<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended June 30, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
Commission File Number: 1-5365
HANDY & HARMAN
(Exact name of registrant as specified in its charter)
STATE OF NEW YORK 13-5129420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 Park Avenue, New York, New York 10177
(Address of principal executive offices) (Zip code)
(212) 661-2400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
year.)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of issuer's Common Stock, par value $1.00 per share
outstanding as of August 12, 1997 was 11,953,702.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(unaudited-thousands of dollars except per share)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------- ---------------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 115,971 $ 105,806 $ 220,903 $ 214,146
Cost of sales 86,086 84,377 169,431 171,368
- --------------------------------------------------------------------------------------------------------------
Gross profit 29,885 21,429 51,472 42,778
Selling, general and
administrative expenses 13,820 11,502 25,634 22,926
- --------------------------------------------------------------------------------------------------------------
Income from operations 16,065 9,927 25,838 19,852
- --------------------------------------------------------------------------------------------------------------
Other deductions:
Interest expense-net 3,954 2,133 6,738 4,187
Other-net 88 (41) (30) 162
- --------------------------------------------------------------------------------------------------------------
4,042 2,092 6,708 4,349
- --------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes 12,023 7,835 19,130 15,503
Income tax provision 5,014 3,381 8,034 6,686
- --------------------------------------------------------------------------------------------------------------
Income from continuing operations 7,009 4,454 11,096 8,817
- --------------------------------------------------------------------------------------------------------------
Discontinued Operations:
Loss from operations,
net of tax benefit of $1,026 -- -- -- (1,354)
Loss on disposal, net of tax
benefit of $4,550 -- -- -- (8,300)
- --------------------------------------------------------------------------------------------------------------
-- -- -- (9,654)
- --------------------------------------------------------------------------------------------------------------
Net Income (loss) $ 7,009 $ 4,454 $ 11,096 ($837)
- --------------------------------------------------------------------------------------------------------------
Earnings (loss) per share
Continuing operations $ .59 $ .32 $ .93 $.63
Discontinued operations -- -- -- (.69)
- --------------------------------------------------------------------------------------------------------------
Net income (loss) $ .59 $ .32 $ .93 ($.06)
- --------------------------------------------------------------------------------------------------------------
Dividends per share $ .12 $ .12 $ .18 $.18
- --------------------------------------------------------------------------------------------------------------
Average shares outstanding 11,957,000 14,023,000 11,973,000 14,027,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-1-
<PAGE> 3
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(thousands of dollars)
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
(unaudited)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 10,537 $ 9,701
Accounts receivable, less allowance for doubtful accounts
of $1,850 in 1997 and $1,686 in 1996 66,420 51,572
Inventories 78,712 70,357
Prepaid expenses, deposits and other current assets 5,269 7,044
- -----------------------------------------------------------------------------------------------
Total current assets 160,938 138,674
- -----------------------------------------------------------------------------------------------
Investment in affiliates, at equity 3,682 3,122
Property, plant and equipment - at cost 209,431 195,623
Less accumulated depreciation and amortization 117,635 112,418
- -----------------------------------------------------------------------------------------------
91,796 83,205
Prepaid retirement costs (net) 56,841 54,566
Intangibles, net of amortization 65,480 24,818
Other assets 14,052 12,079
- -----------------------------------------------------------------------------------------------
$ 392,789 $ 316,464
===============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings $ -- $ 15,000
Accounts payable 44,252 30,163
Futures payable 10,398 9,246
Federal and Foreign taxes on income 1,224 792
Other current liabilities 20,555 21,637
- -----------------------------------------------------------------------------------------------
Total current liabilities 76,429 76,838
- -----------------------------------------------------------------------------------------------
Long-term debt 198,900 127,500
Minority interest 1,395 1,259
Deferred income taxes 13,371 15,261
- -----------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock - par value $1; 60,000,000
shares authorized; 14,611,432 shares issued 14,611 14,611
Capital surplus 13,683 13,432
Retained earnings 121,343 112,399
Foreign currency translation adjustment (887) (61)
- -----------------------------------------------------------------------------------------------
148,750 140,381
Less: Treasury stock 2,673,380 shares - 1997
and 2,618,421 shares - 1996 at cost 45,785 44,308
Unearned compensation 271 467
- -----------------------------------------------------------------------------------------------
Total shareholders' equity 102,694 95,606
- -----------------------------------------------------------------------------------------------
$ 392,789 $ 316,464
===============================================================================================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-2-
<PAGE> 4
HANDY & HARMAN AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited-thousands of dollars)
<TABLE>
<CAPTION>
Increase (Decrease) in Cash
Six Months Ended
-----------------------------
June 30, 1997 June 30, 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 11,096 $ (837)
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Depreciation and amortization 6,809 5,732
Provision for doubtful accounts 205 444
(Gain) loss on disposal of property, plant
and equipment (10) 132
Net retirement cost (2,275) (1,575)
Equity in earnings of affiliates (614) (350)
Minority interest in net income 136 --
Earned compensation - 1988 long-term incentive
and outside director stock option plans 274 296
Provision for disposal of business units -- 11,062
Changes in assets and liabilities:
Accounts receivable (11,287) 2,729
Inventories (4,068) 3,679
Prepaid expenses 3,560 (50)
Deferred charges and other assets (1,473) (663)
Deferred financing costs (873) --
Accounts payable and other current liabilities 5,927 (10,218)
Federal and foreign taxes on income 432 (6,363)
Deferred income taxes (1) (22)
- ---------------------------------------------------------------------------------------
Net cash provided by operating activities 7,838 3,996
- ---------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 21 14
Capital expenditures (9,100) (5,465)
Acquisition, net of cash acquired (52,732) (3,700)
- ---------------------------------------------------------------------------------------
Net cash used by investing activities (61,811) (9,151)
- ---------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase/(decrease) in short-term borrowings (15,000) 8,800
Net decrease in revolving credit facility (120,000) (10,000)
Proceeds from long-term financing 125,000 --
Increase in other long-term debt 66,400 --
Net decrease in futures receivable -- 7,681
Net increase in futures payable 1,152 1,927
Proceeds from joint venture partner -- 705
Dividends paid (1,436) (1,683)
Purchase of treasury stock (net) (1,250) (773)
- ---------------------------------------------------------------------------------------
Net cash provided by financing activities 54,866 6,657
- ---------------------------------------------------------------------------------------
Effect of exchange rate changes on net cash (57) (19)
- ---------------------------------------------------------------------------------------
Net change in cash 836 1,483
Cash at beginning of year 9,701 6,637
- ---------------------------------------------------------------------------------------
Cash at end of period $ 10,537 $ 8,120
- ---------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
-3-
<PAGE> 5
HANDY & HARMAN AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from these estimates.
