other
facilities.
16
<PAGE> 25
Section 3.7 Intellectual Property.
(a) Section 3.7 of the Disclosure Schedule sets forth a list
of all material trademarks and trademark registrations, trade names, service
marks and service mark registrations, service names, logos, assumed names,
computer software applications other than off-the-shelf applications, copyright
registrations and patents, together with all applications therefor, which are
owned by or licensed to Seller and used solely in the operation of the Business
as currently conducted (collectively, the "Intellectual Property").
(b) Except as set forth in Section 3.7 of the Disclosure
Schedule, to the knowledge of Seller, (i) Seller owns all right, title and
interest in, or has a valid and transferrable license to use, the Intellectual
Property; (ii) Seller has not granted any other party any rights with respect to
the Intellectual Property owned by Seller which would materially adversely
affect Buyer's use of the Intellectual Property; (iii) such material trademark
registrations, service mark registrations, and patents comprising the
Intellectual Property have been duly issued and have not been canceled,
abandoned or otherwise terminated; (iv) Seller is not in default under any
material licenses of Intellectual Property; (v) all such material licenses of
Intellectual Property are binding in accordance with their terms; (vi) the use
of the Intellectual Property by Seller does not infringe any rights of other
persons; and (vii) Seller has taken all reasonable steps necessary to protect
the Intellectual Property in all countries where the Business has material
operations.
(c) Except as set forth in Section 3.7 of the Disclosure
Schedule, Seller has not received any notice of an adverse claim by any third
party with respect to the Intellectual Property. Except as set forth
17
<PAGE> 26
in Section 3.7 of the Disclosure Schedule, there are no pending proceedings or
litigations or other adverse claims by any person regarding the use by Seller of
any Intellectual Property.
Section 3.8 Litigation. Set forth in Section 3.8 of the Disclosure
Schedule is a list of all material actions, suits, administrative, arbitration
or other proceedings and governmental investigations and inquiries pending
(collectively "Cases") against Seller or any of its properties, assets, Plans
(as hereinafter defined) and business operations with respect to the Business,
as of the date hereof, whether at law or in equity or by or before any court,
governmental or regulatory authority or by any third party other than Cases
brought in the ordinary course of the Business as to which Seller believes it is
indemnified or held harmless by an insurance carrier and as to which Seller has
received no notice to the contrary from such carrier. No such Cases are pending
which, if adversely determined, would be likely to have a Material Adverse
Effect on the Assets, properties, financial position, or results of operations
of the Business and Seller is not subject to any judgment, consent, award, order
or decree having or which is likely to have such a Material Adverse Effect; nor
is there outstanding any writ, order, award, decree or injunction applicable to
Seller that (i) calls into question Seller's authority or right to enter into
this Agreement and consummate the transactions contemplated hereby, or (ii)
would otherwise prevent or delay the transactions contemplated by this
Agreement.
Section 3.9 Compliance with Applicable Law. Except as set forth in
Section 3.9 of the Disclosure Schedule, to the knowledge of Seller, Seller is,
and conducts the Business, in compliance with all applicable building, zoning,
environmental and other land use laws, ordinances, codes, rules, regulations,
standards, judgments, decrees, writs, rulings, injunctions, orders and
18
<PAGE> 27
other requirements of all governmental, administrative and judicial entities,
and other laws, ordinances, codes, rules, regulations, standards, judgments,
decrees, writs, rulings, injunctions, orders, and other requirements of all
governmental, administrative or judicial entities (collectively, "Legal
Requirements") of any federal, state, local or foreign governmental authority
applicable to the Business and its operations, except for violations, if any,
which would not have a Material Adverse Effect on the Business. Except as set
forth in Section 3.9 of the Disclosure Schedule, no notice of any claim, suit,
action, or inquiry has been issued and served upon or delivered to Seller, and
no investigation or review is pending with respect to any alleged violation by
Seller of any Legal Requirements in connection with the Assets or operations of
the Business.
Section 3.10 Certain Contracts and Arrangements. Except as set forth
in Section 3.10 of the Disclosure Schedule, as of the date hereof, Seller is not
a party with respect to the Business to any written (a) employment agreement,
consulting agreement, personal service or similar agreement; (b) indenture,
mortgage, note, installment obligation, agreement or other instrument relating
to the borrowing of money by Seller, or the guaranty by Seller of any obligation
for the borrowing of money; or (c) other agreement, including without
limitation, purchase orders, or any enforceable oral agreement, which
individually, or together with related agreements with the same or related
parties, involves the receipt or payment after the date hereof of more than
$50,000 on an annual basis or $100,000 over the remaining term thereof. Except
as set forth in Section 3.10 of the Disclosure Schedule, all such agreements are
valid, binding and enforceable in accordance with their terms and, to the
knowledge of Seller, neither Seller nor any other party thereto is in default
under any of the aforesaid agreements. Except as set forth on Section 3.10 of
the Disclosure Schedule, no consent of any party to any such
19
<PAGE> 28
agreements is required in connection with the transactions contemplated by this
Agreement.
Section 3.11 Employee Benefit Plans; ERISA. (a) Section 3.11(a) of
the Disclosure Schedule lists each "employee benefit plan" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and all other employee benefit, bonus and fringe benefit plans,
programs, arrangements or understandings sponsored or maintained for the benefit
of, or contributed to by Seller or any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that, together with Seller would be deemed
a "single employer" within the meaning of Section 4001 of ERISA, for the benefit
of any employee or former employee of Seller in respect of the Business (the
"Plans").
(b) Each of the Plans is in material compliance with its
terms. Each of the Plans that is subject to ERISA materially complies with ERISA
and the applicable provisions of the Internal Revenue Code of 1986, as amended
(the "Code"). Each of the Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to be so qualified and
Seller knows of no fact or set of circumstances that would adversely affect such
qualification for events taking place prior to the Closing. Except as set forth
in Section 3.11 of the Disclosure Schedule, no "reportable event", as such term
is defined in Section 4043(b) of ERISA for which the thirty day notice
requirement to the Pension Benefit Guaranty Corporation has not been waived, has
occurred or will occur as a result of the Closing with respect to any Plan.
There is no "accumulated funding deficiency" as such term is defined in Section
412 of the Code, whether or not waived with respect to any Plan. There are no
pending or, to the knowledge of Seller, threatened material claims (other than
routine claims for benefits) by, on behalf of or
20
<PAGE> 29
against any of the Plans or any trusts related thereto. Seller and its ERISA
affiliates do not contribute to any "multiemployer plans" as such term is
defined in Section 4001(a)(3) of ERISA. Seller has not received written notice
of, and to Seller's knowledge there are no, claims or defaults, nor to Seller's
knowledge, are there any facts or conditions which if continued, or on notice,
will result in a default under any of the Plans. Seller has not engaged in any
prohibited transaction with respect to any Plan.
(c) As to any Plan, except as set forth Section 3.11 of the
Disclosure Schedule, all of the following are true: (i) all amounts due as
contributions, insurance premiums and benefits to the date hereof have been
fully funded and paid by Seller; (ii) to Seller's knowledge, all applicable
requirements of law have been observed with respect to the operation thereof and
all material reporting and disclosure requirements have been timely satisfied;
and (iii) there are no claims pending, and Seller has received no written notice
of claims by, and to Seller's knowledge there are no claims threatened by, any
taxing authority for taxes or penalties, which have not been satisfied in full
except those pending payment or satisfaction in the ordinary course of business.
With respect to all of the Plans, Seller has made available to Buyer complete
copies of each Plan, each Plan's summary plan description and all other material
employee communications, the most recent valuation reports prepared by the
enrolled actuary for each Plan, the most recent annual reports for each Plan as
filed with the IRS, and the most recent audited financial statements of the
Plan.
Section 3.12 Certain Fees. Except as set forth in Section 3.12 of
the Disclosure Schedule, none of Seller or any of its affiliates has employed
any financial advisor or finder or incurred any liability for any
21
<PAGE> 30
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
Section 3.13 Environmental Protection.
Except as set forth in Section 3.13 of the Disclosure
Schedule, (a) Seller or its affiliates have obtained, with respect to the
Business and the real property owned or leased by the Business, all material
permits, licenses, and other authorizations which are required under federal,
state and local statutes, ordinances, and other laws relating to pollution or
protection of the environment ("Environmental Permits"), including laws and
regulations relating to emissions, discharges, releases, threatened releases,
investigations or remediation of pollutants, contaminants, chemicals, or
industrial, hazardous, or toxic materials or waste into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface, sediments, building materials or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, hazardous, or toxic materials or wastes, or any regulation, rule,
code, plan, judicial order, decree, judgment, injunction, or notice issued,
entered, promulgated, or approved thereunder ("Environmental Laws"). All such
Environmental Permits are now and as of the Closing Date will be in full force
and effect. Seller has, or as of the Closing Date will have, timely filed for
all necessary renewals of Environmental Permits, so as not to jeopardize the
renewal thereof. A list of all material Environmental Permits is set forth in
Section 3.13 of the Disclosure Schedule. To the knowledge of Seller, except as
set forth in Section 3.13 of the Disclosure Schedule, Seller, with respect to
the Business and the real property owned or leased by the Business, is in
substantial
22
<PAGE> 31
compliance with all terms and conditions of such Environmental Permits and is
also in substantial compliance, with respect to the Business and the real
property owned or leased by the Business, with all other requirements of
Environmental Laws.
(b) There is no pending civil, administrative or criminal
investigation, litigation, material notice of violation, or administrative
proceeding relating, with respect to the Business or the real property owned or
leased by the Business, in any way to Environmental Laws that, in the aggregate,
would be reasonably likely to have a Material Adverse Effect on the Business.
(c) To the knowledge of Seller, with respect to the Business
or the real property owned or leased by the Business, there have not been and
there are not any events, conditions, circumstances, activities, practices,
incidents or actions on-site or off-site which may reasonably be expected to
interfere with or prevent continued substantial compliance with existing
Environmental Laws after the Closing Date, require investigation or remediation
pursuant to any Environmental Law or otherwise form the basis of any claim,
action or suit under existing Environmental Law based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release, or threatened
release into the environment, of any pollutant, contaminant, chemical,
industrial, hazardous, or toxic material or waste, including, without
limitation, any liability arising, or any claim, action, demand, suit,
proceeding, hearing, study, or investigation which may be brought, under RCRA,
Superfund, or similar state or local laws that, in the aggregate, would be
reasonably likely to have a Material Adverse Effect on the Business (an
"Environmental Condition").
(d) To the knowledge of Seller, there are no underground
storage tanks, above ground storage tanks, polychlorinated biphenyls or
asbestos-containing materi-
23
<PAGE> 32
als present at any real property constituting part of the Assets or the
leasehold.
Section 3.14 Absence of Undisclosed Liabilities. Except as set forth
in Section 3.14 of the Disclosure Schedule, Seller has no knowledge, with
respect to the Business as of the date hereof, of any material liability or
obligation, contingent or otherwise, other than the Excluded Liabilities (as
defined in Section 7.2 hereof), the liabilities or obligations reflected in the
Seller Financial Statements and the notes thereto or liabilities incurred in the
ordinary course of business subsequent to the date thereof and reflected on the
Closing Date Schedule of Liabilities.
Section 3.15 License, Permits, Etc. Except as set forth in Section
3.15 of the Disclosure Schedule, the licenses and permits relating to Seller's
operation of the Business are in full force and effect and constitute all
material permits, licenses, approvals and other governmental authorizations
which are necessary to the lawful operation of the Business as presently
conducted. To Seller's knowledge, Seller has materially complied with the terms,
conditions and requirements of all such licenses and permits and agrees to
extend or renew expiring licenses and permits as required prior to the Closing.
Seller is not aware of any default under any license or permit to which Seller
is a party or by which it is bound relating to Seller's operation of the
Business. Except as set forth in Section 3.15 of the Disclosure Schedule, no
consent of any governmental agency or entity is required in connection with the
transactions contemplated by this Agreement.
Section 3.16 Labor Matters. No employee, union or other
representative of employees has asserted any material claim or grievance against
the Seller under any collective bargaining agreement or other agreement or any
statute, regulation or order of any governmental entity.
24
<PAGE> 33
The Seller has delivered to Buyer true and complete copies of all collective
bargaining agreements concerning the Seller's employees at the Business to which
the Seller is a party. With respect to the Business, Seller is not a party to
any collective bargaining agreements other than those set forth in Schedule 3.16
to the Disclosure Schedule. To the knowledge of Seller, there are no
representation elections, arbitration proceedings, labor strikes, stoppages or
material grievances pending with respect to the employees of Seller at the
Business.
Section 3.17 Employees. Section 3.17 of the Disclosure Schedule sets
forth a list of all employees of the Business having an annual salary in excess
of $60,000, the date of hire of each and the present wage rate of each.
Section 3.18 Intercompany Transactions. Except as set forth in Note
5 to the audited December 31, 1995 financial statements of the Business, Section
3.18 of the Disclosure Schedule describes in general terms all transactions in
excess of $100,000 per annum occurring during the last fiscal year between or
among Seller or its affiliates and the Business which are material to the
Business.
Section 3.19 Customers and Sales. Section 3.19 of the Disclosure
Schedule sets forth a correct and current list of the top 10 customers of the
Business by "gross earnings" (which is defined as total revenue minus total
value of precious metals) during the twelve months ended December 31, 1995.
Except as indicated in Section 3.19 of the Disclosure Schedule, Seller has not
received any written notice indicating that any of these customers intend to
cease doing business with the Business.
25
<PAGE> 34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 4.1 Organization and Authority of Buyer. (a) Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of Australia. Buyer has heretofore delivered to Seller complete and correct
copies of its corporate constituent documents, as currently in effect. Buyer has
the corporate power and corporate authority to execute and deliver this
Agreement and consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the appropriate corporate
governance body of Buyer and no other corporate proceeding, other than the
shareholder approval required by Section 6.1(e) hereof, on the part of Buyer is
necessary to authorize the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated hereby.
(b) This Agreement has been duly executed and delivered by Buyer and
constitutes, and, when executed and delivered, each of the other agreements,
documents and instruments to be executed and delivered by Buyer pursuant hereto
will constitute, a valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms, except that (i) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the
26
<PAGE> 35
discretion of the court before which any proceeding therefor may be brought.
Section 4.2 Consents and Approvals; No Violations. Except for the
shareholder approval required by Section 6.1(e) hereof, neither the execution,
delivery or performance of this Agreement nor the consummation by Buyer of the
transactions contemplated hereby will (a) conflict with or result in any breach
or violation of any provision of the corporate constituent documents of Buyer;
(b) require any filing or registration with, or notice or declaration to, or the
obtaining of any permit, license, authorization, consent or approval of, any
governmental or regulatory authority whether within or outside the United
States; (c) violate, conflict with or result in a default (or any event which,
with notice or lapse of time or both, would constitute a default) under, or
result in any termination, cancellation or acceleration, or give rise to any
such right of termination, cancellation or acceleration under, any of the terms,
conditions or provisions of any note, mortgage, other evidence of indebtedness
or guarantee to which Buyer is a party or by which Buyer or any of its assets is
subject or by which it may be bound; (d) violate any order, injunction, decree,
statute, rule or regulation applicable to Buyer, or (e) result in the creation
or imposition of any Lien upon any properties, assets or business of Buyer,
excluding from the foregoing clauses (b), (c), (d) and (e) such requirements,
conflicts, defaults, rights, Security Interests, Liens, or violations which
would not materially adversely affect the ability of Buyer to consummate the
transactions contemplated by this Agreement or which become applicable as a
result of any acts or omissions by, or the status of or any facts pertaining to,
Seller.
Section 4.3 Litigation. There is no claim, action, suit,
administrative, arbitration or other proceeding or governmental investigation or
inquiry pending against Buyer, by or before any court, governmental or
27
<PAGE> 36
regulatory authority or by any third party which challenges the validity of this
Agreement.
Section 4.4 Approval of Rothschild Australia Limited. Buyer has
delivered to Seller a letter agreement (the "Rothschild Letter Agreement")
between Arrow Property & Investments Pty Limited ("Arrow"), the majority
shareholder of Buyer and a subsidiary of Rothschild Australia Limited, and
Buyer, pursuant to which Arrow has agreed to vote all of its shares of Buyer's
capital stock in favor of approval of the transactions contemplated by this
Agreement.
Section 4.5 Certain Fees. Except as set forth in Section 4.5 of the
Buyer's Disclosure Schedule, neither Buyer nor any of its affiliates has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE V
COVENANTS
Section 5.1 Conduct of the Business. Seller agrees that, during the
period from the date of this Agreement to the Closing, except as otherwise
contemplated by this Agreement or consented to in writing by Buyer:
(a) Seller shall conduct the Business and its operations only
in the ordinary course consistent with past practice and Seller will use its
best efforts to preserve the organization of the Business, the services of the
present officers, employees and agents thereof and to continue business
relationships with suppliers, customers and clients of the Business and to
properly maintain the real property Assets; and
28
<PAGE> 37
(b) Seller shall not, except in the ordinary course of
business consistent with past practice (i) sell or dispose of any of the
material properties of the Business or the Assets; provided, that the agreements
between Seller and GEEKAY EXIM (India) Limited may be terminated; (ii) terminate
or materially amend any material contracts, leases or licenses of the Business;
(iii) permit or cause the Business to enter into any new material agreement (iv)
enter into any employment agreement with any employee or make any material
change in the terms of employment of any employee or increase in any manner the
compensation of any of the officers or other employees of the Business, except
for such increases as are granted in the ordinary course of business in
accordance with its customary practices (which shall include normal periodic
performance reviews and related compensation and benefit increases); (v) adopt,
grant, extend or increase the rate or terms of any bonus, insurance, pension or
other employee benefit plan, payment or arrangement made to, for or with any
such officers or employees of the Business, except increases required by any
applicable law, rule or regulation; (vi) make any change in any of the present
accounting methods and practices of the Business, except as approved by Buyer;
or (vii) enter into or assume any mortgage, pledge, conditional sale or other
title retention agreement, or permit any material lien, encumbrance or charge to
be placed upon any of the Assets (other than liens, encumbrances or charges
arising by operation of law).
(c) Seller will use its best efforts to keep and maintain all
improvements to real property, machinery and equipment used in the Business in
good repair and working order (ordinary wear and tear excepted) in accordance
with the past practices of the Business and Seller will duly observe and conform
to all material terms and conditions of the Leases.
29
<PAGE> 38
(d) Seller will maintain in full force and effect in all
material respects all insurance coverage for the Business currently in effect
and prior to the Closing shall undertake to obtain equivalent replacement
coverage with respect to any policies hereafter canceled or terminated.
(e) Seller shall not (nor will it permit any of its executive
officers, representatives, directors, agents or any other person) directly or
indirectly solicit, initiate or encourage any inquiries regarding any
Acquisition Proposal (as hereinafter defined), or participate in any
negotiations concerning, or knowingly provide any information to any person
known to be making or proposing to make (or any other person acting on behalf of
or in conjunction with such person) any Acquisition Proposal; nor shall Seller
enter into any contract, agreement, arrangement or understanding, or participate
in discussions or negotiations, relating to an Acquisition Proposal. As used
herein an "Acquisition Proposal" shall mean any proposal for the merger,
amalgamation, consolidation, sale, transfer or other conveyance of all or any
part of the Business or the Assets, directly or indirectly, to any person, other
than (i) the sale of inventory in the ordinary course of business of the
Business including customary transfers or dispositions of inventory or fixed
assets for scrap, and (ii) dispositions of surplus or obsolete fixed assets;
provided, however, an Acquisition Proposal shall not include any of the
foregoing transactions involving Buyer or any affiliate of Buyer.
Section 5.2 Access to Information.
(a) Between the date of this Agreement and the Closing, Seller
shall, with respect to the Business, (i) give Buyer and its authorized
representatives reasonable access to all books, records, offices and other
facilities and properties of Seller; (ii) permit
30
<PAGE> 39
Buyer and its authorized representatives to make such inspections thereof as any
of them may reasonably request, including but not limited to environmental
investigations such as ground water or soil sampling; and (iii) cause the
officers of Seller to furnish Buyer and its authorized representatives with such
financial and operating data and other information with respect to the Business
and properties of Seller as any of them may from time to time reasonably
request; provided, that any such investigation shall be conducted during normal
business hours under the supervision of Seller's personnel and in such a manner
as to maintain the confidentiality of this Agreement and the transactions
contemplated hereby and not interfere unreasonably with the business operations
of Seller or the Business, except as otherwise contemplated by this Agreement.
(b) All information concerning Seller furnished or provided by
Seller or its affiliates to Buyer or its representatives (whether furnished
before or after the date of this Agreement) shall be held confidential subject
to the confidentiality agreement between Seller and Buyer (the "Confidentiality
Agreement").
Section 5.3 Consents; Assignment of Certain Contracts. (a) Each of
Seller and Buyer shall cooperate, and use their reasonable best efforts, to make
all filings and obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties necessary to consummate the transactions contemplated by this
Agreement. In addition to the foregoing, Buyer agrees to provide such assurances
as to financial capability, resources and creditworthiness as may be reasonably
requested by any third party whose consent or approval is sought hereunder.
Notwithstanding the foregoing, nothing herein shall obligate or be construed to
obligate Seller or Buyer to make any payment to any third party in order to
obtain the consent or approval of such third party.
31
<PAGE> 40
(b) Seller and Buyer shall promptly file any additional
information requested as soon as practicable after receipt of any request for
additional information. The parties hereto will coordinate and cooperate with
one another in exchanging such information and providing such reasonable
assistance as may be requested in connection with such filings.
(c) Seller is the named party to certain contracts and
agreements which relate to the Business which are currently being performed by
Seller. Said contracts are set forth on Buyer's Schedule 5.3. Prior to the
Closing, Seller shall use its reasonable best efforts to assign such contracts
and agreements to the Buyer (subject, where necessary, to the consent to such
assignment of the other party or parties to such contracts and agreements) and
Seller and Buyer shall cooperate in obtaining all consents necessary to any such
assignment (as so assigned, the "Assigned Contracts").
Section 5.4 Best Efforts. Except as otherwise specifically set forth
herein, each of Seller and Buyer shall cooperate, and use its best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement, including, without
limitation, the satisfaction of the conditions to the Closing of the
transactions contemplated herein.
Section 5.5 Public Announcements. It is contemplated that
immediately following the execution hereof, Buyer and Seller will issue a press
release (the "Press Release") disclosing such action, the language of which
shall be mutually agreed by Buyer and Seller; provided, that, Seller may include
the Press Release in a press release disclosing other action by Seller and Buyer
shall have no right to require any change or modification of the language
describing such other action by Seller.
32
<PAGE> 41
Thereafter, prior to the Closing, except as otherwise agreed to by the parties,
no party shall issue any report, statement or press release or otherwise make
any public statements with respect to this Agreement and the transactions
contemplated hereby, except as in the reasonable judgment of such party may be
required by law or in connection with the obligations of a publicly-held
company, in which case Seller and Buyer will consult with each other with
respect to the issuance of a report, statement or press release as to the
language of any such report, statement or press release. If circumstances (other
than time zone differences) make it impossible to permit such prior consultation
and after the disclosing party has used all reasonable efforts to make such
prior consultation, then any disclosure made shall be no more extensive than is
necessary to meet the minimum legal requirement imposed on the party making such
disclosure. Immediately following the Closing, Seller and Buyer will consult
with each other with respect to the issuance of a joint report, statement or
press release with respect to this Agreement and the transactions contemplated
hereby.
Section 5.6 Covenant to Satisfy Conditions. Seller will use its best
efforts to ensure that the conditions set forth in Article VI hereof are
satisfied, insofar as such matters are within its control and Buyer will use its
best efforts to ensure that the conditions set forth in Article VI hereof are
satisfied, insofar as such matters are within its control. Seller and Buyer
further covenant and agree, with respect to a threatened or pending preliminary
or permanent injunction or other order, decree or ruling or statute, rule,
regulation or executive order that would adversely affect the ability of the
parties hereto to consummate the transactions contemplated hereby, to use all
commercially reasonable efforts to prevent or lift the entry, enactment or
promulgation thereof, as the case may be.
33
<PAGE> 42
Section 5.7 Financing. On or prior to the date hereof, Buyer has
delivered to Seller (i) a true and complete copy of a commitment letter (the
"Commitment Letter") executed by Buyer and Credit Suisse (the "Bank") indicating
the Bank's commitment to provide bank financing (the "Bank Financing") for the
acquisition of the Business by Buyer and (ii) a true and complete copy of the
Replacement Precious Metals Agreement (as defined in Section 5.9 hereof). Buyer
has, prior to the date of this Agreement, delivered, and hereafter will deliver
or cause to be delivered, to Seller (or its designated representatives) true and
complete copies of all drafts of all documentation prepared and exchanged by the
parties in respect of the Bank Financing (other than drafts of the Commitment
Letter) such delivery to be made promptly after the receipt of the
documentation. The Bank Financing is sufficient and adequate financing to permit
the Buyer to consummate the transactions contemplated by this Agreement. Buyer
agrees to use its best efforts to obtain the Bank Financing on the terms
contemplated by the Commitment Letter, except for such changes which will not
adversely affect Seller, and otherwise on such terms and conditions as are
reasonably satisfactory to Buyer and Seller; provided however, that, to the
extent they cannot obtain Bank Financing on such terms, Buyer shall otherwise
use its best efforts to obtain financing for the transactions contemplated by
this Agreement on terms reasonably satisfactory to Buyer and Seller. Seller
agrees to cooperate with Buyer in connection with Buyer's obtaining the Bank
Financing, including, without limitation, the establishment of security
arrangements contemplated by the Bank Financing as of the Closing. Following
receipt by Buyer of any written or oral communication to the effect that the
Bank is contemplating not providing the Bank Financing or is terminating or
canceling or modifying in any respect the Commitment Letters, Buyer shall
immediately communicate to Seller the terms thereof and as soon as practicable
34
<PAGE> 43
thereafter provide Seller with true, complete and correct copies of any such
written communication.
Section 5.8 Employees; Employee Benefits.
(a) (i) On the Closing Date, each person who is an employee of
the Business immediately prior to the Closing (the "Affected Employees") shall
cease to be an employee of Seller, and (ii) for a one-month period following the
Closing Date, Buyer shall cause the Business to continue to employ each such
Affected Employee in a position substantially similar to that held with the
Business as of the Closing Date and at the same location, with salaries or wages
substantially equivalent to those provided as of such date, except for employees
who (i) shall be terminated "for cause," (ii) voluntarily terminate their
employment, or (iii) prior to the Closing were employed for a contractually
specified time period and are terminated upon expiration of that time period.
Following the Closing Date, Buyer shall, or shall cause the Business to, provide
each Affected Employee with benefits that are substantially comparable in the
aggregate to the benefits provided to each such Affected Employee immediately
prior to the Closing Date. Except as provided in Section 5.8(b), Buyer, in
providing such substantially comparable benefits, shall not be required to
provide or maintain any particular plan or benefit which was provided to or
maintained for Affected Employees prior to the Closing Date. Buyer shall give
full credit for all service with Seller, any ERISA Affiliate or any other
affiliate of such entities (together with ERISA Affiliates, "Affiliates"), and
any predecessor thereto to the extent that service with such predecessor entity
was recognized under the applicable Plan of Seller or any Affiliates, to each
Affected Employee for purposes of eligibility to participate in, vesting or
payment of benefits under, including, but not limited to, eligibility for early
retirement or any subsidized benefit provided for under any employee benefit
plan (including,
35
<PAGE> 44
but not limited to, any "employee benefit plan" as defined in Section 3(3) of
ERISA) maintained by Buyer or its subsidiaries (including, without limitation,
any vacation pay plan or policy) on or after the Closing Date. Prior to the
Closing, Seller will furnish Buyer with a list of the length of service with
Seller or its Affiliates for each of the Affected Employees. For purposes of
computing deductible amounts (or like adjustments or limitations on coverage)
under any employee welfare benefit plan (including, without limitation, any
"employee welfare benefit plan" as defined in Section 3(1) of ERISA), expenses
and claims previously recognized for similar purposes under the applicable
welfare benefit plan of Seller or any Affiliate for the current plan year shall
be credited or recognized under the comparable plan maintained after the Closing
Date by Buyer or its subsidiaries for the plan year ending in 1996.
(b) As soon as practicable after (and in any event within 90
days after) and effective as of the Closing Date, (i) Buyer shall establish a
defined benefit pension plan or plans and trust or trusts intended to qualify
under Sections 401(a) and 501(a) of the Code (collectively, the "Buyer Pension
Plan") and (ii) upon receipt by Seller of (A) written evidence of the adoption
of the Buyer Pension Plan and trust thereunder by Buyer and (B) either (x) a
copy of a favorable determination letter issued by the Internal Revenue Service
with respect to the Buyer Pension Plan or (y) an opinion of Buyer's counsel
reasonably satisfactory to Seller's counsel to the effect that a request for
determination has been filed and that the terms of the Buyer Pension Plan and
its related trust meet the requirements for qualification under the respective
provisions of Sections 401(a) and 501(a) of the Code, Seller shall direct the
trustees of each of the Handy & Harman Bargaining Employees Pension Plan and the
Handy & Harman Pension Plan (collectively, the "Seller Pension Plans") to
transfer, in cash or, if acceptable to Buyer, in kind, from the
36
<PAGE> 45
trusts under the Seller Pension Plans, an amount, determined by an actuary
chosen by Seller (the "Seller Actuary") which shall be equal to the present
value (as of the Closing Date) of the aggregate "projected benefit obligations"
(within the meaning of Statement of Financial Accounting Standards No. 87 ("FAS
No. 87")) in respect of the Affected Employees in the Seller Pension Plans. The
calculation of the present value of such benefits shall be no less than the
minimum amount determined in accordance with (i) Section 414(l) of the Code and
the regulations promulgated thereunder and (ii) all rules of the Pension Benefit
Guaranty Corporation ("PBGC"). The present value of such benefits shall be
determined utilizing a discount rate equal to 6.91%. All other actuarial
assumptions, including, but not limited to, retirement age, turnover, mortality,
salary scale, increases in cost of living, and disability shall be those used by
the Seller for FAS No. 87 reporting purposes with respect to its audited
financial statements for fiscal year 1995. Once the amount is determined as of
the Closing Date, interest at the rate of 6.91% per annum shall be credited from
the Closing Date to the date of transfer. The determination by the Seller
Actuary shall be final and binding (it being understood, however, that the
Seller Actuary shall consult in good faith with an actuary selected by Buyer,
who shall be entitled to review the data, assumptions and methodology utilized,
prior to making any final determination). At the time of transfer of the amount
set forth in this Section 5.8(b), Buyer and the Buyer Pension Plan shall assume
all liabilities for all accrued benefits, including all ancillary benefits,
under the Seller Pension Plans in respect of the Affected Employees and each of
Seller and the Seller Pension Plans shall be relieved of all liabilities for
such benefits.
For a period of at least one year after the Closing Date, the Buyer
Pension Plan shall contain eligibility to participate and eligibility for
benefits stan-
37
<PAGE> 46
dards, benefit provisions and other provisions that, in aggregate relative
value, are substantially comparable to the eligibility standards, benefits and
other provisions of the Seller Pension Plans. The Buyer Pension Plan shall
further provide that all service of the Affected Employees with Seller and its
Affiliates prior to the Closing Date shall be recognized for all purposes
(including, without limitation, accrual of benefits and eligibility for early or
other retirement benefits).
Upon the transfer of assets in accordance with this Section 5.8(b)
and provided that Buyer has been provided materially accurate information with
respect to the Seller Pension Plans, Buyer agrees to indemnify and hold
harmless, to the fullest extent permitted under applicable law, Seller, its
officers, directors, employees, agents and affiliates from and against any and
all costs, damages, losses, expenses, or other liabilities arising out of or
related to the Buyer Pension Plan for Affected Employees, including benefits
accrued by Affected Employees prior to the Closing Date under the Seller Pension
Plan.
Buyer and Seller shall provide each other such records and
information as may be necessary or appropriate to carry out their obligations
under this Section 5.8(b) or for the purpose of administration of the Buyer
Pension Plan, and they shall cooperate in the filing of documents required by
the transfer of assets and liabilities described herein. Notwithstanding
anything contained herein to the contrary, no such transfer shall take place
until after the 31st day following Seller's filing of all required Forms 5310A
in connection therewith and notification to PBGC, if required.
(c) Notwithstanding anything in paragraph (a) of this Section
to the contrary, in the event that any Affected Employee is discharged by the
Buyer or its subsidiaries after the Closing Date (other than as de-
38
<PAGE> 47
scribed in clause (i), (ii) or (iii) of paragraph (a) above), then Buyer shall
treat such Affected Employee, and shall be responsible for salary and severance,
in accordance with any applicable severance plan or program maintained by Buyer.
Buyer shall be responsible and assume all liability for all notices or payments
due to any Affected Employees, and all notices, payments, fines or assessments
due to any government authority, pursuant to any applicable foreign, federal,
state or local law, common law, statute, rule or regulation with respect to the
employment, discharge or layoff of employees by the Buyer after the Closing,
including but not limited to the Worker Adjustment and Retraining Notification
Act and any rules or regulations as have been issued in connection with the
foregoing.
(d) Seller and its Affiliates shall, subject to the
consummation of the transactions contemplated herein, and except as otherwise
provided herein, take whatever reasonable action is necessary or appropriate to
terminate, as of the Closing Date (unless earlier terminated), the active
participation of the Affected Employees in each Plan which is sponsored by
Seller or its Affiliates, including Seller's Handy & Harman Pension Plan for
Hourly Employees. Affected Employees who are participants as of the Closing Date
in the Handy & Harman Pension Plan for Hourly Employees shall become fully
vested in their accrued benefits in such plan on the Closing Date.
(e) After the Closing Date, Buyer shall be responsible for,
and shall indemnify and hold harmless Seller and its Affiliates and their
respective officers, directors, employees, affiliates and agents and the
fiduciaries (including plan administrators) of the Plans, from and against, any
and all claims, losses, damages, costs and expenses (including, without
limitation, attorneys' fees and expenses) and other liabilities and obligations
relating to or arising out of (i) all salaries,
39
<PAGE> 48
commissions and vacation entitlements accrued but unpaid as of the Closing Date
and post-Closing bonuses due to any Affected Employee, (ii) the liabilities
assumed by Buyer under this Section 5.8 or any failure by Buyer to comply with
the provisions of this Section 5.8, (iii) any claims of, or damages or penalties
sought by, any Affected Employee, or any governmental entity on behalf of or
concerning any Affected Employee, with respect to any act or failure to act by
Buyer to the extent arising from the employment, discharge, layoff or
termination of any Affected Employee who becomes an employee of Buyer after the
Closing Date, and (iv) all Plan obligations and employment relationships in
existence on or after the Closing Date which are assumed by Buyer.
(f) Notwithstanding anything contained in this Section 5.8 to
the contrary, Seller and its Affiliates shall remain responsible for, and shall
indemnify and hold harmless Buyer and its respective officers, directors,
employees, affiliates and agents from and against any and all claims, losses,
damages, costs and expenses (including, without limitation, attorneys' fees and
expenses) and other liabilities relating to or arising out of (i) any plans or
obligations thereunder not assumed by Buyer pursuant to this Section 5.8, (ii)
coverage of any and all claims for medical, dental or other coverage of Affected
Employees and their dependents occurring on or prior to the Closing Date and
continuing on or after the Closing Date so long as such continuing claim relates
to an occurrence prior to the Closing Date within the meaning of the applicable
welfare plan of Seller as in effect on the date of this Agreement, (iii) any
disability, workers compensation claims or welfare claims (medical, dental, life
and disability insurance claims) for disabled Affected Employees and their
dependents, and/or for disabled dependents of Affected Employees, occurring on
or prior to the Closing Date which continue thereafter, and (iv) coverage under
the Consoli-
40
<PAGE> 49
dated Omnibus Budget Reconciliation Act of 1985, as amended, which commenced
prior to the Closing Date for the remainder of any required period under such
law.
(g) With respect to any outstanding participant loans to
Affected Employees under the Handy & Harman Savings Plan, as of the Closing
Date, Buyer shall cause to be withheld from each such Affected Employee's
regular payroll (so long as such Affected Employee remains employed with Buyer)
all amounts contemplated under such Affected Employee's Promissory Note and
Security Agreement under the Savings Plan and shall remit such amounts to Seller
as soon as practicable (but in no event later than as required under the Code
and ERISA). Nothing in the preceding sentence shall affect any right of Seller
in respect of such Promissory Note and Security Agreement, including after any
applicable Affected Employee is terminated from employment with Buyer. Buyer and
Seller shall provide each other with information necessary to effectuate the
foregoing arrangement.
Section 5.9 Replacement Precious Metals Agreement. Prior to
the Closing, Buyer shall enter into a precious metals agreement (the
"Replacement Precious Metals Agreement") satisfactory to Seller with a suitable
financial institution (the "Replacement Precious Metals Institution") in an
amount of at least $150,000,000 pursuant to which Buyer shall procure an amount
of "fine ounces" (as recognized by the London Metals Exchange) of gold, silver,
platinum and palladium ("Precious Metals") equal to or in excess of (i) the
estimated amount of the total Precious Metals inventory (the "Estimated Precious
Metals Inventory") on hand as of the Closing Date at the Attleboro, South
Windsor, Phoenix and Villa Park facilities (the "Facilities") less (ii) the
Seller Leased Gold (as defined in Section 5.10 hereof) and the net amount of any
Precious Metals consigned to the Business by its customers (the "Net Customer
Consigned Precious Metals") from the Replacement Precious Metals Institution,
and on
41
<PAGE> 50
the Closing Date the Replacement Precious Metals Institution shall deliver to
Seller, and Seller shall take unconditional title to, an amount of fine ounces
of Precious Metals by weight equal to (A) the aggregate weight of the Estimated
Precious Metals Inventory less (B) the Seller Leased Gold and the Net Customer
Consigned Precious Metals (the "Replacement Precious Metals") pursuant to the
terms set forth therein. Upon receipt of the Replacement Precious Metals by
Seller, the Replacement Precious Metals Institution shall take unconditional
title to an equivalent amount of Precious Metals inventory theretofore owned by
Seller and located at the Facilities. Seller shall provide to Buyer its estimate
of the Estimated Precious Metals Inventory five days prior to the Closing.
Section 5.10 Seller Gold Leasing Agreement. Prior to, but effective
as of, the Closing, Seller and Buyer shall enter into the Seller Gold Leasing
Agreement, a form of which is attached hereto as Exhibit B, pursuant to which
Seller shall lease to Buyer the Seller Leased Gold, which shall consist of up to
25,000 fine ounces of "good delivery bullion" gold, for a period of up to a
maximum of 12 months from the Closing Date, subject to the terms and conditions
set forth therein.
Section 5.11 Sales Agreement. Prior to, but effective as of, the
Closing, Seller and/or its affiliates, as the case may be, and Buyer shall enter
into the Sales Agreement, a form of which is attached hereto as Exhibit C,
pursuant to which Seller and its affiliates agree to continue as customers of
the Business in accordance with historical practice and Buyer shall provide
certain services to Seller and its affiliates on the terms and conditions set
forth therein.
Section 5.12 Interim Services Agreement. Prior to, but effective as
of, the Closing, Seller and Buyer
42
<PAGE> 51
shall enter into the Interim Services Agreement, a form of which is attached
hereto as Exhibit D.
Section 5.13 Supplemental Disclosure. Seller, on the one hand, and
Buyer, on the other hand, shall from time to time prior to the Closing
supplement or amend its respective Disclosure Schedule with respect to any
matter hereafter arising or discovered which if existing or known at the date of
this Agreement would have been required to be set forth or described in such
Disclosure Schedule. No such supplemental or amended disclosure shall be deemed
to have cured any breach of any representation or warranty made in this
Agreement constituting a Material Adverse Effect on the Business or the Assets
unless consented to in writing by the other party, in which case such
supplemental or amended Disclosure Schedule will be deemed to have cured any
such breach made in this Agreement and to have been disclosed as of the date of
this Agreement for purposes of determining whether or not the conditions set
forth in Article VI hereof have been satisfied.
Section 5.14 Closing Date Schedule of Liabilities.
(a) Immediately after the Closing, Seller shall cause a
schedule of liabilities of the Business as of the Closing Date (the "Closing
Date Schedule of Liabilities") to be prepared. Seller shall deliver the Closing
Date Schedule of Liabilities to Buyer within 45 days of the Closing Date. The
Closing Date Schedule of Liabilities shall be prepared from the books and
records of the Business and shall be prepared on a basis consistent with the
financial statements prepared by the Business at year end as included in Seller
Financial Statements.
(b) Buyer shall promptly review the Closing Date Schedule of
Liabilities. Seller shall cooperate
43
<PAGE> 52
with Buyer's auditors, Coopers & Lybrand, in connection with a review by such
auditors of such Closing Date Schedule of Liabilities. Should Buyer determine
that the Closing Date Schedule of Liabilities is not in accordance with this
Agreement, Buyer shall so notify Seller within 30 days of receipt of the Closing
Date Schedule of Liabilities of those items on which Buyer is not in agreement
(the "Notice"). The parties shall then promptly designate representatives who
shall meet for the purpose of resolving the differences between the parties. If
such differences have not been resolved within 30 days after receipt by Seller
of the Notice, the remaining items shall be submitted to a jointly selected
independent accounting firm which shall have no prior relationship with Buyer or
Seller (an "Independent Accounting Firm") for resolution in accordance with this
Agreement. The decision of such Independent Accounting Firm shall be binding on
both parties and the expense of such Independent Accounting Firm shall be shared
equally by the parties.
Section 5.15 Silver Price Quotation Services. Seller hereby
covenants that it shall continue to publish Seller's silver spot price after the
Closing Date consistent with its past practice and on the same terms and subject
to the same conditions that such service is, as of the date of this Agreement,
rendered and shall be rendered in the future to third parties unaffiliated with
the Seller or Buyer; provided, that if Seller shall determine to discontinue
such service, Seller shall offer to Buyer a right of first refusal to render
such service in place of Seller and; provided, further, that if Seller
determines to sell such silver quotation service, Seller shall not be required
to offer to Buyer the option to allow Buyer to render such service in place of
Seller.
Section 5.16 Precious Metals Inventory. A physical inventory of the
Precious Metals on hand, including clean-up lots, at the Facilities (the "Final
Pre-
44
<PAGE> 53
cious Metals Inventory") shall be taken as of the Closing Date by the employees
of Seller, observed by representatives of Buyer and, at their respective
options, their respective independent public accountants to determine the
aggregate weight in troy ounces of the Precious Metals on hand. All inventory
will be identified by a lot number. Each lot of material will be categorized as
either (i) unsettled customer lots or (ii) Seller's Final Precious Metals
Inventory. Lots identified as Seller's Final Precious Metals Inventory will be
processed in accordance with the Sales Agreement. If the aggregate weight of
"fine ounces" of the Replacement Precious Metals conveyed to Seller on the
Closing Date is greater than (i) the aggregate weight of the Final Precious
Metals Inventory determined in accordance with the Sales Agreement less (ii) the
aggregate weight of the Seller Leased Gold and the Net Customer Consigned
Precious Metals, Seller shall, not later than 2 days following the determination
of the Final Precious Metals Inventory, convey, transfer and deliver an amount
of Precious Metals equal by weight to the aggregate weight of such excess to
Buyer. If the aggregate weight of the Replacement Precious Metals conveyed to
Seller on the Closing Date is less than the (i) aggregate weight of the Final
Precious Metals Inventory less (ii) the aggregate weight of the Seller Leased
Gold and the Net Customer Consigned Precious Metals, Buyer shall, not later than
2 days following the determination of the Final Precious Metals Inventory,
convey, transfer and deliver an amount of Precious Metals equal to the aggregate
weight of such shortage to Seller.
Section 5.17 Completion of Work-in-Process Inventory. For each lot
of Seller's Final Precious Metals Inventory, Seller shall, not later than 2 days
following the determination of the Final Precious Metals assay, pursuant to the
Sales Agreement, pay to Buyer an amount, in immediately available funds, the
treatment and refining charges as set forth in the Sales Agreement.
45
<PAGE> 54
Section 5.18 Transfer of Environmental Permits. Seller covenants and
agrees to use its best efforts (i) to transfer the Environmental Permits held by
Seller and its affiliates, including such Environmental Permits held by American
Chemical & Refining, Inc., with respect to the Business or the real property
owned or leased by the Business, to Buyer, and (ii) if any such Environmental
Permits cannot be lawfully transferred to Buyer, to cooperate with and assist
Buyer in its application for such replacement Environmental Permits as shall be
required to operate the Business or the real property owned or leased by the
Business as it shall be operated on the Closing Date. Seller further covenants
and agrees to allow Buyer to use such Environmental Permits held by Seller and
its affiliates and used by the Business until such Environmental Permits are
transferred to Buyer or new permits are granted to Buyer.
Section 5.19 Covenant Not to Compete.
(a) In furtherance of the sale to Buyer of the Assets and the
Business, the Seller shall not, and shall cause its subsidiaries and controlled
affiliates not to, directly or indirectly, through equity ownership or otherwise
anywhere in the world, except as the Seller operates its businesses in Canada
and Singapore on the Closing Date:
(i) compete with Buyer (A) in the precious metals
refining business for a period of ten years following the
Closing Date, or (B) in the component retrieval business for a
period of five years following the Closing Date (except that
nothing shall prevent Seller from purchasing or using
electronic components (including components retrieved by the
Business) for use as parts of other products sold by Seller),
in either case as such businesses
46
<PAGE> 55
are conducted on the Closing Date by the Business; provided,
that any "incidental" or internal collection or refining by
the Seller and its subsidiaries and affiliates related to
concentration of solutions containing precious metals shall
not be deemed to be a violation of the foregoing; provided,
further, that Seller shall not solicit third party customers
for such "incidental" or internal collection and refining;
provided, further, that nothing herein shall be construed to
prevent the Seller from owning, as an investment, up to 5% of
a class of equity securities issued by any competitor of Buyer
that is publicly traded.
(ii) for a period of ten years in the case of the
precious metals refining business and five years in the case
of the component retrieval business, communicate with or
contact any customers of the Business for the purpose of
soliciting such customers to purchase any goods, products or
services of the type being manufactured, offered or sold by
the Business as of the Closing Date; nor
(iii) use or disclose to others any trade secrets or
other confidential information relating solely to the Assets
and the Business, including the names, addresses and any other
information relating to the aforesaid customers and confirms
that such information shall constitute exclusive property of
Buyer and agrees that any such property shall not be used by
the Seller or disclosed to other persons or business
enterprises;
47
<PAGE> 56
provided, that nothing in this Section 5.19 shall prevent or be construed to
prevent Seller and its subsidiaries and affiliates from conducting and
continuing to conduct the businesses (and any natural extensions or expansions
thereof), other than the Business, which they conduct or propose to conduct as
of the Closing Date; provided, however, that nothing in this Section 5.19 shall
be construed to prevent the Seller or any of its subsidiaries or affiliates from
effecting a merger, consolidation or similar business combination with, or
making an acquisition, in whole or in part, of the equity or assets of an entity
that competes directly with the Buyer with respect to any of the goods, products
or services of the Business existing on the Closing Date (the "Acquired
Entity"), so long as Seller uses reasonable good faith efforts to dispose of the
portions of the Acquired Entity which compete directly with the Buyer with
respect to such goods, products or services (the "Competing Business") within a
reasonable period of time, not to exceed two years, following completion of such
business combination or acquisition; provided, further, that Seller shall offer
to Buyer a right of first refusal to purchase such Competing Business on terms
and conditions substantially similar to those on which Seller has determined it
will sell the Competing Business to a third party purchaser which has made such
an offer to purchase (a "Purchase Offer") the Competing Business. Seller shall
give Buyer written notice (an "Offer Notice") promptly upon receipt of a
Purchase Offer acceptable to Seller, which Offer Notice shall contain the
material terms of the Purchase Offer. Buyer shall have 30 days to give notice to
Seller of its decision to purchase the Competing Business (a "Buyer's Notice")
on terms and conditions substantially similar to the Purchase Offer. If Buyer
fails to give a Buyer's Notice to Seller within 30 days of Buyer's receipt of
the Offer Notice, Seller may sell the Competing Business to the prospective
third party purchaser. If Buyer gives a Buyer's Notice to Seller, Buyer shall be
required to consummate the purchase of the Competing
48
<PAGE> 57
Business within 90 days of its delivery of the Buyer's Notice. If the terms of
the Purchaser's Offer include any non-cash consideration, Buyer may use
substantially similar non-cash consideration in connection with its purchase of
the Competing Business, or, if it is not possible or practicable for Buyer to
use such substantially similar non-cash consideration, Buyer may substitute cash
for the fair market value of such non-cash consideration (such fair market value
to be mutually agreed by Buyer and Seller, or, in the absence of agreement, by
an independent investment banker). In the event Buyer fails to purchase the
Competing Business within such 90 day period following the delivery of Buyer's
Notice, Seller shall be free to retain such Competing Business or sell it to any
third party without regard to the foregoing right of first refusal.
(b) For a period of five (5) years following the Closing Date,
Seller shall purchase its requirements of fine silver grain ("Grain"), fine
silver crystal ("Crystal") and fine silver crystal which has been analyzed to
meet Seller's chemistry specifications ("Catalyst Grade Silver"), from Buyer.
Seller will provide an equivalent quantity of silver to Buyer in London for the
silver quantity received in the form of Catalyst Grade Silver and Grain. For a
period of one year after the Closing Date, Seller will pay Buyer a premium of
$0.04 per ounce for Grain, $0.01 per ounce for Catalyst Grade Silver, and Seller
will pay no premium for Crystal; provided, that Buyer and Seller agree to
negotiate in good faith to make adjustments in such price at the end of such one
year period in light of then prevailing market conditions. It is agreed that for
a period of five (5) years following the Closing Date, Buyer shall not, and
shall cause the Business not to, directly or indirectly, anywhere in North
America, compete with Seller (x) in the manufacture, distribution, marketing or
sale of any silver products or silver alloy products, (y) in the manufacture,
distribution, marketing or sale of
49
<PAGE> 58
any fabricated sheet or wire products containing silver, or (z) in the
distribution, marketing, or sale of Catalyst Grade Silver, or cast industrial
products to any purchaser. Notwithstanding the foregoing, Buyer may distribute,
market and sell Crystal silver and fine silver Grain to financial institutions,
recognized traders (non-manufacturers) and refiners of precious metals, and fine
silver Grain to customers who are not currently customers of Seller as listed on
Schedule 5.19 hereto. Nothing in this Agreement shall prevent (i) Buyer from
manufacturing, distributing, marketing or sales of gold alloy products, or (ii)
Buyer's Canadian subsidiary from manufacturing, distributing, marketing or
selling silver products generated from such Canadian affiliate's refinery in
Vancouver, Canada.
(c) The parties intend that the covenant contained in the
preceding Sections 5.19(a) and (b) shall be construed as a series of separate
covenants, one for each country, county and city included within each state and,
except for geographic coverage, each such separate covenant shall be deemed
identical. The parties agree that the covenants included in this Section 5.19
are, taken as a whole, reasonable in their geographic scope and their duration
and no party shall raise any issue of the reasonableness of the scope or
duration of the covenants in any proceeding to enforce any such covenants. If,
in any judicial proceeding, a court shall refuse to enforce any of the separate
covenants deemed included in this Section 5.19, then the unenforceable covenant
shall be deemed eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
Section 5.20 Buyer's Covenants. Buyer covenants and agrees: (a) to
return all Net Customer Consigned Precious Metals in the possession of the
Business on the Closing Date to the named owners of such consigned Precious
Metals in accordance with the agreements of the
50
<PAGE> 59
Business with such named owners and in accordance with industry practice; and
(b) if required by applicable law or the rules and regulations
of the Australian Stock Exchange in order to consummate the transactions
contemplated hereby, Buyer, acting through its Board of Directors, shall, in
accordance with applicable law and the rules and regulations of the Australian
Stock Exchange:
(i) promptly and duly call, give notice of, convene and
hold a special meeting of its shareholders (the "Special
Meeting") as soon as practicable following the execution of
this Agreement;
(ii) prepare and file with the required Australian
authorities any proxy or information statement or similar
disclosure document (the "Disclosure Statement") relating to
the transactions contemplated hereby and this Agreement and
use its reasonable efforts (x) to obtain and furnish the
information required to be included by the required Australian
authorities in the Disclosure Statement and cause a definitive
Disclosure Statement to be mailed to its shareholders and (y)
to obtain the necessary approvals by its shareholders of the
transactions contemplated hereby;
(iii) include in the Disclosure Statement the
recommendation of the Board of Directors of Buyer that
shareholders of Buyer vote in favor of the approval of the
transactions contemplated hereby and the adoption of this
Agreement; and
51
<PAGE> 60
(iv) provide Seller with drafts of the Disclosure
Statement prior to the filing of such Disclosure Statement and
Buyer will consider in good faith any comments on the
Disclosure Statement received from Seller or its counsel.
Section 5.21 Nondisclosure. If this Agreement and the transactions
provided for herein shall be terminated or abandoned for any reason whatsoever,
each party shall (a) return to the other party any and all information and data
furnished to such party in connection herewith and (b) hold in confidence its
knowledge of any and all proprietary, confidential and secret information or
data and not disclose or publish the same directly or indirectly (i) without the
prior written consent of such other party or (ii) until the same has been
theretofore publicly disclosed by such other party or otherwise ceased to be
secret or confidential as evidenced by general public knowledge; provided,
however, that each party shall have the right to disclose such information,
without consent, to the extent that such party is required by law to do so. The
foregoing provisions are intended to supplement and not supersede any existing
confidentiality agreement between the parties.
Section 5.22 Trademark Registrations, Corporate Names. As of the
Closing Date, if any of the Intellectual Property to be transferred to Buyer
hereunder is in the process of registration or renewal, or is entitled to be as
of the Closing, but has not been, registered with the U.S. Patent and Trademark
Office, U.S. Copyright Office, or similar U.S. or foreign patent, trademark or
copyright authorities, Seller shall, at the request of Buyer, reasonably assist
Buyer in pursuing and securing any and all such registrations in the name of
Buyer. Such assistance by Seller shall not include any requirement on Seller to
engage in litigation with, or make any
52
<PAGE> 61
payments to, third parties, including (without limitation), governmental
agencies and entities.
Section 5.23 Certain Major Customers. Buyer and Seller covenant and
agree to cooperate in contacting certain major customers of the Business set
forth on Schedule 5.23 hereto (the "Major Customers") prior to the Closing (i)
to inform such Major Customers of the transactions proposed hereby, and (ii)
to encourage such Major Customers to remain customers of the Business after the
Closing. The parties further covenant and agree to promptly notify the other
party hereto of their receipt of any written or verbal notice from any Major
Customer of its intention not to continue to be a customer of the Business after
the Closing. Schedule 5.23 shall include the fiscal year 1995 sales revenues
with respect to each of such Major Customers.
Section 5.24 Real Property Covenants.
(a) Leases. With regard to all Leases, Seller agrees as
follows:
(i) Assignment. Seller agrees to use its best efforts to assign and
transfer all of its right, title and interest as tenant under all
such Leases, and to obtain and deliver such consents as are required
under the relevant Lease and, if Seller is entitled to obtain an
estoppel from the landlord(s) under the terms of the applicable
Lease and in a form as is required under such Lease, estoppels from
the landlord(s) thereof. Seller agrees to hold Buyer harmless and
indemnify it with respect to any and all claims or demands arising
under any such Lease prior to the date of Closing, which agreement
and undertaking shall survive the Closing hereunder.
53
<PAGE> 62
(ii) Lease Documents. Seller agrees to deliver true, accurate and
complete copies of the executed counterparts of each and every Lease
and any amendments, extensions or modifications thereof, on or
before the Closing Date.
(b) Casualties; Risk of Loss to Real Property. (i) If a
casualty to any of the real property Assets should occur prior to the Closing,
then (i) Seller shall procure and deliver the insurance proceeds recovered by
Seller to Buyer; and (ii) Seller shall pay or allow a settlement credit for the
amount by which the estimated costs of such repairs exceed the available net
insurance proceeds. The estimate of any such repair costs shall be mutually
agreed by the parties; if no such agreement can be reached, a mutually agreed
upon independent third party shall be appointed to estimate the cost of such
repairs. Such independent third party's good faith estimate shall be final;
provided, that in no case shall the estimated cost to repair such damage exceed
the fair market value of such real property Asset.
(c) Adjustment Items. Buyer and Seller covenant and agree that
the following items shall be adjusted between Buyer and Seller as of the Closing
Date: occupancy rents; security deposits and all interest due thereon; real
estate taxes; sewer rents and charges; water rents and charges; front foot
benefit charges (if applicable); utilities and fuel oil; and all other operating
and maintenance charges with respect to each real property Asset (the
"Adjustment Items"). Buyer and Seller covenant and agree (i) to cooperate and
use their respective best efforts to promptly establish the net amount of such
Adjustment Items and (ii) to pay the net amount of such Adjustment Items to the
appropriate party hereto, as the case may be, promptly after the Closing.
Section 5.25 Connecticut Transfer Act. Seller shall assume all
liabilities, duties and responsibilities
54
<PAGE> 63
imposed by or arising from the Connecticut Transfer Act, Conn. Gen. Stat.
Section 22a-134 et seq., as amended (the "Act"). Such compliance shall include,
but not be limited to, providing Buyer with a copy of any and all filings and
site assessments made pursuant to the requirements of the Act, preparing and
implementing any site remediation plan required as a result of complying with
the Act and compensating Buyer for any claims, losses, damages, liabilities,
costs and other expenses related to the Act. If Seller does not make a filing
pursuant to the Act, Seller shall provide at Closing an affidavit that it has
reviewed the Act and has determined that the Act does not apply to the
transactions contemplated by this Agreement.
Section 5.26 Estimated Assumed Liabilities. At least two days before
the Closing, Seller shall provide to Buyer an estimate of the balance sheet
liabilities to be assumed by Buyer at the Closing (the "Estimated Assumed
Liabilities"), which Estimated Assumed Liabilities shall be used to determine
the Closing Payment pursuant to Section 1.1 (b)(ii) hereof.
Section 5.27 Handy & Harman Canada, Limited. It is agreed that the
Buyer will assume the commercial relationships to provide refining services,
including all sales and marketing activities and responsibility for settlement,
to the customers of Handy & Harman of Canada, Ltd. ("H&H Canada"). Buyer will
enter into a purchase agreement with H&H Canada (the "H&H Canada Agreement") for
the continuing use of the Toronto facility for collection and preprocessing of
scrap containing precious metals. Buyer and Seller agree to negotiate in good
faith and to enter into the definitive H&H Canada Agreement prior to the
Closing. The term of the H&H Canada Agreement will be 10 years. With regard to
existing customers of H&H Canada on the Closing Date ("Existing Customers"),
Buyer agrees to continue to use the Toronto facilities for the term of the H&H
Canada Agreement for all orders by such Existing Customers to the extent the
55
<PAGE> 64
Toronto facility has the capability to perform such services. The use of the
Toronto facility will be paid for based on a division of revenues derived from
the business. Except as set forth below, future revenues will be divided on the
same percentage as 1995, as set forth by customer on Section 5.27 of the
Disclosure Schedule, or, for such Existing Customers on such Schedule without
such percentage of revenue distribution, as follows:
Buyer's Revenues 40%
H&H Canada's Revenues (for
Collection and Preprocessing) 60%
New customers of H&H Canada established by Buyer requiring such services as are
provided by the Toronto facility will be serviced by such facility on the same
terms as above; provided, that such terms may be modified by mutual agreement of
the parties depending on market and prevailing economic conditions.
Notwithstanding the forgoing, if Buyer's fixed costs with respect to one or more
customer(s) (including costs with respect to third party smelters) materially
increase, then the division of future revenues shall be renegotiated in good
faith by Buyer and H&H Canada and failing to reach such agreement after good
faith negotiations Buyer shall not be bound thereafter with respect to such
customer or customers. New customers requiring services not provided by the
Toronto facility may be serviced as determined by Buyer.
Section 5.28 The CIT Group Equipment Lease. Seller covenants and
agrees to pay to The CIT Group/Equipment Financing, Inc. ("CIT") all amounts
owed or to become due to CIT through the end of the Master Lease, dated as of
August 10, 1987, between CIT and Seller (the "Master Lease"), such that the
Business shall obtain clear title to the equipment which is the subject matter
or such Master Lease.
56
<PAGE> 65
Section 5.29 Third Party Precious Metal. The Business has, and on
the Closing Date will continue to have, in its possession certain Precious
Metals owned by customers of the Business (the "Third Party Precious Metals").
Such Third Party Precious Metals have been delivered to the Business in the
regular course the Business for certain processing, refining and other services
to be performed by the Business, and are Excluded Assets under this Agreement.
Buyer and Seller hereby covenant and agree to contact the customers who own such
Third Party Precious Metals to inform such customers (i) of the pending sale of
the Business to Buyer, (ii) that, after the Closing, Buyer shall be obligated to
return such Third Party Precious Metals to each of the customers owning such
Third Party Precious Metals, and (iii) that, after the Closing, such customers
may only look to Buyer to return such Third Party Precious Metals. Buyer further
covenants and agrees that, after the Closing, (a) Buyer shall be obligated to
return such Third Party Precious Metals to the respective customers of the
Business, (b) Buyer shall indemnify and hold harmless Seller from any loss,
charge, liability or claim of any kind whatsoever related to the return of the
Third Party Precious Metals. In the event that any customer of the Business is
unwilling to look solely to Buyer to replace such customer's Third Party
Precious Metal after the Closing, Seller shall, if practicable, return such
customer's Third Party Precious Metals before the Closing, or, if it is not
practicable to so return such customer's Third Party Precious Metals before the
Closing, as soon as reasonably possible after the Closing; provided, that Buyer
shall replace and deliver to Seller the equivalent amount of any Seller owned
Precious Metals which are delivered to customers in place of any Third Party
Precious Metals.
Section 5.30 Phase II Environmental Study. Buyer shall, at Buyer's
sole cost and expense, promptly after the date of this Agreement, engage an
appropriate
57
<PAGE> 66
environmental consultant to perform a phase II environmental study (the "Phase
II Studies") of each of the Facilities. If the results of such Phase II Studies
reveal any Environmental Condition which is a violation of Environmental Laws or
Environmental Permits (as such laws and permit requirements exist on the Closing
Date), then (i) Seller shall remediate, cure, and resolve such Environmental
Condition at Seller's sole cost and expense, either before or, with Buyer's
consent, after the Closing Date, or (ii) Seller shall reduce the adjusted
Purchase Price by the mutually agreed cost to complete such remediation, cure or
resolution; provided, that Seller shall be under no obligation to remediate,
cure or resolve any condition which is not a violation of Environmental Laws or
Environmental Permits (as such laws and permit requirements exist on the Closing
Date). Any such amounts paid by Seller or reduction in adjusted Purchase Price,
as the case may be, shall be counted towards Seller's maximum indemnification
liability under Section 9.2(b)(ii) hereof.
Section 5.31 Environmental Consent Order.
(a) Prior to the Closing Date, Seller shall enter into a
definitive consent order (the "Definitive Consent Order") with the State of
Connecticut with respect to certain environmental matters. The Definitive
Consent Order shall be, with respect to the South Windsor Facility,
substantially similar to, and shall impose obligations and requirements not
materially more onerous than those set forth in, the draft consent order (the
"Draft Consent Order") attached hereto as Exhibit K. At the Closing, Seller and
Buyer shall enter into an environmental undertaking (the "Environmental
Undertaking") pursuant to which the responsibilities and obligations set forth
in the Definitive Consent Order shall be allocated between Buyer and Seller
after the Closing. The Environmental Undertaking shall allocate the
environmental obligations and responsibilities which
58
<PAGE> 67
are the subject matter of the Definitive Consent Order and which relate to the
ongoing operation of the South Windsor Facility to Buyer or to a subsidiary of
Buyer. If requested by the State of Connecticut, Buyer shall enter into a
supplemental consent order, undertaking or addendum to the Definitive Consent
Order consistent with the foregoing.
(b) With respect to expenditures related to the Definitive
Consent Order, whether occurring before or after the Closing Date, (i) Buyer
agrees to pay, perform and discharge, in accordance with the Definitive Consent
Order, any and all of the "up-front" payment obligations relating to the South
Windsor Facility up to $250,000 (the "Primary Environmental Payment"), (ii)
Seller agrees to pay, perform and discharge, in accordance with the Definitive
Consent Order, any and all of the "up-front" payment obligations relating to the
South Windsor Facility in excess of the Primary Environmental Payment, up to a
maximum of $120,000 (the "Secondary Environmental Payment"), and (iii) Buyer
further agrees to pay, perform and discharge, in accordance with the Definitive
Consent Order, any and all of the "up-front" payment obligations relating to the
South Windsor Facility in excess of the Primary Environmental Payment and the
Secondary Environmental Payment (i.e. any amounts in excess of an aggregate
total of $370,000).
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
Section 6.1 Conditions to Each Party's Obligation. The respective
obligation of each party to consummate the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing of the following
conditions:
59
<PAGE> 68
(a) No statute, rule or regulation shall have been enacted,
entered, promulgated or enforced by any court or governmental authority which
prohibits or restricts the consummation of the transactions contemplated hereby;
(b) There shall not be in effect any judgment, order,
injunction or decree of any court of competent jurisdiction enjoining the
consummation of the transactions contemplated hereby;
(c) There shall not be any suit, action, investigation,
inquiry or other proceeding instituted, pending or threatened by any
governmental or other regulatory or administrative agency or commission which
seeks to enjoin or otherwise prevent consummation of the transactions
contemplated hereby;
(d) Any waiting periods applicable to the transactions
contemplated by this Agreement under applicable Australian antitrust or trade
regulation laws and regulations shall have expired or been terminated;
(e) Buyer shall have received such approval of the
shareholders of Buyer as is required by the rules and regulations of the
Australian Stock Exchange applicable to transactions of the type contemplated by
this Agreement in order to lawfully consummate the transactions set forth
herein;
(f) Buyer and Seller shall have entered into the H&H Canada
Agreement; and
(g) Buyer and Seller shall have executed the Environmental
Undertaking and any further documentation related to the Definitive Consent
Order required by the State of Connecticut.
60
<PAGE> 69
Section 6.2 Conditions to Obligations of Seller. The
obligations of Seller to consummate the transactions contemplated hereby are
further subject to the satisfaction (or waiver) at or prior to the Closing of
the following conditions:
(a) The representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at the date
hereof and as of the Closing as if made at and as of such time, except for
changes permitted or contemplated hereby and except for representations which
are as of a specific date;
(b) Buyer shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Closing pursuant to the terms hereof;
(c) Buyer shall have delivered to Seller a certificate
substantially in the form annexed as Exhibit G hereto, dated as of the Closing
executed by an appropriate officer of Buyer;
(d) Buyer shall have delivered to Seller or its affiliates
those items set forth in Section 1.3 hereof;
(e) Seller shall have received an opinion of Buyer's legal
counsel, dated the Closing Date, substantially in the form annexed as Exhibit H
hereto; and
(f) Seller shall have received and taken unconditional
ownership, title, custody and possession of the Replacement Precious Metals.
Section 6.3 Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated hereby are further subject to
the satisfac-
61
<PAGE> 70
tion (or waiver) at or prior to the Closing of the following conditions:
(a) The representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects at the date
hereof and as of the Closing as if made at and as of such time, except for
changes permitted or contemplated hereby and except for representations which
are as of a specific date;
(b) Seller shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Closing pursuant to the terms hereof;
(c) Seller shall have delivered to Buyer a certificate
substantially in the form annexed as Exhibit G hereto, dated as of the Closing
and executed by an appropriate officer of Seller;
(d) Seller or its affiliates shall have delivered to Buyer
those items set forth in Section 1.3 hereof;
(e) Buyer shall have received an opinion of internal counsel
to Seller, dated the Closing Date, substantially in the form annexed as Exhibit
I hereto;
(f) Buyer shall have consummated the transactions contemplated
by the Commitment Letter and Buyer has, and will at the Closing have, sufficient
immediately available funds, in cash, to pay the Purchase Price, to provide the
Business with sufficient working capital and to pay any other amounts payable
pursuant to this Agreement and to effect the transactions contemplated hereby;
62
<PAGE> 71
(g) Buyer and Seller collectively shall not have received
verbal or written notice from a number of the Major Customers representing 30%
or more of the fiscal year 1995 total sales revenue from such Major Customers,
as set forth on Schedule 5.23 hereto, in the aggregate, to the effect that such
Major Consumers do not intend to continue as customers of the Business after the
Closing; and
(h) Seller shall have received the consents of the landlords
of the Villa Park and Phoenix facilities for the assignment of the leases of
such facilities to Buyer.
Section 6.4 Materiality of Conditions. Notwithstanding anything
contained herein, no condition involving the accuracy of representations and
warranties made by Seller as of the date hereof or the Closing Date (without
giving effect to any "materiality" limitation or Material Adverse Effect
qualifier set forth therein), or the furnishing of an officer's or other
certificate shall be deemed not fulfilled, and Buyer shall not be entitled to
fail to consummate the transactions contemplated by this Agreement or terminate
this Agreement on such basis, if the respects in which such representations and
warranties are inaccurate or the certificates do not conform to what is
prescribed by this Agreement, in the aggregate, do not result in a Material
Adverse Effect to the Business or the Assets.
ARTICLE VII
ASSUMPTION OF CERTAIN LIABILITIES AND OBLIGATIONS
Section 7.1 Assumed Liabilities. Subject to Section 7.2 of this
Agreement, Buyer shall assume and be responsible on the Closing Date for only
the following liabilities and obligations of the Business (such liabil-
63
<PAGE> 72
ities and obligations being hereinafter referred to collectively as the "Assumed
Liabilities"):
(a) all liabilities, contingencies, and obligations reflected
on or referred to in the Closing Date Schedule of Liabilities and any notes
thereto; and
(b) all liabilities, obligations and duties to perform any and
all Assigned Contracts and all commitments of any kind entered into by the
Seller on or prior to the Closing Date which relate to the Business or the
Assets;
provided, that the Assumed Liabilities shall not include any liabilities of the
Business to third party smelters existing on the Closing Date owed in connection
with any Precious Metals which constitute Excluded Assets. At the Closing, Buyer
will deliver to Seller the Undertaking, substantially in the form of Exhibit J
hereto, whereby Buyer will assume and agree to pay and discharge the Assumed
Liabilities. Section 7.1 of the Disclosure Schedule sets forth a non-exhaustive
list of examples of items which shall be Assumed Liabilities.
Section 7.2 Non-Assumed Liabilities. (a) Except for the Assumed
Liabilities, Buyer does not assume or agree to pay, satisfy, discharge or
perform, and shall not be deemed by virtue of the execution and delivery of this
Agreement, or of any instrument, paper or document delivered by it pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed or become a successor to, or to
have agreed to pay, satisfy, discharge or perform, any liability, obligation or
indebtedness (whether absolute, accrued, or contingent, whether filed or
asserted prior to or after the Closing Date) all of which, except for the
Assumed Liabilities, Seller agrees to pay, satisfy, discharge and perform (the
"Excluded Liabilities").
64
<PAGE> 73
(b) Any instruments, papers and documents which shall be
executed and delivered by Buyer in connection with the assumption of the Assumed
Liabilities shall contain express and specific provisions to the effect that in
respect of any Assumed Liabilities:
(i) Buyer shall have the right to resist, contest, defend
against, litigate, compromise and/or otherwise dispose of any and all
Assumed Liabilities to such extent and in such manner as Buyer, in its
sole discretion, shall deem desirable, advisable and for its best
interests, and Buyer shall be deemed to have performed its obligations
under and pursuant to such instruments, papers and documents
notwithstanding such resistance, contest, defense against, litigation,
compromise or other disposition, so long as, and to the extent that,
neither Seller nor its affiliates shall be required to pay, satisfy,
discharge or perform any of the Assumed Liabilities; and
(ii) Nothing in any such instrument, paper or document, or in
this Agreement, contained is intended to be construed, or shall be
construed, as enlarging or extending in any manner, or to any extent, the
period of limitations prescribed by any statute of limitations applicable
to any of the Assumed Liabilities, or as enlarging or extending to any
extent, or in any manner whatsoever, the rights which any owner, holder or
obligee of any of the Assumed Liabilities has had, now has, or hereafter
can, shall or may have in respect thereto against Seller, or as rendering
valid, or enforceable, against Buyer any of the Assumed Liabilities which,
for any reason whatsoever, would not have been valid and enforceable
against Seller and/or its affiliates and that any of the Assumed
Liabilities which would have been valid or enforceable, against Seller
and/or its affiliates only partially, conditionally,
65
<PAGE> 74
contingently or to a limited extent, or in a limited manner, shall be
valid and enforceable against Buyer to no greater extent, and in no
different manner, than the Assumed Liabilities would have been valid and
enforceable against Seller and/or its affiliates.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by mutual written consent of Seller and
Buyer;
(b) at any time on or after October 1, 1996, by either Seller,
on the one hand, or Buyer, on the other hand, if the Closing shall not have
occurred on or prior to such date;
(c) by Buyer or Seller if any court of competent jurisdiction
or other governmental body shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and non-appealable;
(d) by Buyer, (i) if there has been any violation or breach by
Seller in any material respect of any material representation warranty, covenant
or obligation contained in this Agreement and such violation or breach has not
been waived by Buyer or (ii) if Buyer shall not have received the shareholder
approval referred to in Section 6.1(e) hereof; or
66
<PAGE> 75
(e) by Seller, if there has been a violation or breach by
Buyer in any material respect of any material representation, warranty, covenant
or obligation contained in this Agreement and such violation or breach has not
been waived by Seller.
If Buyer or Seller shall terminate this Agreement pursuant to the provisions
hereof, such termination shall be effected by notice to the other parties
specifying the provision hereof pursuant to which such termination is made.
Section 8.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 8.1 hereof, written notice thereof shall
forthwith be given by the party so terminating to the other party hereto and
this Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by Seller, on the one hand, or Buyer, on the
other hand. If this Agreement is terminated pursuant to Section 8.1 hereof:
(a) each party shall redeliver all documents, work papers and
other materials of the other parties relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same, and all confidential information received by any party
hereto with respect to the other party shall be treated in accordance with the
Confidentiality Agreement;
(b) all filings, applications and other submissions made
pursuant hereto shall, at the option of the filing party, and to the extent
practicable, be withdrawn from the agency or other person to which made; and
(c) there shall be no liability or obligation hereunder on the
part of Seller or Buyer or any of
67
<PAGE> 76
their respective directors, officers, employees, affiliates, controlling
persons, agents or representatives, except that Seller or Buyer, as the case may
be, may have liability to the other party if the basis of termination is a
willful, material breach by Seller or Buyer, as the case may be, of one or more
of the provisions of this Agreement, and except that the obligations provided
for in Sections 8.2(a), 8.2(b) and 10.3 hereof shall survive any such
termination.
Section 8.3 Amendment, Modification and Waiver. This Agreement may
be amended, modified or supplemented at any time by written agreement of Seller
and Buyer. Any failure of Seller, on the one hand, or Buyer, on the other hand,
to comply with any term or provision of this Agreement may be waived, with
respect to Buyer, by Seller and, with respect to Seller, by Buyer, by an
instrument in writing signed by or on behalf of the appropriate party, but such
waiver or failure to insist upon strict compliance with such term or provision
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure to comply.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 9.1 Survival of Representations, Warranties and Agreements.
The representations and warranties of Seller and Buyer, made in this Agreement
shall survive the Closing until March 31, 1998 (the "Indemnity Period"), but,
except as provided in Section 8.2(c) hereof, shall not survive any termination
of this Agreement. The Indemnity Period shall not apply to Buyer Damages (as
hereinafter defined) arising out of a breach of any covenant or obligation
contained in this Agreement or arising pursuant to Sections 9.2(a)(ii), (iii) or
(iv) hereof. The parties intend to shorten the statute of
68
<PAGE> 77
limitations and agree that no claims or causes of action may be brought against
Seller, Buyer or any of their respective directors, officers, employees,
affiliates, controlling persons, agents or representatives based upon, directly
or indirectly, any of the representations and warranties contained in this
Agreement after the Indemnity Period or, except as provided in Section 8.2(c)
hereof, any termination of this Agreement. This Section 9.1 shall not limit any
covenant or agreement of the parties which contemplates performance after the
Closing, including, without limitation, the covenants and agreements set forth
in Sections 5.8 and 10.2 hereof.
Section 9.2 Seller's Agreement to Indemnify.
(a) Subject to the terms and conditions set forth herein, from
and after the Closing, Seller shall indemnify and hold harmless Buyer and its
directors, officers, employees, affiliates, controlling persons, agents and
representatives and their successors and assigns (collectively, the "Buyer
Indemnitees") from and against all liability, demands, claims, actions or causes
of action, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively "Buyer
Damages") asserted against or incurred by any Buyer Indemnitee as a result of,
relating to or arising out of the following:
(i) a breach of any representation, warranty, obligation or
covenant contained in this Agreement when made or at and as of the Closing as
though such representations, warranties, agreements and obligations were made at
and as of the Closing;
(ii) any of the Excluded Liabilities or any other liability or
obligation of Seller not expressly assumed by Buyer under this Agreement
regardless of whether or not such events constitute a breach of a representation
or warranty hereunder;
69
<PAGE> 78
(iii) any Environmental Condition resulting from Seller's or
its predecessors' ownership or operation of the Business or the real property
owned or leased by the Business arising under or related to compliance with any
Environmental Laws or Environmental Permits (as such laws and permit
requirements exist on the Closing Date), in each case existing prior to Closing,
whether or not known to Buyer or to Seller at the time of Closing and regardless
of whether or not such events constitute a breach of a representation or
warranty hereunder; and
(iv) any event, fact or condition relating to or arising from
the ownership, control, management or operation of the Business or the real
property owned or leased by the Business or the other assets of the Business or
otherwise arising or occurring prior to the Closing Date regardless of whether
Seller or Buyer had knowledge or was aware thereof, and regardless of whether or
not such events constitute a breach of a representation or warranty hereunder,
on or prior to the Closing Date, including without limitation those arising
under the Comprehensive Environmental Response, Cleanup and Liability Act, as
amended (as such laws exist as of the Closing Date);
provided, that in no case shall the provisions of this Section 9.2 relieve Buyer
of its obligations to assume, discharge and pay the Assumed Liabilities.
(b) Seller's obligations to indemnify the Buyer Indemnitees
pursuant to clause (i) of Section 9.2(a) hereof with respect to a breach of a
representation, warranty, obligation or covenant contained in this Agreement are
subject to the following limitations:
(i) No indemnification shall be made by Seller unless the
aggregate amount of Buyer Damages exceeds $250,000 and, in such event,
indemnification shall
70
<PAGE> 79
be made by Seller only to the extent Buyer Damages exceed $250,000, it being
understood that such $250,000 shall be a "deductible" for the Seller; provided,
that such "deductible" shall not apply to any indemnification pursuant to
Section 9.2(a)(ii) hereof or any breach of Section 5.19 hereof.
(ii) In no event shall Seller's aggregate obligation to
indemnify the Buyer Indemnitees exceed the adjusted Purchase Price (the
"Purchase Price Cap"); provided, that any indemnification pursuant to Section
9.2(a)(iii) or (iv) hereof may exceed the Purchase Price Cap but shall not
exceed $8,500,000 (the "Environmental Indemnification Cap"); provided, further
that (A) any such Section 9.2(a)(iii) or (iv) indemnification shall be counted
towards the Purchase Price Cap and (B) any indemnification for other items under
this Section 9.2 shall be counted towards the Environmental Indemnification Cap;
(iii) The amount of any Buyer Damages shall be reduced by any
amount received by a Buyer Indemnitee with respect thereto under any insurance
coverage or from any other party alleged to be responsible therefor. The Buyer
Indemnitees shall use reasonable efforts to collect any amounts available under
such insurance coverage and from such other party alleged to have
responsibility. If a Buyer Indemnitee receives an amount under insurance
coverage or from such other party with respect to Buyer Damages at any time
subsequent to any indemnification provided by the Seller pursuant to this
Section 9.2, then such Buyer Indemnitee shall promptly reimburse the Seller, for
any payment made or expense incurred by the Seller in connection with providing
such indemnification up to such amount received by the Buyer Indemnitee, but net
of any expenses incurred by such Buyer Indemnitee in collecting such amount;
(iv) Seller shall be obligated to indemnify the Buyer
Indemnitees only for those claims giving
71
<PAGE> 80
rise to Buyer Damages as to which the Buyer Indemnitees have given Seller
written notice thereof prior to the end of the Indemnity Period in the event
that the Indemnity Period applies to such Buyer Damages. Any written notice
delivered by a Buyer Indemnitee to Seller with respect to Buyer Damages shall
set forth with as much specificity as is reasonably practicable the basis of the
claim for Buyer Damages and, to the extent reasonably practicable, a reasonable
estimate of the amount thereof.
Section 9.3 Third Party Indemnification. The obligations of Seller
to indemnify the Buyer Indemnitees under Section 9.2 hereof with respect to
Buyer Damages resulting from the assertion of liability by third parties (a
"Claim"), will be subject to the following terms and conditions:
(a) Any party against whom any Claim is asserted will give the
party required to provide indemnity hereunder written notice of any such Claim
promptly after learning of such Claim, and the indemnifying party may at its
option undertake the defense thereof, at its own expense, by representatives of
its own choosing. Failure to give prompt notice of a Claim hereunder shall not
affect the indemnifying party's obligations under this Section 9.3, except to
the extent the indemnifying party is materially prejudiced by such failure to
give prompt notice. If the indemnifying party, within 30 days after notice of
any such Claim, or such shorter period as is reasonably required, fails to
assume the defense of such Claim, the Buyer Indemnitee against whom such claim
has been made will (upon further notice to the indemnifying party) have the
right to undertake the defense, compromise or settlement of such claim on behalf
of and for the account and risk, and at the expense, of the indemnifying party,
subject to the right of the indemnifying party to assume the defense of such
Claim at any time prior to settlement, compromise or final determination
thereof.
72
<PAGE> 81
(b) Anything in this Section 9.3 to the contrary
notwithstanding, the indemnifying party shall not enter into any settlement or
compromise of any action, suit or proceeding or consent to the entry of any
judgment (i) which does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to the Buyer Indemnitee of a written
release from all liability in respect of such action, suit or proceeding or (ii)
for other than monetary damages to be borne by the indemnifying party without
the prior written consent of the Buyer Indemnitee, which consent shall not be
unreasonably withheld.
ARTICLE X
MISCELLANEOUS
Section 10.1 Sales and Transfer Taxes. Buyer and Seller shall share
equally the payment of all sales, use, transfer and conveyance taxes (including
penalties, interest and additions) arising in connection with the sale and
transfer of the Assets to Buyer (collectively, the "Transfer Taxes") pursuant to
this Agreement, and Buyer and Seller shall cooperate in the preparation of all
necessary tax returns and other documentation with respect to any Transfer Tax;
provided, that Seller shall be solely responsible for any federal, state,
provincial, local or foreign income or gains tax assessed as the result of the
transactions contemplated hereby.
Section 10.2 Property Taxes. Liability for real, personal and
intangible property taxes imposed upon Buyer or Seller with respect to the
Assets for a tax year commencing prior to the Closing Date and concluding
subsequent to the Closing Date shall be apportioned between Buyer and Seller on
a per diem basis with respect to such tax year.
73
<PAGE> 82
Section 10.3 Fees and Expenses. Whether or not the transactions
contemplated herein are consummated pursuant hereto, except as otherwise
provided herein, each of Seller, on the one hand, and Buyer, on the other hand,
shall pay all fees and expenses incurred by, or on behalf of, such party in
connection with, or in anticipation of, this Agreement and the consummation of
the transactions contemplated hereby. Each of Seller, on the one hand, and
Buyer, on the other hand, shall indemnify and hold harmless the other party from
and against any and all claims or liabilities for financial advisory and
finders' fees incurred by reason of any action taken by such party or otherwise
arising out of the transactions contemplated by this Agreement by any person
claiming to have been engaged by such party.
Section 10.4 Further Assurances. From time to time after the Closing
Date, at the request of another party hereto and at the expense of the party so
requesting, each of the parties hereto shall execute and deliver to such
requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
Section 10.5 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such party
as shall be specified by notice given hereunder):
74
<PAGE> 83
If to the Buyer, to:
Golden West Refining Corporation Limited
17 Glassford Road
Kewdale,
Western Australia, 6105
Fax No. (61-9) 353 1232
Attention: Sean Russo
with a copy to:
Robinson & Cole
Financial Centre
P.O. Box 10305
Stamford, Connecticut 06904-2305
Fax No. (203) 462-7599
Attention: Richard A. Krantz, Esq.
If to the Seller, to:
Handy & Harman
International Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, NY 10580
Fax No. (914) 525-4493
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022-9931
Fax No. (212) 735-2001
Attention: Milton G. Strom
All such notices, requests, demands, waivers and communications shall be deemed
received upon (i) actual receipt thereof by the addressee, (ii) actual delivery
75
<PAGE> 84
thereof to the appropriate address or (iii) in the case of a facsimile
transmission, upon transmission thereof by the sender and issuance by the
transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously mail
a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
Section 10.6 Severability. Should any provision of this Agreement
for any reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of this
Agreement, which remaining provisions shall remain in full force and effect and
the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and enforced to the fullest extent permitted by law.
Section 10.7 Binding Effect; Assignment. This Agreement and all of
the provisions hereof shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned, directly or indirectly, including, without limitation, by
operation of law, by any party hereto without the prior written consent of the
other party hereto, except that Buyer shall have the right to assign this
Agreement (and the rights, interests and obligations hereunder) to any
subsidiary or affiliate of Buyer without the prior written consent of Seller;
provided, that the Buyer shall continue to remain liable to Seller for any
amounts or obligation owing to Seller hereunder.
76
<PAGE> 85
Section 10.8 No Third Party Beneficiaries. This Agreement is solely
for the benefit of Seller and its respective successors and permitted assigns,
with respect to the obligations of Buyer under this Agreement, and for the
benefit of Buyer and its respective successors and permitted assigns, with
respect to the obligations of Seller, under this Agreement, and this Agreement
shall not be deemed to confer upon or give to any other third party any remedy,
claim liability, reimbursement, cause of action or other right.
Section 10.9 Interpretation.
(a) The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
(b) As used in this Agreement, the term "person" shall mean
and include an individual, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(c) As used in this Agreement, the term "affiliate" shall have
the meaning set forth in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended.
Section 10.10 Jurisdiction and Consent to Service. Without limiting
the jurisdiction or venue of any other court, Seller and Buyer (a) agree that
any suit, action or proceeding arising out of or relating to this Agreement may
be brought solely in the state or federal courts of New York; (b) consents to
the exclusive jurisdiction of each such court in any suit, action or proceeding
relating to or arising out of this Agreement; (c) waives any objection which it
may have to the laying of
77
<PAGE> 86
venue in any such suit, action or proceeding in any such court; and (d) agrees
that service of any court paper may be made in such manner as may be provided
under applicable laws or court rules governing service of process.
Section 10.11 Entire Agreement. This Agreement, the Confidentiality
Agreement, the Disclosure Schedules, and the Exhibits and other documents
referred to herein or delivered pursuant hereto which form a part hereof
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties or any of them with respect to the subject
matter hereof, including, without limitation, the Letter Agreement, dated
February 16, 1996, between Seller and Buyer.
Section 10.12 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
Section 10.13 Specific Performance. The parties acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies, each
shall be entitled to enforce the terms of this Agreement by a decree of specific
performance without the necessity of proving the inadequacy of money damages as
a remedy.
Section 10.14 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
78
<PAGE> 87
Section 10.15 Waivers. Any condition to a party's obligation
hereunder may only be waived in writing by such party. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
79
<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
GOLDEN WEST REFINING
CORPORATION LIMITED
By:_____________________________________
Name:
Title:
HANDY & HARMAN
By:_____________________________________
Name:
Title:
<PAGE> 1
-----------------------------------------------------------
OLYMPIC MANUFACTURING GROUP, INC.
STOCK PURCHASE AGREEMENT
Among
SAUGATUCK CAPITAL COMPANY LIMITED PARTNERSHIP III,
THE OTHER SELLERS NAMED HEREIN
and
HANDY & HARMAN
Dated as of February 19, 1997
-----------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1. SALE AND PURCHASE OF SHARES................................ 1
1.1 Sale of Shares............................................. 1
1.2 Purchase Price and Payment for Shares...................... 1
1.3 Delivery of the Shares..................................... 3
1.4 Application of the Company's Cash.......................... 3
1.5 Cash Out of Options........................................ 3
ARTICLE 2. CLOSING AND TERMINATION.................................... 4
2.1 Closing.................................................... 4
2.2 Termination................................................ 4
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.................. 5
3.1 Organization and Authority of Seller....................... 5
3.2 Corporate Organization and Authority of
Company.................................................... 5
3.3 Subsidiaries and Equity Investments........................ 5
3.4 Ownership of Shares........................................ 6
3.5 Capitalization............................................. 6
3.6 Consents and Approvals; No Violation....................... 6
3.7 Financial Statements....................................... 7
3.8 Title to Properties; Absence of Liens...................... 7
3.9 Litigation................................................. 9
3.10 Compliance with Law........................................ 9
3.11 Contracts................................................. 10
3.12 Tax Matters............................................... 10
3.13 Employee Benefits; ERISA.................................. 12
3.14 Certain Events............................................ 14
3.15 Environmental Matters..................................... 17
3.16 Accounts Receivable....................................... 18
3.17 Inventories............................................... 19
3.18 Machinery and Equipment................................... 19
3.19 Patents; Trademarks; Trade Names; Copyrights;
Licenses, Etc............................................. 19
3.20 Certain Liabilities....................................... 19
3.21 Compensation and Consulting Arrangements.................. 20
3.22 Insurance................................................. 20
-i-
<PAGE> 3
3.23 Disclaimer of Other Representations and
Warranties; Best Knowledge; Disclosure.................... 21
3.24 Product Liability......................................... 22
3.25 Prior Acquisitions........................................ 22
3.26 Take or Pay Contracts..................................... 23
3.27 Restrictive Agreements.................................... 23
3.28 Nature of Business........................................ 23
3.29 Judgments................................................. 23
3.30 Existing Indebtedness..................................... 23
3.31 Accounts Payable.......................................... 23
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER................... 24
4.1 Organization.............................................. 24
4.2 Corporate Authority....................................... 24
4.3 Consents and Approvals; No Violation...................... 24
4.4 Investment Intent......................................... 24
4.5 Litigation................................................ 25
4.6 Knowledge of Buyer........................................ 25
ARTICLE 5. CERTAIN COVENANTS AND AGREEMENTS OF SELLERS AND
BUYER..................................................... 25
5.1 Conduct of Business Prior to the Closing Date............. 25
5.2 Tax Covenants............................................. 29
5.3 Expenses and Finders' Fees................................ 36
5.4 Access to Information; Verification of
Inventory and Confidentiality............................. 36
5.5 Press Releases............................................ 37
5.6 Books and Records......................................... 37
5.7 Options and Warrants...................................... 38
5.8 Accounts Payable.......................................... 38
5.9 Bank Waiver............................................... 38
ARTICLE 6. CONDITIONS PRECEDENT OF BUYER............................. 38
6.1 Representations and Warranties............................ 38
6.2 Opinion of Counsel........................................ 38
6.3 No Actions................................................ 38
6.4 Consents.................................................. 39
6.5 Closing Documentation..................................... 39
6.6 Approval of Legal Matters................................. 40
6.7 Bank Waiver............................................... 40
6.8 Escrow Agreement.......................................... 40
6.9 Fleet Bank Waiver......................................... 40
-ii-
<PAGE> 4
ARTICLE 7. CONDITIONS PRECEDENT OF SELLERS........................... 40
7.1 Representations and Warranties............................ 40
7.2 Opinion of Buyer's Counsel................................ 41
7.3 No Actions................................................ 41
7.4 Consents.................................................. 41
7.5 Closing Documentation..................................... 41
7.6 Approval of Legal Matters................................. 41
7.7 Escrow Agreement.......................................... 42
7.8 No Material Adverse Change................................ 42
7.9 Repayment of Foster & Foster Indebtedness................. 42
ARTICLE 8. INDEMNIFICATION........................................... 42
8.1 Indemnification by Sellers................................ 42
8.2 Indemnification by Buyer.................................. 43
8.3 Remedies.................................................. 44
8.4 Period of Indemnity....................................... 44
8.5 Certain Limitations....................................... 44
8.6 Contribution.............................................. 46
ARTICLE 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES................ 46
9.1 Representations and Warranties............................ 46
ARTICLE 10. MISCELLANEOUS............................................. 46
10.1 Cooperation............................................... 46
10.2 Waiver.................................................... 46
10.3 Notices................................................... 46
10.4 Governing Law and Consent to Jurisdiction................. 47
10.5 Counterparts.............................................. 48
10.6 Headings.................................................. 48
10.7 Entire Agreement.......................................... 48
10.8 Amendment and Modification................................ 48
10.9 Binding Effect; Benefits.................................. 48
10.10 Assignability............................................. 48
10.11 Saugatuck as Agent of Sellers............................. 48
-iii-
<PAGE> 5
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1 Number of Shares to be Sold by Each Seller
Schedule 1.2(a) Net Present Value of Balloon Payments on
Certain Operating Leases
Schedule 1.4 Third Party Indebtedness to be Repaid at
Closing
Schedule 1.5 Payments Relating to Cash Out of Certain
Options
Schedule 3.5 Capitalization
Schedule 3.6 No Violations; Consents
Schedule 3.7 Exceptions to GAAP on Financial Statements
Schedule 3.8 Encumbrances; Real Property; Property Not in
Satisfactory Condition
Schedule 3.9 Litigation
Schedule 3.11 Contracts
Schedule 3.13 Employee Plans
Schedule 3.14 Changes from and Events Outside of the
Ordinary Course
Schedule 3.15 Environmental Permits; Noncompliance
Schedule 3.16 Accounts Receivable
Schedule 3.18(a) Owned Equipment
Schedule 3.18(b) Leased Equipment
Schedule 3.19 Intellectual Property
Schedule 3.20 Certain Liabilities
Schedule 3.21 Employees and Compensation
Schedule 3.22(a) Insurance Policies
Schedule 3.22(b) Property Damage; Personal Injury Claims
Schedule 3.23 Persons with "Knowledge"
Schedule 3.24 Product Liability Claims
Schedule 3.30 Existing Indebtedness
Exhibit A Escrow Agreement
Exhibit B Proportionate Share of Each Seller
Exhibit C Opinion of Sellers's Counsel
Exhibit D Opinion of Buyer's Counsel
Exhibit E Stockholder Consent
-iv-
<PAGE> 6
STOCK PURCHASE AGREEMENT dated as of February 19, 1997 (herein,
together with the Schedules and Exhibits attached hereto referred to as the
"Agreement") among SAUGATUCK CAPITAL COMPANY LIMITED PARTNERSHIP III, a Delaware
limited partnership, ("Saugatuck") and the other security holders listed on the
signature pages hereof (collectively, the "Sellers"), and HANDY & HARMAN, a New
York corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, Sellers are the beneficial and record holders of all of the
presently issued and outstanding shares of capital stock of OLYMPIC
MANUFACTURING GROUP, INC., a Delaware corporation (together with its subsidiary,
the "Company"), together with certain options and warrants to acquire additional
shares of such capital stock (the presently issued shares, together with the
shares of capital stock to be issued upon exercise of such options and warrants,
being hereinafter referred to as the "Shares"); and
WHEREAS, Sellers wish to sell and Buyer wishes to purchase the
Shares and the parties wish to consummate the other transactions herein
provided, all upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in reliance upon the representations and warranties
made herein and in consideration of the mutual agreements herein contained, the
parties agree as follows:
ARTICLE 1.