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments necessary to a fair
statement of the results for interim periods. These statements should
be read in conjunction with the summary of Significant Accounting
Policies and notes contained in the Registrant's Annual Report (Form
10-K for the year ending December 31, 1996). The results of operations
for the quarter and six months ended June 30, 1997 are not necessarily
indicative of the results of the entire fiscal year.
b. Inventories at June 30, 1997 and December 31, 1996 are comprised as
follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
(unaudited)
- -----------------------------------------------------------------------------------
<S> <C> <C>
Precious metals:
Fine and fabricated metals in
various stages of completion $25,911 $26,569
Non-precious metals:
Base metals, factory supplies
and raw materials 25,499 20,993
Work in process 16,091 15,192
Finished goods 11,211 7,603
- -----------------------------------------------------------------------------------
$78,712 $70,357
===================================================================================
</TABLE>
LIFO inventory - the excess of period end market value over LIFO cost
was $95,364,000 at June 30, 1997 and $97,996,000 at December 31, 1996.
As a result of reductions in the quantities of precious metal
inventories valued under the LIFO method of accounting, income for the
quarter and six months ending June 30, 1997 increased $4,665,000
($2,706,000 after-tax or $.23 per share).
c. In 1997 and 1996 the third quarter dividend was declared in the second
quarter to be paid in the third quarter.
d. On February 28, 1997 the Company acquired 100% of the outstanding
shares of Olympic Manufacturing Group, Inc. for approximately
$53,000,000. This 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 $17,000,000 and liabilities assumed was $5,000,000. The excess of
the purchase price over the fair value of the assets acquired and
liabilities assumed was $41,000,000 and is being amortized over a
period of 40 years. The excess purchase price has a tax deductible
basis of approximately $10,000,000. This business is not material to
the revenues of the Company.
e. In the second quarter of 1997, the Company completed additional
long-term financing for $125,000,000 at a fixed rate of 7.31% due 2004.
The Company's long-term revolving credit facility along with this new
long-term financing gives the Company the ability to classify certain
short-term obligations amounting to $66,400,00 as long-term debt as of
June 30, 1997.
-4-
<PAGE> 6
HANDY & HARMAN AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
f. The following table presents certain selected financial data by
industry segment (expressed in thousands of dollars) for the three
months ended and six months ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------------ ------------------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Wire/Tubing $ 43,602 $ 45,612 $ 86,850 $ 92,637
Precious metals 55,480 56,073 109,924 113,359
Other non-precious
metal businesses 16,889 4,121 24,129 8,150
- -----------------------------------------------------------------------------------------------------------------------
Total $ 115,971 $ 105,806 $ 220,903 $ 214,146
- -----------------------------------------------------------------------------------------------------------------------
Profit contribution before
unallocated expenses:
Wire/Tubing $ 4,454 $ 5,547 $ 8,906 $ 10,589
Precious metals 9,518 4,323 14,542 8,955
Other non-precious
metal businesses 2,455 548 3,320 1,046
- -----------------------------------------------------------------------------------------------------------------------
Total 16,427 10,418 26,768 20,590
- -----------------------------------------------------------------------------------------------------------------------
General corporate expenses (450) (450) (900) (900)
Interest expense (net) (3,954) (2,133) (6,738) (4,187)
- -----------------------------------------------------------------------------------------------------------------------
Income from continuing
operations before taxes $ 12,023 $ 7,835 $ 19,130 $ 15,503
=======================================================================================================================
</TABLE>
See also Note b.
g. Revenue and expenses for 1996 reflect the sale (completed in the third
quarter 1996) of the Company's Refining Division business, exclusive of
the Company's satellite refining operations located in Singapore and
Canada, accounted for as a discontinued operation. A charge associated
with exiting this business of $12,850,000 ($8,300,000 after-tax or $.59
per share) was recorded in the first quarter of 1996.
-5-
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
The Company's precious metal inventories, 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 $95,364,000 in excess of such cost as of June 30, 1997.
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 are 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 companies that produce precious metal fabricated
products, 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 June
30, 1997 there were no borrowings under this facility. In addition to the
Revolving Credit Facility, 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 June 30, 1997 there were 7,000 ounces of gold and 14,544,000
ounces of silver leased under these fee consignment facilities. On April 17,
1997 the Company completed additional long-term financing for $125,000,000 at a
fixed rate of 7.31% due 2004.