SALE AND PURCHASE OF SHARES
1.1 Sale of Shares. At the Closing provided for in Section 2.1, each
Seller shall sell the number of Shares set forth opposite his or its name on
Schedule 1.1 to Buyer and Buyer shall purchase the Shares for the aggregate
purchase price provided in Section 1.2.
<PAGE> 7
1.2 Purchase Price and Payment for Shares. (a) Purchase Price. The
aggregate purchase price (the "Purchase Price") for the Shares is $53,020,000
less (i) the amount of Third Party Indebtedness (as defined below) net of cash
as provided in Section 1.4 and (ii) the amount set forth on Schedule 1.2(a)
relating to the net present value of the balloon payments on the Company's
operating leases and the cost of repairs for noise abatement to be agreed to by
Buyer and Seller prior to Closing. The foregoing payments shall constitute the
full Purchase Price for the Shares. In addition, Buyer, Sellers and the Company
will act in concert to cause $2,300,000 of the Purchase Price (the "Initial
Escrow Amount") to be delivered to NationsBank, N.A., as escrow agent (the
"Escrow Agent"). Buyer shall deliver to the Escrow Agent the amounts set forth
in Section 5.2(e) (the "Additional Escrow Amount" and together with the Initial
Escrow Amount, the "Escrow Amount"), which will be held and disposed of by the
Escrow Agent pursuant to the Escrow Agreement, the form of which is attached
hereto as Exhibit A. Any portion of the Escrow Amount paid to the Buyer in
accordance with the Escrow Agreement and Section 8.1 hereof shall be deemed a
reduction in the Purchase Price paid by the Buyer for the Shares. Each Seller
shall be entitled to receive such percentage of the Purchase Price as set forth
on Schedule 1.1 and shall have such percentage interest in the Escrow Amount as
is set forth opposite such Seller's name on Exhibit B hereto; provided that
Escrow Agent shall distribute such funds to Saugatuck, which shall have the
right to apply such funds toward the payment of or reimbursement for any costs
and expenses incurred by it in connection with the transactions contemplated
hereby (including without limitation, the reasonable fees and expenses of
counsel), before distributing to each Seller its percentage interest. For the
purposes of this Agreement, "Third Party Indebtedness" means the indebtedness
listed on Schedule 1.4.
(b) Payment of Purchase Price. At the Closing, (i) Buyer shall
deliver to the Company an amount equal to the Third Party Indebtedness as set
forth on Schedule 1.4, (ii) the Company shall (A) pay each option holder such
option holder's cash out price, less in the case of each Seller, such Seller's
pro rata share (in accordance with each Seller's percentage interest set forth
in Exhibit B hereto) of the Initial Escrow Amount, which the Company shall
deliver to the Escrow Agent and (B) pay off the Third Party Indebtedness, (iii)
Buyer shall deliver to a payment agent to be mutually agreed to (the "Payment
Agent") the balance of the Purchase Price that has not been paid
-2-
<PAGE> 8
pursuant to clause (i) above, (iv) Payment Agent shall (A) deliver to the
Company the cash out price of the options before tax and escrow withholdings as
set forth on Schedule 1.5, (B) deliver to the Escrow Agent each Seller's pro
rata share (in accordance with each Seller's percentage interest set forth in
Exhibit B hereto) of the Initial Escrow Amount unless previously withheld
pursuant to clause (ii) above, (C) deliver to each warrant holder such warrant
holder's cash out price less such warrant holder's pro rata share (in accordance
with each warrant holder's percentage interest set forth in Exhibit B hereto) of
the Initial Escrow Amount, which Payment Agent shall deliver to the Escrow
Agent, (D) deliver to Saugatuck the amount of any costs and expenses incurred by
it in connection with the transactions contemplated hereby plus $75,000 to pay
for any transaction costs and expenses incurred after the Closing (and to pay at
the end of the indemnity period specified in Section 8.4 each option holder who
is not a Seller such option holder's pro rata share of any Additional Escrow
Amounts without regard to whether any indemnity claims have been paid and
without regard to whether any Escrow Amount remains with the Escrow Agent) and
(E) deliver to each Seller such Seller's pro rata share of the balance of the
Purchase Price (in accordance with each Seller's percentage interest set forth
in Schedule 1.1) and (v) Saugatuck shall pay all the costs and expenses incurred
by it in connection with the transactions contemplated hereby.
1.3 Delivery of the Shares. At the Closing, Sellers will deliver to
Buyer stock certificate(s), in form suitable for transfer, registered in the
name of Sellers, evidencing the Shares, with an executed blank stock transfer
power attached, and with all necessary stock transfer tax stamps attached
thereto.
1.4 Application of the Company's Cash. After making any payments
required by Section 5.8 hereof, Saugatuck shall cause the Company to settle, as
of the Closing Date, the Third Party Indebtedness listed on Schedule 1.4 by
applying to such indebtedness all of the Company's cash as of the Closing Date,
which shall include cash on hand, cash received but not posted to the Company's
account and cash equivalents. Within 10 days after the Closing, Buyer will
reimburse Saugatuck (for pro rata distribution to the Sellers in accordance with
each Seller's percentage interest set forth in Exhibit B hereto) for cash
received but not posted to the Company's account at Closing. An amount equal to
the balance of such Third Party Indebtedness (less the amount of any checks
drawn on Company accounts within
-3-
<PAGE> 9
90 days prior to the Closing which have not cleared), after application of the
Company's cash as provided above, shall be paid by Buyer to the Company at the
Closing and Saugatuck shall cause the Company to repay the balance of such Third
Party Indebtedness at the Closing. Saugatuck and the Company shall provide Buyer
with reasonably satisfactory evidence of the payment of all Third Party
Indebtedness listed on Schedule 1.4 upon such payment.
1.5 Cash Out of Options. At or prior to the Closing, Saugatuck will
cause the Company to repurchase, cash out or cancel certain outstanding options
as set forth on Schedule 1.5, which payments are to be made through the
Company's payroll or through the Company's operating account as specified in
Schedule 1.5. Payments of cash or other property (including stock of the
Company) in respect of the repurchase, cash out or cancellation of such options
shall, to the extent made in respect of options issued as compensation for
United States federal, state or local income tax purposes, be made net of any
Tax required by law to be deducted or withheld.
ARTICLE 2.
CLOSING AND TERMINATION
2.1 Closing. The closing of the transactions provided for herein
(the "Closing") will take place at the offices of Winthrop, Stimson, Putnam &
Roberts, Financial Centre, 695 East Main Street, Stamford, Connecticut at 10:00
A.M. (local time) on February 28, 1997 (the "Closing Date") or at such other
place, time and date as may be agreed upon by Buyer and Saugatuck.
2.2 Termination. Anything contained in this Agreement other than in
this Section 2.2 to the contrary notwithstanding, this Agreement may be
terminated in writing at any time:
(a) without liability on the part of any party hereto (unless
either party has a right of termination under subparagraph (b) or (c) below), by
mutual written consent of Buyer and Saugatuck;
(b) by Buyer, if (i) Sellers shall breach in any material
respect any of their respective representations, warranties or obligations
hereunder, (ii) Sellers shall not have provided reasonable assurance that such
breach will be cured in
-4-
<PAGE> 10
all material respects on or before the Closing Date, and (iii) such breach shall
not have been cured in all material respects or waived by Buyer prior to or as
of the Closing Date, but only if such breach, singly or together with all other
such breaches, constitutes a failure of the conditions contained in Section 6.1
as of the date of such termination;
(c) by Saugatuck, if (i) Buyer shall breach in any material
respect any of its representations, warranties or obligations hereunder, (ii)
Buyer shall not have provided reasonable assurance that such breach will be
cured in all material respects on or before the Closing Date, and (iii) such
breach shall not have been cured in all material respects or waived by Saugatuck
prior to or as of the Closing Date, but only if such breach, singly or together
with all other such breaches, constitutes a failure of the conditions contained
in Section 7.1 as of the date of such termination; or
(d) by either Buyer or Saugatuck after March 31, 1997 if the
Closing shall not have occurred prior to such date; provided, that, the party
terminating this Agreement shall not be permitted to so terminate this Agreement
if such party shall then be in breach in any material respect of its
representations, warranties or obligations under this Agreement.
-5-
<PAGE> 11
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to the Schedules attached hereto and referred to below,
Daniel P. Murphy, Hubert T. McGovern, Thomas P. Wagner and Patrick J. McDonough
(collectively, the "Management Parties") and Saugatuck (together with the
Management Parties, the "Representing Parties") and with regard to Sections 3.1,
3.4, 3.6, 3.9 and 3.23, each other Seller as to itself only and not as to the
Company or any other Seller, represents and warrants to Buyer that:
3.1 Organization and Authority of Seller. If a corporation or
partnership, Seller is duly organized and validly existing under the laws of the
state of its organization. Such Seller has full corporate, partnership or other
power and authority to enter into this Agreement and all other documents
required to be entered into by such Seller pursuant hereto (this Agreement,
collectively with such other documents, the "Agreements") and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by such Seller of the Agreements have been duly authorized by all
requisite corporate, partnership or other action. This Agreement has been, and
each of the other Agreements will be as of the Closing Date, duly executed and
delivered by such Seller, and (assuming due execution and delivery by Buyer)
this Agreement constitutes, and each of the other Agreements when executed and
delivered will constitute, a valid and binding obligation of such Seller,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally or by general equitable principles.
3.2 Corporate Organization and Authority of Company. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power and authority to carry
on its business as now being conducted and to own its properties and is duly
licensed or qualified and in good standing as a foreign corporation in each
jurisdiction in which it is required to be so licensed or so qualified, except
where the failure to be so licensed or so qualified would not have a material
adverse effect on the financial condition, assets, liabilities (contingent or
otherwise), cash flows or results of operations of the Company considered as a
whole (a "Material Adverse Effect"). Saugatuck
-6-
<PAGE> 12
has heretofore delivered or made available to Buyer complete and correct copies
of the certificate of incorporation, by-laws or similar corporate organizational
documents of the Company and each Subsidiary (as defined below) as currently in
effect and as shall be in effect on the Closing Date.
3.3 Subsidiaries and Equity Investments. Except for
Olympic Marketing Foreign Sales Corporation, the Company has no
Subsidiaries (as defined below), is not a general or limited
partner in any partnership or coventurer in any joint venture or other business
enterprise and has no outstanding equity or other investments in any Person
other than Subsidiaries of the Company, whether by means of share purchase,
capital, equity or similar contribution, loan, advance, time deposit or
otherwise. The term "Subsidiary" means any corporation of which the Company,
directly or indirectly, owns or controls capital stock representing more than
fifty percent of the general voting power under ordinary circumstances of such
corporation.
3.4 Ownership of Shares. Seller is the lawful record and beneficial
owner of the Shares to be sold by it. Except for the Investor Stockholders
Agreement dated as May 26, 1994 by and among the Company, Saugatuck and certain
other Sellers (which will be terminated on or prior to the Closing), Seller owns
the Shares to be sold by it free and clear of all Encumbrances (as defined
below) except for restrictions on transfer under federal and state securities
laws. Seller will deliver beneficial and legal, valid and indefeasible title to
such Shares as contemplated under Section 1.3 to Buyer, free and clear of all
Encumbrances except for restrictions on transfer under federal and state
securities laws.
3.5 Capitalization. The authorized capital of the Company consists
of 12,600,000 shares of common stock, par value $0.00166 per share (the "Common
Stock"), of which (i) 4,355,340 shares are issued and outstanding, (ii)
1,884,660 shares are reserved for issuance upon exercise of warrants and options
and (iii) no shares are reflected on the books and records of the Company as
treasury shares. The Company has no other class of capital stock authorized or
outstanding. Except as set forth on Schedule 3.5, none of the Company's shares
of capital stock have been reserved for any purpose. All of the Shares are duly
authorized and validly issued, fully paid, nonassessable and were not issued in
violation of any preemptive rights. Except as set forth on Schedule 3.5, there
are no (i) options, warrants, calls,
-7-
<PAGE> 13
commitments or rights of any character to purchase or otherwise acquire from the
Company shares of any class of capital stock of the Company, (ii) outstanding
securities of the Company that are convertible into or exchangeable or
exercisable for shares of any class of capital stock of the Company, (iii)
options, warrants or other rights to purchase from the Company any such
convertible or exchangeable securities, or (iv) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
or transfer of any capital stock of the Company.
3.6 Consents and Approvals; No Violation. Except as set forth in
Schedule 3.6 and except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), there is no requirement applicable to any Seller or
the Company to make any filing with, or to obtain any permit, authorization,
consent or approval of, any court of competent jurisdiction, regulatory
authority or other public body, federal, state or local domestic or foreign (a
"Governmental Entity") as a condition to the lawful consummation by Seller of
the transactions contemplated by this Agreement. Except as set forth in Schedule
3.6 and except for applicable requirements of the HSR Act, neither the execution
and delivery of this Agreement by Seller, nor the consummation by Seller of the
transactions contemplated hereby, nor compliance by Seller with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws of the Company, (ii)
result in the creation of any material Encumbrance (as defined below) under, or
a breach of, or default under (or give rise to any right of termination,
cancellation or acceleration under), any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement, lease or other
instrument or obligation to which any Seller or the Company is a party, or by
which any of their respective businesses, properties or assets may be bound,
except for such breaches or defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained or
will be obtained prior to the Closing Date or which would not have a Material
Adverse Effect or (iii) violate any order, judgment, writ, injunction, decree,
statute, rule or regulation applicable to any Seller, the Company or the
Company's assets or properties, except for such violations which would not have
a Material Adverse Effect.
-8-
<PAGE> 14
3.7 Financial Statements. The audited balance sheet of the Company
as of September 28, 1996 and the related audited income and cash flow statements
for the fiscal year then ended (including the notes thereto and any other
information included therein) and the unaudited year-to-date financial
statements as of December 28, 1996 are hereinafter collectively referred to as
the "Financial Statements." The Financial Statements are based on and reflect
the books and records of the Company (which books and records have been
routinely maintained on a consistent basis in accordance with the Company's
accounting policies). Except as noted therein or as set forth on Schedule 3.7,
the Financial Statements were prepared in accordance with the Company's
accounting policies referred to above and with generally accepted accounting
principles in the United States ("U.S. GAAP") applied on a consistent basis with
prior years. The Financial Statements fairly present in all material respects
the financial position of the Company at such date and the results of the
Company's operations and its cash flows for the period then ended.
3.8 Title to Properties; Absence of Liens. (a) Title to each piece
and parcel of (including improvements thereon) the Company's owned real property
reflected on the audited balance sheet of the Company as of September 28, 1996
(except for property and assets disposed of since September 28, 1996, or
acquired since September 28, 1996 in the ordinary course of business consistent
with past practice) and required by U.S. GAAP to be included on the balance
sheet of the Company, is marketable, good of record and in fact, insurable by a
recognized title insurance company and free and clear of any pledges, liens,
charges, encumbrances, rights-of-way, easements, defects, security interests,
claims, options and restrictions of every kind ("Encumbrances"), except for (i)
Encumbrances reflected in the audited balance sheet of the Company as of
September 28, 1996, (ii) Encumbrances created in the ordinary course of business
subsequent to September 28, 1996, none of which is in excess of $25,000
individually, except as set forth on Schedule 3.8, (iii) Encumbrances that,
individually or in the aggregate, do not materially interfere with the present
use by the Company or present value of the property subject thereto or affected
thereby, (iv) Encumbrances for taxes, assessments or governmental charges, or
landlords', mechanics', workmen's, materialmen's or similar liens, in each case
that are not delinquent or which are diligently being contested in good faith
and (v) Encumbrances that are reflected in the title reports delivered or
otherwise
-9-
<PAGE> 15
made available to Buyer by the Company or Saugatuck in connection with
the transactions contemplated hereby.
(b) To the Representing Parties' best knowledge, except as set
forth in Schedule 3.8 and except as would not have a Material Adverse Effect, no
improvements on the Company's owned real property are in violation of any zoning
or set-back requirement or similar restriction or regulation, all such
improvements are located within the legal metes and bounds of the real property
and none of such improvements on the real property encroach on any easement or
right of way.
(c) To the Representing Parties' best knowledge, except as set
forth in Schedule 3.8, the properties and the assets owned by or leased to the
Company are in satisfactory condition and repair for their continued use as they
have been used and adequate in all material respects for the continued conduct
of the business of the Company as presently conducted.
(d) Set forth in Schedule 3.8 is (i) a list of all interests
in real property, including improvements thereon, owned by the Company, (ii) a
description of all leasehold interests in real property of the Company, (iii) a
description of all options or other contracts to acquire any such interest,
specifying the location of each such property and (iv) a list of all
Encumbrances existing on any of the Company's properties and assets, real and
personal, other than Encumbrances described in clauses (a)(iv) and (a)(v) of
this Section 3.8.
(e) The Representing Parties have no knowledge of any default
or breach of any terms, covenants or conditions of any lease of, or leasehold
interest in, real property of the Company described in Schedule 3.8 (each, a
"Lease"), or of any actions which would be reasonably likely to, with the
passage of time or the giving of notice by the respective landlord, result in
any default or breach which would give rise to a right in the landlord to
terminate such Lease.
(f) Except as set forth on Schedule 3.8, the Company has good
and valid title to, or subsisting leasehold interests in, all of its personal
property and assets, whether tangible or intangible, reflected on the audited
balance sheet of the Company as of September 28, 1996 (except for personal
property and assets disposed of since September 28, 1996, or acquired since
September 28, 1996 in the ordinary course of
-10-
<PAGE> 16
business consistent with past practice) and required by U.S. GAAP to be included
on the balance sheet of the Company, free and clear of any pledges, liens,
security interests, claims, options and restrictions of every kind ("Personal
Property Liens"), except for (i) Personal Property Liens reflected in the
audited balance sheet of the Company as of September 28, 1996, (ii) Personal
Property Liens created in the ordinary course of business subsequent to
September 28, 1996, none of which is in excess of $25,000 individually, except
as set forth on Schedule 3.8, (iii) Personal Property Liens that, individually
or in the aggregate, do not materially interfere with the present use by the
Company or present value of the property subject thereto or affected thereby and
(iv) Personal Property Liens for taxes, assessments or governmental charges, or
lessors', mechanics', workmen's, materialmen's, warehousemen's or similar liens,
in each case that are not delinquent or which are diligently being contested in
good faith.
3.9 Litigation. Except as disclosed in Schedule 3.9, there is no
action, suit, proceeding or investigation as of the date hereof pending or, to
the best knowledge of the Representing Parties and Seller, threatened against
the Company or such Seller at law, in equity or otherwise, in, before, or by any
court of competent jurisdiction which would have a Material Adverse Effect on
the Company or materially and adversely affect such Seller's ability to
consummate the transactions contemplated hereby.
3.10 Compliance with Law. To the best knowledge of the Representing
Parties, since May 26, 1994, the business of the Company has been and is being
conducted in compliance with all material laws, ordinances and regulations of
any governmental entity applicable to the Company. To the best knowledge of the
Representing Parties since May 26, 1994, all governmental approvals, permits,
consents and licenses required ("Permits") by the Company in connection with the
conduct of its business have been obtained and are valid, subsisting and in full
force and effect and the Company has substantially fulfilled its obligations
under each Permit. To the best knowledge of the Representing Parties, no event
has occurred or condition or state of facts exists which constitutes or, after
notice or lapse of time or both, would constitute a default or violation under
any of the Permits or would permit revocation or termination of any of the
Permits. In respect of any such Permits, to the best knowledge of the
Representing Parties, no proceeding is pending for which notice has been
provided to the Company or, to the best
-11-
<PAGE> 17
knowledge of the Representing Parties, threatened, looking toward revocation or
termination of any such Permits.
3.11 Contracts. Except as set forth in Schedule 3.11, and except for
contracts made in connection with this Agreement and the transactions
contemplated hereby, the Company is not as of the date hereof a party to, or
bound by, any written (or to the Representing Parties' knowledge, oral)
contract, arrangement, agreement, or understanding of any kind to be performed
after the Closing Date pursuant to which the Company is obligated to expend more
than $100,000 in any twelve-month period and which is not subject to
cancellation by the Company without penalty or increased cost (referred to
herein as "Contracts"). Except as set forth on Schedule 3.11, to the best
knowledge of the Representing Parties, there is no default by any party to any
such contract, which default has had or could reasonably have a Material Adverse
Effect on the Company. Except as set forth on Schedule 3.11, neither the Company
nor any employee of the Company is a party to any contract, agreement or
understanding of any kind, written or otherwise, restricting the Company or its
affiliates or any such employee in any material way from competing in any
business or with any individual, company, corporation or other entity.
3.12 Tax Matters. (a) For purposes of this
Agreement,
(i) "Tax" or "Taxes" shall mean any federal, state,
local, foreign or other taxes (including, without limitation, income (net
or gross), gross receipts, profits, alternative or add-on minimum,
franchise, license, capital, capital stock, intangible, services, premium,
mining, transfer, sales, use, ad valorem, payroll, wage, severance,
employment, occupation, property (real or personal), windfall profits,
import, excise, custom, stamp, withholding or estimated taxes), fees,
duties, assessments, withholdings or governmental charges of any kind
whatsoever, and shall include interest, penalties, additions to tax or
additional amounts with respect to such items;
(ii) "Pre-Closing Periods" shall mean all Tax periods
ending on or before the Closing Date and, with respect to any Tax period
that includes but does not end on the Closing Date (a "Straddle Period"),
the portion of such Straddle Period that ends on and includes the Closing
Date;
-12-
<PAGE> 18
(iii) "Returns" shall mean all returns, declarations,
reports, estimates, information returns and statements of any nature
regarding Taxes required to be filed by any person or entity and relating
to the Company;
(iv) "Code" shall mean the Internal Revenue Code of
1986, as amended, or, if appropriate, any predecessor statute; and
(v) the term "Tax deficiency" shall include a reduction
in any net operating losses.
(b) Solely with respect to the period beginning after May 26, 1994:
(i) all Returns for all Pre-Closing Periods required to
be filed by the Company have been duly and timely filed and all such
Returns are true, correct and complete. All estimated Tax payments due for
the taxable period beginning on October 1, 1996 have been or will be duly
and timely paid to the extent due and payable prior to the Closing Date;
(ii) the Company has paid or accrued on its books all
Pre-Closing Period Taxes due or claimed to be due by any taxing authority;
(iii) the payments, charges, accruals and reserves for
Taxes due, or accrued but not yet due, relating to the income, properties
or operations of the Company for any Pre-Closing Period as reflected on
the books of the Company (including, without limitation, the audited
balance sheet of the Company as of September 28, 1996) are adequate to
cover such Taxes through the Closing Date;
(iv) there is no action, suit, proceeding,
investigation, audit or claim now pending or threatened in writing
regarding any Taxes of the Company;
(v) there are no agreements for the extension of the
time for assessment of any Taxes of the Company and the Company has not
waived any statute of limitations for the assessment of Taxes of the
Company;
-13-
<PAGE> 19
(vi) all Taxes which the Company is required by law to
withhold or collect have been duly withheld or collected, and have been
timely paid over to the proper authorities to the extent due and payable;
(vii) all federal income and sales Tax Returns of the
Company for Tax periods through fiscal 1995 have been audited by the
appropriate taxing authorities, or the statute of limitations for the
assessment of such Taxes has expired;
(viii) no power of attorney has been executed by, or on
behalf of, the Company with respect to any matter relating to Taxes which
is currently in force;
(ix) the Company is not a party to a tax sharing or tax
indemnity agreement or any other agreement of a similar nature that will
remain in effect as of the Closing Date;
(x) there are no liens for Taxes upon the assets of the
Company except statutory liens for Taxes not yet due;
(xi) the Company has not filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(2) of the Code) owned by the Company;
(xii) the Company has not requested or received an
adverse ruling from any taxing authority or signed a closing or other
agreement with any taxing authority which could have a Material Adverse
Effect;
(xiii) all tax deficiencies which have been claimed,
proposed or asserted against the Company have been fully paid or finally
settled;
(xiv) the Company is not required to include in income
any adjustment pursuant to Section 481(a) of the Code, by reason of any
voluntary or involuntary change in accounting method (nor has any taxing
authority proposed in writing any such adjustment or change of accounting
method);
-14-
<PAGE> 20
(xv) the Company has not participated in, or
cooperated with, an international boycott within the meaning
of Section 999 of the Code; and
(xvi) prior to Closing, the requisite percentage of the
Company's stockholders have approved the stockholder consent, the form of
which is attached hereto as Exhibit E, for purposes of Section 280G of the
Code.
3.13 Employee Benefits; ERISA. (a) Schedule 3.13 contains a true and
complete list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance or termination pay, change-in-control,
hospitalization, medical, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension, or retirement plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by the Company or by any trade or business, whether or not
incorporated (an "ERISA Affiliate") that together with the Company would be
deemed a "single employer" within the meaning of section 4001(b)(1) of ERISA,
for the benefit of any employee or former employee of the Company (the "Plans").
(b) With respect to each of the Plans, the Company has
heretofore delivered to Buyer true and complete copies of each of the following
documents: (i) a copy of the Plan; (ii) a copy of the most recent annual report;
(iii) a copy of the most recent actuarial report; (iv) a copy of the most recent
Summary Plan Description ("SPD"), together with all Summaries of Material
Modification issued with respect to such SPD and all other material employee
communications relating to such Plan; (v) if the Plan is funded through a trust
or any other funding vehicle, a copy of the trust or other funding agreement and
the latest financial statements thereof; and (vi) the most recent determination
letter received from the Internal Revenue Service with respect to each Plan that
is intended to be qualified under section 401 of the Code.
(c) No Plan is subject to Title IV of ERISA or to the minimum
funding requirements of section 412 of the Code or Part 3 of Title I of ERISA.
No Plan is a "multiemployer plan" within the meaning of section 4001(a)(3) of
ERISA. To the best knowledge of the Representing Parties, since May 26, 1994 no
liability under Title IV of ERISA or under section 412 of the
-15-
<PAGE> 21
Code or Part 3 of Title I of ERISA has been incurred by the Company or any ERISA
Affiliate since the effective date of ERISA that has not been satisfied in full.
To the best knowledge of the Representing Parties, since May 26, 1994 neither
the Company nor any other ERISA Affiliate has taken any action or failed to take
any action, nor has any event occurred, which has resulted or will likely result
in the Company becoming subject to liability under Title IV of ERISA (including
any withdrawal liability with respect to any multiemployer plan) or under
section 412 of the Code or Part 3 of Title I of ERISA.
(d) To the best knowledge of the Representing Parties, since
May 26, 1994 none of the Company, any of the Plans, any trust created thereunder
or any trustee or administrator thereof has engaged in a transaction or has
taken or failed to take any action in connection with which the Company, any of
the Plans, any such trust, any trustee or administrator thereof, or any party
dealing with the Plans or any such trust could be subject to either a material
civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a material
tax imposed pursuant to section 4975, 4976 or 4980B of the Code.
(e) To the best knowledge of the Representing Parties, since
May 26, 1994 full payment has been made, or will be made in accordance with
section 404(a)(6) of the Code, of all amounts which the Company is required to
pay under the terms of each of the Plans and all such amounts properly accrued
through the Closing Date with respect to the current plan year thereof will be
paid by the Company on or prior to the Closing date or will be properly accrued.
(f) To the best knowledge of the Representing Parties, since
May 26, 1994 each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not limited
to ERISA and the Code. To the best knowledge of the Representing Parties, since
May 26, 1994 each of the Plans that is intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under section 501(a) of the Code, and no
event has occurred which may affect such qualification or exemption.
(g) No amounts payable under the Plans or any other agreement
or arrangement to which the Company is a party (except for the exercise,
repurchase, cash out or cancellation of
-16-
<PAGE> 22
warrants and options contemplated hereby, as to which no representation is made,
except as set forth in Section 3.12(b)(xvi)) will, as a result of the
transaction contemplated hereby, fail to be deductible for federal income tax
purposes by virtue of section 280G of the Code.
(h) No Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees of the Company after retirement or other termination of service
other than (i) coverage mandated by applicable law or (ii) death benefits or
retirement benefits under any "employee pension plan," as that term is defined
in section 3(2) of ERISA.
(i) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of the
Company to severance pay, unemployment compensation or any other payment, except
as expressly provided in this Agreement or (ii) accelerate the time of payment
or vesting, or increase the amount of compensation due any such employee or
officer.
(j) There are no pending or, to the best knowledge of the
Representing Parties since May 26, 1994, threatened or anticipated claims by or
on behalf of any Plan, by any employee or beneficiary covered under any such
Plan, or otherwise involving any such Plan (other than routine claims for
benefits).
3.14 Certain Events. Except as and to the extent set forth on
Schedule 3.14 or as expressly contemplated by this Agreement, since December 28,
1996:
(a) the Company has operated its business in the ordinary
course consistent with past practice;
(b) there has not been any Material Adverse Effect on the
Company;
(c) the Company has not incurred any material damage,
destruction or loss (whether or not covered by insurance) to its owned or leased
property or assets;
(d) to the best knowledge of the Representing Parties, the
Company has not transferred, licensed, sublicensed,
-17-
<PAGE> 23
disposed of, abandoned or permitted to lapse or otherwise failed to preserve any
material rights to use any intellectual property owned or licensed by the
Company or disclosed to any Person, other than authorized representatives of the
Buyer, any intellectual property not in the public domain material to the
Company's business or operations;
(e) to the best knowledge of the Representing Parties, the
Company has not transferred, disposed of, abandoned or permitted to lapse or
otherwise failed to preserve any material Permit (not including Environmental
Permits which are covered by Section 3.15(a)) or other form of authorization
issued by a Governmental Entity;
(f) to the best knowledge of the Representing Parties, the
Company has not sold, assigned, leased, transferred, incurred any Encumbrance on
or license with respect to, or disposed of, abandoned, or conveyed any of its
properties or assets (whether real, personal or mixed, tangible or intangible),
except in the ordinary course of business consistent with past practice;
(g) the Company has not canceled any debts or claims, or
waived any rights of any material value;
(h) the Company has not made, or committed to make, any
capital expenditures except capital expenditures made in the ordinary course of
business as set forth on the Company's budget which in the aggregate do not
exceed $200,000;
(i) to the best knowledge of the Representing Parties, the
Company has not incurred any liabilities or obligations (whether absolute,
accrued or contingent, for borrowed money or otherwise, and whether due or to
become due) except liabilities or obligations incurred in the ordinary course of
business consistent with past practice;
(j) the Company has not paid, discharged or satisfied any
Encumbrance or liability (whether absolute, accrued, contingent or otherwise and
whether due or to become due), other than Encumbrances or liabilities which are
reflected or reserved against in the Financial Statements or incurred after the
respective dates thereof in the ordinary course of business consistent with past
practice and which were paid, discharged
-18-
<PAGE> 24
or satisfied in the ordinary course of business consistent with past practice;
(k) to the best knowledge of the Representing Parties, except
in respect of the transactions contemplated hereby, the Company has not (i)
entered into any employment, deferred compensation, retention, consulting or
similar agreement, (ii) granted or promised any bonus or severance payment to
any shareholder, director, officer, employee, distributor, independent
contractor or agent of the Company, (iii) created any additional Plan or
modified or amended any existing Plan (whether or not such Plan would increase
the benefit obligation to any director, officer, employee, distributor,
independent contractor or agent of the Company), or (iv) except in the ordinary
course of business, granted or promised any increase in the rates or terms of
compensation, conditionally or otherwise, including, without limitation, any
commission, bonus, pension, severance or vacation pay, employee welfare or
benefit payment or other direct or indirect remuneration, in each case to any
director, officer, employee, distributor, independent contractor or agent of the
Company;
(l) the Company has not declared, paid or made or set aside
for payment or making, any dividend or other payment or distribution of any kind
in respect of its capital stock or other securities, or to its security holders
(other than salary and benefits), or directly or indirectly retired, redeemed,
purchased or otherwise acquired any of its Shares or other securities, except
with respect to the redemption of existing options and warrants as contemplated
hereby;
(m) the Company has not issued, authorized or proposed the
issuance of, reclassified, or sold any shares of capital stock of the Company,
or securities convertible into or exchangeable or exercisable for, or rights,
warrants or options to acquire, any such shares or other convertible securities
or acquired any capital stock or other securities or interests of any Person, or
otherwise made a loan or advance to or investment in any Person, except for the
sale of Shares pursuant to the exercise of certain options and warrants as
contemplated hereby;
(n) the Company has not made any change in any accounting
methods, principles or practices (including, without limitation, changes in
depreciation or amortization policies or
-19-
<PAGE> 25
rates or relating to the establishment of accrual of reserves) or any material
election with respect to Taxes;
(o) the Company has not paid, loaned or advanced any amount to
or in respect of, or sold, transferred or leased any properties or assets
(whether real, personal or mixed, tangible or intangible) to, or entered to any
agreement, arrangement or transaction with, any Seller, other than salary, bonus
and benefits paid to any Seller who is an employee of the Company in the
ordinary course of business consistent with past practice;
(p) the Company has not entered into any lease, as lessor or
lessee, of real or personal property involving the expenditure of more than
$5,000, individually, or $10,000, in the aggregate, on a monthly basis;
(q) except as set forth on Schedule 3.14, to the best
knowledge of the Representing Parties, the Company has not (i) entered into any
Contract requiring annual payments in excess of $100,000 by the Company over the
term of such Contract, (ii) terminated or amended, breached, or failed to
perform in all material respects all of its obligations under, any Contract, and
to the best knowledge of the Representing Parties, no other party thereto has
terminated or amended, breached, or failed to perform in all material respects
all of its obligations under, any Contract;
(r) to the best knowledge of the Representing Parties, the
Company has not issued any warranties, express, implied or otherwise, with
respect to any products or services created, sold or licensed by the Company,
except in the ordinary and usual course of business consistent with past
practice (including those imposed by applicable law);
(s) the Company has not experienced any actual or, to the best
knowledge of the Representing Parties, threatened employee strikes, disputes,
work stoppages, slow-downs or lockouts, or had any material change in its
relationship with its employees, salesmen, distributors, or independent
contractors;
(t) the Company has not changed any of its significant
business policies;
-20-
<PAGE> 26
(u) the Company has not instituted, settled or agreed to
settle any litigation, action or proceeding before any Governmental Entity; or
(v) the Company has not agreed, whether in writing or, to the
best knowledge of the Representing Parties, otherwise, to take any action
described in this Section 3.14.
3.15 Environmental Matters. (a) Except as set forth in Schedule
3.15, the Company has obtained, with respect to the business of and the real
property owned or leased by the Company, all material permits, licenses, and
other authorizations which are required under federal, state and local statutes,
ordinances, and other laws in effect on the Closing Date relating to pollution
or protection of the environment ("Environmental Permits"), including laws and
regulations relating to emissions, discharges, releases, threatened releases,
investigations or remediation of pollutants, contaminants, chemicals, or
industrial, hazardous, or toxic materials or waste into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface, sediments, building materials or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, hazardous, or toxic materials or wastes, or any regulation, rule,
code, plan, judicial order, decree, judgment, injunction, or notice issued,
entered, promulgated, or approved thereunder ("Environmental Laws"). All such
Environmental Permits are now and as of the Closing Date will be in full force
and effect, except for any Environmental Permits which singly or in the
aggregate the failure to obtain has not had a Material Adverse Effect. The
Company has, or as of the Closing Date will have, filed for all renewals of
Environmental Permits required to be filed as of the Closing Date, except for
any Environmental Permits which singly or in the aggregate the failure to obtain
has not had a Material Adverse Effect. A list of all material Environmental
Permits is set forth in Schedule 3.15. To the best knowledge of the Representing
Parties, except as set forth in Schedule 3.15, the Company, with respect to the
business of and the real property owned or leased by the Company, is in
compliance with all terms and conditions of such Environmental Permits and is
also in compliance, with respect to the business of and the real property owned
or leased by the Company, with all other requirements of Environmental Laws,
except for such lack of
-21-
<PAGE> 27
compliance, if any, which singly or in the aggregate has not had a Material
Adverse Effect.
(b) There is no pending civil, administrative or criminal
investigation, litigation, material notice of violation, or administrative
proceeding relating, with respect to the business of or the real property owned
or leased by the Company, in any way to Environmental Laws that, individually or
in the aggregate, would be reasonably likely to have a Material Adverse Effect.
(c) To the knowledge of the Representing Parties, with respect
to the business of or the real property owned or leased by the Company, there
have not been and there are not any conditions, circumstances, activities,
practices or incidents on-site or off-site, which may reasonably be expected to
prevent substantial compliance with existing Environmental Laws after the
Closing Date, require investigation or remediation pursuant to any Environmental
Law or otherwise form the basis of any claim, action or suit under any
Environmental Law based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or the
emission, discharge, release, or threatened release into the environment, of any
pollutant, contaminant, chemical, industrial, hazardous, or toxic material or
waste, including, without limitation, any liability arising, or any claim,
action, demand, suit, proceeding or investigation which may be brought, under
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act or similar state or local laws that, in
the aggregate, would have a Material Adverse Effect on the Company (an
"Environmental Condition").
(d) To the knowledge of the Representing Parties, there are no
underground storage tanks, above ground storage tanks, polychlorinated biphenyls
or asbestos-containing materials present at any real property owned or leased by
the Company.
3.16 Accounts Receivable. Saugatuck has delivered to Buyer a list
and aging of all unpaid accounts receivable owing to the Company as of December
28, 1996. Except as set forth on Schedule 3.16, all accounts receivable of the
Company are bona fide receivables incurred in the ordinary course of business of
the Company, are collectible at the aggregate recorded amounts thereof, subject
to the reserve for doubtful accounts maintained by the Company in the ordinary
course of business, and are not
-22-
<PAGE> 28
subject to any known counterclaims or setoffs. To the extent the accounts
receivable listed on Schedule 3.16 are not collected by the Company after
exercising its best efforts, Buyer shall have the right to make an indemnity
claim pursuant to Article 8.
3.17 Inventories. All inventories of the Company are valued using
the FIFO method and are stated in accordance with U.S. GAAP at the lower of cost
or market.
3.18 Machinery and Equipment. (a) Owned Equipment. Schedule 3.18(a)
hereto sets forth a list of all material machinery, equipment, motor vehicles,
furniture and fixtures owned by the Company (collectively, the "Owned
Equipment").
(b) Leased Equipment. Schedule 3.18(b) hereto contains a list
of all leases or other agreements, whether written or oral, under which the
Company is lessee of or holds or operates any material items of machinery,
equipment, motor vehicles, furniture and fixtures or other property (other than
real property) owned by any third party (collectively, the "Leased Equipment").
3.19 Patents; Trademarks; Trade Names; Copyrights; Licenses, Etc.
Except as set forth on Schedule 3.19 hereto, there are no patents, trademarks,
trade names, service marks, service names and copyrights, and there are no
applications therefor or licenses thereof, inventions, trade secrets, computer
software, logos, slogans, proprietary processes and formulae and all other
proprietary information, know-how and intellectual property rights, whether
patentable or unpatentable, that are owned, licensed or leased by the Company or
used in the conduct of the Company's business. The Company is not a party to,
nor pays any royalty to anyone under, any license or similar agreement. Except
as set forth on Schedule 3.19, to the best knowledge of the Representing
Parties, there is no existing claim, or basis for any claim, against the Company
that any of its operations, activities or products infringe the patents,
trademarks, trade names, copyrights or other property rights of others or that
the Company is wrongfully or otherwise using the property rights of others.
3.20 Certain Liabilities. (a) Saugatuck has delivered to Buyer a
listing of all accounts payable owing by the Company as of December 28, 1996.
All accounts payable by the
-23-
<PAGE> 29
Company to third parties as of the date hereof arose in the ordinary course of
business and none are delinquent or past-due.
(b) Schedule 3.20 hereto sets forth a list of all indebtedness
and guarantees of the Company in excess of $50,000, other than accounts payable,
as of the close of business on the day preceding the date hereof, including,
without limitation, money borrowed, indebtedness of the Company owed to its
stockholders and former stockholders, the deferred purchase price of assets,
letters of credit and capitalized leases, indicating, in each case, the name or
names of the lender, the date of maturity, the rate of interest, any prepayment
penalties or premiums and the unpaid principal amount of such indebtedness as of
such date. Saugatuck has provided the Buyer with copies of all material
documents relating to such indebtedness. The Company is not in default in the
performance or observance of any obligation or condition with respect to any
indebtedness having a principal amount, individually or in the aggregate, in
excess of $1,000,000.
(c) Except as and to the extent set forth on Schedule 3.20, to
the best knowledge of the Representing Parties, the Company has no material
liabilities or obligations arising from or relating to its business and
operations of any nature (whether absolute, accrued, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) which
were not reflected or reserved against in the Financial Statements, except for
liabilities or obligations incurred since December 28, 1996 in the ordinary
course of business and consistent with past practice and none of which
individually exceeds $100,000 or in the aggregate exceed $500,000. All reserves
established by the Company and set forth on the Financial Statements were
determined in accordance with U.S. GAAP. The sale of the Shares pursuant to this
Agreement will not cause the acceleration of or otherwise adversely affect the
terms or conditions of such liabilities or obligations.
3.21 Compensation and Consulting Arrangements. Set forth on Schedule
3.21 hereto is a list as of December 28, 1996 of all employees (including sales
representatives) and consultants of the Company earning over $50,000 per year in
total cash compensation for the fiscal year ended September 28, 1996, together
with the amount of total cash compensation paid to each such person for such
fiscal year and a listing of the current
-24-
<PAGE> 30
aggregate base salary or hourly rate (including any bonus or commission) for
each such person.
3.22 Insurance. (a) Schedule 3.22(a) hereto contains a list of all
policies of liability, theft, fidelity, life, fire, product liability and
worker's compensation, and other forms of insurance maintained by the Company
(specifying the insurer, amount of coverage, type of insurance, policy number
and any pending claims in excess of $50,000 thereunder). All such policies of
insurance are valid and in force and all premiums due and payable with respect
thereto are currently paid. No notice of cancellation or termination has been
received with respect to any such policy.
(b) Schedule 3.22(b) hereto sets forth a summary of
information pertaining to all pending and, to the best knowledge of the
Representing Parties, threatened, property damage and personal injury claims in
excess of $50,000 against the Company since October 1, 1995, all of which are
fully satisfied or are being defended by the insurance carrier and involve no
exposure to the Company.
3.23 Disclaimer of Other Representations and Warranties; Best
Knowledge; Disclosure. (a) The Representing Parties and Sellers do not make, and
have not made, any representations or warranties relating to Sellers or the
Company or any one of them or otherwise in connection with the transactions
contemplated hereby other than those expressly set out herein which are made by
the Representing Parties and any Seller. Subject to the last sentence of this
Section 3.23(a), without limiting the generality of the foregoing, the
Representing Parties and Sellers have not made, and shall not be deemed to have
made, any representations or warranties in any presentation of the business of
the Company in connection with the transactions contemplated hereby, and no
statement contained in any such presentation shall be deemed a representation or
warranty hereunder or otherwise. Subject to the last sentence of this Section
3.23(a), it is understood that any cost estimates, projections, forecasts or
other predictions, any data, any financial information or any memoranda or
offering materials or presentations are not and shall not be deemed to be or to
include representations or warranties of the Representing Parties or Sellers. No
Person has been authorized by the Representing Parties or Sellers to make any
representation or warranty relating to Sellers or the Company or otherwise in
connection
-25-
<PAGE> 31
with the transactions contemplated hereby and, if made, such representation or
warranty must not be relied upon as having been authorized by the Representing
Parties or Sellers. No representation or warranty by the Representing Parties or
Sellers in this Agreement and no statement by the Representing Parties or
Sellers in any document referred to herein (including the Schedules and Exhibits
hereto), contains any untrue statement of a material fact or omits to state any
material fact necessary, in order to make the statements made herein or therein,
in light of the circumstances under which they were made, not misleading.
(b) Whenever a representation or warranty made herein by the
Representing Parties or Sellers refers to the "knowledge" or "best knowledge" of
the Representing Parties or Sellers, such knowledge or best knowledge shall be
deemed to consist only of the actual knowledge of any of those persons listed on
Schedule 3.23. Whenever any representation or warranty is made as to the
"knowledge" or "best knowledge" of the Representing Parties or Sellers, the
Representing Parties and Sellers shall have made due inquiry as to the accuracy
of such representation or warranty, but need not have undertaken, nor shall they
have any duty to undertake, any special investigation concerning any such
matter.
(c) Notwithstanding anything to the contrary contained in this
Agreement or in any of the Schedules, any information disclosed in one Schedule
shall be deemed to be disclosed in all Schedules only to the extent that such
information is cross-referenced in each applicable Schedule. Certain information
set forth in the Schedules is included solely for informational purposes and may
not be required to be disclosed pursuant to this Agreement. The disclosure of
any information shall not be deemed to constitute an acknowledgment that such
information is required to be disclosed in connection with the representations
and warranties made by the Representing Parties or Sellers and in this Agreement
or is material, nor shall such information be deemed to establish a standard of
materiality.
3.24 Product Liability. Except as and to the extent set forth on
Schedule 3.24, there are not presently pending, or to the best knowledge of the
Representing Parties, threatened, any civil, criminal or administrative actions,
suits, demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or
-26-
<PAGE> 32
alleged defect in design, manufacture, materials or workmanship, including,
without limitation, any failure to warn or alleged breach of express or implied
warranty or representation, relating to any product manufactured, distributed or
sold by or on behalf of the Company. The Company has not extended to its
customers any written non-uniform product warranties, indemnifications or
guarantees.
3.25 Prior Acquisitions. With regard to the Asset Purchase Agreement
by and among the Company, Olympic Manufacturing Group, Inc. ("Old Olympic"),
Tamarack Realty ("Tamarack"), Arthur Jacobson and Esther Jacobson (collectively,
Old Olympic, Tamarack, Arthur Jacobson and Esther Jacobson are referred to
herein as the "Prior Sellers"), dated as of May 26, 1994 (the "Prior Acquisition
Agreement"):
(a) there have been and there are no claims for
indemnification of Buyer Damages (as defined in the Prior Acquisition Agreement)
by the Company against the Prior Sellers pursuant to the Agreement or otherwise;
(b) there have been and to the best knowledge of the
Representing Parties there are no claims for indemnification by the Prior
Sellers against the Company pursuant to the Agreement or otherwise;
(c) to the best knowledge of the Representing Parties, the
provisions of Article 10 of the Prior Acquisition Agreement, to the extent set
forth therein, are in full force and effect and are enforceable by the Company
against the Prior Sellers in accordance with their terms and such rights to
indemnification have not been assigned, terminated, waived, subrogated,
transferred, limited or forgiven in any way; and
(d) all amounts payable to the Prior Sellers pursuant to the
Prior Acquisition Agreement and the Note (as defined in the Prior Acquisition
Agreement) have been paid in full, except pursuant to the Employment and
Consulting Agreement between the Company and Arthur Jacobson; the Escrow
Agreement (as defined in the Prior Acquisition Agreement) has been terminated in
accordance with its terms and is of no further force or effect. Saugatuck has
provided, or before the Closing Date shall provide, evidence of such payment and
termination to Buyer.
-27-
<PAGE> 33
3.26 Take or Pay Contracts. Except for the contract with Lindberg
Corporation (which the Representing Parties do not believe is a "take or pay"
contract) neither the Company nor any of its Subsidiaries is a party to any
material arrangement for the purchase of materials, supplies, other property or
services that by its express terms requires that payment be made by the Company
or any of its Subsidiaries regardless of whether such materials, supplies, other
property or services are delivered or furnished to it.
3.27 Restrictive Agreements. Except for the Company's existing
Credit Agreement dated as of December 12, 1996 between the Company and
NationsBank, N.A., as agent for the lenders party thereto, (the "Company Credit
Agreement"), which shall be terminated at or prior to the Closing, neither the
Company nor any of its Subsidiaries is a party to any agreement prohibiting its
ability to make any payments, directly or indirectly, to its equity holders by
way of dividends, advances, repayments of loans or advances, reimbursement or
management and other intercompany charges, expenses and accruals or other
returns on investments or any other payment of any nature whatsoever.
3.28 Nature of Business. Neither the Company nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock. Neither the Company nor any its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
3.29 Judgments. There are no outstanding judgments or orders for the
payment of money in excess of $1,000,000 that have been rendered against the
Company or any of its Subsidiaries.
3.30 Existing Indebtedness. Schedule 3.30 hereto contains a true and
complete list of all indebtedness of the Company other than accounts payable.
3.31 Accounts Payable. All accounts payable of the Company at the
Closing Date will, over the prior 120 days, average less than seventy (70) days
outstanding.
-28-
<PAGE> 34
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that:
4.1 Organization. Buyer is a corporation duly organized and validly
existing and in good standing under the laws of the State of New York.
4.2 Corporate Authority. Buyer has full corporate power and
authority to enter into the Agreements and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
Buyer of the Agreements have been duly authorized by all requisite corporate
action. This Agreement has been, and each of the other Agreements will be as of
the Closing Date, duly executed and delivered by Buyer, and (assuming due
execution and delivery by Sellers) this Agreement constitutes, and each of the
other Agreements when executed and delivered will constitute, a valid and
binding obligation of Buyer, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally or by general equitable
principles.
4.3 Consents and Approvals; No Violation. Except for consents
already received and except for applicable requirements of the HSR Act, there is
no requirement applicable to Buyer to make any filing with, or to obtain any
permit, authorization, consent or approval of a Governmental Entity as a
condition to the lawful consummation by Buyer of the transactions contemplated
by this Agreement. Except for consents already received and except for
applicable requirements of the HSR Act, neither the execution and delivery of
this Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby, nor compliance by Buyer with any of the provisions hereof
will (i) conflict with or result in any breach of any provision of the
certificate of incorporation or bylaws of Buyer, (ii) result in a breach of, or
default under (or give rise to any right of termination, cancellation or
acceleration under), any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement, lease or other instrument or
obligation to which Buyer is a party, or by which any of its businesses,
properties or assets may be bound or (iii) violate any order, judgment, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or the
Buyer's assets or
-29-
<PAGE> 35
properties, in each case that would prevent the execution, delivery and
performance by Buyer of this Agreement and the consummation of transactions
contemplated hereby.
4.4 Investment Intent. Buyer is acquiring the Shares for its own
account for investment and not with a view to any distribution thereof.
4.5 Litigation. There is no action, suit, proceeding or
investigation as of the date hereof pending or to the best knowledge of Buyer,
threatened against Buyer at law, in equity or otherwise, in, before, or by any
court of competent jurisdiction which would materially and adversely affect
Buyer's ability to consummate the transactions contemplated hereby.
4.6 Knowledge of Buyer. To the knowledge of Buyer, except for the
environmental matters disclosed to Sellers by Buyer in the draft Phase I
Environmental Site Assessment, Limited Subsurface Investigation, and Preliminary
Regulatory Compliance Screening prepared by Paragon Environmental Services,
Inc., prior to the date hereof, nothing has come to the attention of Buyer
during the course of its due diligence investigation of the Company as of the
date of this Agreement which would give rise to a claim for indemnification of
Buyer Losses (as defined herein) under Section 8.1(a)(i) hereof.
ARTICLE 5.
CERTAIN COVENANTS AND AGREEMENTS
OF SELLERS AND BUYER
5.1 Conduct of Business Prior to the Closing Date.
(a) During the period from the date of this Agreement through
the Closing Date, the Representing Parties shall cause the Company, except as
provided in Section 5.1(c) and (d), (i) to conduct its business in the ordinary
and usual course consistent with past practice and (ii) to use commercially
reasonably efforts to maintain and preserve intact the Company's business, to
keep available the services of its officers and employees and to maintain
satisfactory relations with lessors, suppliers, contractors, distributors,
customers and others having business relationships with the Company.
-30-
<PAGE> 36
(b) During the period from the date of this Agreement through
the Closing Date, the Representing Parties shall cause the Company to do each of
the following:
(i) promptly advise Buyer in writing of (A) any Material
Adverse Effect on the Company; (B) the occurrence of any event which
causes the representations and warranties made by the Representing Parties
or the Sellers in this Agreement or the information included in the
Schedules attached hereto to be incomplete or inaccurate in any material
respect; and (C) the receipt of any inquiry relating to an Acquisition
Proposal (as defined below) from a third party, including the identity of
the third party and a copy of the inquiry; and
(ii) prior to the Closing Date, prepare updated
Schedules under the signature of its Chief Executive Officer setting forth
all information (including information not previously disclosed) necessary
to make all representations and warranties of the Representing Parties and
the Sellers accurate as of the Closing Date. The parties expressly
acknowledge and agree that the determination whether and to what extent
any representation or warranty has been breached for any purpose in this
Agreement (including rights to indemnification for breach of
representations and warranties) shall be made without reference to such
updated Company Schedules.
(c) During the period from the date of this Agreement through
the Closing Date, the Representing Parties shall cause the Company not to do any
of the following, except as expressly contemplated hereby, without Buyer's prior
written
consent:
(i) undertake a course of action inconsistent with this
Agreement or which would cause any representation or warranty in this
Agreement to become materially inaccurate or which would prevent any
condition precedent to their obligations under this Agreement from being
satisfied at or prior to the Closing Date;
(ii) amend the Company's organizational documents as
previously delivered to Buyer;
-31-
<PAGE> 37
(iii) except for the issuance of Shares upon exercise of
options and warrants outstanding on the date hereof, issue any of the
Company's capital shares or grant any options, warrants or rights to
acquire any capital shares, or modify the terms or waive any rights under
any options, warrants or other securities currently outstanding; or
declare, set aside or pay any dividend or make any other distribution in
respect of the Company's capital shares, or make any direct or indirect
redemption, purchase or other acquisition of the Company's capital shares,
except as contemplated hereby;
(iv) undertake any stock split, combination
recapitalization, reorganization or similar transaction;
(v) solicit, encourage, negotiate, provide information
for, or otherwise cooperate in any way with, assist, or facilitate, and
the Representing Parties shall use their best efforts to prevent any
officers and directors, employees, representatives and agents of the
Company or any Seller from assisting or facilitating, any of the
following:
(A) any merger or consolidation of the Company
with any person other than Buyer,
(B) any sale of material assets of the Company,
except in the ordinary course of business, to any person other than Buyer,
(C) any equity or debt investment in the Company
by any person, except for the repayment of indebtedness of approximately
$1,000,000 plus accrued interest to Saugatuck with the proceeds of a
drawdown on the facility under the Company Credit Agreement, or
(D) any purchase of outstanding securities of the
Company by any person, except by Buyer and except for the exercise of
options and warrants as contemplated hereby, (any of the foregoing an
"Acquisition Proposal");
(vi) make any investment in any other business or entity
through purchase of stock or securities, contribution to capital, property
transfer, purchase of
-32-
<PAGE> 38
property or assets or otherwise (except short-term investments of idle
funds in the ordinary course of business consistent with past practice);
(vii) make any loans to or engage in transactions with
any of their stockholders, officers, directors or employees, except in the
ordinary and usual course consistent with past practice and except with
respect to existing options and warrants as contemplated hereby;
(viii) except pursuant to employment agreements existing
on the date hereof or as contemplated by the transactions which are the
subject of this Agreement or as required by applicable laws, (A) increase
the compensation payable or to become payable or grant any incentive or
equity-based awards to its executive officers (other than in accordance
with Plans as in effect on the date hereof), (B) grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any director or executive officer, of the Company (other than in
accordance with Plans as in effect on the date hereof) or (C) establish,
adopt, enter into or amend in any material respect or take any action to
accelerate any rights or benefits under any Plan (other than as required
by applicable law);
(ix) impair any of its copyrights, trademarks or other
intellectual property rights;
(x) alter the manner of keeping its books and accounts
or accounting practices and procedures;
(xi) revalue any of its assets, including without
limitation writing down the value of inventory or accounts receivable
other than in the ordinary course of business consistent with past
practice or as contemplated by the Company's budget;
(xii) make any material Tax election except in the
ordinary course of business consistent with past practice, change any
material Tax election already made, adopt any material Tax accounting
method except in the ordinary course of business consistent with past
practice, change any material Tax accounting method, enter into any
closing agreement, settle any Tax claim or assessment or
-33-
<PAGE> 39
consent to any Tax claim or assessment or any waiver of the statute of
limitations for any such claim or assessment, except as contemplated
hereby;
(xiii) fail to maintain its qualifications to do
business in every state in which such qualification is required, or fail
to maintain any other material permit, license, authorization or approval
required or useful to the operations of its business, except where such
failure would not have a Material Adverse Effect;
(xiv) make any capital expenditure or other purchase of
or improvements to any fixed asset except in the ordinary course of
business as set forth on the Company's budget; or
(xv) collect accounts receivable other than in the
normal course of business in accordance with past practice of the Company;
(xvi) enter into contracts with Whiting Door Corporation
or N.T.B. Fastening Systems, Inc., each of which could be construed as a
"take or pay" contract; or
(xvii) agree to do any of the foregoing.
(d) During the period from the date of this Agreement through
the Closing Date, the Representing Parties shall cause the Company not to do any
of the following, except as expressly contemplated hereby, without first
consulting with Buyer:
(i) waive any material rights arising out of the conduct
of, or with respect to, the Company or its business;
(ii) except as contemplated by this Agreement, enter
into, amend in any material respect or terminate any material sales agency
or distribution agreement, any management or employment or consulting
agreement, any lease, operating lease, capital lease, sale-leaseback or
similar transaction, material license or material royalty agreement, or
any other material agreement or Contract or waive any rights thereunder in
any material respect;
-34-
<PAGE> 40
(iii) incur any material obligation other than in
ordinary course of business, or mortgage, pledge or subject to an
Encumbrance any of its property or assets;
(iv) except for the repayment of indebtedness of
approximately $1,000,000 plus accrued interest to Saugatuck with the
proceeds of a drawdown on the facility under the Company Credit Agreement,
borrow money or incur new or additional indebtedness (other than accounts
payable or trade payables incurred in the ordinary course of business) or
lend money to any person (other than travel and similar advances to
employees in the ordinary course of business) or incur any contingent
liability as a guarantor or otherwise with respect to the obligations of
any person; or
(v) incur liabilities in connection with the leasing of
property, equipment or other assets.
(e) During the period from the date of this Agreement through
the Closing Date, the Representing Parties shall cause the Company not to, and
each Seller shall not, and shall not authorize or permit any of their respective
subsidiaries, officers, directors or employees or any of their respective
independent auditors, counsel, other advisors or representatives, directly or
indirectly, to (i) solicit, initiate or knowingly encourage or induce the making
of any Acquisition Proposal, (ii) furnish information regarding the Company in
connection with an Acquisition Proposal or potential Acquisition Proposal, (iii)
negotiate or engage in discussions with any third party with respect to any
Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent, contract or other instrument
related directly or indirectly to any Acquisition Proposal.
(f) During the period from the date of this Agreement through
the Closing Date, the Representing Parties shall cause the Company to promptly
advise Buyer orally and in writing of the receipt of any Acquisition Proposal or
any inquiry relating to an Acquisition Proposal prior to the Closing Date.
(g) During the period from the date of this Agreement through
the Closing Date, the Representing Parties shall cause the Company to
immediately cease and cause to be terminated any discussions or negotiations
with any parties
-35-
<PAGE> 41
existing as of the date of this Agreement and that relate to any Acquisition
Proposal.
5.2 Tax Covenants. (a) (i) Except as provided in Section 5.2(a)(ii),
and subject to Section 5.2(a)(iii), Buyer shall timely prepare and file, or
cause to be prepared and filed, all Returns of the Company required to be filed
after the Closing Date and shall timely pay, or cause to be paid, when due all
Taxes relating to such Returns. Such Returns shall be prepared or completed in a
manner consistent with prior practice of the Company with respect to Returns
concerning the income, properties or operations of the Company (including
elections and accounting methods and conventions), except as otherwise required
by law or regulation or otherwise agreed to by Saugatuck prior to the filing
thereof.
(ii) Subject to Section 5.2(a)(iii), Saugatuck shall timely
prepare, or cause to be prepared, the United States federal income tax return of
the Company for the taxable period ending on the Closing Date, as well as any
similar state and local income tax Returns of the Company for taxable periods
ending as a result of the sale and purchase of the Shares pursuant to this
Agreement. Such Returns shall be prepared or completed in a manner consistent
with prior practice of the Company with respect to Returns concerning the
income, properties or operations of the Company (including elections and
accounting methods and conventions), except as otherwise required by law or
regulation or otherwise agreed to by Buyer prior to the filing thereof. Subject
to Section 5.2(a)(iii), Buyer shall timely file, or cause to be filed, all such
Returns and shall timely pay, or cause to be paid, when due all Taxes relating
to such Returns. Within a reasonable time after the due date for filing any such
Returns, Saugatuck shall deliver to Buyer an invoice for one-half the cost of
preparing such Returns, including without limitation all fees and expenses, and
Buyer shall, within 5 days after receipt of such invoice, pay to Saugatuck the
amount shown as due thereon.
(iii) With respect to any Return (including any Return in
respect of estimated Taxes) described in Section 5.2(a)(i) or (ii) that covers
or includes any Pre-Closing Period and is due to be filed on or before the later
of the first anniversary of the Closing Date (the "First Anniversary") and the
first day as of which all Buyer claims against the Escrow Amount have been
resolved, the party responsible for preparing such
-36-
<PAGE> 42
Return pursuant to Section 5.2(a)(i) or (ii) shall, no later than 30 days before
the due date of such Return, send such Return to the other party for its review
and approval, which approval shall not be unreasonably withheld or delayed.
(iv) No later than 10 days before the due date of any Returns
described in Section 5.2(a)(i) or (ii), Buyer shall be entitled to receive from
the Escrow Agent, pursuant to the Escrow Agreement, a distribution amount equal
to the net tax payable due, if any, shown on such Returns to the extent
attributable to the Pre-Closing Period and to the extent not previously paid or
accrued on the books of the Company. For purposes of this Agreement, the amount
of Taxes attributable to any Straddle Period shall be determined based upon an
interim closing of the books as of the close of the Closing Date, except that
the amount of any Taxes that are imposed on a periodic basis shall be determined
by reference to the relative number of days in the pre-closing and post-closing
portions of such Straddle Period.
(v) Any disputes with respect to any Return described in
Section 5.2(a)(i) or (ii) arising on or before the later of the First
Anniversary and the first day as of which all Buyer claims against the Escrow
Amount have been resolved shall be resolved by a "Big Six" accounting firm
jointly selected by Buyer and Saugatuck; provided, however, that the pending
resolution of any such disputes shall not prevent the timely filing by Buyer of
any such Return, and distribution by the Escrow Agent to Buyer of the amounts
described in Section 5.2(a)(iv), as initially determined by Buyer. Any
overpayments or underpayments of such amounts determined by the independent
accountants to have been made shall be (A) in the case of an overpayment,
deposited with the Escrow Agent by Buyer (or, if the Escrow Agreement shall have
terminated, repaid by Buyer to Saugatuck (for pro rata distribution to the
Sellers in accordance with each Seller's percentage interest set forth in
Exhibit B hereto)) and (B) in the case of an underpayment (up to the Escrow
Amount), distributed by the Escrow Agent to Buyer (or, if the Escrow Agreement
shall have terminated, paid by the Sellers (pro rata in accordance with each
Seller's percentage interest set forth in Exhibit B hereto payable solely from
the Escrow Amount previously distributed to each Seller)) to Buyer, in each case
with interest at the rate for overpayments determined by Section 6621(a) (2) of
the Code from the date that such payment was made or due through the date of
such deposit or payment; provided
-37-
<PAGE> 43
further, however, that, except in extraordinary circumstances, Saugatuck and
Buyer shall cause any such disputes to be resolved prior to the First
Anniversary.
(b) Saugatuck shall have the right to represent the interests
of the Company in any Tax audit or administrative or court proceeding relating
to Returns for Pre-Closing Periods; provided, however, that Buyer shall have the
right to participate at its own expense in any such audit or proceeding to the
extent that any such audit or proceeding may affect the Tax liability of Buyer,
any of its affiliates or the Company for any period ending after the Closing
Date, and to employ counsel of its choice at its own expense for purposes of
such participation. Notwithstanding anything to the contrary contained or
implied in this Agreement, without the prior written approval of Buyer, which
approval shall not be unreasonably withheld, each Seller agrees that neither
such Seller nor any affiliate of such Seller shall agree or consent to
compromise or settle, either administratively or after the commencement of
litigation, any issue or claim arising in any such audit or proceeding, or
otherwise agree or consent to any Tax liability, to the extent that any such
compromise, settlement, consent or agreement may affect the Tax liability of
Buyer, any of its affiliates or the Company for any period ending after the
Closing Date.
(c) Buyer shall promptly notify Saugatuck (which shall notify
the other Sellers) in writing upon receipt by Buyer, any affiliate of Buyer or
the Company of notice of any pending or threatened Tax audits or assessments
relating to the income, properties or operations of the Company, in each case
for Pre-Closing Periods only, so long as Pre-Closing Periods remain open;
provided, however, that failure by Buyer to comply with this Section 5.2(c)
shall not affect Buyer's right to indemnification relating to Taxes if such
failure does not materially prejudice the rights of Sellers. Each Seller shall
promptly notify Saugatuck, which will in turn notify Buyer in writing, upon
receipt by such Seller or any affiliate of such Seller of notice of any pending
or threatened Tax audits or assessments relating to the income, properties or
operations of the Company.
(d) Except as provided in Section 5.2(a)(ii), each Seller
agrees that neither such Seller nor any affiliate of such Seller shall, without
the prior written consent of Buyer, file, or cause to be filed, any amended
Return or claim for Tax refund, with respect to the Company for any Pre-Closing
Period,
-38-
<PAGE> 44
to the extent that any such filing may affect the Tax liability of Buyer, any of
its affiliates, or the Company for any period ending after the Closing Date
(including, but not limited to, the imposition of Tax deficiencies, the
reduction of asset basis or cost adjustments, the lengthening of any
amortization or depreciation periods, the denial of amortization or depreciation
deductions, or the reduction of loss or credit carryforwards).
(e)(i) Notwithstanding anything to the contrary contained or
implied in this Agreement: (A) Saugatuck and Buyer shall, no later than the due
date for the first filed Return of the Company described in Section 5.2(a)(ii),
acting together reasonably and in good faith, and subject to the dispute
resolution provision of Section 5.2(a)(v), determine the Sellers' Tax Benefit
(as defined below); (B) within 15 business days after the Company, Buyer or any
of their affiliates Realizes (as defined below) a Tax Benefit (as defined below)
that is Realized at any time before the First Anniversary, Buyer shall, or shall
cause the Company to, deposit with the Escrow Agent an amount equal to 40% of
such Tax Benefit, to be held and disposed of pursuant to the Escrow Agreement;
and (C) no later than the fifth day immediately preceding the First Anniversary,
Buyer shall, or shall cause the Company to, deposit with the Escrow Agent an
amount equal to the Sellers' Tax Benefit (whether or not Realized by that day or
expected to be Realized at any other time) less the sum of all amounts
previously deposited with the Escrow Agent pursuant to clause (B) of this
Section 5.2(e)(i), to be held and disposed of pursuant to the Escrow Agreement.
For the avoidance of any doubt, except as expressly provided
in this Agreement, neither Buyer's obligation to make payments to the Escrow
Agent pursuant to this Section 5.2(e)(i), nor the amounts so payable, shall
depend upon any factor, including without limitation the earnings of the
Company, Buyer, any affiliate of Buyer, or any consolidated, affiliated or
combined group of which Buyer is a member, and Buyer shall in all events make
such payments in such amounts as provided herein notwithstanding any reason to
the contrary whatsoever.
(ii) For purposes of this Agreement, "Sellers' Tax Benefit"
means an amount equal to 40% of the sum of all Tax Benefits (as defined below).
(iii) For purposes of this Agreement, "Tax Benefit" means: (A)
in the case of a separate United States
-39-
<PAGE> 45
federal, state, local or other Tax Return (including an estimated Tax Return),
the sum of (x) the undiscounted amount by which the Tax liability of the Company
is or will be reduced (or would be reduced assuming the exercise of reasonable
diligence in Realizing any Tax Benefit at the earliest possible time) as a
result of a Transaction Deduction/Loss (as defined below) (including, without
limitation, by deduction, entitlement to refund, credit or otherwise, whether
available in the current taxable year (including a reduction in estimated Tax
payable), as an adjustment to taxable income in any other taxable year, as a
carryforward from a Pre-Closing Period to a taxable period beginning after the
Closing Date (a "Post-Closing Period"), or as a carryback from a Post-Closing
Period to a Pre-Closing Period, as applicable) and (y) any interest payable in
respect of such reduction in Tax liability; and (B) in the case of a
consolidated United States federal Tax Return (including an estimated Tax
Return) or any similar state or local Tax Return, the sum of (x) the
undiscounted, amount by which the Tax liability of the relevant consolidated,
combined or affiliated group of corporations is or will be reduced (or would be
reduced assuming the exercise of reasonable diligence in Realizing any Tax
Benefit at the earliest possible time) as a result of a Transaction
Deduction/Loss (including, without limitation, by deduction, entitlement to
refund, credit or otherwise, whether available in the current taxable year
(including a reduction in estimated Tax payable), as an adjustment to taxable
income in any other taxable year, as a carryforward from a Pre-Closing Period to
Post-Closing Period, or as a carryback from a Post-Closing Period to a
Pre-Closing Period, as applicable) and (y) any interest payable in respect of
such reduction in Tax liability.
(iv) For purposes of this Agreement, a "Transaction
Deduction/Loss" means any deduction, credit, refund, carryback, carryforward, or
loss for purposes of income Taxes arising in the taxable period of the Company
ending on the Closing Date or in connection with or as a result of the
transactions contemplated by this Agreement (including, without limitation, any
operating losses, deductions resulting from deferred financing charges and
deductions resulting from payments of cash or other property (including stock of
the Company) made by the Company with respect to options, warrants, or other
such securities in connection with the transactions contemplated by this
Agreement).
-40-
<PAGE> 46
(v) For purposes of this Agreement, a Tax Benefit shall be
deemed to have been "Realized" at the time any refund of Taxes is received or
applied against other Taxes due or, with respect to any periods beginning on or
after the Closing Date, at the time of filing of a Tax Return (including any Tax
Return relating to estimated Taxes) (other than an amended Tax Return or claim
for refund) on which a Transaction Deduction/Loss is applied in reduction of
Taxes that would otherwise be due; provided, however, that Transaction
Deduction/Losses shall be deemed to be the last items utilized in any such Tax
Return. In determining the amount of Tax Benefit Realized, the amount by which
the Tax liability of the Company, or a consolidated, combined or affiliated
group of which the Company is a member, is reduced shall be the excess of (A)
the Tax Liability for the period if such Tax Benefit had not been Realized over
(B) the actual Tax Liability for the period.
(vi) Following the Closing, Saugatuck, Buyer and the Company,
in consultation with one another, shall, and shall cause their affiliates to, in
either case absent a good faith determination by Buyer that such steps would
have a material adverse effect on the Company, Buyer, or their affiliates (which
determination shall not be unreasonably delayed), take, as promptly as is
reasonably practicable, all reasonable steps to ensure that all reasonably
available Tax Benefits are Realized at the earliest possible time, including,
without limitation, the filing of the Company's Returns for taxable periods
ending on or before the Closing Date, estimated Tax Returns of the consolidated,
combined or affiliated groups that include the Company for taxable periods
ending after the Closing Date, applications for tentative refunds and claims for
refund.
(vii) Unless otherwise agreed to by Saugatuck in its sole
discretion, Buyer and each Seller shall, to the fullest extent permitted by
applicable law, treat any Transaction Deduction/Loss as having occurred within
the taxable period of the Company ending on the Closing Date. It is also
understood that Buyer will have paid the full amount of the Sellers' Tax Benefit
to the Escrow Agent at or before the First Anniversary.
(f) Subject to Section 5.2(e), which alone shall apply to the
subject matter addressed therein, if Buyer or any affiliate of Buyer (including
the Company) receives a refund of Taxes directly relating to any Pre-Closing
Period of the Company (including but not limited to (A) a refund received in
respect of
-41-
<PAGE> 47
the Massachusetts tax refund claim filed by the Company in February 1997 (the
"Massachusetts Claim"), it being understood that (i) any carrybacks relating to
the Massachusetts Claim shall be for the account of Sellers; provided that
Sellers shall pay any additional federal income Tax payable by Buyer or the
Company as a result of the use of such carrybacks by Sellers and (ii) any
carryforwards relating to the Massachusetts Claim shall be for the account of
Buyer or (B) any refund in respect of an overpayment of estimated federal or
state taxes, for which the Company hereby agrees to file a claim) or if any
Seller receives a refund of any Taxes of the Company directly relating to any
Post-Closing Period, the party receiving such refund shall, within 30 days after
receipt of such refund, remit such refund (net of any Tax cost relating thereto)
to Saugatuck (for pro rata distribution to the Sellers in accordance with each
Seller's percentage interest set forth in Exhibit B hereto), in the case of
Taxes relating to a Pre-Closing Period, or Buyer, in the case of Taxes relating
to a Post-Closing Period. For purposes of this Section 5.2(f), the term "refund"
shall include a reduction in Tax and the use of an overpayment as a credit or
other Tax offset, and the receipt of a refund shall be deemed to occur upon the
filing of a Return or an adjustment thereto utilizing such reduction,
overpayment or offset upon the receipt of cash. Refunds attributable to any
Straddle Period shall be equitably apportioned pursuant to the principles of
this Agreement.
(g) Buyer shall cause the Company to make a valid and timely
election for United States federal income tax purposes (and any similar state,
local or other election) to waive its right to carry back any net operating loss
arising in its taxable year that will end on the Closing Date. The immediately
preceding sentence shall not be read to imply any restriction on Buyer's ability
to cause the Company to carry back a net operating loss from any taxable year
beginning after termination of the indemnity period set forth in Section 8.4.
(h) After the Closing Date, Buyer and Saugatuck shall provide
each other, and Buyer shall cause the Company to provide Saugatuck, with such
cooperation and information relating to the Company as either party reasonably
may request in (A) filing any Return, amended Return or claim for refund, (B)
determining any Tax liability or a right to refund of Taxes, (C) conducting or
defending any audit or other proceeding in respect of Taxes or (D) effectuating
the terms of this Agreement. The parties shall retain, and Buyer shall cause the
Company to
-42-
<PAGE> 48
retain, all Returns, schedules and work papers, and all material records and
other documents relating thereto, until the expiration of the statute of
limitation (and, to the extent notified by any party, any extensions thereof) of
the taxable years to which such Returns and other documents relate and, unless
such Returns and other documents are offered and delivered to Sellers or Buyer,
as applicable, until the final determination of any Tax in respect of such
years. Any information obtained under this Section 5.2 shall be kept
confidential, except as may be otherwise necessary in connection with filing any
Return, amended Return, or claim for refund, determining any Tax liability or
right to refund of Taxes, or in conducting or defending any audit or other
proceeding in respect of Taxes. Notwithstanding the foregoing, no Seller nor
Buyer, nor any of their respective affiliates, shall be required unreasonably to
prepare any document, or determine any information not then in its possession,
in response to a request under this Section 5.2(g).
(i) Buyer shall be liable for any transfer, real property
gains, documentary, sales, use, registration, stamp, value added or other
similar Taxes payable by reason of the transactions contemplated by this
Agreement or attributable to the sale, transfer or delivery of the Shares
hereunder and shall reimburse Sellers for any such Taxes paid by Sellers within
30 days after receipt of an invoice therefor. All Returns related to such Taxes
shall be filed by Buyer (unless required by law to be filed by Sellers).
5.3 Expenses and Finders' Fees. Buyer and each Seller will bear
their own transaction expenses in connection with this Agreement and its
performance that would not have been incurred in the ordinary course of the
Company's business. It is understood that the Company will continue to be
responsible for all audit, legal and tax fees and expenses incurred in the
ordinary course of its business. Each Seller, on the one hand, and Buyer, on the
other hand, each represents and warrants to the other that the negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on in such a manner as not to give rise to any valid claims against the
other party or the Company for a brokerage commission, finder's fee or other
like payment.
5.4 Access to Information; Verification of Inventory and
Confidentiality. (a) The Representing Parties shall, and
-43-
<PAGE> 49
shall cause the Company to, permit Buyer and its representatives at Buyer's
expense to have reasonable access during normal business hours, upon reasonable
advance notice, to the books and records and facilities of the Company for the
purpose of among other things verifying the representations and warranties of
the Representing Parties and Sellers hereunder, conducting a physical inventory
of product and equipment, and conducting an audit of the Company's financial
statements.
(b) Prior to execution of this Agreement, Buyer will have
verified (i) the adequacy of the inventory obsolescence reserve and completed a
net realizable value test of the inventory and (ii) the physical existence and
suitability for use of the tooling but Buyer shall not object to the valuation
methodology (including without limitation, cost standards and other procedures
used to value such items) of either the inventory or tooling. Any material
differences except for differences resolved pursuant to Section 5.4(d) (net of
existing balance sheet reserves for such items as of January 25, 1997) relating
to inventory or tooling in the aggregate shall have been resolved by Buyer and
Saugatuck prior to the execution of this Agreement and, if necessary, the
Purchase Price shall be adjusted as mutually agreed to by Saugatuck and Buyer.
(c) Buyer and each Seller hereby confirm the terms and
provisions of that certain Confidentiality Letter executed dated December 4,
1996 between Buyer and Saugatuck (the "Confidentiality Letter") and hereby
incorporate the Confidentiality Letter herein, in its entirety, by this
reference. Buyer and each Seller further acknowledge and agree that all
information provided to the Buyer hereunder shall constitute Confidential
Material (as such term is defined in the Confidentiality Letter), and that the
provisions of this Section 5.4, including the terms and provisions of the
Confidentiality Letter, shall survive the termination of this Agreement for any
reason before Closing.
(d) Buyer will conduct a physical inventory on March 1 and 2,
1997. Buyer shall be entitled to make an indemnity claim pursuant to Article 8
for variances that exceed all the inventory reserves set forth on the Company's
records as of February 28, 1997, in the aggregate, plus $100,000; provided, that
any indemnification claims made hereunder shall be paid from the first dollar
and shall not be subject to the $75,000 basket set forth in Section 8.5(c). If
the value of the physical
-44-
<PAGE> 50
inventory exceeds the amount set forth on the Company's records as of February
28, 1997 by more than $100,000, then Buyer will make payment in cash of an
amount equal to the excess of the value of the physical inventory over the
record amount to Saugatuck (for pro rata distribution to the Sellers in
accordance with each Seller's percentage interest set forth in Exhibit B
hereto).
(e) No claims shall be made after the execution of this
Agreement relating to valuation methodology, net realizable value or
obsolescence of inventory or tooling.
5.5 Press Releases. Any public announcements regarding the
transactions contemplated hereby shall be made only with the mutual consent of
Sellers and Buyer, except (i) as required by law or the rules of the New York
Stock Exchange (in which event Sellers will be notified before such announcement
is made) and (ii) Sellers shall be permitted to announce the sale after the
Closing to the trade and, in each Seller's discretion, to publish a so-called
"Tombstone" advertisement.
5.6 Books and Records. Buyer will, and will cause the Company to,
retain all books, records and other documents pertaining to the business of the
Company in existence on the Closing Date for a period of seven (7) years from
the Closing Date and to make the same available after the Closing Date for such
seven (7) year period for inspection and copying by Sellers at Sellers' expense
during the normal business hours of the Company, upon reasonable request and
upon reasonable advance notice. Without limiting the generality of the
foregoing, Buyer will, and will cause the Company to, make available to Sellers
and their representatives all information deemed necessary or desirable by
Sellers in preparing their respective financial statements and Returns and
conducting any audits in connection therewith.
5.7 Options and Warrants. On or before the Closing, Saugatuck shall
cause the Company to repurchase, cash out or cancel the outstanding options and
warrants as set forth in Article 1.
5.8 Accounts Payable. Saugatuck will cause the Company to pay at or
before the Closing (i) all accounts payable over ninety (90) days except for
accounts payable which are being disputed by the Company in good faith or are in
accordance with
-45-
<PAGE> 51
the payment terms plus ten days of a particular vendor and (ii) the Nissho Iwai
invoice #SH-2023-0 in the amount of approximately $130,500 relating to a
Nakashimada TH2-6A Cold Header.
5.9 Bank Waiver. Buyer shall use its best efforts to
obtain the requisite waivers from its banks as set forth in
Section 6.7.
ARTICLE 6.
CONDITIONS PRECEDENT OF BUYER
Buyer need not consummate the transactions contemplated by this
Agreement unless the following conditions shall be fulfilled or waived by the
Buyer:
6.1 Representations and Warranties. Except as otherwise contemplated
or permitted by this Agreement, (a) the representations and warranties of the
Representing Parties and Sellers contained in this Agreement or in any
certificate or document delivered to Buyer pursuant hereto shall be deemed to
have been made again at and as of the Closing Date and shall then be true in all
material respects, except to the extent that any representation or warranty is
made as of a specified date, in which case such representation and warranty
shall be true in all material respects as of such date, (b) Sellers shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by
Sellers prior to or on the Closing Date, and (c) there shall not be issued or
outstanding any options, warrants or other rights of any kind to acquire any
shares of capital stock of the Company or securities convertible into or
exchangeable for any such shares of capital stock, and Buyer shall have been
furnished with a certificate of an appropriate officer of each Seller, dated the
Closing Date, certifying to the effect of clauses (a), (b) and (c) of this
Section 6.1 to the extent applicable to such Seller.
6.2 Opinion of Counsel. Buyer shall have been furnished with an
opinion dated the Closing Date of Winthrop, Stimson, Putnam & Roberts, counsel
for Sellers, substantially in the form attached hereto as Exhibit C.
6.3 No Actions. No action, suit, or proceeding before any court or
governmental or regulatory authority shall be
-46-
<PAGE> 52
pending, no investigation by any governmental or regulatory authority shall have
been commenced, and no action, suit or proceeding by any governmental or
regulatory authority shall have been threatened, against Buyer, Sellers, the
Company, or any of the principals, officers or directors of any of them, seeking
to restrain, prevent or change the transactions contemplated hereby or
questioning the legality or validity of any such transactions or seeking damages
in connection with any such transactions.
6.4 Consents. All material consents, approvals and authorizations of
governmental and regulatory authorities, and all material filings with and
notifications of governmental authorities and regulatory agencies or other
entities which regulate the business of Sellers, the Company or Buyer, necessary
on the part of Sellers, the Company or Buyer, to the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
shall have been obtained or effected (and all applicable waiting periods, if
any, including any extensions thereof, under any applicable law, statute,
regulation or rule, including but not limited to the HSR Act, if applicable,
shall have expired or terminated, as applicable).
6.5 Closing Documentation. Buyer shall have received the following
documents, agreements and instruments from Sellers:
(a) the stock certificates representing the Shares described
in Section 1.3 hereof;
(b) such duly signed resignations of directors and officers of
the Company as Buyer shall have previously requested;
(c) a certificate dated as of a recent date from (i) the
Secretary of State of the State of Delaware to the effect that the Company is
duly incorporated and in good standing in such state and stating that the
Company owes no franchise taxes in such state and listing all documents of the
Company on file with said Secretary of State, and (ii) a certificate of the
Secretary of State of the State of Massachusetts to the effect that the Company
is duly qualified as a foreign corporation and is in good standing in such
jurisdiction;
(d) a copy of the Company's Certificate of Incorporation,
including all amendments thereto, certified as of a recent date by the Secretary
of State of the State of Delaware;
-47-
<PAGE> 53
(e) evidence, reasonably satisfactory to Buyer, of the
authority and incumbency of the persons acting on behalf of Sellers in
connection with the execution of any document delivered in connection with this
Agreement; and
(f) such other instruments and documents as Buyer shall
reasonably request not inconsistent with the provisions hereof.
6.6 Approval of Legal Matters. The form of all instruments,
certificates and documents to be executed and delivered by Sellers to Buyer
pursuant to this Agreement and all legal matters in respect of the transactions
as contemplated hereby shall be reasonably satisfactory to Buyer and its
counsel, none of whose approval shall be unreasonably withheld or delayed.
6.7 Bank Waiver. Buyer shall have received the requisite waivers
from its banks pursuant to the Revolving Credit Agreement (the "Credit
Agreement"), dated as of September 28, 1994, among Buyer and the financial
institutions named therein, the Bank of Nova Scotia, Chemical Bank and The Bank
of New York, as co-agents, and The Bank of Nova Scotia, as administrative agent,
providing for a waiver (or amendment) (i) to the effect that the goodwill
created in connection with the transaction contemplated by this Agreement will
not be considered in calculating the tangible net worth of Buyer for purposes of
the Credit Agreement and (ii) with respect to any other matters required to be
waived or consented to under the Credit Agreement.
6.8 Escrow Agreement. Sellers, Buyer and the Escrow Agent shall have
entered into the Escrow Agreement substantially in the form attached hereto as
Exhibit A, pursuant to which the Escrow Amount will be held in escrow in order
to secure the obligations of the Sellers pursuant to Article 8 hereof.
6.9 Fleet Bank Waiver. The Company shall have received a waiver from
Fleet Capital Corporation ("Fleet") with respect to the technical default in the
Master Equipment Lease Agreement No. 31974-01 dated July 10, 1995 between the
Company and Fleet as a result of transactions entered into by the Company
with NationsBank, N.A.
-48-
<PAGE> 54
ARTICLE 7.
CONDITIONS PRECEDENT OF SELLERS
Sellers need not consummate the transactions contemplated hereby
unless the following conditions shall be fulfilled or waived by Saugatuck:
7.1 Representations and Warranties. Except as otherwise contemplated
or permitted by this Agreement, (a) the representations and warranties of Buyer
contained in this Agreement or in any certificate or document delivered to
Sellers pursuant hereto shall be deemed to have been made again at and as of the
Closing Date and shall then be true in all material respects, except to the
extent that any representation or warranty is made as of a specified date, in
which case such representation and warranty shall be true in all material
respects as of such date, and (b) Buyer shall have performed and complied in all
material respects with all agreements and conditions required by this Agreement
to be performed or complied with by it prior to or on the Closing Date, and
Sellers shall have been furnished a certificate of an appropriate officer of
Buyer, dated the Closing Date, certifying to the effect of clauses (a) and (b)
of this Section 7.1.
7.2 Opinion of Buyer's Counsel. Sellers shall have been furnished
with an opinion dated the Closing Date of Paul E. Dixon, Esq., general counsel
of Buyer, substantially in the form attached hereto as Exhibit D.
7.3 No Actions. No action, suit, or proceeding before any court or
governmental or regulatory authority shall be pending, no investigation by any
governmental or regulatory authority shall have been commenced, and no action,
suit or proceeding by any governmental or regulatory authority shall have been
threatened, against Buyer, Sellers, the Company, or any of the principals,
officers or directors of any of them, seeking to restrain, prevent, or change
the transactions contemplated hereby or questioning the legality or validity of
any such transactions or seeking damages in connection with any such
transactions.
7.4 Consents. All material consents, approvals and authorizations of
governmental and regulatory authorities, and all material filings with and
notifications of governmental authorities and regulatory agencies or other
entities which regulate the business of Sellers, the Company or Buyer, necessary
-49-
<PAGE> 55
on the part of Sellers, the Company or Buyer, to the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
shall have been obtained or effected (and all applicable waiting periods, if
any, including any extensions thereof, under any applicable law, statute,
regulation or rule, including but not limited to the HSR Act, if applicable,
shall have expired or terminated, as applicable).
7.5 Closing Documentation. Sellers shall have received the following
documents, agreements and instruments from Buyer:
(a) payment of the Purchase Price pursuant to Section 1.2
hereof;
(b) evidence, reasonably satisfactory to Saugatuck, of the
authority and incumbency of the persons acting on behalf of Buyer in connection
with the execution of any document delivered in connection with this Agreement;
and
(c) such other instruments and documents as Saugatuck shall
reasonably request not inconsistent with the provisions hereof.
7.6 Approval of Legal Matters. The form of all certificates,
instruments and documents to be executed or delivered by Buyer to Sellers
pursuant to this Agreement and all legal matters in respect of the transactions
as contemplated hereby shall be reasonably satisfactory to Saugatuck and its
counsel, none of whose approval shall be unreasonably withheld or delayed.
7.7 Escrow Agreement. The Sellers, Buyer and the Escrow Agent shall
have entered into the Escrow Agreement.
7.8 No Material Adverse Change. As of the Closing Date, there shall
have been no material adverse change in the financial condition, assets,
liabilities (contingent or otherwise), cash flows or results of operations of
the Company considered as a whole since the date hereof.
7.9 Repayment of Foster & Foster Indebtedness. The indebtedness to
Foster & Foster as set forth on Schedule 1.4 shall be paid in full.
-50-
<PAGE> 56
ARTICLE 8.
INDEMNIFICATION
8.1 Indemnification by Sellers. Notwithstanding that certain of the
representations and warranties set forth in Article 3 hereof are being made only
by certain of the Sellers, each of the Sellers severally and not jointly hereby
agree to defend, indemnify and hold harmless Buyer, the Company, and their
respective successors, assigns and affiliates (collectively, the "Buyer
Indemnitees") from and against any and all losses, deficiencies, liabilities,
damages, assessments, judgments, costs and expenses, including reasonable
attorneys' fees (collectively, "Buyer Losses"), caused by, resulting from or
arising out of:
(a) (i) breaches of the representations and warranties
hereunder on the part of the Representing Parties and any Seller; and/or (ii)
failures by any Seller to perform or otherwise fulfill any undertaking or other
agreement or obligation hereunder; and/or
(b) any Environmental Condition arising in connection with
real property owned or the business operated by the Company and resulting from
the Company's or its predecessors' ownership or operation of its business or the
real property owned or leased by the Company or its predecessors or arising
under any Environmental Laws or Environmental Permits, in each case existing on
or prior to the Closing Date, whether or not known to Buyer, the Company or
Sellers at the time of Closing and regardless of whether or not such events
constitute a breach of a representation or warranty hereunder; provided, however
that such indemnity shall be limited solely to remediation (i) the need for
which has arisen as a result of the Company's or its predecessors' ownership or
operation of such real property or the business prior to the Closing and (ii) is
required under applicable Environmental Laws; and/or
(c) any and all actions, suits, proceedings, claims, demands,
incident to any of the foregoing or such indemnification;
provided, however, that if any claim, liability, demand, assessment, action,
suit or proceeding shall be asserted in respect of which a Buyer Indemnitee
proposes to demand indemnification ("Buyer Indemnified Claims"), Buyer or such
other
-51-
<PAGE> 57
Buyer Indemnitee shall notify Saugatuck thereof, provided, further, however,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure. Subject to rights of or duties
to any insurer or other third Person having liability therefor, Saugatuck shall
have the right promptly upon receipt of such notice to assume the control of the
defense, compromise or settlement of any Buyer Indemnified Claims arising out of
a lawsuit or claim brought by a third party (provided that any compromise or
settlement must include as an unconditional term thereof the delivery by the
claimant or plaintiff to the indemnified party of a written release from all
liability in respect of such claims and must otherwise be reasonably approved by
Buyer), including, at its own expense, employment of counsel reasonably
satisfactory to Buyer; provided, however, that if Saugatuck shall have exercised
its right to assume such control, Buyer may, in its sole discretion and at its
expense, employ counsel to represent it (in addition to counsel employed by
Saugatuck) in any such matter, and in such event counsel selected by Saugatuck
shall be required to cooperate with such counsel of Buyer in such defense,
compromise or settlement.