-6-
<PAGE> 8
On May 14, 1996, Handy & Harman announced that it had decided to exit the
refining business, exclusive of the Company's 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 in continuing operations, acquisition of new businesses
and the repurchase of 1.8 million shares of the Company's common stock via a
"Dutch Auction", completed in December 1996. On February 28, 1997 the Company
acquired Olympic Manufacturing Group, Inc. for approximately $53,000,000. In the
second quarter 1997 a LIFO gain of $4,665,000 ($2,706,000 after-tax or $.23 per
share) was realized from the sale of gold inventories.
During 1997 the Financial Accounting Standards Board issued SFAS No. 128
"Earnings per Share" effective for interim and annual periods ending after
December 31, 1997. The adoption of this standard has no effect on the Company's
earnings per share calculation since, under the prior method which had
considered common stock equivalents for primary earnings per share, there was no
dilutive effect for outstanding stock options.
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.
OPERATING ACTIVITIES
Net cash provided by operating activities amounted to $7,838,000 in 1997
and $3,996,000 in 1996. The cash provided by operating activities increased
$3,842,000 primarily due to a decrease in working capital requirements amounting
to $3,125,000. Included in cash provided by operating activities is a gain
generated by the reduction of precious metal inventories valued under the LIFO
method of accounting.
-7-
<PAGE> 9
INVESTING ACTIVITIES.
Net cash used by investing activities amounted to $61,811,000 in 1997 and
$9,151,000 in 1996. The net cash used in 1997 includes approximately $53,000,000
for the purchase of Olympic Manufacturing Group, Inc. on February 28, 1997 and
capital expenditures of $9,100,000. Capital expenditures include a major
modernization program of our precious metal product facility in Fairfield,
Connecticut and the retrofitting of the former karat gold facility in East
Providence, Rhode Island by the Electronic Materials Group. Net cash used in
investing activities of $9,151,000 in 1996 was primarily due to the acquisition
of the ele Corporation, which resulted in a net cash outlay of $3,700,000 and
the increased production space added at Sumco in 1996 and machinery and
equipment for the wire and tubing segment.
FINANCING ACTIVITIES
Net cash provided by financing activities amounted to $54,866,000 in 1997
and $6,657,000 in 1996. 1997's primary financing activity was the purchase of
Olympic Manufacturing Group, Inc. with long-term debt for approximately
$53,000,000. The Company also completed long-term financing for $125,000,000 on
April 17, 1997 at a fixed rate of 7.31% due 2004, the proceeds of which were
used to reduce borrowings under the revolving credit facility. In 1996 financing
activities consisted primarily of net proceeds from a decrease in futures
receivable (the sale of precious metal inventory for future delivery) of
$7,681,000, the increase of futures payable of $1,927,000 (the purchase of
precious metal inventory for future receipt) and the receipt of $705,000 from a
joint venture partner. These sources of cash were partially offset by the
payment of debt of $1,200,000, the payment of dividends of $1,683,000 and net
treasury stock transactions of $773,000.
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.
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.
COMPARISON OF SECOND QUARTER OF 1997 VERSUS SECOND QUARTER OF 1996
Sales for the wire/tubing segment decreased $2,010,000 (4%) primarily due
to decreased sales of stainless steel tubing caused by the continued weakness in
the semiconductor fabrication industry which began in the third
-8-
<PAGE> 10
quarter of 1996. The profit contribution (pre-tax income before deducting
interest and corporate expenses) decreased $1,093,000 (20%) primarily due to the
decreased sales noted above. Although the weakness in the semiconductor
fabrication industry is expected to continue through year end, it is anticipated
that second half sales and contribution will exceed the comparable 1996 period.
Sales for the precious metal segment decreased $593,000 (1%) due to
decreased sales experienced in the Electronic Materials Group caused by changing
customer needs, and the effect of lower precious metal prices on the dollar
volume of sales. This decrease was partially offset by the addition of ele
Corporation on June 27, 1996. The average price for gold was $343.02 per ounce
in 1997 and $390.18 in 1996 and the average price for silver was $4.76 per ounce
in 1997 and $5.30 in 1996. The profit contribution increased $5,195,000 (120%)
primarily due to a reduction of precious metal inventories valued under the LIFO
method of accounting resulting in a gain of $4,665,000 ($2,706,000 after-tax).
The balance of the increase in contribution was primarily due to improved
operating performance of the Precious Metals Fabrication Group of companies
partially offset by the decreased sales of the Electronic Materials Group
mentioned above. The completion of several capital projects should enhance this
segment's profit contribution in the second half of 1997.
In the other non-precious metal segment, sales increased $12,768,000
(310%) and profit contribution increased by $1,907,000 (348%) due to the
addition of Olympic Manufacturing Group, Inc., purchased on February 28, 1997.
Due to Olympic's business cycle, a comparable increase in profit contribution is
expected for the third quarter as well.
Interest expense increased $1,821,000 (86%) due to increased borrowings
as a result of the purchase of Olympic Manufacturing Group, Inc. on February 28,
1997 and the purchase of 1.8 million shares of the Company's common stock via a
"Dutch Auction" completed in December 1996.
The Company's income taxes are primarily composed of U.S. Federal and
state income taxes.
COMPARISON OF SIX MONTHS OF 1997 VERSUS SIX MONTHS OF 1996
Sales of the wire/tubing segment decreased $5,787,000 (6%) due to
decreased sales of stainless steel tubing caused by the continued weakness in
the semiconductor fabrication industry and the effects of the strengthened
British pound against other European currencies on our United Kingdom
subsidiary's export sales. The profit contribution decreased $1,683,000 (16%)
due to the decreased sales noted above.
Sales for the precious metal segment decreased $3,435,000 (3%) primarily
due to the exit from low margin
-9-
<PAGE> 11
business in Canada, the effect of lower precious metal prices on the dollar
volume of sales and reduced sales in the Electronic Materials Group due to
changing customer needs. These decreases were partially offset by the addition
of ele Corporation acquired on June 27, 1996. The average price for gold was
$347.10 per ounce in 1997 and $395.10 in 1996. The average price for silver was
$4.88 per ounce in 1997 and $5.42 in 1996. The profit contribution increased
$5,587,000 (62%) primarily due to a reduction of precious metal inventories
valued under the LIFO method of accounting resulting in a gain of $4,665,000
($2,706,000 after-tax). The balance of the increase in contribution was
primarily due to improved operating performance of the Precious Metals
Fabrication Group of companies partially offset by the decreased sales of the
Electronic Materials Group mentioned above.
In the other non-precious metals segment sales increased $15,979,000
(196%) and profit contribution increased $2,274,000 (217%) primarily due to the
addition of Olympic Manufacturing Group, Inc. purchased on February 28, 1997.
Interest expense increased $2,551,000 (61%) primarily due to
substantially increased levels of borrowings as discussed in the quarterly
analysis.
The effective income tax rate for 1997 is 42% and 1996 was 43.13%. The
reason for the decrease in rates is primarily due to decreased foreign losses,
for which a valuation allowance has been provided, as a percentage of income
before taxes.
-10-
<PAGE> 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to the Company's Form 10-K Annual Report for the year
ended December 31, 1996, and to the proceedings described therein under
Part I, Item 3. Legal Proceedings and under Part II, Item I. Legal
Proceedings of the Company's Form 10-Q for the quarter ended March 31,
1997. Negotiations and discovery procedures are continuing in this
matter.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Shareholders held May 13, 1997, the
shareholders representing 10,932,633 shares voted to elect the nine
nominated Directors and to ratify the appointment of KPMG Peat Marwick
LLP as the Company's auditors. The Company's Proxy Statement dated
April 2, 1997 describes these matters in detail. The votes were as
follows:
<TABLE>
<CAPTION>
Votes Votes Votes Brokers
For Against Withheld Abstentions Non-Votes
DIRECTORS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
C.A. Abramson 10,807,667 0 124,966 -- --
R.E. Cornelia 10,808,405 0 124,228 -- --
R.N. Daniel 10,803,469 0 129,164 -- --
G.G. Garbacz 10,821,341 0 111,292 -- --
F.E. Grzelecki 10,820,462 0 112,171 -- --
G.M. Nichols 10,798,988 0 133,645 -- --
H.P. Sotos 10,815,441 0 117,192 -- --
E.J. Sussman 10,815,579 0 117,054 -- --
R.E. Tetrault 10,821,605 0 111,028 -- --
AUDITORS 10,866,142 28,206 0 38,284 0
</TABLE>
Item 5.
The Company has entered into certain agreements with change of control
provisions with the following officers: Robert F. Burlinson, Paul E.
Dixon and Dennis C. Kelly. (Filed as Exhibit 10 (u) to the Company's
1996 Annual Report on Form 10-K).
The Company has amended and supplemented with change of control
provisions the Employment Agreement dated October 22, 1996 with Robert
D. LeBlanc. (Filed as Exhibit 10 (v) to the Company's 1996 Annual
Report on Form 10-K.)
-11-
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits as required by Item 601 of Regulation S-K:
Exhibit 10(u) and 10(v) to Form 10-K.
(b) Reports on Form 8-K:
None filed during the quarter for which this report is
submitted.
-12-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
HANDY & HARMAN
-----------------------------
(Registrant)
Date: August 12, 1997 R.F. Burlinson /s/
--------------- ------------------------------
R.F. Burlinson, Vice President
Treasurer
Date: August 12, 1997 D.C. Kelly /s/
--------------- ------------------------------
D.C. Kelly - Controller
-13-
<PAGE> 1
Exhibit 10 (u)
AGREEMENT
Agreement is made this 14th day of May, 1997 between Handy & Harman (H&H) and
__________________________.
WHEREAS, _________________________ is employed by H&H; and
WHEREAS, H&H desires to retain the services of _________________________ in the
event of a Change of Control (as defined herein) of H&H;
NOW THEREFORE, in consideration of the agreements and provisions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows.
1. Term of Agreement. This Agreement shall commence on the date hereof and shall
continue in effect thereafter, unless, not later than any September 30, H&H
shall have given notice that it will not extend this Agreement beyond the
ensuing December 31; provided, further, that, notwithstanding any such notice by
H&H to terminate, if a change of control shall have occurred during the term of
this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the date on which the change of control occurs.