8.2 Indemnification by Buyer. Buyer hereby agrees to defend,
indemnify and hold harmless Sellers and their respective successors, assigns and
affiliates (collectively, "Seller Indemnitees") from and against any and all
losses, deficiencies, liabilities, damages, assessments, judgments, costs and
expenses, including reasonable attorneys' fees (collectively, "Seller Losses"),
resulting from or arising out of:
(a) (i) breaches of the representations and warranties
hereunder on the part of Buyer; (ii) failures by Buyer to perform or otherwise
fulfill any undertaking or agreement or obligation hereunder; and/or (iii) any
action, suit, proceeding or claim against any Seller Indemnitees with respect to
employees of the Company ("Company Employees") incident to events arising on or
after the Closing Date including but not limited to (A) termination of
employment; (B) changes in compensation or terms and conditions of employment;
and (C) changes in or failure to comply with the terms of any employee benefit
or compensation plans or programs (or any legal requirement applicable thereto);
and/or
-52-
<PAGE> 58
(b) any and all actions, suits, proceedings, claims and
demands incident to any of the foregoing or such indemnification;
provided, however, that if any claim, liability, demand, assessment, action,
suit or proceeding shall be asserted in respect of which such Seller Indemnitee
proposes to demand indemnification ("Seller Indemnified Claims"), Sellers shall
notify Buyer thereof, provided, further, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure. Subject to rights of or duties to any insurer or other
third Person having liability therefor, Buyer shall have the right promptly upon
receipt of such notice to assume the control of the defense, compromise or
settlement of any such Seller Indemnified Claims arising out of a lawsuit or
claim brought by a third party (provided that any compromise or settlement must
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the indemnified party of a written release from all liability in
respect of such claims and must otherwise be reasonably approved by Sellers)
including, at their own expense, employment of counsel reasonably satisfactory
to Sellers; provided, however, that if Buyer shall have exercised its right to
assume such control, Sellers may, in their sole discretion and at their expense,
employ counsel to represent them (in addition to counsel employed by Buyer) in
any such matter, and in such event counsel selected by Buyer shall be required
to cooperate with such counsel of Sellers in such defense, compromise or
settlement.
8.3 Remedies. Except as specifically provided in this Agreement, the
sole and exclusive remedy of both Buyer and Sellers hereunder for breaches of
representations, warranties and covenants shall be restricted to the
indemnification rights set forth in this Article 8, including the right to
enforce such indemnification rights.
8.4 Period of Indemnity. The indemnities contained in Sections 8.1
and 8.2 hereof shall expire one (1) year from the Closing Date, except with
respect to (i) Section 5.4(d) relating to inventory and tooling which will
expire on the close of business on March 14, 1997, (ii) Sections 3.17 and 5.4
(except Section 5.4(d)) relating to inventory and tooling which will expire on
the date hereof and (ii) Buyer Losses or Seller Losses
-53-
<PAGE> 59
as to which notice has been given pursuant to Sections 8.1 or 8.2 within such
period, in which case the indemnification period shall be extended until final
resolution of such losses.
8.5 Certain Limitations. (a) Notwithstanding any other provision
hereof, Sellers shall not be liable for punitive damages or any damages that
Buyer could have avoided by exercise of prudent business practices or are a
result of Buyer's bad faith, gross negligence or misconduct.
(b) Payments by Sellers shall be limited to Buyer Reimbursable
Losses (as defined below) that remain after deducting therefrom (i) any
insurance proceeds actually received by Buyer, (ii) any indemnity, contribution
or other similar payment recovered by the Buyer Indemnitees from any third party
with respect thereto and (iii) any Tax benefit to the Buyer Indemnitees arising
as a result of recognizing on any Tax Return the Buyer Reimbursable Losses
giving rise to the indemnification payment. The calculation of the amount due in
the preceding sentence shall be increased such that the indemnification payment
less any income Taxes payable by the Buyer Indemnitees, solely as a result of
having received such indemnification payment, equals the Buyer Reimbursable
Losses giving rise to the indemnification payment. To the extent such Buyer
Reimbursable Losses do not result in a Tax benefit in the taxable period in
which such Buyer Reimbursable Losses are incurred, the Buyer shall cause the
Company to transfer to the Sellers the amount of such Tax benefit within 30 days
of the date such Tax benefit is actually realized. Buyer shall file, or shall
cause to the Company to file, for and obtain any refunds or credits to which
Sellers are entitled under this Section 8.5, unless Buyer determines in good
faith that such action will have a Material Adverse Effect, directly or
indirectly, on the Company or Buyer. Notwithstanding anything to the contrary
contained or implied herein, Sellers and Buyer agree that, to the extent
permitted by applicable law, they shall treat any indemnification payment made
pursuant to this Agreement as an adjustment to the Purchase Price.
(c) Sellers' obligation to indemnify for Buyer Losses under
this Agreement shall be limited to Buyer Losses that individually, and after the
application of Section 8.5(b), exceed $5,000 ("Buyer Reimbursable Losses") and
only after the aggregate of all such Buyer Reimbursable Losses exceeds
Seventy-five Thousand Dollars ($75,000), in which event, indemnification shall
be made by Sellers from the first dollar of such Buyer
-54-
<PAGE> 60
Reimbursable Losses, provided that breaches of the representation and warranty
contained in Section 3.16 (Accounts Receivable) shall be limited to Buyer Losses
that individually exceed $1,000 and shall not be subject to such $75,000
"basket." If Buyer makes a claim for indemnification hereunder relating to
accounts receivable, then Saugatuck shall have the right to collect payment from
the person which originated the account receivable without interference from the
Company, which will cooperate with Saugatuck in attempting to collect such
account receivable and supply Saugatuck with all information necessary to
collect such payment. Sellers shall have no obligation to make any
indemnification payments under this Agreement for items which have a reserve on
the Company's balance sheet as of January 25, 1997 until Buyer has exhausted the
reserves for such item on the balance sheet, which use of reserves will not
apply toward the $75,000 "basket." Buyer's obligation to indemnify for Seller
Losses under this Agreement shall be limited to Seller Losses that individually
exceed $5,000 ("Seller Reimbursable Losses") and only after the aggregate of all
such Seller Reimbursable Losses exceeds Seventy-five Thousand Dollars ($75,000),
in which event, indemnification shall be made by Buyer from the first dollar of
such Seller Reimbursable Losses. Indemnification payments hereunder shall be
made in cash from immediately available funds and shall not be subject to any
right of setoff.
(d) Sellers' obligation to indemnify for Buyer Losses shall be
limited to an amount or amounts in the aggregate equal to $2,300,000 plus the
Sellers' Tax Benefit (as defined in Section 5.2), all of which Buyer Losses
shall be payable solely from the Escrow Amount.
8.6 Contribution. Each Seller agrees that it shall contribute to the
amount of Buyer Losses paid or payable by the Sellers in accordance with each
Seller's percentage interest set forth in Exhibit B hereto; provided, that if
any Buyer Losses are found to be caused by the intentional misrepresentation or
intentional misconduct of any Seller or Sellers, then such Seller or Sellers
shall be obligated to the other Sellers for the total amount of such Buyer
Losses, based on the relative fault and benefit to those Sellers who
participated in such intentional misrepresentation or intentional misconduct.
-55-
<PAGE> 61
ARTICLE 9.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties. The representations and
warranties of the parties contained herein shall survive the Closing for the
periods set forth in Section 8.4.
ARTICLE 10.
MISCELLANEOUS
10.1 Cooperation. Each of the parties hereto shall use its
reasonable efforts to take or cause to be taken all actions, to cooperate with
the other party hereto, with respect to all actions, and to do or cause to be
done all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement.
10.2 Waiver. Any failure of Sellers to comply with any of their
obligations or agreements herein contained may be waived only in writing by
Buyer. Any failure of Buyer to comply with any of its obligations or agreements
herein contained may be waived only in writing by Sellers.
10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given upon receipt of: hand
delivery; certified or registered mail, return receipt requested; or telecopy
transmission with confirmation of receipt:
(i) If to Buyer, to:
Handy & Harman
International Corporate Center at Rye
555 Theodore Fremd Avenue
Rye, NY 10380
Telecopier: (914) 925-4493
Telephone: (914) 925-4443
Attention: Paul E. Dixon, Esq.
-56-
<PAGE> 62
(with a copy to):
Skadden, Arps, Slate, Meagher and Flom LLP
919 Third Avenue
New York, NY 10022
Telecopier: (212) 735-2000
Telephone: (212) 735-3000
Attention: Milton G. Strom, Esq.
(ii) If to Sellers, to:
c/o Saugatuck Associates
One Canterbury Green
Stamford, CT 06901
Telecopier: (203) 324-6995
Telephone: (203) 348-6669
Attention: Christy S. Sadler
(with a copy to):
Winthrop, Stimson, Putnam & Roberts
Financial Centre
695 East Main Street
Stamford, CT 06904
Telecopier: (203) 965-8226
Telephone: (203) 348-2300
Attention: Frode Jensen, III, Esq.
Such names and addresses may be changed by written notice to each person listed
above.
10.4 Governing Law and Consent to Jurisdiction. (a) This Agreement
shall be governed by and construed in accordance with the internal substantive
laws and not the choice of law rules of the State of New York.
(b) Any judicial proceeding brought with respect to this
Agreement must be brought in any court of competent jurisdiction in the State of
New York, and, by execution and delivery of this Agreement, each party (i)
accepts, generally and unconditionally, the exclusive jurisdiction of such
courts and any related appellate court, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement and (ii)
irrevocably waives any objection it may now or hereafter have as to the venue of
any such suit, action or
-57-
<PAGE> 63
proceeding brought in such a court or that such court is an inconvenient forum.
THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY
ARE BOTH PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT.
10.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
10.6 Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto and the documents referred to herein, embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
10.8 Amendment and Modification. This Agreement may be amended or
modified only by written agreement of Saugatuck and Buyer.
10.9 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns; nothing in this Agreement, express or implied, is
intended to confer on any Person other than the parties hereto and their
respective successors and assigns (and, to the extent provided in Sections 8.1
and 8.2, the other Buyer Indemnitees and Seller Indemnitees) any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
10.10 Assignability. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other parties.
10.11 Saugatuck as Agent of Sellers. (a) Each Seller hereby
irrevocably appoints Saugatuck as such Seller's attorney-in-fact, to do any and
all things and to execute any and all documents in such Seller's name, place and
stead in connection with this Agreement and the transactions contemplated
hereby,
-58-
<PAGE> 64
including, without limitation, to accept on such Seller's behalf any amount
payable to such Seller under this Agreement or the Escrow Agreement, to engage
counsel and other professionals for and on behalf of the Sellers in connection
with the transactions contemplated hereby, to give or receive, on such Seller's
behalf, any notice or instruction under this Agreement, or, with the consent of
66-2/3% or more of the percentage interest of the Sellers as set forth on
Exhibit B and if all Sellers are treated equally, to amend, modify, terminate or
extend, or waive the terms of, this Agreement or resolve any disputes with Buyer
or Escrow Agent (including without limitation, settlement of any claims for
indemnification) arising under this Agreement or the Escrow Agreement. Buyer
shall be entitled to rely, as being binding upon each Seller, upon any document
or other writing executed by Saugatuck.
(b) Notwithstanding the provisions of Article 8 hereof,
Saugatuck agrees to indemnify and hold harmless Buyer for any act or omission of
Saugatuck under Section 1.2(b) hereof and under this Section 10.11.
-59-
<PAGE> 65
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
BUYER
HANDY & HARMAN
By:______________________________________________
Name:
Title:
SELLERS
SAUGATUCK CAPITAL COMPANY LIMITED
PARTNERSHIP III
By: GREYROCK PARTNERS LIMITED
PARTNERSHIP
By:______________________________________________
Name:
Title:
FOSTER & FOSTER
By:______________________________________________
Name:
Title:
SYMMETRIX CAPITAL PARTNERS
By: SYMMETRIX, INC.
By:______________________________________________
Name:
Title:
-60-
<PAGE> 66
SYMMETRIX, INC.
By:______________________________________________
Name:
Title:
________________________________
Daniel P. Murphy
________________________________
Hubert T. McGovern
________________________________
Thomas P. Wagner
________________________________
John P. O'Brien
________________________________
Patrick J. McDonough
-61-
<PAGE> 1
[EXECUTION COPY]
FIRST AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
This FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT, dated as of June 30,
1995 (this "Amendatory Agreement"), among HANDY & HARMAN, a New York corporation
("the Borrower"), certain financial institutions signatories hereto, THE BANK OF
NOVA SCOTIA, CHEMICAL BANK and THE BANK OF NEW YORK, as the co-agents
(collectively referred to herein as the "Co-Agents") and THE BANK OF NOVA
SCOTIA, as administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders (as defined below), the Co-Agents and
the Administrative Agent are parties to a Revolving Credit Agreement, dated as
of September 28, 1994 (as amended or otherwise modified to the date hereof, the
"Existing Credit Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"First Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II; except as so amended, the Existing Credit Agreement shall
continue in full force and
effect.
SUBPART 2.1. Amendment to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definition in such Section in the appropriate
alphabetical sequence:
"First Amendment" means the First Amendment, dated as of June 30,
1995, to this Agreement among the Borrower, the Lenders party thereto, the
Co-Agents and the Administrative Agent.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended as follows:
(a) the definition of "Interest Coverage Ratio" appearing in such
Section is hereby amended in its entirety to read as follows:
"`Interest Coverage Ratio' means, at the close of
any Fiscal Quarter, the ratio, computed for the
-2-
<PAGE> 3
period consisting of such Fiscal Quarter and each
of the three immediately preceding Fiscal
Quarters, of
(a) EBIT
to
(b) Interest Expense;
provided, that the calculation of the Interest Coverage Ratio
from and after the First Amendment Effective Date shall
exclude the effects of the non-recurring, pre-tax charges in
an aggregate amount not to exceed $9,500,000 relating to
Borrower's discontinuance of its karat gold fabricating
product line in East Providence, Rhode Island and additional
costs primarily related to that division's ongoing operation
in Fairfield, Connecticut."
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This Amendatory Agreement
shall become effective as of the date first set forth above (the "First
Amendment Effective Date") when each of the conditions set forth in this Subpart
3.1 shall have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and the Required Lenders.
SUBPART 3.1.2. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
-3-
<PAGE> 4
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding, however, those contained in
Section 6.7 thereof) are true and correct in all material respects (unless
stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct as of such earlier
date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
-4-
<PAGE> 5
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) after giving effect to this Amendatory Agreement, no Default has
occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Issuer or any Lender under this Amendatory Agreement shall, except as may be
otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval to be granted after the date hereof, and except as
expressly modified by this Amendatory Agreement, the provisions of the Existing
Credit Agreement shall remain in full force and effect, without amendment or
other modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By ___________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By ___________________________________
Title:
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By ___________________________________
Title:
CHEMICAL BANK, in its capacity
as Co-Agent and Lender
By ___________________________________
Title:
-6-
<PAGE> 7
FLEET BANK, N.A.
By ___________________________________
Title:
NBD BANK
By ___________________________________
Title:
THE BANK OF TOKYO TRUST COMPANY
By ___________________________________
Title:
LTCB TRUST COMPANY
By ___________________________________
Title:
SHAWMUT BANK, N.A.
By ___________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By ___________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By ___________________________________
Title:
-7-
<PAGE> 8
THE DAIWA BANK, LIMITED
By ___________________________________
Title:
By ___________________________________
Title:
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By ___________________________________
Title:
By ___________________________________
Title:
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By ___________________________________
Title:
NATWEST BANK N.A.
By ___________________________________
Title:
ABN AMRO BANK N.V. NEW YORK BRANCH
By ___________________________________
Title:
By ___________________________________
Title:
-8-
<PAGE> 9
BANQUE PARIBAS
By ___________________________________
Title:
By ___________________________________
Title:
GIROCREDIT BANK AG DER SPARKESSEN
GRAND CAYMAN ISLAND BRANCH
By ___________________________________
Title:
By ___________________________________
Title:
COMERICA BANK
By ___________________________________
Title:
IBJ SCHRODER BANK & TRUST COMPANY
By ___________________________________
Title:
THE MITSUBISHI BANK, LIMITED -
NEW YORK BRANCH
By ___________________________________
Title:
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By ___________________________________
Title:
-9-
<PAGE> 1
[EXECUTION COPY]
SECOND AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
This SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT, dated as of September
24, 1996 (this "Amendatory Agreement"), is among HANDY & HARMAN, a New York
corporation (the "Borrower"), certain financial institutions signatories hereto
(the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK (formerly
known as Chemical Bank) and THE BANK OF NEW YORK, as the co-agents (collectively
referred to herein as the "Co-Agents") and THE BANK OF NOVA SCOTIA, as
administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Revolving Credit Agreement, dated as of September 28,
1994 (as amended or otherwise modified to the date hereof, the "Existing Credit
Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
"Existing Credit Agreement" is defined in the first recital.
<PAGE> 2
"Lenders" is defined in the preamble.
"Second Amendment Effective Date" is defined in Subpart 4.1.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
AND EXTENSION OF STATED MATURITY DATE
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Credit Agreement is hereby amended and the Stated
Maturity Date is hereby extended in accordance with this Part II; except as so
amended, the Existing Credit Agreement shall continue in full force and effect.
SUBPART 2.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"Applicable Commitment Fee Margin" means the lowest per annum rate
determined by reference to the Net Debt to EBITDA Ratio and EBITDA to
Interest Ratio, in each case that is satisfied for each of such ratios in
a given clause below and as indicated in the Compliance Certificate most
recently delivered pursuant to clause (c) of Section 7.1.1, equal to:
(a) 0.15% if the Net Debt to EBITDA Ratio is less than or
equal to 1.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 5.0:1;
(b) 0.20% if the Net Debt to EBITDA Ratio is less than or
equal to 2.25:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.75:1;
(c) 0.25% if the Net Debt to EBITDA Ratio is less than or
equal to 2.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.00:1; and
(d) 0.30% if the Net Debt to EBITDA Ratio is greater than
2.75:1 or the EBITDA to Interest Ratio is less than 3.00:1.
-2-
<PAGE> 3
The Net Debt to EBITDA Ratio and the EBITDA to Interest Ratio used
to compute the Applicable Commitment Fee Margin shall be the Net Debt to
EBITDA Ratio and the EBITDA to Interest Ratio, as the case may be, set
forth in the Compliance Certificate most recently delivered by the
Borrower to the Administrative Agent pursuant to clause (c) of Section
7.1.1; changes in the Applicable Commitment Fee Margin resulting from a
change in the Net Debt to EBITDA Ratio and/or the EBITDA to Interest
Ratio, as the case may be, shall become effective upon delivery by the
Borrower to the Administrative Agent of a new Compliance Certificate
pursuant to clause (c) of Section 7.1.1. Notwithstanding the foregoing,
the Lenders acknowledge and agree that, subject to the next sentence, the
Applicable Commitment Fee Margin for the period from the Second Amendment
Effective Date through (but excluding) the date that the first Compliance
Certificate is delivered following the Second Amendment Effective Date
shall be determined by reference to level (c) above (notwithstanding the
actual Net Debt to EBITDA Ratio and EBITDA to Interest Ratio for such
period). If the Borrower shall fail to deliver a Compliance Certificate
within the number of days after the end of any Fiscal Quarter as required
pursuant to clause (c) of Section 7.1.1 (without giving effect to any
grace period), the Applicable Commitment Fee Margin from and including the
first day after the date on which such Compliance Certificate was required
to be delivered to but not including the date the Borrower delivers to the
Administrative Agent a Compliance Certificate shall conclusively equal the
highest Applicable Commitment Fee Margin set forth above.
"Applicable L/C Margin" means the lowest per annum rate determined
by reference to the Net Debt to EBITDA Ratio and EBITDA to Interest Ratio,
in each case that is satisfied for each of such ratios in a given clause
below and as indicated in the Compliance Certificate most recently
delivered pursuant to clause (c) of Section 7.1.1, equal to:
(a) 0.40% if the Net Debt to EBITDA Ratio is less than or
equal to 1.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 5.0:1;
(b) 0.55% if the Net Debt to EBITDA Ratio is less than or
equal to 2.25:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.75:1;
(c) 0.70% if the Net Debt to EBITDA Ratio is less than or
equal to 2.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.00:1; and
-3-
<PAGE> 4
(d) 0.95% if the Net Debt to EBITDA Ratio is greater than
2.75:1 or the EBITDA to Interest Ratio is less than 3.00:1.
The Net Debt to EBITDA Ratio and the EBITDA to Interest Ratio used
to compute the Applicable L/C Margin shall be the Net Debt to EBITDA Ratio
and the EBITDA to Interest Ratio, as the case may be, set forth in the
Compliance Certificate most recently delivered by the Borrower to the
Administrative Agent pursuant to clause (c) of Section 7.1.1; changes in
the Applicable L/C Margin resulting from a change in the Net Debt to
EBITDA Ratio and/or the EBITDA to Interest Ratio, as the case may be,
shall become effective upon delivery by the Borrower to the Administrative
Agent of a new Compliance Certificate pursuant to clause (c) of Section
7.1.1. Notwithstanding the foregoing, the Lenders acknowledge and agree
that, subject to the next sentence, the Applicable L/C Margin for the
period from the Second Amendment Effective Date through (but excluding)
the date that the first Compliance Certificate is delivered following the
Second Amendment Effective Date shall be determined by reference to level
(c) above (notwithstanding the actual Net Debt to EBITDA Ratio and EBITDA
to Interest Ratio for such period). If the Borrower shall fail to deliver
a Compliance Certificate within the number of days after the end of any
Fiscal Quarter as required pursuant to clause (c) of Section 7.1.1
(without giving effect to any grace period), the Applicable L/C Margin
from and including the first day after the date on which such Compliance
Certificate was required to be delivered to but not including the date the
Borrower delivers to the Administrative Agent a Compliance Certificate
shall conclusively equal the highest Applicable L/C Margin set forth
above.
"Applicable LIBO Rate Margin" means, with respect to any Loan made
or maintained as a LIBO Rate Loan, the lowest per annum rate determined by
reference to the Net Debt to EBITDA Ratio and EBITDA to Interest Ratio, in
each case that is satisfied for each of such ratios in a given clause
below and as indicated in the Compliance Certificate most recently
delivered pursuant to clause (c) of Section 7.1.1, equal to:
(a) 0.45% if the Net Debt to EBITDA Ratio is less than or
equal to 1.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 5.0:1;
(b) 0.60% if the Net Debt to EBITDA Ratio is less than or
equal to 2.25:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.75:1;
-4-
<PAGE> 5
(c) 0.75% if the Net Debt to EBITDA Ratio is less than or
equal to 2.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.00:1; and
(d) 1.00% if the Net Debt to EBITDA Ratio is greater than
2.75:1 or the EBITDA to Interest Ratio is less than 3.00:1.
The Net Debt to EBITDA Ratio and the EBITDA to Interest Ratio used
to compute the Applicable LIBO Rate Margin shall be the Net Debt to EBITDA
Ratio and the EBITDA to Interest Ratio, as the case may be, set forth in
the Compliance Certificate most recently delivered by the Borrower to the
Administrative Agent pursuant to clause (c) of Section 7.1.1; changes in
the Applicable LIBO Rate Margin resulting from a change in the Net Debt to
EBITDA Ratio and/or the EBITDA to Interest Ratio, as the case may be,
shall become effective upon delivery by the Borrower to the Administrative
Agent of a new Compliance Certificate pursuant to clause (c) of Section
7.1.1. Notwithstanding the foregoing, the Lenders acknowledge and agree
that, subject to the next sentence, the Applicable LIBO Rate Margin for
the period from the Second Amendment Effective Date through (but
excluding) the date that the first Compliance Certificate is delivered
following the Second Amendment Effective Date shall be determined by
reference to level (c) above (notwithstanding the actual Net Debt to
EBITDA Ratio and EBITDA to Interest Ratio for such period). If the
Borrower shall fail to deliver a Compliance Certificate within the number
of days after the end of any Fiscal Quarter as required pursuant to clause
(c) of Section 7.1.1 (without giving effect to any grace period), the
Applicable LIBO Rate Margin from and including the first day after the
date on which such Compliance Certificate was required to be delivered to
but not including the date the Borrower delivers to the Administrative
Agent a Compliance Certificate shall conclusively equal the highest
Applicable LIBO Rate Margin set forth above.
"EBITDA" means, for any period, the sum for such period of all
amounts which, in accordance with GAAP, would be included on the
consolidated financial statements of the Borrower and its Subsidiaries as
(a) EBIT;
plus
(b) the amount deducted, in determining Net Income,
representing amortization;
-5-
<PAGE> 6
plus
(c) the amount deducted, in determining Net Income,
representing depreciation of assets.
"EBITDA to Interest Ratio" means, at the close of any Fiscal
Quarter, the ratio, computed for the period consisting of such Fiscal
Quarter and each of the three immediately preceding Fiscal Quarters, of
(a) EBITDA
to
(b) Interest Expense.
"Net Debt to EBITDA Ratio" means, at the last day of any Fiscal
Quarter, the ratio, computed (in the case of clause (b) below) for the
period consisting of such Fiscal Quarter and each of the three immediately
preceding Fiscal Quarters, of
(a) Debt minus the aggregate amount of cash and Cash
Equivalent Investments (not subject to any Lien or other
encumbrance) owned by the Borrower and its Subsidiaries on such last
day
to
(b) EBITDA.
"Second Amendment" means the Second Amendment, dated as of September
24, 1996, to this Agreement among the Borrower, the Lenders party thereto,
the Co-Agents and the Administrative Agent.
"Second Amendment Effective Date" means the Second Amendment
Effective Date as defined in Subpart 4.1 of the Second Amendment.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended by amending the definition of "Loan Commitment Amount" appearing in such
Section in its entirety to read as follows:
"`Loan Commitment Amount' means, on any day, $150,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2."
-6-
<PAGE> 7
SUBPART 2.2. Amendments to Article III. Article III of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.2.1 and 2.2.2.
SUBPART 2.2.1. Clause (ii) of Section 3.2.1 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"(ii) On that portion of such Borrowing maintained as LIBO Rate
Loans, during each Interest Period applicable thereto, such rate shall be
equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest
Period plus the Applicable LIBO Rate Margin; and"
SUBPART 2.2.2. Section 3.3.1 of the Existing Credit Agreement is hereby
amended by deleting the words "at the rate of 3/8 of 1% per annum" and inserting
the words "equal to the Applicable Commitment Fee Margin" in place thereof.
SUBPART 2.2.3. Section 3.3.2 of the Existing Credit Agreement is hereby
amended by (i) deleting the words "at the rate of 7/8 of 1% per annum" appearing
in clause (x) of such Section and inserting the words "equal to the Applicable
L/C Margin" in place thereof and (ii) deleting the words "at the rate of 1/4 of
1% per annum" appearing in clause (y) of such Section and inserting the words
"at the rate of 0.1875% per annum" in place thereof.
SUBPART 2.3. Amendments to Exhibits. Exhibit A-1 (Form of Revolving Note),
Exhibit A-2 (Form of Competitive Bid Loan Note) and Exhibit E (Compliance
Certificate) to the Existing Credit Agreement are hereby amended in their
entirety to read as respectively set forth on Exhibits A, B and C hereto.
SUBPART 2.4. Extension of Stated Maturity Date. By their signatures below,
the parties hereto hereby agree that, in accordance with the terms of Section
2.4 of the Existing Credit Agreement, upon the effectiveness of this Amendatory
Agreement, the Stated Maturity Date shall be September 27, 1999.
PART III
ACKNOWLEDGEMENT
SUBPART 3.1. Acknowledgement. By their signature below, each of the
Lenders acknowledges and agrees that, as of the Second Amendment Effective Date
(and notwithstanding any reductions to the Loan Commitment Amount that have
occurred prior to the Second Amendment Effective Date), the Loan Commitment
Amount is $150,000,000, as such amount may be reduced from time to time pursuant
to Section 2.2 of the Credit Agreement.
-7-
<PAGE> 8
PART IV
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1. Second Amendment Effective Date. This Amendatory Agreement
shall become effective on the date first set forth above (the "Second Amendment
Effective Date") when each of the conditions set forth in this Subpart 4.1 shall
have been satisfied.
SUBPART 4.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and each of the Lenders.
SUBPART 4.1.2. Resolutions, etc. The Administrative Agent shall have
received from the Borrower, with copies for each Lender, a certificate, dated
the Second Amendment Effective Date, of its Secretary or Assistant Secretary as
to
(a) resolutions of its Board of Directors, then in full force and
effect, authorizing the execution, delivery and performance of this
Amendatory Agreement and each other Loan Document to be executed by it in
connection with this Amendatory Agreement; and
(b) the incumbency and signatures of its officers authorized to
execute and deliver, and act with respect to, this Amendatory Agreement,
each other Loan Document and each of the other documents, certificates,
instruments and other agreements delivered or to be delivered by it
pursuant to this Amendatory Agreement and pursuant to the Credit
Agreement.
Each of the Lenders and the Agents may conclusively rely upon such certificate
until the Administrative Agent has received a further certificate of the
Secretary or an Assistant Secretary of the Borrower cancelling or amending such
prior certificate.
SUBPART 4.1.3. Fees and Expenses. The Administrative Agent shall have
received payment in full of (i) an amendment fee in an amount equal to $155,875
for the pro rata account of the Lenders as set forth on Schedule I and (ii) all
other fees, costs and expenses due and payable as of the Second Amendment
Effective Date.
SECTION 4.1.4. Opinions of Counsel. The Administrative Agent shall have
received opinions, dated the Second Amendment Effective Date and addressed to
the Issuer, the Agents and all Lenders, from counsel to the Borrower, in form
and substance satisfactory to the Adminstrative Agent.
-8-
<PAGE> 9
SUBPART 4.1.5. Delivery of Notes. The Administrative Agent shall have
received, for the account of each Lender, Notes, issued in substitution and
exchange for, and not in satisfaction of, the Notes delivered under the terms of
the Existing Credit Agreement, duly executed and delivered by the Borrower.
SUBPART 4.1.6. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART V
MISCELLANEOUS
SUBPART 5.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 5.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 5.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 5.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 5.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants to the Agents, the Issuer and the Lenders that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding, however, those contained in
Section 6.7 thereof) are true and correct in all material respects (unless
stated to
-9-
<PAGE> 10
relate solely to an earlier date, in which case such representations and
warranties were true and correct as of such earlier date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) no Default has occurred and is continuing.
SUBPART 5.6. Limited Waiver, etc. No amendment, waiver or approval by the
Agents, the Issuer or any Lender under this Amendatory Agreement shall, except
as may be otherwise stated in this Amendatory Agreement, be applicable to
subsequent transactions. No amendment, waiver or approval hereunder shall
require any similar or dissimilar amendment, waiver or approval to be granted
after the date hereof, and except as expressly modified by this Amendatory
Agreement, the provisions of the Existing Credit Agreement shall remain in full
force and effect, without amendment or other modification.
SUBPART 5.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-10-
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By ____________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By ____________________________________
Title:
<PAGE> 12
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By ____________________________________
Title:
<PAGE> 13
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
Co-Agent and Lender
By ____________________________________
Title:
<PAGE> 14
FLEET PRECIOUS METALS INC.
By ____________________________________
Title:
<PAGE> 15
THE FIRST NATIONAL BANK OF CHICAGO
(formerly known as NBD Bank)
By ____________________________________
Title:
<PAGE> 16
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By ____________________________________
Title:
<PAGE> 17
LTCB TRUST COMPANY
By ____________________________________
Title:
<PAGE> 18
CREDIT LYONNAIS NEW YORK BRANCH
By ____________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By ____________________________________
Title:
<PAGE> 19
THE SUMITOMO BANK, LIMITED
By ____________________________________
Title:
By ____________________________________
Title:
<PAGE> 20
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By ____________________________________
Title:
By ____________________________________
Title:
<PAGE> 21
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By ____________________________________
Title:
<PAGE> 22
ABN AMRO BANK N.V. NEW YORK BRANCH
By ____________________________________
Title:
By ____________________________________
Title:
<PAGE> 23
BANQUE PARIBAS
By ____________________________________
Title:
By ____________________________________
Title:
<PAGE> 24
GIROCREDIT BANK AG DER SPARKESSEN
GRAND CAYMAN ISLAND BRANCH
By ____________________________________
Title:
By ____________________________________
Title:
<PAGE> 25
COMERICA BANK
By ____________________________________
Title:
<PAGE> 26
IBJ SCHRODER BANK & TRUST COMPANY
By ____________________________________
Title:
<PAGE> 27
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By ____________________________________
Title:
<PAGE> 28
SCHEDULE I
TO SECOND AMENDMENT
Allocation of Amendment Fee
Lender Amount
------ ------
$_________
<PAGE> 29
EXHIBIT A
TO SECOND AMENDMENT
EXHIBIT A-1
Revolving Loan Note
$____________ September 28, 1994
FOR VALUE RECEIVED, the undersigned, HANDY & HARMAN, a New York
corporation (the "Borrower"), promises to pay to the order of
_________________________ (the "Lender") on the Stated Maturity Date (as such
term is defined in the Credit Agreement referred to below), the principal sum of
______________ DOLLARS ($__________) or, if less, the aggregate unpaid principal
amount of all Revolving Loans (as such term is defined in the Revolving Credit
Agreement, dated as of the date hereof (as such Revolving Credit Agreement may
be amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, The Bank of Nova Scotia,
The Chase Manhattan Bank (formerly known as Chemical Bank) and The Bank of New
York, as Co-Agents, The Bank of Nova Scotia, as Administrative Agent and certain
financial institutions (including the Lender) as are, or may become, parties
thereto), made by the Lender pursuant to the Credit Agreement. A notation
indicating all Revolving Loans made by the Lender pursuant to the Credit
Agreement and payments on account of principal of such Revolving Loans may, from
time to time, be made by the holder hereof on the grid attached to this
Revolving Loan Note. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
The unpaid principal amount of this Revolving Loan Note from time to time
outstanding shall bear interest as provided in Section 3.2.1 of the Credit
Agreement. All payments of principal of and interest on this Revolving Loan Note
shall be payable in lawful currency of the United States of America to the
account designated by the Administrative Agent in same day funds.
This Revolving Loan Note represents a renewal of, and is issued in
substitution and exchange for, and not in satisfaction of, that certain
Revolving Loan Note of the Borrower, dated September 28, 1994, payable to the
order of the Lender (or its assignor). The indebtedness originally evidenced by
such promissory note is a continuing Indebtedness, and nothing herein contained
shall be construed to deem such promissory note paid.
<PAGE> 30
This Revolving Loan Note is one of the Revolving Loan Notes referred to
in, and evidences indebtedness incurred in respect of the Revolving Loans under,
the Credit Agreement, to which reference is made for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments of principal of the indebtedness evidenced by this Revolving Loan
Note and on which such indebtedness may be declared to be or may become
immediately due and payable.
-2-
<PAGE> 31
THIS REVOLVING LOAN NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK, AND
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK.
HANDY & HARMAN
By ____________________________________
Title:
-3-
<PAGE> 32
GRID
<TABLE>
<CAPTION>
===============================================================================================================================
Last Day
of Outstandin
Applicable Amount of g
Amount of Alternate Interest Principal Principal Notation Made
Date Loan Base Rate LIBO Rate Period Payment Balance By
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
===============================================================================================================================
</TABLE>
-4-
<PAGE> 33
EXHIBIT B
TO SECOND AMENDMENT
Exhibit A-2
Competitive Bid Loan Note
$150,000,000 September 28, 1994
FOR VALUE RECEIVED, the undersigned, HANDY & HARMAN, a New York
corporation (the "Borrower"), promises to pay to the order of
_______________________ (the "Lender") on the earlier of (i) each Competitive
Bid Loan Maturity Date (as such term is defined in that certain Revolving Credit
Agreement, dated as of the date hereof (as such Revolving Credit Agreement may
be amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, The Bank of Nova Scotia,
The Chase Manhattan Bank (formerly known as Chemical Bank) and The Bank of New
York, as Co-Agents, The Bank of Nova Scotia, as Administrative Agent and certain
financial institutions (including the Lender) as are, or may from time to time
become parties thereto), and (ii) the Commitment Termination Date (as defined in
the Credit Agreement), the principal sum of ONE HUNDRED FIFTY MILLION DOLLARS
($150,000,000) or, if less, the unpaid principal amount of all Competitive Bid
Loans made by the Lender to the Borrower from time to time pursuant to Section
2.4. of the Credit Agreement. A notation indicating all Competitive Bid Loans
made by the Lender pursuant to the Credit Agreement and all payments on account
of principal of such Competitive Bid Loans may, from time to time, be made by
the holder hereof on the grid attached to this Competitive Bid Loan Note.
The unpaid principal amount of this Competitive Bid Loan Note from time to
time outstanding shall bear interest as provided in Section 3.2.1 of the Credit
Agreement. All payments of principal of and interest on this Competitive Bid
Loan Note shall be payable in lawful currency of the United States of America to
the account designated by the Administrative Agent in same day funds.
This Competitive Bid Loan Note represents a renewal of, and is issued in
substitution and exchange for, and not in satisfaction of, that certain
Competitive Bid Loan Note of the Borrower, dated September 28, 1994, payable to
the order of the Lender (or its assignor). The indebtedness originally evidenced
by such promissory note is a continuing indebtedness, and nothing herein
contained shall be construed to deem such promissory note paid.
<PAGE> 34
This Competitive Bid Loan Note is one of the Competitive Bid Loan Notes
referred to in, and evidences indebtedness incurred in respect of Competitive
Bid Loans under, the Credit Agreement, to which reference is made for a
statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments of principal of the indebtedness evidenced by this
Competitive Bid Loan Note and on which such indebtedness may be declared to be
or may become immediately due and payable. Unless otherwise defined herein or
the context otherwise requires, terms used herein have the meanings provided in
the Credit Agreement.
THIS COMPETITIVE BID LOAN NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK
AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK.
HANDY & HARMAN
By _________________________
Title:
-2-
<PAGE> 35
GRID
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Competitive
Bid Loan Amount of Amount of Outstanding
Amount Maturity Interest Interest Principal Principal Notation
Date of Loan Date Period Payment Payment Balance Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE> 36
EXHIBIT C
TO SECOND AMENDMENT
Form of Compliance Certificate
To: Each of the Lenders
(as defined below)
-and-
The Bank of Nova Scotia,
as Administrative Agent
One Liberty Plaza
New York, New York 10006
Attention: ______________
Handy & Harman
Gentlemen:
This Compliance Certificate is being delivered pursuant to clause (c) of
Section 7.1.1 of the Revolving Credit Agreement, dated as of September 28, 1994
(as amended, supplemented, amended and restated or otherwise modified, the
"Credit Agreement"), among Handy & Harman, a New York corporation (the
"Borrower"), certain financial institutions now or hereafter parties thereto
(the "Lenders"), The Bank of Nova Scotia, The Chase Manhattan Bank (formerly
known as Chemical Bank) and The Bank of New York, as Co-Agents for the Lenders
and The Bank of Nova Scotia, as Administrative Agent. Terms used herein without
definition shall have the meanings assigned to such terms in Section 1.1 of the
Credit Agreement.
The Borrower hereby certifies, represents and warrants that as of
_________ __, 19__ (the "Computation Date"):
(a) The Adjusted Consolidated Tangible Net Worth was $__________, as
computed on Attachment 1 hereto and such amount [complies] [does not comply]
with the provisions of clause (a) of Section 7.2.4 of the Credit Agreement;
(b) The Leverage Ratio was __:1.00, as computed on Attachment 2 hereto and
such ratio [complies] [does not comply] with the provisions of clause (b) of
Section 7.2.4 of the Credit Agreement;
(c) The Interest Coverage Ratio was __:1.00, as computed on Attachment 3
hereto and such ratio [complies] [does not comply]
<PAGE> 37
with the provisions of clause (c) of Section 7.2.4 of the Credit Agreement;
(d) The Net Debt to EBITDA Ratio was __:1.00 and the EBITDA to Interest
Ratio was __:1.00, as computed on Attachment 4 hereto;
(e) The aggregate amount of Designated Debt of the Borrower and its
Subsidiaries was $_________ as computed on Attachment 5 hereto and such amount
[complies] [does not comply] with clause (a) of Section 7.2.2 of the Credit
Agreement;
(f) The aggregate amount of Debt of all Subsidiaries was $_________, and
such amount [complies] [does not comply] with clause (b) of Section 7.2.2 of the
Credit Agreement;
(g) The aggregate face amount of Indebtedness in respect of letters of
credit (other than Letters of Credit) was $________, and such amount [complies]
[does not comply] with clause (a)(ii)(B) of Section 7.2.2 of the Credit
Agreement;
(h) The aggregate amount of Investments (other than the Investments
permitted by clauses (a) through (f) of Section 7.2.5 of the Credit Agreement)
made, incurred, assumed or otherwise existing by the Borrower and its
Subsidiaries was $_________ and such amount [complies] [does not comply] with
clause (g) of Section 7.2.5 of the Credit Agreement;
(i) The aggregate amount of rental obligations entered into by the
Borrower and its Subsidiaries of the type set forth in Section 7.2.8 of the
Credit Agreement was $_________ and such amount [complies] [does not comply]
with Section 7.2.8 of the Credit Agreement;
(j) The aggregate book value or market value, if higher (determined as to
particular assets as of the respective date of disposition thereof) (other than
in accordance with clauses (a), (b) and (c) of Section 7.2.11 of the Credit
Agreement) of all assets sold, transferred, leased, contributed or otherwise
conveyed by the Borrower and its Subsidiaries (i) since the Effective Date was
$__________ and such amount [complies] [does not comply] with clause (d)(i) of
Section 7.2.11 of the Credit Agreement, and (ii) constitutes assets which
contributed __% of operating profit contribution during the three most recently
completed Fiscal Years of the Borrower, and such amount [complies][does not
comply] with clause (d)(ii) of Section 7.2.11 of the Credit Agreement;
(k) No Default has occurred and is continuing [other than as follows:];
-2-
<PAGE> 38
(l) The total market value of precious metal held on consignment by the
Borrower and its Subsidiaries was $__________;
(m) The total number of ounces of precious metal held on consignment at
each Plant (as defined in the Consignment Facilities) under the terms of the
Consignment Facilities was ; and
(n) The total number of ounces of U.S. Bullion (as defined in the
Consignment Facilities) located at each Plant was _____.
(o) Based on paragraph (d) above, the Applicable LIBO Rate Margin is ___%,
the Applicable L/C Margin is ___% and the Applicable Commitment Fee Margin is
___%.
IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate to
be executed and delivered by its duly Authorized Officer on this ____ day of
_________, 19__.
HANDY & HARMAN
By__________________________
Title:
-3-
<PAGE> 39
ATTACHMENT 1
(to __/__/__ Compliance
Certificate)
ADJUSTED CONSOLIDATED TANGIBLE NET WORTH
(________ __, 19__)
1. Adjusted Consolidated
Tangible Net Worth:
A. The par value (or value stated on
the books of the Borrower) of the
capital stock of all classes of the
Borrower................................................$_________
B. The amount of the consolidated
surplus, whether capital or earned,
of the Borrower and its
and its Subsidiaries................................... $_________
C. The sum (or difference, in the
case of a surplus deficit in
Item 1.B) of Items 1.A and 1.B......................... $_________
D. The aggregate amount of treasury
stock, subscribed but unissued
stock, unamortized debt discount
and expense, good will,
trademarks, trade names, patents
and other intangible assets (but
not deferred charges) of the
Borrower and its Subsidiaries ......................... $_________
E. The aggregate amount of all write-
ups in the book value of any assets
owned by the Borrower or its
Subsidiaries subsequent to
March 16, 1992, other than write-ups
of assets (and assets of Subsidiaries)
acquired by the Borrower and/or its
Subsidiaries (exclusive of goodwill)
that are made in connection with the
acquisition thereof ................................... $_________
F. Sum of Items 1.D through 1.E $_________
G. Consolidated Tangible Net Worth:
The excess of Item 1.C over Item 1.F................... $_________
<PAGE> 40
H. 40% of the excess of the Market
Value of the Borrower's and its
Subsidiaries' owned precious metal
holdings over the LIFO cost of such
holdings as set forth in the
Borrower's most recent consolidated
financial statements delivered
pursuant to clause (a) or clause
(b) of Section 7.1.1 of the
Credit Agreement....................................... $_________
I. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH:
The sum of Items 1.G and 1.H............................$_________
-2-
<PAGE> 41
ATTACHMENT 2
(to __/__/__ Compliance
Certificate)
LEVERAGE RATIO
(on ___________ __, 19__)
2. (1)Leverage Ratio:
A. The aggregate outstanding principal
and stated amount of the
consolidated Indebtedness of the
Borrower and its Subsidiaries for
borrowed money and all other
obligations evidenced by bonds,
debentures, notes or other
similar instruments..................................... $_________
B. The aggregate outstanding principal
and stated amount of the
consolidated Indebtedness of the
Borrower and its Subsidiaries
(without duplication of the
obligations set forth in Item 2.A of
this Attachment 2), whether
contingent or otherwise, relative to
banker's acceptances issued for the
account of the Borrower and its
Subsidiaries ............................................$_________
C. The aggregate outstanding principal
and stated amount of the
consolidated Indebtedness of the
Borrower and its Subsidiaries as
lessee under leases which have been
or should be, in accordance with
GAAP, recorded as
Capitalized Lease Liabilities........................... $_________
D. Without duplication, Contingent
Liabilities of the Borrower and its
Subsidiaries in respect of any types
of Indebtedness described in
Items 2.A through 2.C .................................. $_________
- ----------
(1) Computed in accordance with the final sentence contained in the definition
of "Indebtedness".
<PAGE> 42
E. Debt: The Sum of Items 2.A through 2.D................. $_________
F. Adjusted Consolidated Tangible
Net Worth (from Attachment 1, Item 1.I)................. $_________
G. LEVERAGE RATIO: The ratio
of Item 2.E to Item 2.F.................................. ____:1.00
-2-
<PAGE> 43
ATTACHMENT 3
(to __/__/__ Compliance
Certificate)
INTEREST COVERAGE RATIO
(on __/__/19__)
3. Interest Coverage Ratio:
*A. The consolidated net income of
the Borrower and its Subsidiaries
(excluding any extraordinary gains
and losses)........................................ $__________
*B. The aggregate amount of interest
expense of the Borrower and its
Subsidiaries, including the portion
of any rent paid on Capital Lease
Liabilities which is allocable to
interest expense in accordance with
GAAP and including fees or rents
arising from or relating to
consignment or leasing of precious
metals other than up-front fees paid
on the Effective Date to the Lenders
(provided, that any such interest
expense which is subject to a
Hedging Obligation will be
calculated on the net effect of any
payments made by the other party to
such Hedging Obligation)........................... $__________
*C. To the extent deducted in
determining Net Income,
provisions for income taxes........................ $__________
D. EBIT: The sum of Items 3.A
through 3.C........................................ $__________
E. Interest Expense: The amount set
forth in Item 3.B above minus the
effects of the nonrecurring, pre-
tax charges in an aggregate amount
- ----------
* The amount which, in accordance with GAAP, would be included on the
consolidated financial statements of the Borrower and its Subsidiaries.
<PAGE> 44
not to exceed $9,500,000 relating to the Borrower's discontinuance of
its karat gold fabricating product line in East Providence, Rhode
Island and additional costs primarily related to that division's
ongoing operation
in Fairfield, Connecticut.......................... $__________
F. INTEREST COVERAGE RATIO: The ratio
of Item 3.D to Item 3.E............................ _____:1.00
-2-
<PAGE> 45
ATTACHMENT 4
(to __/__/__ Compliance
Certificate)
NET DEBT TO EBITDA RATIO
EBITDA TO INTEREST RATIO (on __/__/19__)
4. I. Net Debt to EBITDA Ratio:
A. Debt: Item 2.E from Attachment 2................... $__________
B. The aggregate amount of cash and
Cash Equivalent Investments (not
subject to any Lien or other
encumbrance) owned by the Borrower
and its Subsidiaries on the last day
of the applicable Fiscal Quarter................... $__________
C. Net Debt: Item 4.A minus Item 4.B................. $__________
*D. EBIT: Item 3.D from Attachment 3................... $__________
*E. To the extent deducted in
determining Net Income,
provisions for depreciation of assets.............. $__________
*F. To the extent deducted in
determining Net Income,
provisions for amortization........................ $__________
G. EBITDA: The sum of Items 4.D
through 4.F........................................ $__________
H. NET DEBT TO EBITDA RATIO: The ratio
of Item 4.C to Item 4.G............................ ____:1.00
II. EBITDA to Interest Ratio:
I. EBITDA: Item 4.G above............................ $__________
J. Interest Expense: Item 3.E........................ $__________
K. EBITDA TO INTEREST RATIO: The ratio of
Item 4.I to Item 4.J............................... ____:1.00
- ----------
* The amount which, in accordance with GAAP, would be included on the
consolidated financial statements of the Borrower and its Subsidiaries.
<PAGE> 46
ATTACHMENT 5
(to __/__/__ Compliance
Certificate)
DESIGNATED DEBT
(as of _________ __, 19__)
5. Designated Debt:
A. Current Debt: The aggregate amount
of current maturities of the
consolidated Debt of the Borrower
and its Subsidiaries, determined in
accordance with GAAP............................... $_________
B. The sum of the aggregate outstanding
principal amount of all Loans plus
Letter of Credit Outstandings (as
such terms are defined in the Long
Term Credit Agreement)............................. $_________
C. The sum of Item 5.A and Item 5.B................... $_________
D. 90% of the Market Value of the gold,
silver and platinum group metals and
the gold, silver and platinum group
metals' content of alloys then owned
by the Borrower and its Subsidiaries
in inventory and not held in
consignment........................................ $_________
E. 75% of the Eligible Receivables of
the Borrower and its Subsidiaries as
computed on Attachment 6 hereto.................... $_________
F. The aggregate amount of cash and
Cash Equivalent Investments of the
Borrower and its Subsidiaries, but
only to the extent that such cash
and Cash Equivalent Investments are
not subject to any Lien and (if held
or owned by a Subsidiary) are
transferable to the Borrower without
the consent or approval of any
other Person....................................... $_________
<PAGE> 47
G. The sum of Items 5.D through 5.F................... $_________
H. The excess of Item 5.C over Item 5.G............... $_________
-2-
<PAGE> 48
ATTACHMENT 6
(to __/__/__ Compliance
Certificate)
ELIGIBLE RECEIVABLES
(as of _________ __, 19__)
6. Eligible Receivables:
A. Without duplication, the aggregate
amount of Receivables of the
Borrower and its Subsidiaries...................... $_________
B. The amount of such Receivables
lawfully owned by the Borrower or
such Subsidiary which is not free
and clear of Liens (other than Liens
permitted under Section 7.2.3 of the
Credit Agreement).................................. $_________
C. The amount of such Receivables which
is not valid, binding and legally
enforceable obligations of the
obligor under such Receivable...................... $_________
D. The amount of such Receivables which
is subject to any dispute, setoff,
counterclaim or other claim or
defense on the part of the obligor
thereunder, or which is subject to
any obligor denying liability under
such Receivable in whole or in part................ $_________
E. The amount of such Receivables which
is not a bona fide Receivable
arising from the sale (on an
absolute, and not a consignment,
approval, or sale-and-return-
basis (subject to the terms of
the parenthetical in clause (d) of
the definition of "Eligible Receivable"
contained in the Credit Agreement))................ $_________
F. The amount of such Receivables which
is payable more than 90 days after
the shipping of goods giving rise to
such Receivable, or is more than
60 days past due................................... $_________
<PAGE> 49
G. The amount of such Receivables
which have been written off or
reserved against................................... $_________
H. The amount of such Receivables which
is the obligation of an obligor that
is either an Affiliate of the
Borrower, or the subject of any
reorganization, bankruptcy,
receivership, custodianship,
insolvency or like proceeding or any
event of the nature set forth in
clauses (a) through (d) of Section
8.1.9 of the Credit Agreement...................... $_________
I. The sum of Items 6.B through 6.H................... $_________
J. Item 6.A minus Item 6.I............................ $_________
K. 75% of the amount of the GO/DAN
Receivable ...................................... $_________
L. ELIGIBLE RECEIVABLES: Item 6.J plus
Item 6.K ...................................... $_________
-2-
<PAGE> 1
[EXECUTION COPY]
THIRD AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
This THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT, dated as of October
11, 1996 (this "Amendatory Agreement"), is among HANDY & HARMAN, a New York
corporation (the "Borrower"), certain financial institutions signatories hereto
(the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK (formerly
known as Chemical Bank) and THE BANK OF NEW YORK, as the co-agents (collectively
referred to herein as the "Co-Agents"), and THE BANK OF NOVA SCOTIA, as
administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Revolving Credit Agreement, dated as of September 28,
1994 (as amended or otherwise modified to the date hereof, the "Existing Credit
Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
"Third Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II; except as so amended, the Existing Credit Agreement shall
continue in full force and effect.
SUBPART 2.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"1996 Transaction" means the sale of gold by the Borrower on or
before December 31, 1996 and certain other events, as more specifically
described in the letter, dated October 2, 1996, from the Borrower to the
Lenders, the Co-Agents and the Administrative Agent.
"Third Amendment" means the Third Amendment, dated as of October 11,
1996, to this Agreement among the Borrower, the Lenders party thereto, the
Co-Agents and the Administrative Agent.
"Third Amendment Effective Date" means the Third Amendment Effective
Date as defined in Subpart 3.1 of the Third Amendment.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended by
-2-
<PAGE> 3
(a) amending clause (b)(i) of the definition of "Consolidated
Tangible Net Worth" in its entirety to read as follows:
"(i) treasury stock (excluding the amount, not to exceed
$45,000,000, of cash consideration expended for the repurchase
and/or redemption of the Borrower's outstanding common stock
in accordance with the 1996 Transaction that results in an
increase in such treasury stock), subscribed but unissued
stock, unamortized debt discount and expense, good will,
trademarks, trade names, patents and other intangible assets
(but not deferred charges) of the Borrower, and"; and
(b) the definition of "Designated Debt" is amended in its entirety
to read as follows:
"`Designated Debt' means the aggregate amount of (i)
Current Debt, and (ii) outstanding Loans and Letter of Credit
Outstandings; provided, that from the Third Amendment
Effective Date until the first anniversary thereof, Designated
Debt shall exclude outstanding Loans and Letter of Credit
Outstandings and outstanding Loans under (and as defined in)
the Short Term Credit Agreement in up to an aggregate maximum
outstanding principal amount of $64,500,000, as such amount is
reduced Dollar for Dollar by the amount of Debt not
constituting Designated Debt incurred during such period."
SUBPART 2.2. Amendments to Article II. Section 2.2.2 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:
"SECTION 2.2.2. Mandatory Reduction of Commitments. Immediately upon
the sale, lease, transfer, contribution or conveyance of an asset pursuant
to clause (c) of Section 7.2.11 (other than in connection with the 1996
Transaction), the Loan Commitment Amount shall be automatically reduced by
an amount equal to the aggregate Net Disposition Proceeds of such sale,
lease, transfer, contribution or conveyance."
-3-
<PAGE> 4
SUBPART 2.3. Amendments to Article VII. Article VII of the Existing Credit
Agreement is hereby amended in accordance with Subpart 2.3.1.
SUBPART 2.3.1. Clauses (c) and (d) of Section 7.2.11 of the Existing
Credit Agreement are hereby amended by:
(a) amending clause (c) of such Section in its entirety to read as
follows:
"(c) such sale, transfer, lease, contribution or
conveyance is (i) in connection with the 1996 Transaction
(provided, that the Market Value of the gold sold or otherwise
disposed of in connection therewith shall not exceed an
aggregate amount equal to $45,000,000), or (ii) if not in the
ordinary course of business, or not otherwise permitted
hereunder, the assets are sold for fair value (as determined
by the Board of Directors of the Borrower or the Subsidiary
owning such assets) and the Commitments of the Lenders are
reduced by an amount equal to the Net Disposition Proceeds of
such sale, transfer, lease, contribution or conveyance; or";
and
(b) amending clause (d) of such Section by deleting the words
"Effective Date" wherever appearing therein and inserting the words "Third
Amendment Effective Date" in each case in place thereof.
SUBPART 2.4. Amendment to Exhibit E. Attachments 1 and 4 of Exhibit E
(Compliance Certificate) to the Existing Credit Agreement are hereby amended in
their entirety to read as set forth on Exhibit A hereto.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Third Amendment Effective Date. This Amendatory Agreement
shall become effective on the date first set forth above (the "Third Amendment
Effective Date") when each of the conditions set forth in this Subpart 3.1 shall
have been satisfied.
-4-
<PAGE> 5
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and the Required Lenders.
SUBPART 3.1.2. Short Term Credit Agreement Amendment No. 3. The conditions
to the effectiveness of the Third Amendment to the Short Term Credit Agreement,
also dated as of the date hereof ("ST Amendment No. 3") (other than the
effectiveness of this Amendatory Agreement) shall have been satisfied and such
ST Amendment No. 3 shall, concurrently with the effectiveness of this Amendatory
Agreement, have been declared effective by the Administrative Agent.
SUBPART 3.1.3. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
-5-
<PAGE> 6
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants to the Agents and the Lenders that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding, however, those contained in
Section 6.7 thereof) are true and correct in all material respects (unless
stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct as of such earlier
date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Agents or any Lender under this Amendatory Agreement shall, except as may be
otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No amendment, waiver or approval hereunder shall require any
similar or dissimilar amendment, waiver or approval to be granted after the date
hereof, and except as expressly modified by this Amendatory Agreement, the
provisions of the Existing Credit Agreement shall remain in full force and
effect, without amendment or other modification.
-6-
<PAGE> 7
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By ____________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By ____________________________________
Title:
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By ____________________________________
Title:
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
Co-Agent and Lender
By ____________________________________
Title:
FLEET PRECIOUS METALS INC.
By ____________________________________
Title:
-8-
<PAGE> 9
THE FIRST NATIONAL BANK OF CHICAGO
(formerly known as NBD Bank)
By ____________________________________
Title:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By ____________________________________
Title:
LTCB TRUST COMPANY
By ____________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By ____________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By ____________________________________
Title:
THE SUMITOMO BANK, LIMITED
By ____________________________________
Title:
By ____________________________________
Title:
-9-
<PAGE> 10
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By ____________________________________
Title:
ABN AMRO BANK N.V. NEW YORK BRANCH
By ____________________________________
Title:
By ____________________________________
Title:
COMERICA BANK
By ____________________________________
Title:
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By ____________________________________
Title:
-10-
<PAGE> 11
EXHIBIT A
TO THIRD AMENDMENT
ATTACHMENT 1
(to __/__/__ Compliance Certificate)
ADJUSTED CONSOLIDATED TANGIBLE NET WORTH
(________ __, 19__)
Adjusted Consolidated
Tangible Net Worth:
A. The par value (or value stated on
the books of the Borrower) of the
capital stock of all classes of the
Borrower................................................$_________
B. The amount of the consolidated
surplus, whether capital or earned,
of the Borrower and its
and its Subsidiaries................................... $_________
C. The sum (or difference, in the
case of a surplus deficit in
Item 1.B) of Items 1.A and 1.B......................... $_________
D. The aggregate amount of treasury
stock (excluding the amount, not to
exceed $45,000,000, of cash
consideration expended for the
repurchase and/or redemption of the
of the Borrower's outstanding
common stock in accordance with the
1996 Transaction), subscribed but
unissued stock, unamortized debt
discount and expense, good will,
trademarks, trade names, patents
and other intangible assets (but
not deferred charges) of the
Borrower and its Subsidiaries...........................$_________
E. The aggregate amount of all write-
ups in the book value of any assets
owned by the Borrower or its
Subsidiaries subsequent to March
16, 1992, other than write-ups of
assets (and assets of Subsidiaries)
acquired by the Borrower and/or its
Subsidiaries (exclusive of
goodwill) that are made in
connection with the
<PAGE> 12
acquisition thereof.....................................$_________
F. Sum of Items 1.D through 1.E............................$_________
G. Consolidated Tangible Net Worth:
The excess of Item 1.C over Item 1.F................... $_________
H. 40% of the excess of the Market
Value of the Borrower's and its
Subsidiaries' owned precious metal
holdings over the LIFO cost of such
holdings as set forth in the
Borrower's most recent consolidated
financial statements delivered
pursuant to clause (a) or clause
(b) of Section 7.1.1 of the
Credit Agreement....................................... $_________
I. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH:
The sum of Items 1.G and 1.H............................$_________
<PAGE> 13
ATTACHMENT 4
(to __/__/__ Compliance
Certificate)
DESIGNATED DEBT
(as of _________ __, 19__)
Designated Debt:
A. Current Debt: The aggregate amount
of current maturities of the
consolidated Debt of the Borrower
and its Subsidiaries, determined in
accordance with GAAP....................................$_________
B. The sum of the aggregate
outstanding principal amount of all
Loans plus Letter of Credit
Outstandings (as such terms are
defined in the Long Term
Credit Agreement).......................................$_________
C. The sum of Item 4.A and Item 4.B
(excluding, from the Third
Amendment Effective Date until the
first anniversary thereof, Loans
and Letter of Credit Outstandings
and Loans under (and as defined in)
the Short Term Credit Agreement in
up to a maximum principal amount of
$64,500,000, as such amount is
reduced Dollar for Dollar by the
amount of Debt not constituting
Designated Debt incurred
during such period).....................................$_________
D. 90% of the Market Value of the
gold, silver and platinum group
metals and the gold, silver and
platinum group metals' content of
alloys then owned by the Borrower
and its Subsidiaries in inventory
and not held in consignment.............................$_________
E. 75% of the Eligible Receivables of
the Borrower and its Subsidiaries
as computed on Attachment 5 hereto......................$_________
F. The aggregate amount of cash and
Cash Equivalent Investments of the
Borrower and its Subsidiaries, but
only to the extent that such cash
and Cash Equivalent Investments are
<PAGE> 14
not subject to any Lien and (if
held or owned by a Subsidiary) are
transferable to the Borrower
without the consent or approval of
any other Person........................................$_________
G. The sum of Items 4.D through 4.F........................$_________
H. The excess of Item 4.C over Item 4.G....................$_________
<PAGE> 1
[EXECUTION COPY]
FOURTH AMENDMENT
TO
REVOLVING CREDIT AGREEMENT
This FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT, dated as of January
15, 1997 (this "Amendatory Agreement"), is among HANDY & HARMAN, a New York
corporation (the "Borrower"), certain financial institutions signatories hereto
(the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK (formerly
known as Chemical Bank) and THE BANK OF NEW YORK, as the co-agents (collectively
referred to herein as the "Co-Agents"), and THE BANK OF NOVA SCOTIA, as
administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Revolving Credit Agreement, dated as of September 28,
1994 (as amended or otherwise modified to the date hereof, the "Existing Credit
Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"Fourth Amendment Effective Date" is defined in Subpart 3.1.
"Lenders" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Fourth Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II; except as so amended, the Existing Credit Agreement shall
continue in full force and
effect.
SUBPART 2.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"Fourth Amendment" means the Fourth Amendment, dated as of January
15, 1997, to this Agreement among the Borrower, the Lenders party thereto,
the Co-Agents and the Administrative Agent.
"Fourth Amendment Effective Date" means the Fourth Amendment
Effective Date as defined in Subpart 3.1 of the Fourth Amendment.
"Olympic Transaction" means the purchase of all of the outstanding
stock of Olympic Manufacturing Group Inc., as more specifically described
in the letter, dated January 13, 1997, from the Borrower to the Lenders,
the Co-Agents and the Administrative Agent.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended by amending clause (b)(i) of the definition of "Consolidated Tangible
Net Worth" in its entirety to read as follows:
-2-
<PAGE> 3
"(i) treasury stock (excluding the amount, not to exceed
$45,000,000, of cash consideration expended for the repurchase and/or
redemption of the Borrower's outstanding common stock in accordance with
the 1996 Transaction that results in an increase in such treasury stock),
subscribed but unissued stock, unamortized debt discount and expense,
goodwill (excluding goodwill in an amount not to exceed $45,000,000
associated with the Olympic Transaction), trademarks, trade names, patents
and other intangible assets (but not deferred charges) of the Borrower,
and"
SUBPART 2.2. Amendment to Article II. Section 2.2.2 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 2.2.2. Mandatory Reduction of Commitments. Immediately upon
the sale, lease, transfer, contribution or conveyance of an asset pursuant
to clause (c)(iii) of Section 7.2.11, the Loan Commitment Amount shall be
automatically reduced by an amount equal to the aggregate Net Disposition
Proceeds of such sale, lease, transfer, contribution or conveyance."
SUBPART 2.3. Amendments to Article VII. Clause (c) of Section 7.2.11 of
the Existing Credit Agreement is hereby amended in its entirety to read as
follows:
"(c) such sale, transfer, lease, contribution or conveyance is (i)
in connection with the 1996 Transaction (provided, that the Market Value
of the gold sold or otherwise disposed of in connection therewith shall
not exceed an aggregate amount equal to $45,000,000), (ii) in connection
with the sale or disposition of precious metal having an aggregate Market
Value in a maximum amount not to exceed $55,000,000 but only to the extent
the proceeds are used to finance the Olympic Transaction, or (iii) if not
in the ordinary course of business, or not otherwise permitted hereunder,
the assets are sold for fair value (as determined by the Board of
Directors of the Borrower or the Subsidiary owning such assets) and the
Commitments of the Lenders are reduced by an amount equal to the Net
Disposition Proceeds of such sale, transfer, lease, contribution or
conveyance; or".
SUBPART 2.4. Amendment to Exhibit E. Attachment 1 of Exhibit E (Compliance
Certificate) to the Existing Credit Agreement is hereby amended in its entirety
to read as set forth on Exhibit A hereto.
-3-
<PAGE> 4
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Fourth Amendment Effective Date. This Amendatory Agreement
shall become effective on the date first set forth above (the "Fourth Amendment
Effective Date") when each of the conditions set forth in this Subpart 3.1 shall
have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and the Required Lenders.
SUBPART 3.1.2. Short Term Credit Agreement Amendment No. 4. The conditions
to the effectiveness of the Fourth Amendment to the Short Term Credit Agreement,
also dated as of the date hereof ("ST Amendment No. 4") (other than the
effectiveness of this Amendatory Agreement) shall have been satisfied and such
ST Amendment No. 4 shall, concurrently with the effectiveness of this Amendatory
Agreement, have been declared effective by the Administrative Agent.
SUBPART 3.1.3. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies of such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
-4-
<PAGE> 5
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants to the Agents and the Lenders that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding, however, those contained in
Section 6.7 thereof) are true and correct in all material respects (unless
stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct as of such earlier
date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Agents or any Lender under this Amendatory
-5-
<PAGE> 6
Agreement shall, except as may be otherwise stated in this Amendatory Agreement,
be applicable to subsequent transactions. No amendment, waiver or approval
hereunder shall require any similar or dissimilar amendment, waiver or approval
to be granted after the date hereof, and except as expressly modified by this
Amendatory Agreement, the provisions of the Existing Credit Agreement shall
remain in full force and effect, without amendment or other modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By ___________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By ___________________________________
Title:
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By ___________________________________
Title:
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
Co-Agent and Lender
By ___________________________________
Title:
FLEET PRECIOUS METALS INC.
By ___________________________________
Title:
-7-
<PAGE> 8
THE FIRST NATIONAL BANK OF CHICAGO
(formerly known as NBD Bank)
By ___________________________________
Title:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By ___________________________________
Title:
LTCB TRUST COMPANY
By ___________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By ___________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By ___________________________________
Title:
THE SUMITOMO BANK, LIMITED
By ___________________________________
Title:
By ___________________________________
Title:
-8-
<PAGE> 9
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By ___________________________________
Title:
ABN AMRO BANK N.V. NEW YORK BRANCH
By ___________________________________
Title:
By ___________________________________
Title:
COMERICA BANK
By ___________________________________
Title:
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By ___________________________________
Title:
-9-
<PAGE> 10
EXHIBIT A
TO FOURTH AMENDMENT
ATTACHMENT 1
(to __/__/__ Compliance Certificate)
ADJUSTED CONSOLIDATED TANGIBLE NET WORTH
(________ __, 19__)
Adjusted Consolidated
Tangible Net Worth:
A. The par value (or value stated on
the books of the Borrower) of the
capital stock of all classes of the
Borrower................................................$_________
B. The amount of the consolidated
surplus, whether capital or earned,
of the Borrower and its
and its Subsidiaries................................... $_________
C. The sum (or difference, in the
case of a surplus deficit in
Item 1.B) of Items 1.A and 1.B......................... $_________
D. The aggregate amount of treasury
stock (excluding the amount, not to
exceed $45,000,000, of cash
consideration expended for the
repurchase and/or redemption of the
Borrower's outstanding common stock
in accordance with the 1996
Transaction that results in an
increase in such treasury stock),
subscribed but unissued stock,
unamortized debt discount
and expense, goodwill (excluding
goodwill in an amount not to exceed
$45,000,000 associated with the
Olympic Transaction), trademarks,
trade names, patents and other
intangible assets (but not deferred
charges), of the Borrower and
its Subsidiaries........................................$_________
E. The aggregate amount of all write-
ups in the book value of any assets
<PAGE> 11
owned by the Borrower or its
Subsidiaries subsequent to
March 16, 1992, other than
write-ups of assets (and assets
of Subsidiaries) acquired by
the Borrower and/or its
Subsidiaries (exclusive of
goodwill) that are made in
connection with the
acquisition thereof.....................................$_________
F. Sum of Items 1.D through 1.E............................$_________
G. Consolidated Tangible Net Worth:
The excess of Item 1.C over Item 1.F................... $_________
H. 40% of the excess of the Market
Value of the Borrower's and its
Subsidiaries' owned precious metal
holdings over the LIFO cost of such
holdings as set forth in the
Borrower's most recent consolidated
financial statements delivered
pursuant to clause (a) or clause
(b) of Section 7.1.1 of the
Credit Agreement....................................... $_________
I. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH:
The sum of Items 1.G and 1.H............................$_________
-2-
<PAGE> 1
[EXECUTION COPY]
FIRST AMENDMENT
TO
SHORT TERM REVOLVING CREDIT AGREEMENT
This FIRST AMENDMENT TO SHORT TERM REVOLVING CREDIT AGREEMENT, dated as of
June 30, 1995 (this "Amendatory Agreement"), among HANDY & HARMAN, a New York
corporation ("the Borrower"), certain financial institutions signatories hereto
(the "Lenders"), THE BANK OF NOVA SCOTIA, CHEMICAL BANK and THE BANK OF NEW
YORK, as the co-agents (collectively referred to herein as the "Co-Agents") and
THE BANK OF NOVA SCOTIA, as administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders (as defined below), the Co-Agents and
the Administrative Agent are parties to a Short Term Revolving Credit Agreement,
dated as of September 28, 1994 (as amended or otherwise modified to the date
hereof, the "Existing Credit Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"First Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II; except as so amended, the Existing Credit Agreement shall
continue in full force and effect.
SUBPART 2.1. Amendment to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definition in such Section in the appropriate
alphabetical sequence:
"First Amendment" means the First Amendment, dated as of June 30,
1995, to this Agreement among the Borrower, the Lenders party thereto, the
Co-Agents and the Administrative Agent.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended as follows:
(a) the definition of "Interest Coverage Ratio" appearing in such
Section is hereby amended in its entirety to read as follows:
"`Interest Coverage Ratio' means, at the close of any Fiscal
Quarter, the ratio, computed for the period consisting of such
Fiscal Quarter and each of the three immediately preceding
Fiscal Quarters, of
(a) EBIT
to
(b) Interest Expense;
-2-
<PAGE> 3
provided, that the calculation of the Interest Coverage Ratio
from and after the First Amendment Effective Date shall
exclude the effects of the non-recurring, pre-tax charges in
an aggregate amount not to exceed $9,500,000 relating to the
Borrower's discontinuance of its karat gold fabricating
product line in East Providence, Rhode Island and additional
costs primarily related to that division's ongoing operation
in Fairfield, Connecticut."
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This Amendatory Agreement
shall become effective on the date first set forth above (the "First Amendment
Effective Date") when each of the conditions set forth in this Subpart 3.1 shall
have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and the Required Lenders.
SUBPART 3.1.2. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed,
-3-
<PAGE> 4
administered and applied in accordance with all of the terms and provisions of
the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding, however, those contained in
Section 6.7 thereof) are true and correct in all material respects (unless
stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct as of such earlier
date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
-4-
<PAGE> 5
(c) after giving effect to this Amendatory Agreement, no Default has
occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Issuer or any Lender under this Amendatory Agreement shall, except as may be
otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval to be granted after the date hereof, and except as
expressly modified by this Amendatory Agreement, the provisions of the Existing
Credit Agreement shall remain in full force and effect, without amendment or
other modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By ___________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By ___________________________________
Title:
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By ___________________________________
Title:
CHEMICAL BANK, in its capacity
as Co-Agent and Lender
By ___________________________________
Title:
-6-
<PAGE> 7
FLEET BANK, N.A.
By ___________________________________
Title:
NBD BANK
By ___________________________________
Title:
THE BANK OF TOKYO TRUST COMPANY
By ___________________________________
Title:
LTCB TRUST COMPANY
By ___________________________________
Title:
SHAWMUT BANK, N.A.
By ___________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By ___________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By ___________________________________
Title:
-7-
<PAGE> 8
THE DAIWA BANK, LIMITED
By ___________________________________
Title:
By ___________________________________
Title:
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By ___________________________________
Title:
By ___________________________________
Title:
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By ___________________________________
Title:
NATWEST BANK N.A.
By ___________________________________
Title:
ABN AMRO BANK N.V. NEW YORK BRANCH
By ___________________________________
Title:
By ___________________________________
Title:
-8-
<PAGE> 9
BANQUE PARIBAS
By ___________________________________
Title:
By ___________________________________
Title:
GIROCREDIT BANK AG DER SPARKESSEN
GRAND CAYMAN ISLAND BRANCH
By ___________________________________
Title:
By ___________________________________
Title:
COMERICA BANK
By ___________________________________
Title:
IBJ SCHRODER BANK & TRUST COMPANY
By ___________________________________
Title:
THE MITSUBISHI BANK, LIMITED -
NEW YORK BRANCH
By ___________________________________
Title:
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By ___________________________________
Title:
-9-
<PAGE> 1
[EXECUTION COPY]
SECOND AMENDMENT
TO
SHORT TERM REVOLVING CREDIT AGREEMENT
This SECOND AMENDMENT TO SHORT TERM REVOLVING CREDIT AGREEMENT, dated as
of September 24, 1996 (this "Amendatory Agreement"), is among HANDY & HARMAN, a
New York corporation (the "Borrower"), certain financial institutions
signatories hereto (the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN
BANK (formerly known as Chemical Bank) and THE BANK OF NEW YORK, as the
co-agents (collectively referred to herein as the "Co-Agents"), and THE BANK OF
NOVA SCOTIA, as administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Short Term Revolving Credit Agreement, dated as of
September 28, 1994 (as amended or otherwise modified to the date hereof, the
"Existing Credit Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
"Second Amendment Effective Date" is defined in Subpart 4.1.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
AND EXTENSION OF STATED MATURITY DATE
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Credit Agreement is hereby amended and the Stated
Maturity Date is hereby extended in accordance with this Part II; except as so
amended, the Existing Credit Agreement shall continue in full force and effect.
SUBPART 2.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"Applicable Commitment Fee Margin" means the lowest per annum rate
determined by reference to the Net Debt to EBITDA Ratio and EBITDA to
Interest Ratio, in each case that is satisfied for each of such ratios in
a given clause below and as indicated in the Compliance Certificate most
recently delivered pursuant to clause (c) of Section 7.1.1, equal to:
(a) 0.11% if the Net Debt to EBITDA Ratio is less than or
equal to 1.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 5.0:1;
(b) 0.15% if the Net Debt to EBITDA Ratio is less than or
equal to 2.25:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.75:1;
(c) 0.1875% if the Net Debt to EBITDA Ratio is less than or
equal to 2.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.00:1; and
-2-
<PAGE> 3
(d) 0.225% if the Net Debt to EBITDA Ratio is greater than
2.75:1 or the EBITDA to Interest Ratio is less than 3.00:1.
The Net Debt to EBITDA Ratio and the EBITDA to Interest Ratio used
to compute the Applicable Commitment Fee Margin shall be the Net Debt to
EBITDA Ratio and the EBITDA to Interest Ratio, as the case may be, set
forth in the Compliance Certificate most recently delivered by the
Borrower to the Administrative Agent pursuant to clause (c) of Section
7.1.1; changes in the Applicable Commitment Fee Margin resulting from a
change in the Net Debt to EBITDA Ratio and/or the EBITDA to Interest
Ratio, as the case may be, shall become effective upon delivery by the
Borrower to the Administrative Agent of a new Compliance Certificate
pursuant to clause (c) of Section 7.1.1. Notwithstanding the foregoing,
the Lenders acknowledge and agree that, subject to the next sentence, the
Applicable Commitment Fee Margin for the period from the Second Amendment
Effective Date through (but excluding) the date that the first Compliance
Certificate is delivered following the Second Amendment Effective Date
shall be determined by reference to level (c) above (notwithstanding the
actual Net Debt to EBITDA Ratio and EBITDA to Interest Ratio for such
period). If the Borrower shall fail to deliver a Compliance Certificate
within the number of days after the end of any Fiscal Quarter as required
pursuant to clause (c) of Section 7.1.1 (without giving effect to any
grace period), the Applicable Commitment Fee Margin from and including the
first day after the date on which such Compliance Certificate was required
to be delivered to but not including the date the Borrower delivers to the
Administrative Agent a Compliance Certificate shall conclusively equal the
highest Applicable Commitment Fee Margin set forth above.
"Applicable LIBO Rate Margin" means, with respect to any Loan made
or maintained as a LIBO Rate Loan, the lowest per annum rate determined by
reference to the Net Debt to EBITDA Ratio and EBITDA to Interest Ratio, in
each case that is satisfied for each of such ratios in a given clause
below and as indicated in the Compliance Certificate most recently
delivered pursuant to clause (c) of Section 7.1.1, equal to:
(a) 0.45% if the Net Debt to EBITDA Ratio is less than or
equal to 1.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 5.0:1;
(b) 0.60% if the Net Debt to EBITDA Ratio is less than or
equal to 2.25:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.75:1;
-3-
<PAGE> 4
(c) 0.75% if the Net Debt to EBITDA Ratio is less than or
equal to 2.75:1 and the EBITDA to Interest Ratio is greater than or
equal to 3.00:1; and
(d) 1.00% if the Net Debt to EBITDA Ratio is greater than
2.75:1 or the EBITDA to Interest Ratio is less than 3.00:1.
The Net Debt to EBITDA Ratio and the EBITDA to Interest Ratio used
to compute the Applicable LIBO Rate Margin shall be the Net Debt to EBITDA
Ratio and the EBITDA to Interest Ratio, as the case may be, set forth in
the Compliance Certificate most recently delivered by the Borrower to the
Administrative Agent pursuant to clause (c) of Section 7.1.1; changes in
the Applicable LIBO Rate Margin resulting from a change in the Net Debt to
EBITDA Ratio and/or the EBITDA to Interest Ratio, as the case may be,
shall become effective upon delivery by the Borrower to the Administrative
Agent of a new Compliance Certificate pursuant to clause (c) of Section
7.1.1. Notwithstanding the foregoing, the Lenders acknowledge and agree
that, subject to the next sentence, the Applicable LIBO Rate Margin for
the period from the Second Amendment Effective Date through (but
excluding) the date that the first Compliance Certificate is delivered
following the Second Amendment Effective Date shall be determined by
reference to level (c) above (notwithstanding the actual Net Debt to
EBITDA Ratio and EBITDA to Interest Ratio for such period). If the
Borrower shall fail to deliver a Compliance Certificate within the number
of days after the end of any Fiscal Quarter as required pursuant to clause
(c) of Section 7.1.1 (without giving effect to any grace period), the
Applicable LIBO Rate Margin from and including the first day after the
date on which such Compliance Certificate was required to be delivered to
but not including the date the Borrower delivers to the Administrative
Agent a Compliance Certificate shall conclusively equal the highest
Applicable LIBO Rate Margin set forth above.
"EBITDA" means, for any period, the sum for such period of all
amounts which, in accordance with GAAP, would be included on the
consolidated financial statements of the Borrower and its Subsidiaries as
(a) EBIT;
plus
(b) the amount deducted, in determining Net Income,
representing amortization;
-4-
<PAGE> 5
plus
(c) the amount deducted, in determining Net Income,
representing depreciation of assets.
"EBITDA to Interest Ratio" means, at the close of any Fiscal
Quarter, the ratio, computed for the period consisting of such Fiscal
Quarter and each of the three immediately preceding Fiscal Quarters, of
(a) EBITDA
to
(b) Interest Expense.
"Net Debt to EBITDA Ratio" means, at the last day of any Fiscal
Quarter, the ratio, computed (in the case of clause (b) below) for the
period consisting of such Fiscal Quarter and each of the three immediately
preceding Fiscal Quarters, of
(a) Debt minus the aggregate amount of cash and Cash
Equivalent Investments (not subject to any Lien or other
encumbrance) owned by the Borrower and its Subsidiaries on such last
day
to
(b) EBITDA.
"Second Amendment" means the Second Amendment, dated as of September
24, 1996, to this Agreement among the Borrower, the Lenders party thereto,
the Co-Agents and the Administrative Agent.
"Second Amendment Effective Date" means the Second Amendment
Effective Date as defined in Subpart 4.1 of the Second Amendment.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended by amending the definition of "Loan Commitment Amount" appearing in such
Section in its entirety to read as follows:
"`Loan Commitment Amount' means, on any day, $50,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2."
-5-
<PAGE> 6
SUBPART 2.2. Amendments to Article III. Article III of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.2.1 and 2.2.2.
SUBPART 2.2.1. Clause (ii) of Section 3.2.1 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"(ii) On that portion of such Borrowing maintained as LIBO Rate
Loans, during each Interest Period applicable thereto, such rate shall be
equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest
Period plus the Applicable LIBO Rate Margin; and"
SUBPART 2.2.2. Section 3.3.1 of the Existing Credit Agreement is hereby
amended by deleting the words "at the rate of 1/4 of 1% per annum" and inserting
the words "equal to the Applicable Commitment Fee Margin" in place thereof.
SUBPART 2.3. Amendments to Exhibits. Exhibit A-1 (Form of Revolving Note),
Exhibit A-2 (Form of Competitive Bid Loan Note) and Exhibit E (Compliance
Certificate) to the Existing Credit Agreement are hereby amended in their
entirety to read as respectively set forth on Exhibits A, B and C hereto.
SUBPART 2.4. Extension of Stated Maturity Date. By their signatures below,
the parties hereto hereby agree that, in accordance with the terms of Section
2.4 of the Existing Credit Agreement, effective on the Stated Maturity Date
under the Existing Credit Agreement, the Stated Maturity Date shall be extended
to September 24, 1997.
PART III
ACKNOWLEDGEMENT
SUBPART 3.1. Acknowledgement. By their signature below, each of the
Lenders acknowledges and agrees that as of the Second Amendment Effective Date
(and notwithstanding any reductions to the Loan Commitment Amount that have
occurred prior to the Second Amendment Effective Date) the Loan Commitment
Amount is $50,000,000, as such amount may be reduced from time to time after the
Second Amendment Effective Date pursuant to Section 2.2 of the Credit Agreement.
PART IV
-6-
<PAGE> 7
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1. Second Amendment Effective Date. This Amendatory Agreement
shall become effective on the date first set forth above (the "Second Amendment
Effective Date") when each of the conditions set forth in this Subpart 4.1 shall
have been satisfied.
SUBPART 4.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and each of the Lenders.
SUBPART 4.1.2. Resolutions, etc. The Administrative Agent shall have
received from the Borrower, with copies for each Lender, a certificate, dated
the Second Amendment Effective Date, of its Secretary or Assistant Secretary as
to
(a) resolutions of its Board of Directors, then in full force and
effect, authorizing the execution, delivery and performance of this
Amendatory Agreement and each other Loan Document to be executed by it in
connection with this Amendatory Agreement; and
(b) the incumbency and signatures of its officers authorized to
execute and deliver, and act with respect to, this Amendatory Agreement,
each other Loan Document and each of the other documents, certificates,
instruments and other agreements delivered or to be delivered by it
pursuant to this Amendatory Agreement and pursuant to the Credit
Agreement.
Each of the Lenders and the Agents may conclusively rely upon such certificate
until the Administrative Agent has received a further certificate of the
Secretary or an Assistant Secretary of the Borrower cancelling or amending such
prior certificate.
SUBPART 4.1.3. Fees and Expenses. The Administrative Agent shall have
received payment in full of all fees, costs and expenses due and payable as of
the Second Amendment Effective Date.
SECTION 4.1.4. Opinions of Counsel. The Administrative Agent shall have
received opinions, dated the Second Amendment Effective Date and addressed to
the Agents and all Lenders, from counsel to the Borrower, in form and substance
satisfactory to the Administrative Agent.
SUBPART 4.1.5. Delivery of Notes. The Administrative Agent shall have
received, for the account of each Lender, Notes, issued in substitution and
exchange for, and not in satisfaction
-7-
<PAGE> 8
of, the Notes delivered under the terms of the Existing Credit Agreement, duly
executed and delivered by the Borrower.
SUBPART 4.1.6. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART V
MISCELLANEOUS
SUBPART 5.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 5.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 5.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 5.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 5.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants to the Agents and the Lenders that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding, however, those contained in
Section 6.7 thereof) are true and correct in all material respects (unless
stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct as of such earlier
date);
-8-
<PAGE> 9
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) no Default has occurred and is continuing.
SUBPART 5.6. Limited Waiver, etc. No amendment, waiver or approval by the
Agents or any Lender under this Amendatory Agreement shall, except as may be
otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No amendment, waiver or approval hereunder shall require any
similar or dissimilar amendment, waiver or approval to be granted after the date
hereof, and except as expressly modified by this Amendatory Agreement, the
provisions of the Existing Credit Agreement shall remain in full force and
effect, without amendment or other modification.
SUBPART 5.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-9-
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By __________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By __________________________________
Title:
<PAGE> 11
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By __________________________________
Title:
<PAGE> 12
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
Co-Agent and Lender
By __________________________________
Title:
<PAGE> 13
FLEET PRECIOUS METALS INC.
By __________________________________
Title:
<PAGE> 14
THE FIRST NATIONAL BANK OF CHICAGO
(formerly known as NBD Bank)
By __________________________________
Title:
<PAGE> 15
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By __________________________________
Title:
<PAGE> 16
LTCB TRUST COMPANY
By __________________________________
Title:
<PAGE> 17
CREDIT LYONNAIS NEW YORK BRANCH
By __________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By __________________________________
Title:
<PAGE> 18
THE SUMITOMO BANK, LIMITED
By __________________________________
Title:
By __________________________________
Title:
<PAGE> 19
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By __________________________________
Title:
By __________________________________
Title:
<PAGE> 20
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By __________________________________
Title:
<PAGE> 21
ABN AMRO BANK N.V. NEW YORK BRANCH
By __________________________________
Title:
By __________________________________
Title:
<PAGE> 22
BANQUE PARIBAS
By __________________________________
Title:
By __________________________________
Title:
<PAGE> 23
GIROCREDIT BANK AG DER SPARKESSEN
GRAND CAYMAN ISLAND BRANCH
By __________________________________
Title:
By __________________________________
Title:
<PAGE> 24
COMERICA BANK
By __________________________________
Title:
<PAGE> 25
IBJ SCHRODER BANK & TRUST COMPANY
By __________________________________
Title:
<PAGE> 26
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By __________________________________
Title:
<PAGE> 27
EXHIBIT A
TO SECOND AMENDMENT
EXHIBIT A-1
Revolving Loan Note
$______________ September 28, 1994
FOR VALUE RECEIVED, the undersigned, HANDY & HARMAN, a New York
corporation (the "Borrower"), promises to pay to the order of
_________________________ (the "Lender") on the Stated Maturity Date (as such
term is defined in the Credit Agreement referred to below), the principal sum of
_______________ DOLLARS ($___________) or, if less, the aggregate unpaid
principal amount of all Revolving Loans (as such term is defined in the Short
Term Revolving Credit Agreement, dated as of the date hereof (as such Short Term
Revolving Credit Agreement may be amended, supplemented, amended and restated or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, The Bank of Nova Scotia, The Chase Manhattan Bank (formerly known as
Chemical Bank) and The Bank of New York, as Co-Agents, The Bank of Nova Scotia,
as Administrative Agent and certain financial institutions (including the
Lender) as are, or may become, parties thereto), made by the Lender pursuant to
the Credit Agreement. A notation indicating all Revolving Loans made by the
Lender pursuant to the Credit Agreement and payments on account of principal of
such Revolving Loans may, from time to time, be made by the holder hereof on the
grid attached to this Revolving Loan Note. Unless otherwise defined herein or
the context otherwise requires, terms used herein have the meanings provided in
the Credit Agreement.
The unpaid principal amount of this Revolving Loan Note from time to time
outstanding shall bear interest as provided in Section 3.2.1 of the Credit
Agreement. All payments of principal of and interest on this Revolving Loan Note
shall be payable in lawful currency of the United States of America to the
account designated by the Administrative Agent in same day funds.
This Revolving Loan Note represents a renewal of, and is issued in
substitution and exchange for, and not in satisfaction of, that certain
Revolving Loan Note of the Borrower, dated September 28, 1994, payable to the
order of the Lender (or its assignor). The Indebtedness originally evidenced by
such promissory note is a continuing Indebtedness, and nothing herein contained
shall be construed to deem such promissory note paid.
<PAGE> 28
This Revolving Loan Note is one of the Revolving Loan Notes referred to
in, and evidences indebtedness incurred in respect of the Revolving Loans under,
the Credit Agreement, to which reference is made for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments of principal of the indebtedness evidenced by this Revolving Loan
Note and on which such indebtedness may be declared to be or may become
immediately due and payable.
THIS REVOLVING LOAN NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK, AND
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK.
HANDY & HARMAN
By_________________________
Title:
-2-
<PAGE> 29
GRID
<TABLE>
<CAPTION>
======================================================================================================================
Last Day of Amount of Outstanding
Alternate Base Applicable Principal Principal Notation Made
Date Amount of Loan Rate LIBO Rate Interest Period Payment Balance By
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
</TABLE>
-3-
<PAGE> 30
EXHIBIT B
TO SECOND AMENDMENT
EXHIBIT A-2
Competitive Bid Loan Note
$50,000,000 September 28, 1994
FOR VALUE RECEIVED, the undersigned, HANDY & HARMAN, a New York
corporation (the "Borrower"), promises to pay to the order of
_______________________ (the "Lender") on the earlier of (i) each Competitive
Bid Loan Maturity Date (as such term is defined in that certain Short Term
Revolving Credit Agreement, dated as of the date hereof (as such Short Term
Revolving Credit Agreement may be amended, supplemented, amended and restated or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, The Bank of Nova Scotia, The Chase Manhattan Bank (formerly known as
Chemical Bank) and The Bank of New York, as Co-Agents, The Bank of Nova Scotia,
as Administrative Agent and certain financial institutions (including the
Lender) as are, or may from time to time become parties thereto), and (ii) the
Loan Commitment Termination Date (as defined in the Credit Agreement), the
principal sum of FIFTY MILLION DOLLARS ($50,000,000) or, if less, the unpaid
principal amount of all Competitive Bid Loans made by the Lender to the Borrower
from time to time pursuant to Section 2.4. of the Credit Agreement. A notation
indicating all Competitive Bid Loans made by the Lender pursuant to the Credit
Agreement and all payments on account of principal of such Competitive Bid Loans
may, from time to time, be made by the holder hereof on the grid attached to
this Competitive Bid Loan Note.
The unpaid principal amount of this Competitive Bid Loan Note from time to
time outstanding shall bear interest as provided in Section 3.2.1 of the Credit
Agreement. All payments of principal of and interest on this Competitive Bid
Loan Note shall be payable in lawful currency of the United States of America to
the account designated by the Administrative Agent in same day funds.
This Competitive Bid Loan Note represents a renewal of, and is issued in
substitution and exchange for, and not in satisfaction of, that certain
Competitive Bid Loan Note of the Borrower, dated September 28, 1994, payable to
the order of the Lender (or its assignor). The indebtedness originally evidenced
by such promissory note is a continuing indebtedness, and nothing herein
contained shall be construed to deem such promissory note paid.