2. Change of Control of H&H. No benefits shall be payable unless there is a
change of control (Change of Control) of H&H. A Change of Control shall be
deemed to have occurred if:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any corporation owned, directly or indirectly, by the
stockholders of H&H in substantially the same proportions as their
ownership of stock of H&H), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of H&H representing 25% or more of the combined voting
power of H&H's then outstanding securities;
(b) during any period of not more than two (2) consecutive years (not
including any period prior to the adoption of the Plan), individuals
who at the beginning of such period constitute the Board of Directors
and any new director (other than a director designated by a person who
has entered into an agreement with H&H to effect a transaction
described in clause (a), (c) or (d) of this Section) whose election by
the Board of Directors or nomination for election by H&H's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof;
<PAGE> 2
(c) the stockholders of H&H approve a merger or consolidation of H&H
with any other corporation, other than (A) a merger or consolidation
which would result in the voting securities of H&H outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 70% of the combined voting power of the
voting securities of H&H or such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of H&H (or
similar transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of H&H's then
outstanding securities; or
(d) the stockholders of H&H approve a plan of complete liquidation of
H&H or an agreement for the sale or disposition by H&H of all or
substantially all of H&H's assets.
3. Termination Following Change of Control. If any of the events described in
Section 2 above constituting a Change of Control shall have occurred, you shall
be entitled to the benefits provided in Section 4 hereof upon termination of
your employment with H&H during the two (2) year period following the Change of
Control unless such termination is (A) a result of your death or retirement, or
(B) your resignation for other than Good Reason, or (C) your being terminated by
H&H for Disability or for Cause.
(a) Cause. For purposes of this Agreement, "Cause" shall mean your
willful breach of duty in the course of your employment, or your
habitual neglect of your employment duties.
(b) Disability. For purposes of this Agreement, "Disability" shall mean
your absence from your duties with H&H for three hundred sixty-five
(365) consecutive days as a result of your physical or mental illness.
(c) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For the purpose of this Agreement, "Good Reason" shall
mean the occurrence of any of the following circumstances:
(i) the assignment to you of any duties inconsistent
with your status as a ______________________________ (or any
higher position to which you have been promoted at the time)
or as a substantial diminution in the nature or status of your
responsibilities from those in effect immediately prior to the
Change of Control;
(ii) as a reduction in your annual base salary as in
effect on the date of the Change of Control;
<PAGE> 3
(iii) the relocation of the office in which you are
located prior to the Change of Control to a location more than
sixty (60) miles from New York City, except for required
travel on the business of H&H to an extent substantially
consistent with your present business travel obligations;
(iv) or pursuant to an action taken by H&H you are
selectively excluded from a compensation, bonus, stock option
or stock ownership plan otherwise in existence at the time of
the Change of Control or thereafter put into effect for the
benefit of others in a similar situation;
(v) except as a required by law, the failure by H&H
to continue to provide you with benefits at least as favorable
as those enjoyed by you under the employee benefit and welfare
plans of H&H in which you were participating at the time of
the Change of Control or the taking of any action by H&H which
would materially reduce any of the benefits enjoyed by you at
the time of the Change of Control;
(vi) the failure of H&H to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated in Section 5 hereof; or
(vii) any purported termination of your employment
not effected pursuant to a Notice of Termination satisfying
the requirements of Section 3(d) below; for purposes of this
Agreement, no such purported termination shall be effective.
Your continued employment shall not constitute consent to, or as a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination of your employment by H&H or
by you shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 7 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice
indicating the specific termination provision in this Agreement relied
upon and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated.
(e) Date of Termination, Etc. "Date of Termination" shall mean thirty
(30) days after the date specified in the Notice of Termination.
4. Compensation Upon Termination. Following a Change of Control of H&H, as
defined herein, upon termination of your employment by (a) H&H other than for
Cause or (b) by you for Good Reason, you shall be entitled to the following
benefits:
<PAGE> 4
(a) H&H shall pay you a severance payment (the "Severance Payment")
equal to one years' full base salary at your highest rate in effect
during the twelve (12) months preceding the date on which the Notice of
Termination is given;
(b) For a twelve (12) month period after termination of your
employment, H&H shall arrange to provide you with life, medical and
dental insurance benefits substantially similar to those which you are
receiving or entitled to receive immediately prior to the Notice of
Termination, unless you are eligible to receive such benefits from as a
subsequent employer or as a spouse's employer;
(c) H&H shall pay you the Severance Payment no later than the fifth
(5th) day following the Date of Termination;
5. Successors; Binding Agreement. H&H will require any successor to all or
substantially all of the business and/or assets of H&H to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
H&H is required to perform it. Failure of H&H to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation from H&H in the same amount
and on the same terms as you would be entitled to if you had terminated your
employment for Good Reason following a Change of Control of H&H, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. All references to H&H
shall be deemed to include its successors.
(a) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you die
while any amount is payable to you hereunder, all such amounts shall be
paid in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to your
estate.
6. Section 280G - Excise Tax Limitation. Notwithstanding other provisions of
this Agreement, in the event of a change of control, as defined in paragraph 2
(a) (b) (c) and (d) herein, payments would only be made to you to the extent
that they are deductible by H&H and not subject to the excise tax provisions of
Section 280G of the Internal Revenue Code.
7. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to H&H shall be directed to the attention of the Office of the
Vice President and General Counsel of H&H, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
<PAGE> 5
8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by both parties. No waiver by either party at any time of any breach
by the other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or any prior or subsequent time. No agreements or
representations, oral or written, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York. All references to sections of the Code shall be deemed also to refer to
any successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law.
9. Validity. This invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first written above.
Handy & Harman
- -------------------------- --------------------------
by: by:
<PAGE> 1
Exhibit 10 (v)
EMPLOYMENT AGREEMENT
This Agreement (the "Agreement"), dated as of October 22,
1996, will confirm that Handy & Harman, a New York corporation (the "Company")
has offered, and you have accepted, the position of Executive Vice President of
the Company.
1. The initial term of your employment shall be from November
11, 1996 through May 11, 1999, subject to earlier termination pursuant to the
provisions set forth below; provided, however, that at no time during the
initial term or thereafter shall the term of this agreement be less than one
year.
2. You agree to use your best efforts to promote the interest
of the Company, and devote your full business time and energies to the business
and affairs of the Company. You agree to perform such services as are customary
to your position and as shall from time to time be assigned to you by the
President and Chief Operating Officer of the Company.
3. Your annual base salary shall be no less than $300,000,
less applicable federal, state and local tax deductions, payable in accordance
with the Company's customary payroll practices. Any increases in your annual
salary shall be in the sole discretion of the Company's Board of Directors.
<PAGE> 2
4. (a) You shall be eligible to participate in the following
compensation plans that may be offered from time to time by the Company, in
accordance with the terms and provisions of such plans and subject to the
discretion of the Compensation Committee of the Company's Board of Directors
(the "Committee"): the Handy & Harman Management Incentive Plan (the "Bonus
Plan"), the Handy & Harman Long-Term Incentive Plan (the "Stock Plan") and the
Handy & Harman 1995 Omnibus Stock Incentive Plan (the "Option Plan"), in each
case as described below.
(b) You shall be eligible to participate in the Bonus Plan
beginning in respect of the 1997 plan year; provided, however, that any bonus
amounts payable thereunder are contingent upon the Company's attainment of
performance goals established by the Committee in its sole discretion and
further, provided, that your maximum annual bonus opportunity shall not exceed
100% of your annual base salary.
(c) You shall be eligible to participate in the Stock Plan
beginning in respect of the 1997-through-1999 cycle; provided, however, that
any awards granted and any amounts payable thereunder are contingent upon the
Company's attainment of performance goals established by the Committee in its
sole discretion and further,
2
<PAGE> 3
provided, that your level of participation shall be 40% of your annual base
salary (as in effect on January 1, 1997).
(d) You shall be granted, effective as of the date of your
employment, options (the "Options") to purchase 50,000 shares of common stock of
the Company. The Options shall (i) be granted under, and subject to the terms
of, the Omnibus Stock Option Plan, (ii) be non-qualified options (i.e., not
incentive stock options), (iii) have a ten-year term (subject to earlier
termination as provided in the Option Plan and the form of grant agreement
thereunder), (iv) vest and become exercisable with respect to 25% of the shares
of common stock subject thereto on each of the first four anniversaries of the
date of grant and (v) have an exercise price per share of common stock equal to
the fair market value of the common stock as of the date of grant.
5. (a) You shall be eligible to participate in all Company
employee benefit plans and programs which are made generally available to
salaried employees of the Company, in accordance with the terms and provisions
of such plans. With respect to such plans and programs, you shall not be subject
to any eligibility waiting periods, except for any waiting period under any
pension benefit
3
<PAGE> 4
plan intended to be qualified under Section 401(a) of the Internal Revenue Code.
(b) You shall be eligible to participate in the Handy &
Harman Supplemental Executive Retirement Plan and the Handy & Harman Executive
Life Insurance and Post-Retirement Life Insurance Program, in each case in
accordance with the terms and provisions of such plans.
6. (a) The Company shall reimburse you for all reasonable
business expenses incurred by you in accordance with the Company's policy on
reimbursement for business expenses as then in effect.
(b) The Company shall reimburse you for initiation fees and
annual membership fees with respect to your membership in a country club
selected by you; provided, however, that your selection of a country club shall
be subject to the approval of the Company.
(c) You agree to permanently relocate your primary place of
residence to the Westchester County area as soon as practicable after the date
hereof. The Company shall promptly reimburse you for (i) all normal moving costs
involved in relocating your family's belongings and household furnishings, (ii)
the real estate brokerage commission (up to a maximum of 6% of the sales price)
in connection with the sale of your current house
4
<PAGE> 5
and (iii) any legal fees and other customary closing costs in connection with
the sale of such house and the purchase of a house in the Westchester County
area (collectively, the "Moving Expenses"). In the event your current house is
not sold by the time you purchase a home in the Westchester County area, if
required, the Company will provide you with a bridge loan for the purpose of
enabling you to purchase a house in the Westchester County area, which loan
shall (i) bear interest at applicable Federal rates, (ii) be for a term of not
more than one year, and (iii) have such other terms, including principal amount,
as the Company and you shall reasonably agree.
(d) The Company shall pay to you a cash signing bonus (the
"Signing Bonus") in an amount equal to (i) $140,000, less (ii) the amount of
bonus paid to you by your former employer in respect of the 1996 calendar year,
less (iii) applicable federal, state and local tax deductions. You shall
promptly notify the Company of any and all amounts received by you from your
former employer and provide the Company with satisfactory evidence of the amount
you receive in respect of such 1996 bonus. The Company shall pay the Signing
Bonus to you as soon as
5
<PAGE> 6
practicable following receipt of such satisfactory evidence.
(e) The Company shall reimburse you for the reasonable cost
of obtaining temporary housing for a period of not more than six months
following the date hereof; provided, however, that such costs are subject to the
approval of the Company.
(f) You and your spouse shall be entitled to receive
post-retirement health insurance benefits from the Company under the Company's
Post-Retirement Medical Plan in effect for employees of the Company prior to
1992 on such terms and conditions in place for other employees covered by the
Plan.