<PAGE> 31
This Competitive Bid Loan Note is one of the Competitive Bid Loan Notes
referred to in, and evidences indebtedness incurred in respect of Competitive
Bid Loans under, the Credit Agreement, to which reference is made for a
statement of the terms and conditions on which the Borrower is permitted and
required to make prepayments of principal of the indebtedness evidenced by this
Competitive Bid Loan Note and on which such indebtedness may be or may become
declared to be immediately due and payable. Unless otherwise defined herein or
the context otherwise requires, terms used herein have the meanings provided in
the Credit Agreement.
THIS COMPETITIVE BID LOAN NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK
AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK.
HANDY & HARMAN
By________________________
Title:
- 2 -
<PAGE> 32
GRID
<TABLE>
<CAPTION>
====================================================================================================================================
Competitive Bid Amount of
Amount of Loan Maturity Amount of Principal Outstanding
Date Loan Date Interest Period Interest Payment Payment Principal Balance Notation Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
-3-
<PAGE> 33
EXHIBIT C
TO SECOND AMENDMENT
EXHIBIT E
Form of Compliance Certificate
To: Each of the Lenders
(as defined below)
-and-
The Bank of Nova Scotia,
as Administrative Agent
One Liberty Plaza
New York, New York 10006
Attention: ______________
Handy & Harman
Gentlemen:
This Compliance Certificate is being delivered pursuant to clause (c) of
Section 7.1.1 of the Short Term Revolving Credit Agreement, dated as of
September 28, 1994 (as amended, supplemented, amended and restated or otherwise
modified, the "Credit Agreement"), among Handy & Harman, a New York corporation
(the "Borrower"), certain financial institutions now or hereafter parties
thereto (the "Lenders"), The Bank of Nova Scotia, The Chase Manhattan Bank
(formerly known as Chemical Bank) and The Bank of New York, as Co-Agents for the
Lenders and The Bank of Nova Scotia, as Administrative Agent. Terms used herein
without definition shall have the meanings assigned to such terms in Section 1.1
of the Credit Agreement.
The Borrower hereby certifies, represents and warrants that as of
_________ __, 19__ (the "Computation Date"):
(a) The Adjusted Consolidated Tangible Net Worth was $__________, as
computed on Attachment 1 hereto and such amount [complies] [does not comply]
with the provisions of clause (a) of Section 7.2.4 of the Credit Agreement;
(b) The Leverage Ratio was __:1.00, as computed on Attachment 2 hereto and
such ratio [complies] [does not comply] with the provisions of clause (b) of
Section 7.2.4 of the Credit Agreement;
<PAGE> 34
(c) The Interest Coverage Ratio was __:1.00, as computed on Attachment 3
hereto and such ratio [complies] [does not comply] with the provisions of clause
(c) of Section 7.2.4 of the Credit Agreement;
(d) The Net Debt to EBITDA Ratio was __:1.00 and the EBITDA to Interest
Ratio was __:1.00, as computed on Attachment 4 hereto;
(e) The aggregate amount of Designated Debt of the Borrower and its
Subsidiaries was $_________ as computed on Attachment 5 hereto and such amount
[complies] [does not comply] with clause (a) of Section 7.2.2 of the Credit
Agreement;
(f) The aggregate amount of Debt of all Subsidiaries was $_________, and
such amount [complies] [does not comply] with clause (b) of Section 7.2.2 of the
Credit Agreement;
(g) The aggregate face amount of Indebtedness in respect of letters of
credit (other than Letters of Credit) was $________, and such amount [complies]
[does not comply] with clause (a)(ii)(B) of Section 7.2.2 of the Credit
Agreement;
(h) The aggregate amount of Investments (other than the Investments
permitted by clauses (a) through (f) of Section 7.2.5 of the Credit Agreement)
made, incurred, assumed or otherwise existing by the Borrower and its
Subsidiaries was $_________ and such amount [complies] [does not comply] with
clause (g) of Section 7.2.5 of the Credit Agreement;
(i) The aggregate amount of rental obligations entered into by the
Borrower and its Subsidiaries of the type set forth in Section 7.2.8 of the
Credit Agreement was $_________ and such amount [complies] [does not comply]
with Section 7.2.8 of the Credit Agreement;
(j) The aggregate book value or market value, if higher (determined as to
particular assets as of the respective date of disposition thereof) (other than
in accordance with clauses (a), (b) and (c) of Section 7.2.11 of the Credit
Agreement) of all assets sold, transferred, leased, contributed or otherwise
conveyed by the Borrower and its Subsidiaries (i) since the Effective Date was
$__________ and such amount [complies] [does not comply] with clause (d)(i) of
Section 7.2.11 of the Credit Agreement, and (ii) constitutes assets which
contributed __% of operating profit contribution during the three most recently
completed Fiscal Years of the Borrower, and such amount [complies][does not
comply] with clause (d)(ii) of Section 7.2.11 of the Credit Agreement;
-2-
<PAGE> 35
(k) No Default has occurred and is continuing [other than as follows:];
(l) The total market value of precious metal held on consignment by the
Borrower and its Subsidiaries was $_________;
(m) The total number of ounces of precious metal held on consignment at
each Plant (as defined in the Consignment Facilities) under the terms of the
Consignment Facilities was ____________; and
(n) The total number of ounces of U.S. Bullion (as defined in the
Consignment Facilities) located at each Plant was __________.
(o) Based on paragraph (d) above, the Applicable LIBO Rate Margin is ___%
and the Applicable Commitment Fee Margin is ___%.
IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate to
be executed and delivered by its duly Authorized Officer on this ____ day of
_________, 19__.
HANDY & HARMAN
By_________________________
Title:
-3-
<PAGE> 36
ATTACHMENT 1
(to __/__/__ Compliance
Certificate)
ADJUSTED CONSOLIDATED TANGIBLE NET WORTH
(________ __, 19__)
1. Adjusted Consolidated
Tangible Net Worth:
A. The par value (or value stated on
the books of the Borrower) of the
capital stock of all classes of the
Borrower................................................$_________
B. The amount of the consolidated
surplus, whether capital or earned,
of the Borrower and its
and its Subsidiaries................................... $_________
C. The sum (or difference, in the
case of a surplus deficit in
Item 1.B) of Items 1.A and 1.B......................... $_________
D. The aggregate amount of treasury
stock, subscribed but unissued
stock, unamortized debt discount
and expense, good will,
trademarks, trade names, patents
and other intangible assets (but
not deferred charges) of the
Borrower and its Subsidiaries ......................... $_________
E. The aggregate amount of all write-
ups in the book value of any assets
owned by the Borrower or its
Subsidiaries subsequent to March
16, 1992, other than write-ups of
assets (and assets of Subsidiaries)
acquired by the Borrower and/or its
Subsidiaries (exclusive of
goodwill) that are made in
connection with
the acquisition thereof.................................$_________
F. Sum of Items 1.D through 1.E $_________
<PAGE> 37
G. Consolidated Tangible Net Worth:
The excess of Item 1.C over Item 1.F................... $_________
H. 40% of the excess of the Market
Value of the Borrower's and its
Subsidiaries' owned precious metal
holdings over the LIFO cost of such
holdings as set forth in the
Borrower's most recent consolidated
financial statements delivered
pursuant to clause (a) or clause
(b) of Section 7.1.1 of the
Credit Agreement....................................... $_________
I. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH:
The sum of Items 1.G and 1.H............................$_________
-2-
<PAGE> 38
ATTACHMENT 2
(to __/__/__ Compliance
Certificate)
LEVERAGE RATIO
(on ___________ __, 19__)
2. (1)Leverage Ratio:
A. The aggregate outstanding principal
and stated amount of the
consolidated Indebtedness of the
Borrower and its Subsidiaries for
borrowed money and all other
obligations evidenced by bonds,
debentures, notes or other
similar instruments..................................... $_________
B. The aggregate outstanding principal
and stated amount of the
consolidated Indebtedness of the
Borrower and its Subsidiaries
(without duplication of the
obligations set forth in Item 2.A of
this Attachment 2), whether
contingent or otherwise, relative to
banker's acceptances issued for the
account of the Borrower and its
Subsidiaries ............................................$_________
C. The aggregate outstanding principal
and stated amount of the
consolidated Indebtedness of the
Borrower and its Subsidiaries as
lessee under leases which have been
or should be, in accordance with
GAAP, recorded as
Capitalized Lease Liabilities........................... $_________
D. Without duplication, Contingent
Liabilities of the Borrower and its
Subsidiaries in respect of any types
of Indebtedness described in
Items 2.A through 2.C .................................. $_________
- ----------
(1) Computed in accordance with the final sentence contained in the definition
of "Indebtedness".
<PAGE> 39
E. Debt: The Sum of Items 2.A through 2.D................. $_________
F. Adjusted Consolidated Tangible
Net Worth (from Attachment 1,
Item 1.I)............................................... $_________
G. LEVERAGE RATIO: The ratio
of Item 2.E to Item 2.F.................................. ____:1.00
-2-
<PAGE> 40
ATTACHMENT 3
(to __/__/__ Compliance
Certificate)
INTEREST COVERAGE RATIO
(on __/__/19__)
3. Interest Coverage Ratio:
*A. The consolidated net income of
the Borrower and its Subsidiaries
(excluding any extraordinary gains
and losses)........................................ $__________
*B. The aggregate amount of interest
expense of the Borrower and its
Subsidiaries, including the portion
of any rent paid on Capital Lease
Liabilities which is allocable to
interest expense in accordance with
GAAP and including fees or rents
arising from or relating to
consignment or leasing of precious
metals other than up-front fees paid
on the Effective Date to the Lenders
(provided, that any such interest
expense which is subject to a
Hedging Obligation will be
calculated on the net effect of any
payments made by the other party to
such Hedging Obligation)........................... $__________
*C. To the extent deducted in
determining Net Income,
provisions for income taxes........................ $__________
D. EBIT: The sum of Items 3.A
through 3.C........................................ $__________
E. Interest Expense: The amount set forth in Item 3.B above minus the
effects of the non-recurring, pre-tax charges in an aggregate amount
not to exceed $9,500,000 relating to the Borrower's discontinuance
of its karat gold fabricating product
- ----------
* The amount which, in accordance with GAAP, would be included on the
consolidated financial statements of the Borrower and its Subsidiaries.
<PAGE> 41
line in East Providence, Rhode Island and additional
costs primarily related to that division's ongoing
operation in Fairfield, Connecticut.....................$__________
F. INTEREST COVERAGE RATIO: The ratio
of Item 3.D to Item 3.E............................ _____:1.00
-2-
<PAGE> 42
ATTACHMENT 4
(to __/__/__ Compliance
Certificate)
NET DEBT TO EBITDA RATIO
EBITDA TO INTEREST RATIO (on __/__/19__)
4. I. Net Debt to EBITDA Ratio:
A. Debt: Item 2.E from Attachment 2................... $__________
B. The aggregate amount of cash and
Cash Equivalent Investments (not
subject to any Lien or other
encumbrance) owned by the Borrower
and its Subsidiaries on the last day
of the applicable Fiscal Quarter................... $__________
C. Net Debt: Item 4.A minus Item 4.B................. $__________
*D. EBIT: Item 3.D from Attachment 3................... $__________
*E. To the extent deducted in
determining Net Income,
provisions for depreciation of assets.............. $__________
*F. To the extent deducted in
determining Net Income,
provisions for amortization........................ $__________
G. EBITDA: The sum of Items 4.D
through 4.F........................................ $__________
H. NET DEBT TO EBITDA RATIO: The ratio
of Item 4.C to Item 4.G............................ ____:1.00
II. EBITDA to Interest Ratio:
I. EBITDA: Item 4.G above............................ $__________
J. Interest Expense: Item 3.E........................ $__________
K. EBITDA TO INTEREST RATIO: The ratio of
Item 4.I to Item 4.J............................... ____:1.00
- ----------
* The amount which, in accordance with GAAP, would be included on the
consolidated financial statements of the Borrower and its Subsidiaries.
<PAGE> 43
ATTACHMENT 5
(to __/__/__ Compliance
Certificate)
DESIGNATED DEBT
(as of _________ __, 19__)
5. Designated Debt:
A. Current Debt: The aggregate amount
of current maturities of the
consolidated Debt of the Borrower
and its Subsidiaries, determined in
accordance with GAAP............................... $_________
B. The sum of the aggregate outstanding
principal amount of all Loans plus
Letter of Credit Outstandings (as
such terms are defined in the Long
Term Credit Agreement)............................. $_________
C. The sum of Item 5.A and Item 5.B................... $_________
D. 90% of the Market Value of the gold,
silver and platinum group metals and
the gold, silver and platinum group
metals' content of alloys then owned
by the Borrower and its Subsidiaries
in inventory and not held in
consignment........................................ $_________
E. 75% of the Eligible Receivables of
the Borrower and its Subsidiaries as
computed on Attachment 6 hereto.................... $_________
F. The aggregate amount of cash and
Cash Equivalent Investments of the
Borrower and its Subsidiaries, but
only to the extent that such cash
and Cash Equivalent Investments are
not subject to any Lien and (if held
or owned by a Subsidiary) are
transferable to the Borrower without
the consent or approval of any
other Person....................................... $_________
<PAGE> 44
G. The sum of Items 5.D through 5.F................... $_________
H. The excess of Item 5.C over Item 5.G............... $__________
-2-
<PAGE> 45
ATTACHMENT 6
(to __/__/__ Compliance
Certificate)
ELIGIBLE RECEIVABLES
(as of _________ __, 19__)
6. Eligible Receivables:
A. Without duplication, the aggregate
amount of Receivables of the
Borrower and its Subsidiaries...................... $_________
B. The amount of such Receivables
lawfully owned by the Borrower or
such Subsidiary which is not free
and clear of Liens (other than Liens
permitted under Section 7.2.3 of the
Credit Agreement).................................. $_________
C. The amount of such Receivables which
is not valid, binding and legally
enforceable obligations of the
obligor under such Receivable...................... $_________
D. The amount of such Receivables which
is subject to any dispute, setoff,
counterclaim or other claim or
defense on the part of the obligor
thereunder, or which is subject to
any obligor denying liability under
such Receivable in whole or in part................ $_________
E. The amount of such Receivables which
is not a bona fide Receivable
arising from the sale (on an
absolute, and not a consignment,
approval, or sale-and-return-
basis (subject to the terms of
the parenthetical in clause (d) of
the definition of "Eligible Receivable"
contained in the Credit Agreement))................ $_________
F. The amount of such Receivables which
is payable more than 90 days after
the shipping of goods giving rise to
such Receivable, or is more than
60 days past due................................... $_________
<PAGE> 46
G. The amount of such Receivables
which have been written off or
reserved against................................... $_________
H. The amount of such Receivables which
is the obligation of an obligor that
is either an Affiliate of the
Borrower, or the subject of any
reorganization, bankruptcy,
receivership, custodianship,
insolvency or like proceeding or any
event of the nature set forth in
clauses (a) through (d) of Section
8.1.9 of the Credit Agreement...................... $_________
I. The sum of Items 6.B through 6.H................... $_________
J. Item 6.A minus Item 6.I............................ $_________
K. 75% of the amount of the GO/DAN
Receivable ...................................... $_________
L. ELIGIBLE RECEIVABLES: Item 6.J plus
Item 6.K ...................................... $_________
-2-
<PAGE> 1
[EXECUTION COPY]
THIRD AMENDMENT
TO
SHORT TERM REVOLVING CREDIT AGREEMENT
This THIRD AMENDMENT TO SHORT TERM REVOLVING CREDIT AGREEMENT, dated as of
October 11, 1996 (this "Amendatory Agreement"), is among HANDY & HARMAN, a New
York corporation (the "Borrower"), certain financial institutions signatories
hereto (the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN BANK
(formerly known as Chemical Bank) and THE BANK OF NEW YORK, as the co-agents
(collectively referred to herein as the "Co-Agents"), and THE BANK OF NOVA
SCOTIA, as administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Short Term Revolving Credit Agreement, dated as of
September 28, 1994 (as amended or otherwise modified to the date hereof, the
"Existing Credit Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
"Third Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II; except as so amended, the Existing Credit Agreement shall
continue in full force and
effect.
SUBPART 2.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"1996 Transaction" means the sale of gold by the Borrower on or
before December 31, 1996 and certain other events, as more specifically
described in the letter, dated October 2, 1996, from the Borrower to the
Lenders, the Co-Agents and the Administrative Agent.
"Third Amendment" means the Third Amendment, dated as of October 11,
1996, to this Agreement among the Borrower, the Lenders party thereto, the
Co-Agents and the Administrative Agent.
"Third Amendment Effective Date" means the Third Amendment Effective
Date as defined in Subpart 3.1 of the Third Amendment.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended by
-2-
<PAGE> 3
(a) amending clause (b)(i) of the definition of "Consolidated
Tangible Net Worth" in its entirety to read as follows:
"(i) treasury stock (excluding the amount, not to exceed
$45,000,000, of cash consideration expended for the repurchase
and/or redemption of the Borrower's outstanding common stock
in accordance with the 1996 Transaction that results in an
increase in such treasury stock), subscribed but unissued
stock, unamortized debt discount and expense, good will,
trademarks, trade names, patents and other intangible assets
(but not deferred charges) of the Borrower, and"; and
(b) the definition of "Designated Debt" is amended in its entirety
to read as follows:
"`Designated Debt' means the aggregate amount of (i)
Current Debt, and (ii) outstanding Loans and Letter of Credit
Outstandings (as such terms are defined in the Long Term
Credit Agreement); provided, that from the Third Amendment
Effective Date until the first anniversary thereof, Designated
Debt shall exclude outstanding Loans and outstanding Loans and
Letter of Credit Outstandings under (and as defined in) the
Long Term Credit Agreement in up to an aggregate maximum
outstanding principal amount of $64,500,000, as such amount is
reduced Dollar for Dollar by the amount of Debt not
constituting Designated Debt incurred during such period."
SUBPART 2.2. Amendments to Article VII. Article VII of the Existing Credit
Agreement is hereby amended in accordance with Subpart 2.2.1.
SUBPART 2.2.1. Clauses (c) and (d) of Section 7.2.11 of the Existing
Credit Agreement are hereby amended by:
(a) amending clause (c) of such Section in its entirety
to read as follows:
-3-
<PAGE> 4
"(c) such sale, transfer, lease, contribution or
conveyance is (i) in connection with the 1996 Transaction
(provided, that the Market Value of the gold sold or otherwise
disposed of in connection therewith shall not exceed an
aggregate amount equal to $45,000,000) or (ii) if not in the
ordinary course of business, or not otherwise permitted
hereunder, the assets are sold for fair value (as determined
by the Board of Directors of the Borrower or the Subsidiary
owning such assets) and the commitments of the lenders under
the Long Term Credit Agreement are reduced by an amount equal
to the Net Disposition Proceeds (as defined in the Long Term
Credit Agreement) of such sale, transfer, lease, contribution
or conveyance; or"; and
(b) amending clause (d) of such Section by deleting the words
"Effective Date" wherever appearing therein and inserting the words "Third
Amendment Effective Date" in each case in place thereof.
SUBPART 2.3. Amendment to Exhibit E. Attachments 1 and 4 to Exhibit E
(Compliance Certificate) to the Existing Credit Agreement are hereby amended in
their entirety to read as set forth on Exhibit A hereto.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Third Amendment Effective Date. This Amendatory Agreement
shall become effective on the date first set forth above (the "Third Amendment
Effective Date") when each of the conditions set forth in this Subpart 3.1 shall
have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and the Required Lenders.
SUBPART 3.1.2. Amendment Fees. The Administrative Agent shall have
received an amendment fee in the maximum amount of $155,875, which shall be
payable for the pro rata account of each Lender (as set forth in Schedule I
hereto).
-4-
<PAGE> 5
SUBPART 3.1.3. LT Amendment No. 3. The conditions to the effectiveness of
the Third Amendment to the Long Term Credit Agreement, also dated the date
hereof ("LT Amendment No. 3"), (other than the effectiveness of this Amendatory
Agreement) shall have been satisfied and such LT Amendment No. 3 shall,
concurrently with the effectiveness of this Amendatory Agreement, have been
declared effective by the Administrative Agent.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants to the Agents and the Lenders that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding,
-5-
<PAGE> 6
however, those contained in Section 6.7 thereof) are true and correct in
all material respects (unless stated to relate solely to an earlier date,
in which case such representations and warranties were true and correct as
of such earlier date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Agents or any Lender under this Amendatory Agreement shall, except as may be
otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No amendment, waiver or approval hereunder shall require any
similar or dissimilar amendment, waiver or approval to be granted after the date
hereof, and except as expressly modified by this Amendatory Agreement, the
provisions of the Existing Credit Agreement shall remain in full force and
effect, without amendment or other modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By_________________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By_________________________________________
Title:
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By_________________________________________
Title:
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
Co-Agent and Lender
By_________________________________________
Title:
<PAGE> 8
FLEET PRECIOUS METALS INC.
By_________________________________________
Title:
THE FIRST NATIONAL BANK OF CHICAGO
(formerly known as NBD Bank)
By________________________________________
Title:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By________________________________________
Title:
LTCB TRUST COMPANY
By________________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By________________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By________________________________________
Title:
THE SUMITOMO BANK, LIMITED
By________________________________________
Title:
By________________________________________
Title:
<PAGE> 9
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By________________________________________
Title:
ABN AMRO BANK N.V. NEW YORK BRANCH
By________________________________________
Title:
By________________________________________
Title:
COMERICA BANK
By_________________________________________
Title:
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By________________________________________
Title:
<PAGE> 10
EXHIBIT A
TO THIRD AMENDMENT
ATTACHMENT 1
(to __/__/__ Compliance Certificate)
ADJUSTED CONSOLIDATED TANGIBLE NET WORTH
(________ __, 19__)
Adjusted Consolidated
Tangible Net Worth:
A. The par value (or value stated on
the books of the Borrower) of the
capital stock of all classes of the
Borrower............................................... $_________
B. The amount of the consolidated
surplus, whether capital or earned,
of the Borrower and its
and its Subsidiaries................................... $_________
C. The sum (or difference, in the
case of a surplus deficit in
Item 1.B) of Items 1.A and 1.B......................... $_________
D. The aggregate amount of treasury
stock (excluding the amount, not to
exceed $45,000,000, of cash
consideration expended for the
repurchase and/or redemption of the
Borrower's outstanding common stock
in accordance with the 1996
Transaction that results in an
increase in such treasury stock),
subscribed but unissued stock,
unamortized debt discount
and expense, good will, trademarks,
trade names, patents and other
intangible assets (but not deferred
charges) of the Borrower and its
Subsidiaries .......................................... $_________
E. The aggregate amount of all write-
ups in the book value of any assets
owned by the Borrower or its
Subsidiaries subsequent to March
16, 1992, other than write-ups of
<PAGE> 11
assets (and assets of Subsidiaries)
acquired by the Borrower and/or its
Subsidiaries (exclusive of goodwill)
that are made in connection with
the acquisition thereof................................ $_________
F. Sum of Items 1.D through 1.E........................... $_________
G. Consolidated Tangible Net Worth:
The excess of Item 1.C over Item 1.F.................. $_________
H. 40% of the excess of the Market
Value of the Borrower's and its
Subsidiaries' owned precious metal
holdings over the LIFO cost of such
holdings as set forth in the
Borrower's most recent consolidated
financial statements delivered
pursuant to clause (a) or clause (b)
of Section 7.1.1 of the Credit
Agreement.............................................. $_________
I. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH:
The sum of Items 1.G and 1.H........................... $_________
<PAGE> 12
ATTACHMENT 4
(to __/__/__ Compliance
Certificate)
DESIGNATED DEBT
(as of _________ __, 19__)
Designated Debt:
A. Current Debt: The aggregate amount
of current maturities of the
consolidated Debt of the Borrower
and its Subsidiaries, determined in
accordance with GAAP................................... $_________
B. The sum of the aggregate
outstanding principal amount of all
Loans plus Letter of Credit
Outstandings (as such terms are
defined in the Long
Term Credit Agreement)................................. $_________
C. The sum of Item 4.A and Item 4.B
(excluding, from the Third
Amendment Effective Date until the
first anniversary thereof, Loans
and Loans and Letter of Credit
Outstandings under (and as defined
in) the Long Term Credit Agreement
in up to a maximum principal amount
of $64,500,000, as such amount is
reduced Dollar for Dollar by the
amount of Debt not constituting
Designated Debt incurred
during such period).................................... $_________
D. 90% of the Market Value of the
gold, silver and platinum group
metals and the gold, silver and
platinum group metals' content of
alloys then owned by the Borrower
and its Subsidiaries in inventory
and not held in consignment............................ $_________
E. 75% of the Eligible Receivables of
the Borrower and its Subsidiaries
as computed on Attachment 5 hereto..................... $_________
F. The aggregate amount of cash and
Cash Equivalent Investments of the
<PAGE> 13
Borrower and its Subsidiaries, but
only to the extent that such cash and
Cash Equivalent Investments are not
subject to any Lien and (if held or
owned by a Subsidiary) are
transferable to the Borrower without
the consent or approval of
any other Person....................................... $_________
G. The sum of Items 4.D through 4.F....................... $_________
H. The excess of Item 4.C over Item 4.G................... $_________
<PAGE> 1
[EXECUTION COPY]
FOURTH AMENDMENT
TO
SHORT TERM REVOLVING CREDIT AGREEMENT
This FOURTH AMENDMENT TO SHORT TERM REVOLVING CREDIT AGREEMENT, dated as
of January 15, 1997 (this "Amendatory Agreement"), is among HANDY & HARMAN, a
New York corporation (the "Borrower"), certain financial institutions
signatories hereto (the "Lenders"), THE BANK OF NOVA SCOTIA, THE CHASE MANHATTAN
BANK (formerly known as Chemical Bank) and THE BANK OF NEW YORK, as the
co-agents (collectively referred to herein as the "Co-Agents"), and THE BANK OF
NOVA SCOTIA, as administrative agent (the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Co-Agents and the Administrative
Agent are parties to a Short Term Revolving Credit Agreement, dated as of
September 28, 1994 (as amended or otherwise modified to the date hereof, the
"Existing Credit Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Credit Agreement in certain
respects as herein provided (the Existing Credit Agreement, as so amended by
this Amendatory Agreement, being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Borrower" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Credit Agreement" is defined in the second recital.
<PAGE> 2
"Existing Credit Agreement" is defined in the first recital.
"Fourth Amendment Effective Date" is defined in Subpart 3.1.
"Lenders" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Fourth Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II; except as so amended, the Existing Credit Agreement shall
continue in full force and
effect.
SUBPART 2.1. Amendments to Article I. Article I of the Existing Credit
Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"Fourth Amendment" means the Fourth Amendment, dated as of January
15, 1997, to this Agreement among the Borrower, the Lenders party thereto,
the Co-Agents and the Administrative Agent.
"Fourth Amendment Effective Date" means the Fourth Amendment
Effective Date as defined in Subpart 3.1 of the Fourth Amendment.
"Olympic Transaction" means the purchase of all of the outstanding
stock of Olympic Manufacturing Group Inc., as more specifically described
in the letter, dated January 13, 1997, from the Borrower to the Lenders,
the Co-Agents and the Administrative Agent.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement is further
amended by amending clause (b)(i) of the definition of "Consolidated Tangible
Net Worth" in its entirety to read as follows:
-2-
<PAGE> 3
"(i) treasury stock (excluding the amount, not to exceed
$45,000,000, of cash consideration expended for the repurchase and/or
redemption of the Borrower's outstanding common stock in accordance with
the 1996 Transaction that results in an increase in such treasury stock),
subscribed but unissued stock, unamortized debt discount and expense,
goodwill (excluding goodwill in an amount not to exceed $45,000,000
associated with the Olympic Transaction), trademarks, trade names, patents
and other intangible assets (but not deferred charges) of the Borrower,
and"
SUBPART 2.2. Amendment to Article VII. Clause (c) of Section 7.2.11 of the
Existing Credit Agreement is hereby amended in its entirety to read as follows:
"(c) such sale, transfer, lease, contribution or conveyance is
(i) in connection with the 1996 Transaction (provided, that the
Market Value of the gold sold or otherwise disposed of in connection
therewith shall not exceed an aggregate amount equal to
$45,000,000), (ii) in connection with the sale or disposition of
precious metal having an aggregate Market Value in a maximum amount
not to exceed $55,000,000 but only to the extent the proceeds are
used to finance the Olympic Transaction, or (iii) if not in the
ordinary course of business, or not otherwise permitted hereunder,
the assets are sold for fair value (as determined by the Board of
Directors of the Borrower or the Subsidiary owning such assets) and
the commitments of the Lenders under the Long Term Credit Agreement
are reduced by an amount equal to the Net Disposition Proceeds (as
defined in the Long Term Credit Agreement) of such sale, transfer,
lease, contribution or conveyance; or".
SUBPART 2.3. Amendment to Exhibit E. Attachment 1 of Exhibit E (Compliance
Certificate) to the Existing Credit Agreement is hereby amended in its entirety
to read as set forth
on Exhibit A hereto.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Fourth Amendment Effective Date. This Amendatory Agreement
shall become effective on the date first set forth above (the "Fourth Amendment
Effective Date") when each of
-3-
<PAGE> 4
the conditions set forth in this Subpart 3.1 shall have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Borrower and the Required Lenders.
SUBPART 3.1.2. Long Term Credit Agreement Amendment No. 4. The conditions
to the effectiveness of the Fourth Amendment to the Long Term Credit Agreement,
also dated as of the date hereof ("LT Amendment No. 4") (other than the
effectiveness of this Amendatory Agreement) shall have been satisfied and such
LT Amendment No. 4 shall, concurrently with the effectiveness of this Amendatory
Agreement, have been declared effective by the Administrative Agent.
SUBPART 3.1.3. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies of such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this Amendatory Agreement shall be satisfactory to
the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendatory Agreement is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each
-4-
<PAGE> 5
of which when executed and delivered shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, the Borrower hereby represents and
warrants to the Agents and the Lenders that
(a) the representations and warranties set forth in Article VI of
the Existing Credit Agreement (excluding, however, those contained in
Section 6.7 thereof) are true and correct in all material respects (unless
stated to relate solely to an earlier date, in which case such
representations and warranties were true and correct as of such earlier
date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit Agreement,
(i) no litigation, arbitration or governmental investigation
or proceeding is pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to materially adversely affect the
Borrower's, or the Borrower and its Subsidiaries' taken as a whole,
financial condition, operations, assets, businesses, properties or
prospects or which purports to affect the legality, validity or
enforceability of the Existing Credit Agreement, the Notes or any
other Loan Document; and
(ii) no development has occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 of the Existing Credit Agreement which may
reasonably be expected to materially adversely affect the financial
condition, operations, assets, businesses, properties or prospects
of the Borrower or the Borrower and its Subsidiaries, taken as a
whole; and
(c) no Default has occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Agents or any Lender under this Amendatory Agreement shall, except as may be
otherwise stated in this Amendatory Agreement, be applicable to subsequent
transactions. No amendment, waiver or approval hereunder shall require any
similar or dissimilar amendment, waiver or approval to be granted after the date
hereof, and except as expressly modified by this Amendatory Agreement, the
provisions of the Existing Credit
-5-
<PAGE> 6
Agreement shall remain in full force and effect, without amendment or other
modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By_________________________________________
Title:
THE BANK OF NOVA SCOTIA,
in its capacity as Administrative
Agent, Co-Agent and Lender
By_________________________________________
Title:
THE BANK OF NEW YORK,
in its capacity as
Co-Agent and Lender
By_________________________________________
Title:
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
Co-Agent and Lender
By_________________________________________
Title:
FLEET PRECIOUS METALS INC.
By_________________________________________
Title:
-7-
<PAGE> 8
THE FIRST NATIONAL BANK OF CHICAGO
(formerly known as NBD Bank)
By_________________________________________
Title:
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By_________________________________________
Title:
LTCB TRUST COMPANY
By_________________________________________
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By_________________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By_________________________________________
Title:
THE SUMITOMO BANK, LIMITED
By_________________________________________
Title:
By_________________________________________
Title:
-8-
<PAGE> 9
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By_________________________________________
Title:
ABN AMRO BANK N.V. NEW YORK BRANCH
By_________________________________________
Title:
By_________________________________________
Title:
COMERICA BANK
By_________________________________________
Title:
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By_________________________________________
Title:
-9-
<PAGE> 10
EXHIBIT A
TO FOURTH AMENDMENT
ATTACHMENT 1
(to __/__/__ Compliance Certificate)
ADJUSTED CONSOLIDATED TANGIBLE NET WORTH
(________ __, 19__)
Adjusted Consolidated
Tangible Net Worth:
A. The par value (or value stated on
the books of the Borrower) of the
capital stock of all classes of the
Borrower............................................... $_________
B. The amount of the consolidated
surplus, whether capital or earned,
of the Borrower and its
and its Subsidiaries................................... $_________
C. The sum (or difference, in the
case of a surplus deficit in
Item 1.B) of Items 1.A and 1.B......................... $_________
D. The aggregate amount of treasury
stock (excluding the amount, not to
exceed $45,000,000, of cash
consideration expended for the
repurchase and/or redemption of the
Borrower's outstanding common stock
in accordance with the 1996
Transaction that results in an
increase in such treasury stock),
subscribed but unissued stock,
unamortized debt discount
and expense, goodwill (excluding
goodwill in an amount not to exceed
$45,000,000 associated with the
Olympic Transaction), trademarks,
trade names, patents and other
intangible assets (but not deferred
charges), of the Borrower and
its Subsidiaries....................................... $_________
E. The aggregate amount of all write-
ups in the book value of any assets
<PAGE> 11
owned by the Borrower or its
Subsidiaries subsequent to March 16,
1992, other than write-ups of assets
(and assets of Subsidiaries) acquired
by the Borrower and/or its
Subsidiaries (exclusive of goodwill)
that are made in connection with the
acquisition thereof.................................... $_________
F. Sum of Items 1.D through 1.E........................... $_________
G. Consolidated Tangible Net Worth:
The excess of Item 1.C over Item 1.F................... $_________
H. 40% of the excess of the Market
Value of the Borrower's and its
Subsidiaries' owned precious metal
holdings over the LIFO cost of such
holdings as set forth in the
Borrower's most recent consolidated
financial statements delivered
pursuant to clause (a) or clause
(b) of Section 7.1.1 of the
Credit Agreement...................................... $_________
I. ADJUSTED CONSOLIDATED TANGIBLE NET WORTH:
The sum of Items 1.G and 1.H.......................... $_________
-2-
<PAGE> 1
[EXECUTION COPY]
FIRST AMENDMENT
TO
FEE CONSIGNMENT AGREEMENT
This FIRST AMENDMENT TO FEE CONSIGNMENT AGREEMENT, dated as of June 30,
1995 (this "Amendatory Agreement"), between HANDY & HARMAN, a New York
corporation (the "Consignee") and THE BANK OF NOVA SCOTIA (the "Consignor").
W I T N E S S E T H:
WHEREAS, the Consignee and the Consignor are parties to a Fee Consignment
Agreement, dated as of September 28, 1994 (as amended or otherwise modified
prior to the date hereof, the "Existing Fee Consignment Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Fee Consignment Agreement in
certain respects as herein provided (the Existing Fee Consignment Agreement, as
so amended by this Amendatory Agreement, being referred to as the "Fee
Consignment Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Amendatory Agreement" is defined in the preamble.
"Consignee" is defined in the preamble.
"Consignor" is defined in the preamble.
"Fee Consignment Agreement" is defined in the second
recital.
"Existing Fee Consignment Agreement" is defined in the first
recital.
"First Amendment Effective Date" is defined in Subpart 3.1.
<PAGE> 2
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Fee Consignment Agreement are, unless otherwise defined herein or
the context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING FEE CONSIGNMENT AGREEMENT
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Fee Consignment Agreement is hereby amended in
accordance with this Part II; except as so amended, the Existing Fee Consignment
Agreement shall continue in full force and effect.
SUBPART 2.1. Amendment to Article I. Article I of the Existing Fee
Consignment Agreement is hereby amended in accordance with Subparts 2.1.1
through 2.1.3.
SUBPART 2.1.1. Section 1.1 of the Existing Fee Consignment Agreement is
hereby amended by inserting the following definition in such Section in the
appropriate alphabetical sequence:
"First Amendment" means the First Amendment, dated as of June 30, 1995, to
this Agreement between the Consignee and the Consignor.
SUBPART 2.1.2. Section 1.1 of the Existing Fee Consignment Agreement is
hereby further amended by
(a) amending the definition of "Plant" in its entirety to read as
follows:
"`Plant' means the Consignee's fabrication facility located at 1770
Kings Highway, Fairfield, Connecticut."; and
(b) amending the definition of "Commitment Amount" in its entirety
to read as follows:
"`Commitment Amount' means, on any day,
(a) with respect to gold, (i) 30,000 troy ounces of gold or,
if less, (ii) the maximum number of troy ounces of gold obtained by
dividing (A) $14,250,000 (or, if, on or prior to such day, the
Advance Commitment Amount is reduced pursuant to the terms of the
Dollar Supply Agreement, a Dollar amount equal to the product of (x)
the Advance Commitment Amount (after giving effect to any reduction
thereto on or prior to
-2-
<PAGE> 3
such day) and (y) 17.9810726%), by (B) $475 (rounded down to the
next whole number); and
(b) with respect to silver, (i) 10,000,000 troy ounces of
silver or, if less, (ii) the maximum number of troy ounces of silver
obtained by dividing (A) $65,000,000 (or, if, on or prior to such
day, the Advance Commitment Amount is reduced pursuant to the terms
of the Dollar Supply Agreement, a Dollar amount equal to the product
of (x) the Advance Commitment Amount (after giving effect to any
reduction thereto on or prior to such day) and (y) 82.0189274%), by
(B) $6.50 (rounded down to the next whole number);
as the amounts in clauses (a)(i) and (b)(i) above may be reduced from time
to time pursuant to Section 2.2 or as required in accordance with the
proviso contained in clause (b) of Section 2.4.2."
SUBPART 2.2. Amendment to Article II. Section 2.2.2 of the Existing Fee
Consignment Agreement is hereby amended by (i) deleting the percentage
"41.6749751%" in clause (a) of such Section and substituting the percentage
"17.9810726%" in place thereof, and (ii) deleting the percentage "58.3250249%"
in clause (b) of such Section, and substituting the percentage "82.0189274" in
place thereof.
SUBPART 2.3. Global Amendment to Fee Consignment Documents. The Existing
Fee Consignment Agreement and each other Fee Consignment Document is hereby
amended by deleting each reference to "the Plants", "each Plant", "either
Plant", "applicable Plant" and terms of a similar import and by inserting the
term "the Plant" in each case in place thereof, and the Existing Fee Consignment
Agreement and each other Fee Consignment Document is hereby amended mutatis
mutandis in order to give full effect to the amendments described in this
Subpart 2.3.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This Amendatory Agreement
shall become effective on July 6, 1995 (the "First Amendment Effective Date"),
but only if each of the conditions set forth in this Subpart 3.1 shall have been
satisfied on or prior to that date.
SUBPART 3.1.1. Execution of Counterparts. The Consignor shall have
received counterparts of this Amendatory Agreement, duly executed on behalf of
the Consignee and the Consignor.
-3-
<PAGE> 4
SUBPART 3.1.2. Execution of Consent. The Consignor shall have received
counterparts of the Consent, substantially in the form of Exhibit A hereto, duly
executed on behalf of each Supplier.
SUBPART 3.1.3. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the Consignor and
its counsel. The Consignor and its counsel shall have received all information
and such counterpart originals or such certified or other copies or such
materials, as the Consignor or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendatory Agreement
shall be satisfactory to the Consignor and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Fee Consignment Document Pursuant to Existing Fee Consignment
Agreement. This Amendatory Agreement is a Fee Consignment Document executed
pursuant to the Existing Fee Consignment Agreement and shall be construed,
administered and applied in accordance with all of the terms and provisions of
the Existing Fee Consignment Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, and after giving effect to the
amendments set forth above, the Consignee hereby represents and warrants that
(a) the representations and warranties set forth in Article VI of
the Existing Fee Consignment Agreement are true and correct in all
material respects (unless stated to relate solely to an earlier date, in
which case such representations and warranties were true and correct as of
such earlier date); and
-4-
<PAGE> 5
(b) after giving effect to this Amendatory Agreement, no Default has
occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Consignor under this Amendatory Agreement shall, except as may be otherwise
stated in this Amendatory Agreement, be applicable to subsequent transactions.
No waiver or approval hereunder shall require any similar or dissimilar waiver
or approval to be granted after the date hereof, and except as expressly
modified by this Amendatory Agreement, the provisions of the Existing Fee
Consignment Agreement shall remain in full force and effect, without amendment
or other modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By_________________________________________
Title:
THE BANK OF NOVA SCOTIA
By_________________________________________
Title:
-6-
<PAGE> 7
Exhibit A
CONSENT
Dated as of June 30, 1995
Reference is made to:
(i) the Short-Term Dollar Supply Agreement, dated as of September
28, 1994 (as amended or otherwise modified, the "Short-Term Dollar Supply
Agreement"), among The Bank of Nova Scotia, as the consignor (the
"Consignor"), certain commercial lending institutions (including the
undersigned) from time to time parties thereto (the "Suppliers"), The Bank
of Nova Scotia, Chemical Bank and The Bank of New York, as the co-agents
for the Suppliers (the "Co-Agents"), and The Bank of Nova Scotia, as the
administrative agent for the Suppliers (the "Administrative Agent");
(ii) the Dollar Supply Agreement, dated as of September 28, 1994 (as
amended or otherwise modified, the "Dollar Supply Agreement"), among the
Consignor, the Suppliers, the Co-Agents and the Administrative Agent;
(iii) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Short-Term Fee Consignment Agreement"), to the Short-Term Fee
Consignment Agreement, dated as of September 28, 1994, between Handy &
Harman, a New York corporation (the "Consignee"), and the Consignor; and
(iv) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Fee Consignment Agreement"), to the Fee Consignment Agreement,
dated as of September 28, 1994, between the Consignee and the Consignor.
The undersigned Supplier hereby consents to Amendment No. 1 to Short-Term
Fee Consignment Agreement and Amendment No. 1 to Fee Consignment Agreement
(collectively, the "Amendments") and, in accordance with Section 8.1 of each of
the Short-Term Dollar Supply Agreement and the Dollar Supply Agreement, hereby
consents to the Consignor executing and delivering a copy of each Amendment in
the form previously delivered to the undersigned Supplier. The undersigned
Supplier also authorizes and directs The Bank of Nova Scotia, in its capacity as
the Consignor and the Administrative Agent, to execute and deliver Uniform
Commercial Code termination statements
<PAGE> 8
and other instruments and documents as reasonably requested by the Consignee to
give effect to each Amendment.
__________________________________
[INSERT NAME OF SUPPLIER]
By_________________________________________
Title:
<PAGE> 1
[EXECUTION COPY]
SECOND AMENDMENT
TO
FEE CONSIGNMENT AGREEMENT
This SECOND AMENDMENT TO FEE CONSIGNMENT AGREEMENT, dated as of September
24, 1996 (this "Amendatory Agreement"), is between HANDY & HARMAN, a New York
corporation (the "Consignee") and THE BANK OF NOVA SCOTIA (the "Consignor").
W I T N E S S E T H:
WHEREAS, the Consignee and the Consignor are parties to a Fee Consignment
Agreement, dated as of September 28, 1994 (as amended or otherwise modified
prior to the date hereof, the "Existing Fee Consignment Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Fee Consignment Agreement in
certain respects as herein provided (the Existing Fee Consignment Agreement, as
so amended by this Amendatory Agreement, being referred to as the "Fee
Consignment Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows.
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Amendatory Agreement" is defined in the preamble.
"Consignee" is defined in the preamble.
"Consignor" is defined in the preamble.
"Fee Consignment Agreement" is defined in the second
recital.
"Existing Fee Consignment Agreement" is defined in the first
recital.
"Second Amendment Effective Date" is defined in Subpart 3.1.
<PAGE> 2
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Fee Consignment Agreement are, unless otherwise defined herein or
the context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING FEE CONSIGNMENT AGREEMENT
AND EXTENSION OF CONSIGNMENT MATURITY DATE
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Fee Consignment Agreement is hereby amended, and
the Consignment Maturity Date is extended, in accordance with this Part II;
except as so amended, the Existing Fee Consignment Agreement shall continue in
full force
and effect.
SUBPART 2.1. Amendment to Recital. The first recital of the Existing Fee
Consignment Agreement is hereby amended by deleting the words "up to 110,000
troy ounces of gold and up to 11,250,000 troy ounces of silver" in such recital,
and inserting the words "gold and silver in the amounts set forth herein" in
place thereof.
SUBPART 2.2. Amendment to Article I. Article I of the Existing Fee
Consignment Agreement is hereby amended in accordance with Subparts 2.2.1
through 2.2.2.
SUBPART 2.2.1. Section 1.1 of the Existing Fee Consignment Agreement is
hereby amended by inserting the following definition in such Section in the
appropriate alphabetical sequence:
"Second Amendment" means the Second Amendment, dated as of September
24, 1996, to this Agreement between the Consignee and the Consignor.
SUBPART 2.2.2. Section 1.1 of the Existing Fee Consignment Agreement is
hereby further amended by amending the definition of "Commitment Amount" in its
entirety to read as follows:
"`Commitment Amount' means, on any day,
(a) with respect to gold, (i) 22,500 troy ounces of gold or,
if less, (ii) the maximum number of troy ounces of gold obtained by
dividing (A) $10,687,500 (or, if, on or prior to such day, the
Advance Commitment Amount is reduced pursuant to the terms of the
Dollar Supply Agreement, a Dollar amount equal to the product of (x)
the Advance Commitment Amount (after giving effect to any reduction
thereto on or prior to
-2-
<PAGE> 3
such day) and (y) 12.751677852%), by (B) $475 (rounded
down to the next whole number); and
(b) with respect to silver, (i) 11,250,000 troy ounces of
silver or, if less, (ii) the maximum number of troy ounces of silver
obtained by dividing (A) $73,125,000 (or, if, on or prior to such
day, the Advance Commitment Amount is reduced pursuant to the terms
of the Dollar Supply Agreement, a Dollar amount equal to the product
of (x) the Advance Commitment Amount (after giving effect to any
reduction thereto on or prior to such day) and (y) 87.248322148%),
by (B) $6.50 (rounded down to the next whole number);
as the amounts in clauses (a)(i) and (b)(i) above may be reduced from time
to time pursuant to Section 2.2 or as required in accordance with the
proviso contained in clause (b) of Section 2.4.2."