(g) You shall be provided with a Company-owned automobile
in accordance with the Company's existing policies and procedures in place for
other executive officers of the Company.
7. (a) The Company may terminate your employment at any time,
without prior notice, for any of the following reasons: (i) your engaging in
conduct which is materially injurious to the Company, its subsidiaries or
affiliates, or any of their respective customer or supplier relationships,
monetarily or otherwise; (ii) your engaging in any act of fraud,
misappropriation or embezzlement or any act which would constitute a felony
6
<PAGE> 7
(other than minor traffic violations); or (iii) your material breach of this
Agreement.
(b) If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties hereunder for a period of time (at least 60 days within any 12
consecutive months excluding vacation time actually used in accordance with the
Company's policy thereon) which the Company determines, in its reasonable
discretion, to have had an adverse impact on the Company, your employment may be
terminated by the Company, upon written notice in accordance with paragraph 10
hereof without further notice.
(c) The Company, in its sole discretion, may terminate your
employment at any time for any reason other than those stated in paragraphs 7(a)
or 7(b) upon thirty days prior written notice.
8. (a) If your employment is terminated by the Company
pursuant to paragraph 7(a), you shall receive your salary through the date of
termination and the Company shall have no further obligations to you under this
Agreement.
(b) If your employment is terminated by the Company
pursuant to paragraph 7(b) or by your death,
7
<PAGE> 8
you or your personal representative, guardian, or the representative of your
estate shall continue to receive your salary for a period of 12 months payable
in accordance with the Company's customary payroll practices. However, your
salary shall be offset by any payments you receive pursuant to the Company's
disability plans and programs. Thereafter, the Company shall have no further
obligations under this Agreement to you, your estate, personal representative,
guardian, or your beneficiaries.
(c) If your employment is terminated by the Company
pursuant to paragraph 7(c), you shall continue to receive your salary through
the end of the term or for a period of 12 months, whichever is longer, payable
in accordance with the Company's customary payroll practices. You shall also
continue to participate in the Company's employee benefit plans and programs in
accordance with paragraph 5 hereof, to the extent permissible under the terms
of such plans and programs, through the end of the term, provided that following
your termination of employment you shall no longer accrue any vacation benefits.
Thereafter, the Company shall have no further obligations to you under this
Agreement.
(d) During the period you are receiving any payments or
benefits under paragraphs 8(b) 8(c), you
8
<PAGE> 9
agree to promptly notify the Company upon your acceptance of any other
employment. During any such employment (i) you shall not receive the salary
provided hereunder; provided, however, that if your salary pursuant to such
employment is less than the salary provided hereunder, you shall receive the
differential and (ii) upon your eligibility for any medical benefits or
insurance by your new employer you shall no longer be eligible to participate
in any of the Company's benefit plans and arrangements.
9. Simultaneous herewith, you are executing the
Non-Competition Agreement annexed hereto.
10. Any notices required by this Agreement shall be in
writing and shall be deemed to have been given when delivered or mailed by
United States certified mail, return receipt requested, postage prepaid, as
follows:
if to you:
Mr. Robert D. LeBlanc
4 Totten Drive
Bridgewater, New Jersey 08807
if to the Company:
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Paul E Dixon, Esq.
Vice President
and General Counsel
9
<PAGE> 10
or to such other address as either party may furnish to the other in writing in
accordance with this paragraph. Notices of change of address shall only be
effective upon receipt.
11. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to its conflict
of laws principles.
12. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, arrangements and understandings among the
Company and you with respect to such subject matter. This Agreement can be
modified only by a writing signed by both you and the Company. If any provision
of this Agreement shall be held to be void or unenforceable, the remainder of
this Agreement shall nevertheless remain in full force and effect. This
Agreement shall inure to the benefit of and be binding upon the Company's
successors and assigns.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
HANDY & HARMAN
By: _______________________________
Name: Frank E. Grzelecki
Title: President & Chief
Operating Officer
Agreed to this 25th day
of October 1996
- -------------------------
11
<PAGE> 12
Exhibit 10 (v)
SUPPLEMENTAL AGREEMENT
Notwithstanding the terms and conditions set forth in an Employment Agreement
(the "Agreement") dated October 22, 1996 between you and Handy & Harman (H&H),
the terms and conditions stated herein are intended to supplement that Agreement
by adding Change of Control provisions and not to duplicate or enhance the
compensation recited therein. Further, at any time that you are receiving
payments under provisions of paragraph 8 of the Agreement, those terms and
conditions will apply and this Supplemental Agreement will not be in effect or
enforceable by you.
WHEREAS, H&H desires to retain the services of Robert D. LeBlanc in the event of
a Change of Control (as defined herein) of H&H;
NOW THEREFORE, in consideration of the agreements and provisions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows.
1. Term of Agreement. This Agreement shall commence on the date hereof and shall
continue in effect thereafter, unless, not later than any September 30, H&H
shall have given notice that it will not extend this Agreement beyond the
ensuing December 31; provided, further, that, notwithstanding any such notice by
H&H to terminate, if a change of control shall have occurred during the term of
this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the date on which the change of control occurs.
2. Change of Control of H&H. No benefits shall be payable unless there is a
change of control (Change of Control) of H&H. A Change of Control shall be
deemed to have occurred if:
(a) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any corporation owned, directly or indirectly, by the
stockholders of H&H in substantially the same proportions as their
ownership of stock of H&H), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of H&H representing 25% or more of the combined voting
power of H&H's then outstanding securities;
(b) during any period of not more than two (2) consecutive years (not
including any period prior to the adoption of the Plan), individuals
who at the beginning of such period constitute the Board of Directors
and any new director (other than a director designated by a person who
has entered into an agreement with H&H to effect a transaction
described in clause (a), (c) or (d) of this Section) whose election by
the Board of Directors or nomination for election by H&H's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or
<PAGE> 13
whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(c) the stockholders of H&H approve a merger or consolidation of H&H
with any other corporation, other than (A) a merger or consolidation
which would result in the voting securities of H&H outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than 70% of the combined voting power of the
voting securities of H&H or such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of H&H (or
similar transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of H&H's then
outstanding securities; or
(d) the stockholders of H&H approve a plan of complete liquidation of
H&H or an agreement for the sale or disposition by H&H of all or
substantially all of H&H's assets.
3. Termination Following Change of Control. If any of the events described in
Section 2 above constituting a Change of Control shall have occurred, you shall
be entitled to the benefits provided in Section 4 hereof upon termination of
your employment with H&H during the two (2) year period following the Change of
Control unless such termination is (A) a result of your death or retirement, or
(B) your resignation for other than Good Reason, or (C) your being terminated by
H&H for Disability or for Cause.
(a) Cause. For purposes of this Agreement, "Cause" shall mean your
willful breach of duty in the course of your employment, or your
habitual neglect of your employment duties.
(b) Disability. For purposes of this Agreement, "Disability" shall mean
your absence from your duties with H&H for three hundred sixty-five
(365) consecutive days as a result of your physical or mental illness.
(c) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For the purpose of this Agreement, "Good Reason" shall
mean the occurrence of any of the following circumstances:
(i) the assignment to you of any duties inconsistent
with your status as an Executive Vice President (or any higher
position to which you have been promoted at the time) or as a
substantial diminution in the nature or status of your
responsibilities from those in effect immediately prior to the
Change of Control;
(ii) as a reduction in your annual base salary as in
effect on the date of the Change of Control;
<PAGE> 14
(iii) the relocation of the office in which you are
located prior to the Change of Control to a location more than
sixty (60) miles from New York City, except for required
travel on the business of H&H to an extent substantially
consistent with your present business travel obligations;
(iv) or pursuant to an action taken by H&H you are
selectively excluded from a compensation, bonus, stock option
or stock ownership plan otherwise in existence at the time of
the Change of Control or thereafter put into effect for the
benefit of others in a similar situation;
(v) except as a required by law, the failure by H&H
to continue to provide you with benefits at least as favorable
as those enjoyed by you under the employee benefit and welfare
plans of H&H in which you were participating at the time of
the Change of Control or the taking of any action by H&H which
would materially reduce any of the benefits enjoyed by you at
the time of the Change of Control;
(vi) the failure of H&H to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated in Section 5 hereof; or
(vii) any purported termination of your employment
not effected pursuant to a Notice of Termination satisfying
the requirements of Section 3(d) below; for purposes of this
Agreement, no such purported termination shall be effective.
Your continued employment shall not constitute consent to, or as a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination of your employment by H&H or
by you shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 7 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice
indicating the specific termination provision in this Agreement relied
upon and setting forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated.
(e) Date of Termination, Etc. "Date of Termination" shall mean thirty
(30) days after the date specified in the Notice of Termination.
4. Compensation Upon Termination. Following a Change of Control of H&H, as
defined herein, upon termination of your employment by (a) H&H other than for
Cause or (b) by you for Good Reason, you shall be entitled to the following
benefits:
<PAGE> 15
(a) H&H shall pay you a severance payment (the "Severance Payment")
equal to one years' full base salary at your highest rate in effect
during the twelve (12) months preceding the date on which the Notice of
Termination is given;
(b) For a twelve (12) month period after termination of your
employment, H&H shall arrange to provide you with life, medical and
dental insurance benefits substantially similar to those which you are
receiving or entitled to receive immediately prior to the Notice of
Termination, unless you are eligible to receive such benefits from as a
subsequent employer or as a spouse's employer;
(c) H&H shall pay you the Severance Payment no later than the fifth
(5th) day following the Date of Termination;
5. Successors; Binding Agreement. H&H will require any successor to all or
substantially all of the business and/or assets of H&H to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
H&H is required to perform it. Failure of H&H to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle you to compensation from H&H in the same amount
and on the same terms as you would be entitled to if you had terminated your
employment for Good Reason following a Change of Control of H&H, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. All references to H&H
shall be deemed to include its successors.
(a) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you die
while any amount is payable to you hereunder, all such amounts shall be
paid in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to your
estate.
6. Section 280G - Excise Tax Limitation. Notwithstanding other provisions of
this Agreement, in the event of a change of control, as defined in paragraph 2
(a) (b) (c) and (d) herein, payments would only be made to you to the extent
that they are deductible by H&H and not subject to the excise tax provisions of
Section 280G of the Internal Revenue Code.
7. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to H&H shall be directed to the attention of the Office of the
Vice President and General Counsel of H&H, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
<PAGE> 16
8. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by both parties. No waiver by either party at any time of any breach
by the other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or any prior or subsequent time. No agreements or
representations, oral or written, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York. All references to sections of the Code shall be deemed also to refer to
any successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law.
9. Validity. This invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first written above.
Handy & Harman
- ----------------------------- -----------------------------
by: by:
Dated as of this 14th day of May, 1997
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