SUBPART 2.3. Amendment to Article II. Section 2.2.2 of the Existing Fee
Consignment Agreement is hereby amended by (i) deleting the percentage
"17.9810726%" in clause (a) of such Section and substituting the percentage
"12.751677852%" in place thereof, and (ii) deleting the percentage "82.0189274%"
in clause (b) of such Section, and substituting the percentage "87.248322148%"
in place thereof.
SUBPART 2.4. Amendments to Article III. Article III of the Existing Fee
Consignment Agreement is hereby amended in accordance with Subparts 2.4.1 and
2.4.2.
SUBPART 2.4.1. Clause (a) and clause (b) of Section 3.3.1 of the of the
Existing Fee Consignment Agreement is hereby amended by deleting "1/2 of 1% per
annum" appearing in each such clause, and inserting "40 basis points per annum"
in place thereof.
SUBPART 2.4.2. Section 3.3.2 of the Existing Fee Consignment Agreement is
hereby amended by deleting "1/5 of 1% per annum" appearing in such Section, and
inserting "15 basis points per annum" in place thereof.
SUBPART 2.5. Amendments to Article IX. Section 9.3 of the Existing Fee
Consignment Agreement is hereby amended by deleting "1/2 of 1% per annum"
wherever appearing in such Section, and inserting "40 basis points per annum" in
each case in place thereof.
SUBPART 2.6. Extension of Consignment Maturity Date. By their signatures
below, the Consignor and the Consignee hereby agree that, in accordance with the
terms of Section 2.4 of the
-3-
<PAGE> 4
Existing Fee Consignment Agreement, upon the effectiveness of
this Amendatory Agreement, the Consignment Maturity Date shall be
September 27, 1999.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Second Amendment Effective Date. This Amendatory Agreement
shall become effective as of the date first written above (the "Second Amendment
Effective Date"), but only if each of the conditions set forth in this Subpart
3.1 shall have been satisfied on or prior to that date.
SUBPART 3.1.1. Execution of Counterparts. The Consignor shall have
received counterparts of this Amendatory Agreement, duly executed on behalf of
the Consignee and the Consignor.
SUBPART 3.1.2. Execution of Consent. The Consignor shall have received
counterparts of the Consent, substantially in the form of Exhibit A hereto, duly
executed on behalf of each Supplier.
SUBPART 3.1.3. First Amendment to Dollar Supply Agreement. The Consignor
shall have received evidence that the First Amendment to the Dollar Supply
Agreement, dated as of the date hereof, shall have, or contemporaneously with
the effectiveness of this Amendatory Agreement will, become effective in
accordance with its terms.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the Consignor and
its counsel. The Consignor and its counsel shall have received all information
and such counterpart originals or such certified or other copies or such
materials, as the Consignor or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendatory Agreement
shall be satisfactory to the Consignor and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Fee Consignment Document Pursuant to Existing Fee Consignment
Agreement. This Amendatory Agreement is a Fee
-4-
<PAGE> 5
Consignment Document executed pursuant to the Existing Fee Consignment Agreement
and shall be construed, administered and applied in accordance with all of the
terms and provisions of the Existing Fee Consignment Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, and after giving effect to the
amendments set forth above, the Consignee hereby represents and warrants that
(a) the representations and warranties set forth in Article VI of
the Existing Fee Consignment Agreement are true and correct in all
material respects (unless stated to relate solely to an earlier date, in
which case such representations and warranties were true and correct as of
such earlier date); and
(b) no Default has occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Consignor under this Amendatory Agreement shall, except as may be otherwise
stated in this Amendatory Agreement, be applicable to subsequent transactions.
No amendment, waiver or approval hereunder shall require any similar or
dissimilar amendment, waiver or approval to be granted after the date hereof,
and except as expressly modified by this Amendatory Agreement, the provisions of
the Existing Fee Consignment Agreement shall remain in full force and effect,
without amendment or other modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By ________________________________________
Title:
THE BANK OF NOVA SCOTIA
By ________________________________________
Title:
-6-
<PAGE> 7
Exhibit A
CONSENT
Dated as of September 24, 1996
Reference is made to:
(i) the Short-Term Dollar Supply Agreement, dated as of September
28, 1994 (as amended or otherwise modified, the "Short-Term Dollar Supply
Agreement"), among The Bank of Nova Scotia, as the consignor (the
"Consignor"), certain commercial lending institutions (including the
undersigned) from time to time parties thereto (the "Suppliers"), The Bank
of Nova Scotia, The Chase Manhattan Bank (formerly known as Chemical Bank)
and The Bank of New York, as the co-agents for the Suppliers (the
"Co-Agents"), and The Bank of Nova Scotia, as the administrative agent for
the Suppliers (the "Administrative Agent");
(ii) the Dollar Supply Agreement, dated as of September 28, 1994 (as
amended or otherwise modified, the "Dollar Supply Agreement"), among the
Consignor, the Suppliers, the Co-Agents and the Administrative Agent;
(iii) the Second Amendment, dated as of the date hereof ("Amendment
No. 2 to Short-Term Fee Consignment Agreement"), to the Short-Term Fee
Consignment Agreement, dated as of September 28, 1994 (as amended or
otherwise modified prior to the date hereof), between Handy & Harman, a
New York corporation (the "Consignee"), and the Consignor; and
(iv) the Second Amendment, dated as of the date hereof ("Amendment
No. 2 to Fee Consignment Agreement"), to the Fee Consignment Agreement,
dated as of September 28, 1994 (as amended or otherwise modified prior to
the date hereof), between the Consignee and the Consignor.
The undersigned Supplier hereby consents to Amendment No. 2 to Short-Term
Fee Consignment Agreement and Amendment No. 2 to Fee Consignment Agreement
(collectively, the "Amendments") and, in accordance with Section 8.1 of each of
the Short-Term Dollar Supply Agreement and the Dollar Supply Agreement, hereby
consents to the Consignor executing and delivering a copy of each Amendment in
the form previously delivered to the undersigned Supplier.
___________________________________________
[INSERT NAME OF SUPPLIER]
By ________________________________________
Title:
<PAGE> 1
[EXECUTION COPY]
FIRST AMENDMENT
TO
SHORT-TERM FEE CONSIGNMENT AGREEMENT
This FIRST AMENDMENT TO SHORT-TERM FEE CONSIGNMENT AGREEMENT, dated as of
June 30, 1995 (this "Amendatory Agreement"), among HANDY & HARMAN, a New York
corporation (the "Consignee") and THE BANK OF NOVA SCOTIA (the "Consignor").
W I T N E S S E T H:
WHEREAS, the Consignee and the Consignor are parties to a Short-Term Fee
Consignment Agreement, dated as of September 28, 1994 (as amended or otherwise
modified prior to the date hereof, the "Existing Fee Consignment Agreement");
and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Fee Consignment Agreement in
certain respects as herein provided (the Existing Fee Consignment Agreement, as
so amended by this Amendatory Agreement, being referred to as the "Fee
Consignment Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Amendatory Agreement" is defined in the preamble.
"Consignee" is defined in the preamble.
"Consignor" is defined in the preamble.
"Fee Consignment Agreement" is defined in the second
recital.
"Existing Fee Consignment Agreement" is defined in the first
recital.
"First Amendment Effective Date" is defined in Subpart 3.1.
<PAGE> 2
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Fee Consignment Agreement are, unless otherwise defined herein or
the context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING FEE CONSIGNMENT AGREEMENT
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Fee Consignment Agreement is hereby amended in
accordance with this Part II; except as so amended, the Existing Fee Consignment
Agreement shall continue in full force and effect.
SUBPART 2.1. Amendment to Article I. Article I of the Existing Fee
Consignment Agreement is hereby amended in accordance with Subparts 2.1.1
through 2.1.3.
SUBPART 2.1.1. Section 1.1 of the Existing Fee Consignment Agreement is
hereby amended by inserting the following definition in such Section in the
appropriate alphabetical sequence:
"First Amendment" means the First Amendment, dated as of June 30, 1995, to
this Agreement between the Consignee and the Consignor.
SUBPART 2.1.2. Section 1.1 of the Existing Fee Consignment Agreement is
hereby further amended by
(a) amending the definition of "Plant" in its entirety to read as
follows:
"`Plant' means the Consignee's fabrication facility located at 1770
Kings Highway, Fairfield, Connecticut."; and
(b) amending the definition of "Commitment Amount" in its entirety
to read as follows:
"`Commitment Amount' means, on any day,
(a) with respect to gold, (i) 30,000 troy ounces of gold or,
if less, (ii) the maximum number of troy ounces of gold obtained by
dividing (A) $14,250,000 (or, if, on or prior to such day, the
Advance Commitment Amount is reduced pursuant to the terms of the
Short-Term Dollar Supply Agreement, a Dollar amount equal to the
product of (x) the Advance Commitment
-2-
<PAGE> 3
Amount (after giving effect to any reduction thereto on or prior to
such day) and (y) 17.9810726%), by (B) $475 (rounded down to the
next whole number); and
(b) with respect to silver, (i) 10,000,000 troy ounces of
silver or, if less, (ii) the maximum number of troy ounces of silver
obtained by dividing (A) $65,000,000 (or, if, on or prior to such
day, the Advance Commitment Amount is reduced pursuant to the terms
of the Short-Term Dollar Supply Agreement, a Dollar amount equal to
the product of (x) the Advance Commitment Amount (after giving
effect to any reduction thereto on or prior to such day) and (y)
82.0189274%), by (B) $6.50 (rounded down to the next whole number);
as the amounts in clauses (a)(i) and (b)(i) above may be reduced from time
to time pursuant to Section 2.2 or as required in accordance with the
proviso contained in clause (b) of Section 2.4.2."
SUBPART 2.2. Amendment to Article II. Section 2.2.2 of the Existing Fee
Consignment Agreement is hereby amended by (i) deleting the percentage
"41.6749751%" in clause (a) of such Section and substituting the percentage
"17.9810726%" in place thereof, and (ii) deleting the percentage "58.3250249%"
in clause (b) of such Section, and substituting the percentage "82.0189274" in
place thereof.
SUBPART 2.3. Global Amendment to Fee Consignment Documents. The Existing
Fee Consignment Agreement and each other Fee Consignment Document is hereby
amended by deleting each reference to "the Plants", "each Plant", "either
Plant", "applicable Plant" and terms of a similar import and by inserting the
term "the Plant" in each case in place thereof, and the Existing Fee Consignment
Agreement and each other Fee Consignment Document is hereby amended mutatis
mutandis in order to give full effect to the amendments described in this
Subpart 2.3.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This Amendatory Agreement
shall become effective on July 6, 1995 (the "First Amendment Effective Date"),
but only if each of the conditions set forth in this Subpart 3.1 shall have been
satisfied on or prior to that date.
SUBPART 3.1.1. Execution of Counterparts. The Consignor shall have
received counterparts of this Amendatory Agreement, duly executed on behalf of
the Consignee and the Consignor.
-3-
<PAGE> 4
SUBPART 3.1.2. Execution of Consent. The Consignor shall have received
counterparts of the Consent, substantially in the form of Exhibit A hereto, duly
executed on behalf of each Supplier.
SUBPART 3.1.3. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the Consignor and
its counsel. The Consignor and its counsel shall have received all information
and such counterpart originals or such certified or other copies or such
materials, as the Consignor or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendatory Agreement
shall be satisfactory to the Consignor and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Fee Consignment Document Pursuant to Existing Fee Consignment
Agreement. This Amendatory Agreement is a Fee Consignment Document executed
pursuant to the Existing Fee Consignment Agreement and shall be construed,
administered and applied in accordance with all of the terms and provisions of
the Existing Fee Consignment Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, and after giving effect to the
amendments set forth above, the Consignee hereby represents and warrants that
(a) the representations and warranties set forth in Article VI of
the Existing Fee Consignment Agreement are true and correct in all
material respects (unless stated to relate solely to an earlier date, in
which case such
-4-
<PAGE> 5
representations and warranties were true and correct as of
such earlier date); and
(b) after giving effect to this Amendatory Agreement, no Default has
occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Consignor under this Amendatory Agreement shall, except as may be otherwise
stated in this Amendatory Agreement, be applicable to subsequent transactions.
No waiver or approval hereunder shall require any similar or dissimilar waiver
or approval to be granted after the date hereof, and except as expressly
modified by this Amendatory Agreement, the provisions of the Existing Fee
Consignment Agreement shall remain in full force and effect, without amendment
or other modification.
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By_________________________________________
Title:
THE BANK OF NOVA SCOTIA
By_________________________________________
Title:
-6-
<PAGE> 7
Exhibit A
CONSENT
Dated as of June 30, 1995
Reference is made to:
(i) the Short-Term Dollar Supply Agreement, dated as of September
28, 1994 (as amended or otherwise modified, the "Short-Term Dollar Supply
Agreement"), among The Bank of Nova Scotia, as the consignor (the
"Consignor"), certain commercial lending institutions (including the
undersigned) from time to time parties thereto (the "Suppliers"), The Bank
of Nova Scotia, Chemical Bank and The Bank of New York, as the co-agents
for the Suppliers (the "Co-Agents"), and The Bank of Nova Scotia, as the
administrative agent for the Suppliers (the "Administrative Agent");
(ii) the Dollar Supply Agreement, dated as of September 28, 1994 (as
amended or otherwise modified, the "Dollar Supply Agreement"), among the
Consignor, the Suppliers, the Co-Agents and the Administrative Agent;
(iii) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Short-Term Fee Consignment Agreement"), to the Short-Term Fee
Consignment Agreement, dated as of September 28, 1994, between Handy &
Harman, a New York corporation (the "Consignee"), and the Consignor; and
(iv) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Fee Consignment Agreement"), to the Fee Consignment Agreement,
dated as of September 28, 1994, between the Consignee and the Consignor.
The undersigned Supplier hereby consents to Amendment No. 1 to Short-Term
Fee Consignment Agreement and Amendment No. 1 to Fee Consignment Agreement
(collectively, the "Amendments") and, in accordance with Section 8.1 of each of
the Short-Term Dollar Supply Agreement and the Dollar Supply Agreement, hereby
consents to the Consignor executing and delivering a copy of each Amendment in
the form previously delivered to the undersigned Supplier. The undersigned
Supplier also authorizes and directs The Bank of Nova Scotia, in its capacity as
the Consignor and the
-7-
<PAGE> 8
Administrative Agent, to execute and deliver Uniform Commercial Code termination
statements and other instruments and documents as reasonably requested by the
Consignee to give effect to each Amendment.
___________________________________________
[INSERT NAME OF SUPPLIER]
By ________________________________________
Title:
-8-
<PAGE> 1
[EXECUTION COPY]
SECOND AMENDMENT
TO
SHORT-TERM FEE CONSIGNMENT AGREEMENT
This SECOND AMENDMENT TO SHORT-TERM FEE CONSIGNMENT AGREEMENT, dated as of
September 24, 1996 (this "Amendatory Agreement"), is between HANDY & HARMAN, a
New York corporation (the "Consignee") and THE BANK OF NOVA SCOTIA (the
"Consignor").
W I T N E S S E T H:
WHEREAS, the Consignee and the Consignor are parties to a Short-Term Fee
Consignment Agreement, dated as of September 28, 1994 (as amended or otherwise
modified prior to the date hereof, the "Existing Fee Consignment Agreement");
and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Fee Consignment Agreement in
certain respects as herein provided (the Existing Fee Consignment Agreement, as
so amended by this Amendatory Agreement, being referred to as the "Fee
Consignment Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Amendatory Agreement" is defined in the preamble.
"Consignee" is defined in the preamble.
"Consignor" is defined in the preamble.
"Fee Consignment Agreement" is defined in the second
recital.
"Existing Fee Consignment Agreement" is defined in the first
recital.
"Second Amendment Effective Date" is defined in Subpart 3.1.
<PAGE> 2
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Fee Consignment Agreement are, unless otherwise defined herein or
the context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING FEE CONSIGNMENT AGREEMENT
AND EXTENSION OF CONSIGNMENT MATURITY DATE
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Fee Consignment Agreement is hereby amended, and
the Consignment Maturity Date is extended, in accordance with this Part II;
except as so amended, the Existing Fee Consignment Agreement shall continue in
full force and effect.
SUBPART 2.1. Amendment to Recital. The first recital of the Existing Fee
Consignment Agreement is hereby amended by deleting the words "up to 110,000
troy ounces of gold and up to 11,250,000 troy ounces of silver" in such recital,
and inserting the words "gold and silver in the amounts set forth herein" in
place thereof.
SUBPART 2.2. Amendment to Article I. Article I of the Existing Fee
Consignment Agreement is hereby amended in accordance with Subparts 2.2.1
through 2.2.2.
SUBPART 2.2.1. Section 1.1 of the Existing Fee Consignment Agreement is
hereby amended by inserting the following definition in such Section in the
appropriate alphabetical sequence:
"Second Amendment" means the Second Amendment, dated as of September
24, 1996, to this Agreement between the Consignee and the Consignor.
SUBPART 2.2.2. Section 1.1 of the Existing Fee Consignment Agreement is
hereby further amended by
(a) amending the definition of "Commitment Amount" in its entirety
to read as follows:
"`Commitment Amount' means, on any day,
(a) with respect to gold, (i) 7,500 troy ounces of gold or, if
less, (ii) the maximum number of troy ounces of gold obtained by
dividing (A) $3,562,500 (or, if, on or prior to such day, the
Advance Commitment Amount is reduced pursuant to the terms of the
Short-Term Dollar Supply Agreement, a Dollar amount equal to
-2-
<PAGE> 3
the product of (x) the Advance Commitment Amount (after giving
effect to any reduction thereto on or prior to such day) and (y)
12.751677852%), by (B) $475 (rounded down to the next whole number);
and
(b) with respect to silver, (i) 3,750,000 troy ounces of
silver or, if less, (ii) the maximum number of troy ounces of silver
obtained by dividing (A) $24,375,000 (or, if, on or prior to such
day, the Advance Commitment Amount is reduced pursuant to the terms
of the Short-Term Dollar Supply Agreement, a Dollar amount equal to
the product of (x) the Advance Commitment Amount (after giving
effect to any reduction thereto on or prior to such day) and (y)
87.248322148%), by (B) $6.50 (rounded down to the next whole
number);
as the amounts in clauses (a)(i) and (b)(i) above may be reduced from time
to time pursuant to Section 2.2 or as required in accordance with the
proviso contained in clause (b) of Section 2.4.2."; and
(b) amending the definition of "Swing Line Commitment Amount" by
deleting the figure "$10,000,000" appearing in such definition, and
inserting the figure "$15,000,000" in place thereof.
SUBPART 2.3. Amendment to Article II. Section 2.2.2 of the Existing Fee
Consignment Agreement is hereby amended by (i) deleting the percentage
"17.9810726%" in clause (a) of such Section and substituting the percentage
"12.751677852%" in place thereof, and (ii) deleting the percentage "82.0189274%"
in clause (b) of such Section, and substituting the percentage "87.248322148%"
in place thereof.
SUBPART 2.4. Amendments to Article III. Article III of the Existing Fee
Consignment Agreement is hereby amended in accordance with Subparts 2.4.1 and
2.4.2.
SUBPART 2.4.1. Clause (a)(i) and clause (b) of Section 3.3.1 of the
Existing Fee Consignment Agreement is hereby amended by deleting "1/2 of 1% per
annum" appearing in each such clause, and inserting "40 basis points per annum"
in place thereof.
SUBPART 2.4.2. Section 3.3.2 of the Existing Fee Consignment Agreement is
hereby amended by deleting "1/8 of 1% per annum" appearing in such Section, and
inserting "10 basis points per annum" in place thereof.
SUBPART 2.5. Amendments to Article IX. Section 9.3 of the Existing Fee
Consignment Agreement is hereby amended by deleting
-3-
<PAGE> 4
"1/2 of 1% per annum" wherever appearing in such Section, and inserting "40
basis points per annum" in each case in place thereof.
SUBPART 2.6. Extension of Consignment Maturity Date. By their signatures
below, the Consignor and the Consignee hereby agree that, in accordance with the
terms of Section 2.4 of the Existing Fee Consignment Agreement, effective on the
Stated Maturity Date under the Existing Fee Consignment Agreement, the
Consignment Maturity Date shall be extended to September 24, 1997.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Second Amendment Effective Date. This Amendatory Agreement
shall become effective as of the date first written above (the "Second Amendment
Effective Date"), but only if each of the conditions set forth in this Subpart
3.1 shall have been satisfied on or prior to that date.
SUBPART 3.1.1. Execution of Counterparts. The Consignor shall have
received counterparts of this Amendatory Agreement, duly executed on behalf of
the Consignee and the Consignor.
SUBPART 3.1.2. Execution of Consent. The Consignor shall have received
counterparts of the Consent, substantially in the form of Exhibit A hereto, duly
executed on behalf of each Supplier.
SUBPART 3.1.3. First Amendment to Short-Term Dollar Supply Agreement. The
Consignor shall have received evidence that the First Amendment to the
Short-Term Dollar Supply Agreement, dated as of the date hereof, shall have, or
contemporaneously with the effectiveness of this Amendatory Agreement, will,
become effective in accordance with its terms.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the Consignor and
its counsel. The Consignor and its counsel shall have received all information
and such counterpart originals or such certified or other copies or such
materials, as the Consignor or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendatory Agreement
shall be satisfactory to the Consignor and its counsel.
-4-
<PAGE> 5
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Fee Consignment Document Pursuant to Existing Fee Consignment
Agreement. This Amendatory Agreement is a Fee Consignment Document executed
pursuant to the Existing Fee Consignment Agreement and shall be construed,
administered and applied in accordance with all of the terms and provisions of
the Existing Fee Consignment Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Representations, No Default, etc. As of the date of
effectiveness of this Amendatory Agreement, and after giving effect to the
amendments set forth above, the Consignee hereby represents and warrants that
(a) the representations and warranties set forth in Article VI of
the Existing Fee Consignment Agreement are true and correct in all
material respects (unless stated to relate solely to an earlier date, in
which case such representations and warranties were true and correct as of
such earlier date); and
(b) no Default has occurred and is continuing.
SUBPART 4.6. Limited Waiver, etc. No amendment, waiver or approval by the
Consignor under this Amendatory Agreement shall, except as may be otherwise
stated in this Amendatory Agreement, be applicable to subsequent transactions.
No amendment, waiver or approval hereunder shall require any similar or
dissimilar amendment, waiver or approval to be granted after the date hereof,
and except as expressly modified by this Amendatory Agreement, the provisions of
the Existing Fee Consignment Agreement shall remain in full force and effect,
without amendment or other modification.
-5-
<PAGE> 6
SUBPART 4.7. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
HANDY & HARMAN
By ________________________________________
Title:
THE BANK OF NOVA SCOTIA
By ________________________________________
Title:
-7-
<PAGE> 8
Exhibit A
CONSENT
Dated as of September 24, 1996
Reference is made to:
(i) the Short-Term Dollar Supply Agreement, dated as of September
28, 1994 (as amended or otherwise modified, the "Short-Term Dollar Supply
Agreement"), among The Bank of Nova Scotia, as the consignor (the
"Consignor"), certain commercial lending institutions (including the
undersigned) from time to time parties thereto (the "Suppliers"), The Bank
of Nova Scotia, The Chase Manhattan Bank (formerly known as Chemical Bank)
and The Bank of New York, as the co-agents for the Suppliers (the
"Co-Agents"), and The Bank of Nova Scotia, as the administrative agent for
the Suppliers (the "Administrative Agent");
(ii) the Dollar Supply Agreement, dated as of September 28, 1994 (as
amended or otherwise modified, the "Dollar Supply Agreement"), among the
Consignor, the Suppliers, the Co-Agents and the Administrative Agent;
(iii) the Second Amendment, dated as of the date hereof ("Amendment
No. 2 to Short-Term Fee Consignment Agreement"), to the Short-Term Fee
Consignment Agreement, dated as of September 28, 1994 (as amended or
otherwise modified prior to the date hereof), between Handy & Harman, a
New York corporation (the "Consignee"), and the Consignor; and
(iv) the Second Amendment, dated as of the date hereof ("Amendment
No. 2 to Fee Consignment Agreement"), to the Fee Consignment Agreement,
dated as of September 28, 1994 (as amended or otherwise modified prior to
the date hereof), between the Consignee and the Consignor.
The undersigned Supplier hereby consents to Amendment No. 2 to Short-Term
Fee Consignment Agreement and Amendment No. 2 to Fee Consignment Agreement
(collectively, the "Amendments") and, in accordance with Section 8.1 of each of
the Short-Term Dollar Supply Agreement and the Dollar Supply Agreement, hereby
consents to the Consignor executing and delivering a copy of each Amendment in
the form previously delivered to the undersigned Supplier.
___________________________________________
[INSERT NAME OF SUPPLIER]
By ________________________________________
Title:
<PAGE> 1
[EXECUTION COPY]
FIRST AMENDMENT
TO
DOLLAR SUPPLY AGREEMENT
This FIRST AMENDMENT TO DOLLAR SUPPLY AGREEMENT, dated as of September 24,
1996 (this "Amendatory Agreement"), is among THE BANK OF NOVA SCOTIA
("Scotiabank") as consignor (in such capacity, the "Consignor"), the various
financial institutions parties hereto (collectively, the "Suppliers"),
SCOTIABANK, THE CHASE MANHATTAN BANK (formerly known as Chemical Bank) and THE
BANK OF NEW YORK as the co-agents (in such capacity, the "Co-Agents") for the
Suppliers, and Scotiabank, as administrative agent (in such capacity, the
"Administrative Agent") for the Suppliers.
W I T N E S S E T H:
WHEREAS, the Consignor, the Suppliers, the Co-Agents and the
Administrative Agent are parties to a Dollar Supply Agreement, dated as of
September 28, 1994 (as amended or otherwise modified prior to the date hereof,
the "Existing Dollar Supply Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Dollar Supply Agreement in
certain respects as herein provided (the Existing Dollar Supply Agreement, as so
amended by this Amendatory Agreement, being referred to as the "Dollar Supply
Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Consignor" is defined in the preamble.
<PAGE> 2
"Dollar Supply Agreement" is defined in the second recital.
"Existing Dollar Supply Agreement" is defined in the first recital.
"First Amendment Effective Date" is defined in Subpart 3.1.
"Scotiabank" is defined in the preamble.
"Suppliers" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Dollar Supply Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING DOLLAR SUPPLY AGREEMENT
AND EXTENSION OF STATED MATURITY DATE
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Dollar Supply Agreement is hereby amended, and the
Stated Maturity Date is extended, in accordance with this Part II; except as so
amended, the Existing Dollar Supply Agreement shall continue in full force and
effect.
SUBPART 2.1. Amendment to Recital. The first recital of the Existing
Dollar Supply Agreement is hereby amended by deleting the words "up to 110,000
troy ounces of gold and up to 11,250,000 troy ounces of silver" in such recital,
and inserting the words "gold and silver in the amounts set forth therein" in
place thereof.
SUBPART 2.2. Amendment to Article I. Article I of the Existing Dollar
Supply Agreement is hereby amended by inserting the following definition in such
Section in the appropriate alphabetical sequence:
"First Amendment" means the First Amendment, dated as of September
24, 1996, to this Agreement among the Consignor, the Suppliers, the
Co-Agents and the Administrative Agent.
SUBPART 2.3. Amendments to Article III. Article III of the Existing Dollar
Supply Agreement is hereby amended in accordance with Subparts 2.3.1 and 2.3.2.
SUBPART 2.3.1. Section 3.2.1 of the Existing Dollar Supply Agreement is
hereby amended by deleting "1/2 of 1% per annum"
-2-
<PAGE> 3
wherever appearing in such Section, and inserting "40 basis points per annum" in
each case in place thereof.
SUBPART 2.3.2. Section 3.2.2 of the Existing Dollar Supply Agreement is
hereby amended by deleting "1/5 of 1% per annum" appearing in such Section, and
inserting "15 basis points per annum" in place thereof.
SUBPART 2.4. Amendments to Article IV. Sections 4.1, 4.2 and 4.3 of the
Existing Dollar Supply Agreement are each hereby amended by deleting "1/2 of 1%
per annum" wherever appearing in such Sections, and inserting "40 basis points
per annum" in each case in place thereof.
SUBPART 2.5. Extension of Stated Maturity Date. By their signatures below,
the Consignor, the Suppliers, the Co-Agents and the Administrative Agent hereby
agree that, in accordance with the terms of Section 2.4 of the Existing Dollar
Supply Agreement, upon the effectiveness of this Amendatory Agreement, the
Stated Maturity Date shall be September 27, 1999.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This Amendatory Agreement
shall become effective as of the date first written above (the "First Amendment
Effective Date"), but only if each of the conditions set forth in this Subpart
3.1 shall have been satisfied on or prior to that date.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Consignor, the Suppliers, the Co-Agents and the Administrative Agent.
SUBPART 3.1.2. Execution of Consent. The Consignor shall have received,
for each Supplier, an executed copy of the Consent, substantially in the form of
Exhibit A hereto, duly executed on behalf of the Consignee.
SUBPART 3.1.3. First Amendment to Fee Consignment Agreement. The Consignor
shall have received evidence that the First Amendment to the Fee Consignment
Agreement, dated as of the date hereof, shall have, or contemporaneously with
the effectiveness of this Amendatory Agreement, will, become effective in
accordance with its terms.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The
-3-
<PAGE> 4
Administrative Agent and its counsel shall have received all information and
such counterpart originals or such certified or other copies or such materials,
as the Administrative Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendatory Agreement
shall be satisfactory to the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Document Pursuant to Existing Dollar Supply Agreement. This
Amendatory Agreement is executed pursuant to the Existing Dollar Supply
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Dollar Supply Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Limited Waiver, etc. No amendment, waiver or approval under
this Amendatory Agreement shall, except as may be otherwise stated in this
Amendatory Agreement, be applicable to subsequent transactions. No amendment,
waiver or approval hereunder shall require any similar or dissimilar amendment,
waiver or approval to be granted after the date hereof, and except as expressly
modified by this Amendatory Agreement, the provisions of the Existing Dollar
Supply Agreement shall remain in full force and effect, without amendment or
other modification.
SUBPART 4.6. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
THE BANK OF NOVA SCOTIA,
in its capacity as Consignor,
Administrative Agent, a Co-Agent and
a Supplier
By: _____________________________________________
Name:
Title:
<PAGE> 6
THE BANK OF NEW YORK, in its capacity as
a Co-Agent and a Supplier
By: _____________________________________________
Name:
Title:
<PAGE> 7
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
a Co-Agent and a Supplier
By: _____________________________________________
Name:
Title:
<PAGE> 8
FLEET PRECIOUS METALS INC.
By: _____________________________________________
Name:
Title:
<PAGE> 9
THE FIRST NATIONAL BANK OF CHICAGO
(formerly known as NBD Bank, N.A.)
By: _____________________________________________
Name:
Title:
<PAGE> 10
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By: _____________________________________________
Name:
Title:
<PAGE> 11
LTCB TRUST COMPANY
By: _____________________________________________
Name:
Title:
<PAGE> 12
CREDIT LYONNAIS NEW YORK BRANCH
By: _____________________________________________
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: _____________________________________________
Name:
Title:
<PAGE> 13
THE SUMITOMO BANK, LIMITED
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 14
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
ISLANDS BRANCHES
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 15
THE FUJI BANK LTD.
By: _____________________________________________
Name:
Title:
<PAGE> 16
ABN AMRO BANK N.V. NEW YORK BRANCH
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 17
BANQUE PARIBAS
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 18
GIROCREDIT BANK AG DER SPARKESSEN GRAND
CAYMAN ISLAND BRANCH
By: _____________________________________________
Name:
Title:
<PAGE> 19
COMERICA BANK
By: _____________________________________________
Name:
Title:
<PAGE> 20
IBJ SCHRODER BANK & TRUST COMPANY
By: _____________________________________________
Name:
Title:
<PAGE> 21
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By: _____________________________________________
Name:
Title:
<PAGE> 22
Exhibit A
CONSENT
Dated as of September 24, 1996
Reference is made to:
(i) the Short-Term Dollar Supply Agreement, dated as of September
28, 1994 (as amended or otherwise modified prior to the date hereof, the
"Short-Term Dollar Supply Agreement"), among The Bank of Nova Scotia, as
the consignor (the "Consignor"), certain commercial lending institutions
from time to time parties thereto (the "Suppliers"), The Bank of Nova
Scotia, The Chase Manhattan Bank (formerly known as Chemical Bank) and The
Bank of New York, as the co-agents for the Suppliers (the "Co-Agents"),
and The Bank of Nova Scotia, as the administrative agent for the Suppliers
(the "Administrative Agent");
(ii) the Dollar Supply Agreement, dated as of September 28, 1994 (as
amended or otherwise modified prior to the date hereof, the "Dollar Supply
Agreement"), among the Consignor, the Suppliers, the Co-Agents and the
Administrative Agent;
(iii) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Short-Term Dollar Supply Agreement"), to the Short-Term Dollar
Supply Agreement, among the Consignor, the Suppliers, the Co-Agents and
the Administrative Agent; and
(iv) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Dollar Supply Agreement"), to the Dollar Supply Agreement, among
the Consignor, the Suppliers, the Co-Agents and the Administrative Agent.
The undersigned hereby consents to Amendment No. 1 to Short-Term Dollar
Supply Agreement and Amendment No. 1 to Dollar Supply Agreement (collectively,
the "Amendments") and, in accordance with Section 8.1 of each of the Short-Term
Dollar Supply Agreement and the Dollar Supply Agreement, hereby consents to the
execution and delivery of each Amendment by the parties thereto in the form
previously delivered to the undersigned.
HANDY & HARMAN
By: ______________________________________
Name:
Title:
Name:
Title:
<PAGE> 1
[EXECUTION COPY]
FIRST AMENDMENT
TO
SHORT-TERM DOLLAR SUPPLY AGREEMENT
This FIRST AMENDMENT TO SHORT-TERM DOLLAR SUPPLY AGREEMENT, dated as of
September 24, 1996 (this "Amendatory Agreement"), is among THE BANK OF NOVA
SCOTIA ("Scotiabank") as consignor (in such capacity, the "Consignor"), the
various financial institutions (collectively, the "Suppliers"), SCOTIABANK, THE
CHASE MANHATTAN BANK (formerly known as Chemical Bank) and THE BANK OF NEW YORK
as the co-agents (in such capacity, the "Co-Agents") for the Suppliers, and
Scotiabank, as administrative agent (in such capacity, the "Administrative
Agent") for the Suppliers.
W I T N E S S E T H:
WHEREAS, the Consignor, the Suppliers, the Co-Agents and the
Administrative Agent are parties to a Short-Term Dollar Supply Agreement, dated
as of September 28, 1994 (as amended or otherwise modified prior to the date
hereof, the "Existing Dollar Supply Agreement"); and
WHEREAS, the parties hereto have agreed, subject to the conditions and
terms hereinafter set forth, to amend the Existing Dollar Supply Agreement in
certain respects as herein provided (the Existing Dollar Supply Agreement, as so
amended by this Amendatory Agreement, being referred to as the "Dollar Supply
Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms (whether or not
underscored) when used in this Amendatory Agreement shall have the following
meanings (such meanings to be equally applicable to the singular and plural form
thereof):
"Administrative Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Co-Agents" is defined in the preamble.
"Consignor" is defined in the preamble.
<PAGE> 2
"Dollar Supply Agreement" is defined in the second recital.
"Existing Dollar Supply Agreement" is defined in the first recital.
"First Amendment Effective Date" is defined in Subpart 3.1.
"Scotiabank" is defined in the preamble.
"Suppliers" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings are provided in
the Existing Dollar Supply Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this Amendatory Agreement with such
meanings.
PART II
AMENDMENTS TO THE
EXISTING DOLLAR SUPPLY AGREEMENT
AND EXTENSION OF STATED MATURITY DATE
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Dollar Supply Agreement is hereby amended, and the
Stated Maturity Date is extended, in accordance with this Part II; except as so
amended, the Existing Dollar Supply Agreement shall continue in full force and
effect.
SUBPART 2.1.9. Amendment to Recital. The first recital of the Existing
Dollar Supply Agreement is hereby amended by deleting the words "up to 110,000
troy ounces of gold and up to 11,250,000 troy ounces of silver" in such recital,
and inserting the words "gold and silver in the amounts set forth therein" in
place thereof.
SUBPART 2.2. Amendment to Article I. Article I of the Existing Dollar
Supply Agreement is hereby amended by inserting the following definition in such
Section in the appropriate alphabetical sequence:
"First Amendment" means the First Amendment, dated as of September
24, 1996, to this Agreement among the Consignor, the Suppliers, the
Co-Agents and the Administrative Agent.
SUBPART 2.3. Amendments to Article III. Article III of the Existing Dollar
Supply Agreement is hereby amended in accordance with Subparts 2.3.1 and 2.3.2.
SUBPART 2.3.1. Section 3.2.1 of the Existing Dollar Supply Agreement is
hereby amended by deleting "1/2 of 1% per annum"
-2-
<PAGE> 3
wherever appearing in such Section, and inserting "40 basis points per annum" in
each case in place thereof.
SUBPART 2.3.2. Section 3.2.2 of the Existing Dollar Supply Agreement is
hereby amended by deleting "1/8 of 1% per annum" appearing in such Section, and
inserting "10 basis points per annum" in place thereof.
SUBPART 2.4. Amendments to Article IV. Sections 4.1, 4.2 and 4.3 of the
Existing Dollar Supply Agreement are each hereby amended by deleting "1/2 of 1%
per annum" wherever appearing in such Sections, and inserting "40 basis points
per annum" in each case in place thereof.
SUBPART 2.5. Extension of Stated Maturity Date. By their signatures below,
the Consignor, the Suppliers, the Co-Agents and the Administrative Agent hereby
agree that, in accordance with the terms of Section 2.4 of the Existing Dollar
Supply Agreement, effective on the Stated Maturity Date under the Existing
Credit Agreement, the Stated Maturity Date shall be extended to September 24,
1997.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This Amendatory Agreement
shall become effective as of the date first written above (the "First Amendment
Effective Date"), but only if each of the conditions set forth in this Subpart
3.1 shall have been satisfied on or prior to that date.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendatory Agreement, duly executed on behalf
of the Consignor, the Suppliers, the Co-Agents and the Administrative Agent.
SUBPART 3.1.2. Execution of Consent. The Consignor shall have received,
for each Supplier, an executed copy of the Consent, substantially in the form of
Exhibit A hereto, duly executed on behalf of the Consignee.
SUBPART 3.1.3. First Amendment to Short-Term Fee Consignment Agreement.
The Consignor shall have received evidence that the First Amendment to the
Short-Term Fee Consignment Agreement, dated as of the date hereof, shall have,
or contemporaneously with the effectiveness of this Amendatory Agreement shall,
become effective in accordance with its terms.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and
-3-
<PAGE> 4
substance to the Administrative Agent and its counsel. The Administrative Agent
and its counsel shall have received all information and such counterpart
originals or such certified or other copies or such materials, as the
Administrative Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this Amendatory Agreement
shall be satisfactory to the Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this Amendatory Agreement to
any Part or Subpart are, unless otherwise specified or otherwise required by the
context, to such Part or Subpart of this Amendatory Agreement.
SUBPART 4.2. Document Pursuant to Existing Dollar Supply Agreement. This
Amendatory Agreement is executed pursuant to the Existing Dollar Supply
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Dollar Supply Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may be executed by
the parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.5. Limited Waiver, etc. No amendment, waiver or approval under
this Amendatory Agreement shall, except as may be otherwise stated in this
Amendatory Agreement, be applicable to subsequent transactions. No amendment,
waiver or approval hereunder shall require any similar or dissimilar amendment,
waiver or approval to be granted after the date hereof, and except as expressly
modified by this Amendatory Agreement, the provisions of the Existing Dollar
Supply Agreement shall remain in full force and effect, without amendment or
other modification.
SUBPART 4.6. Governing Law. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendatory
Agreement to be executed by their respective authorized officers as of the day
and year first above written.
THE BANK OF NOVA SCOTIA,
in its capacity as Consignor,
Administrative Agent, a Co-Agent and
a Supplier
By: _____________________________________________
Name:
Title:
<PAGE> 6
THE BANK OF NEW YORK, in its capacity as
a Co-Agent and a Supplier
By: _____________________________________________
Name:
Title:
<PAGE> 7
THE CHASE MANHATTAN BANK (formerly known
as Chemical Bank), in its capacity as
a Co-Agent and a Supplier
By: _____________________________________________
Name:
Title:
<PAGE> 8
FLEET PRECIOUS METALS INC.
By: _____________________________________________
Name:
Title:
<PAGE> 9
THE FIRST NATIONAL BANK OF CHICAGO (formerly known
as NBD Bank, N.A.)
By: _____________________________________________
Name:
Title:
<PAGE> 10
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
By: _____________________________________________
Name:
Title:
<PAGE> 11
LTCB TRUST COMPANY
By: _____________________________________________
Name:
Title:
<PAGE> 12
CREDIT LYONNAIS NEW YORK BRANCH
By: _____________________________________________
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: _____________________________________________
Name:
Title:
<PAGE> 13
THE SUMITOMO BANK, LIMITED
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 14
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
ISLANDS BRANCHES
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 15
THE FUJI BANK LTD.
By: _____________________________________________
Name:
Title:
<PAGE> 16
ABN AMRO BANK N.V. NEW YORK BRANCH
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 17
BANQUE PARIBAS
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
<PAGE> 18
GIROCREDIT BANK AG DER SPARKESSEN GRAND
CAYMAN ISLAND BRANCH
By: _____________________________________________
Name:
Title:
<PAGE> 19
COMERICA BANK
By: _____________________________________________
Name:
Title:
<PAGE> 20
IBJ SCHRODER BANK & TRUST COMPANY
By: _____________________________________________
Name:
Title:
<PAGE> 21
YASUDA TRUST & BANKING CO., LTD.
NEW YORK BRANCH
By: _____________________________________________
Name:
Title:
<PAGE> 22
Exhibit A
CONSENT
Dated as of September 24, 1996
Reference is made to:
(i) the Short-Term Dollar Supply Agreement, dated as of September
28, 1994 (as amended or otherwise modified prior to the date hereof, the
Short-Term Dollar Supply Agreement"), among The Bank of Nova Scotia, as
the consignor (the "Consignor"), certain commercial lending institutions
from time to time parties thereto (the "Suppliers"), The Bank of Nova
Scotia, The Chase Manhattan Bank (formerly known as Chemical Bank) and The
Bank of New York, as the co-agents for the Suppliers (the "Co-Agents"),
and The Bank of Nova Scotia, as the administrative agent for the Suppliers
(the "Administrative Agent");
(ii) the Dollar Supply Agreement, dated as of September 28, 1994 (as
amended or otherwise modified prior to the date hereof, the "Dollar Supply
Agreement"), among the Consignor, the Suppliers, the Co-Agents and the
Administrative Agent;
(iii) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Short-Term Dollar Supply Agreement"), to the Short-Term Dollar
Supply Agreement, among the Consignor, the Suppliers, the Co-Agents and
the Administrative Agent; and
(iv) the First Amendment, dated as of the date hereof ("Amendment
No. 1 to Dollar Supply Agreement"), to the Dollar Supply Agreement, among
the Consignor, the Suppliers, the Co-Agents and the Administrative Agent.
The undersigned hereby consents to Amendment No. 1 to Short-Term Dollar
Supply Agreement and Amendment No. 1 to Dollar Supply Agreement (collectively,
the "Amendments") and, in accordance with Section 8.1 of each of the Short-Term
Dollar Supply Agreement and the Dollar Supply Agreement, hereby consents to the
execution and delivery of each Amendment by the parties thereto in the form
previously delivered to the undersigned.
HANDY & HARMAN
By: ______________________________________
Name:
Title:
<PAGE> 1
Exhibit 21
HANDY & HARMAN
SUBSIDIARIES AS OF DECEMBER 31, 1996
Alloy Ring Service, Inc.
Camdel Metals Corporation
Continental Industries, Inc.
Daniel Radiator Corporation
ele Corporation
H&H Ltd.
H&H Productions, Inc. (Formerly Greenback Industries, Inc.)
Handy & Harman Automotive Group, Inc.
(Handy & Harman Radiator Corporation and Handy & Harman
Automotive Group, Inc. merger)
Handy & Harman Electronic Materials Corporation
Handy & Harman Europe Ltd.
Handy & Harman of Canada, Limited
Handy & Harman International, Ltd.
Handy & Harman Peru, Inc.
Handy & Harman Tube Company, Inc.
Indiana Tube Corporation
KJ-VMI Realty, Inc. (Formerly Valley Metals Inc.)
Lucas-Milhaupt, Inc.
Maryland Specialty Wire, Inc.
Micro-Tube Fabricators, Inc.
Pal-Rath Realty, Inc. (Formerly Rathbone Corporation)
Platina Laboratories, Inc.
Rigby-Maryland (Stainless), Ltd.
Sheffield Street Corporation
(Formerly American Chemical & Refining Company, Incorporated)
SWM, Inc.
(Formerly South Windsor Metallurgical, Inc.)
Sumco Inc.
Willing B Wire Corporation
In addition to the wholly-owned subsidiaries listed above, the company has
a 5% interest in Mizuno Handy Harman, Ltd. and a 50% interest in Handy & Harman
(Asia), S.A. Handy & Harman (Asia), S.A. owns 100% of Handy & Harman (HK)
Limited and 75% of Handy & Harman Manufacturing (Singapore) Pte. Ltd. The
Company owns 12-1/2% of Handy & Harman Manufacturing (Singapore) Pte. Ltd.
The Company, through Handy & Harman Peru, has a 70% interest in the
Electro-Connection Finishers Joint venture.
The Company also has a 1% interest in Ravel Inc., formerly named R.V.L.
Investments, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 9,701
<SECURITIES> 0
<RECEIVABLES> 53,258
<ALLOWANCES> 1,686
<INVENTORY> 70,357
<CURRENT-ASSETS> 138,674
<PP&E> 195,623
<DEPRECIATION> 112,418
<TOTAL-ASSETS> 316,464
<CURRENT-LIABILITIES> 76,838
<BONDS> 142,500
0
0
<COMMON> 14,611
<OTHER-SE> 80,995
<TOTAL-LIABILITY-AND-EQUITY> 316,464
<SALES> 407,107
<TOTAL-REVENUES> 407,107
<CGS> 293,572
<TOTAL-COSTS> 293,572
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,052
<INTEREST-EXPENSE> 9,682
<INCOME-PRETAX> 58,973
<INCOME-TAX> 25,200
<INCOME-CONTINUING> 33,773
<DISCONTINUED> (14,515)
<EXTRAORDINARY> (2,889)
<CHANGES> 0
<NET-INCOME> 16,369
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 1.19
</TABLE>
