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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14 (d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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HANDY & HARMAN
(NAME OF SUBJECT COMPANY)
HANDY & HARMAN
(NAME OF PERSON(S) FILING STATEMENT)
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COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
410306104
(CUSIP NUMBER OF CLASS OF SECURITIES)
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PAUL E. DIXON, ESQ.
SENIOR VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
HANDY & HARMAN
250 PARK AVENUE
NEW YORK, NEW YORK 10177
(212) 661-2400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
With copy to:
MILTON G. STROM, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022-3897
(212) 735-3000
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Handy & Harman, a New York corporation
(the 'Company'), and the address of the principal executive offices of the
Company is 250 Park Avenue, New York, New York 10177. The title of the class of
equity securities to which this Schedule 14D-9 relates is the common stock, par
value $1.00 per share (the 'Shares'), of the Company (including the associated
common stock purchase rights (the 'Rights') issued pursuant to the Rights
Agreement, dated as of January 26, 1989, as amended on April 25, 1996, October
22, 1996 and March 1, 1998 (the 'Rights Agreement'), between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent).
ITEM 2. TENDER OFFER OF THE PURCHASER
This Schedule 14D-9 relates to the tender offer by HN Acquisition Corp., a
New York corporation (the 'Purchaser') and wholly owned subsidiary of WHX
Corporation, a Delaware corporation ('WHX'), disclosed in a Tender Offer
Statement on Schedule 14D-1, dated March 6, 1998 (the 'Schedule 14D-1'), to
purchase all of the issued and outstanding Shares at $35.25 per Share net to the
seller in cash (the 'Offer Price'), upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated March 6, 1998 (the 'Offer to
Purchase'), and the related Letter of Transmittal (which, together with the
Offer to Purchase, as amended or supplemented from time to time, constitute the
'Offer').
As set forth in the Schedule 14D-1, the principal executive offices of the
Purchaser and WHX are located at 110 East 59th Street, New York, New York 10022.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above.
(b) Except as set forth in this Item 3(b), to the knowledge of the Company,
there are no material contracts, agreements, arrangements or understandings and
no actual or potential conflicts of interest between the Company or its
affiliates and (i) the Company's executive officers, directors or affiliates or
(ii) WHX or the Purchaser or their respective executive officers, directors or
affiliates.
ARRANGEMENTS WITH WHX, THE PURCHASER OR THEIR AFFILIATES
Confidentiality Agreement
The following is a summary of certain material provisions of the
Confidentiality Agreement, dated as of February 28, 1998, between the Company
and WHX (the 'Confidentiality Agreement'). This summary does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Confidentiality Agreement, a copy of which is filed as Exhibit 1 hereto and
incorporated herein by reference.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other things, WHX has agreed to keep confidential all non-public,
confidential or proprietary information relating to the Company furnished to it
by the Company, subject to certain customary exceptions (the 'Confidential
Information'), and to use the Confidential Information solely for the purpose of
evaluating a possible transaction involving the Company and WHX. WHX also agreed
that, for a period of one year from the date of the Confidentiality Agreement,
WHX will not, and will direct its affiliates and representatives not to, solicit
for employment or hire any person who is now employed by the Company or any of
its subsidiaries whom WHX initially meets as a result of its investigation of
the Company.
The Merger Agreement
The following is a summary of certain material provisions of the Agreement
and Plan of Merger, dated as of March 1, 1998, by and among WHX, the Purchaser
and the Company (the 'Merger Agreement'). This summary does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Merger Agreement, a copy of which is filed as Exhibit 2 hereto and
incorporated herein by reference. Capitalized terms used and not otherwise
defined below have the meanings set forth in the Merger Agreement.
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The Offer. The Merger Agreement provides for commencement of the Offer as
promptly as practicable, but no later than the fifth business day from the
public announcement of the execution of the Merger Agreement. The Purchaser
will, on the terms and subject to the prior satisfaction or waiver (except that
the Minimum Condition, as defined below, may not be waived) of the conditions of
the Offer, accept for payment and pay for Shares tendered as soon as it is
legally permitted to do so under applicable law. The Merger Agreement also
provides that the Purchaser cannot amend or waive the Minimum Condition,
decrease the Offer Price or the number of Shares sought, or amend any other
condition of the Offer in any manner adverse to the holders of Shares without
the prior written consent of the Company; provided, however, that (i) subject to
applicable legal requirements, WHX may cause the Purchaser to waive any
condition to the Offer (other than the Minimum Condition), in WHX's reasonable
judgment, and (ii) the Offer may be extended in connection with an increase in
the consideration to be paid pursuant to the Offer so as to comply with
applicable rules and regulations of the Securities and Exchange Commission (the
'SEC'). Notwithstanding the foregoing, the Purchaser has agreed to extend the
Offer at any time up to May 1, 1998 for one or more periods of not more than ten
business days, if, at the initial expiration date of the Offer or any extension
thereof, any condition to the Offer is not satisfied or waived. The Purchaser
may also, in its sole discretion, extend the expiration date of the Offer for up
to ten additional business days after the initial expiration date of the Offer.
In addition, the Offer Price may be increased and the Offer may be extended to
the extent required by law in connection with such increase, in each case
without the consent of the Company.
Conditions to the Offer. The obligations of the Purchaser to accept for
payment and pay for Shares tendered pursuant to the Offer is subject to the
condition that there will be validly tendered and not withdrawn a number of
Shares which, together with any Shares owned by WHX or the Purchaser, represent
at least a majority of the Shares outstanding on a fully diluted basis (the
'Minimum Condition'). In addition, the Purchaser is not required to accept for
payment or, subject to applicable legal requirements, pay for any tendered
Shares, and may delay acceptance for payment of, or, subject to applicable legal
requirements, delay payment for, any tendered Shares, and may terminate the
Offer, if (a) the Rights under the Rights Agreement shall have become
exercisable, or (b) at any time on or after March 1, 1998 and before Shares are
accepted for payment pursuant to the Offer, any of the following occur: (i)
there shall have been any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to the
Offer or the Merger (as defined below) by any federal or state governmental
regulatory or administrative agency, authority, court or legislative body or
commission which (A) prohibits, or imposes any material limitations on, WHX's or
the Purchaser's ownership or operation of all or a material portion of the
Company's businesses or assets or the Shares, (B) prohibits, or makes illegal,
the acceptance for payment, payment for or purchase of Shares or the
consummation of the Offer or the Merger, or (C) restricts the Purchaser's
ability, or renders the Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares; provided, that WHX will have used all
reasonable efforts to cause any such judgment, order or injunction to be vacated
or lifted; (ii) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and accurate as of the date of
consummation of the Offer as though made on or as of such date or the Company
shall have breached or failed to perform or comply with any material obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it except, in each case (A) for changes specifically permitted
by the Merger Agreement and (B) (x) those representations and warranties that
address matters only as of a particular date which need only be true and
accurate as of such date or (y) where the failure of such representations and
warranties to be true and accurate, or the performance or compliance with such
obligations, agreements or covenants, do not, individually or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole; (iii) the Merger Agreement shall have been terminated in accordance with
its terms; (iv) (A) it shall have been publicly disclosed that any person,
entity or 'group' (as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the 'Exchange Act')), shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the Exchange
Act) of more than 20% of any class or series of capital stock of the Company
(including the Shares), through the acquisition of stock, the formation of a
group or otherwise, other than any person or group existing on the date of the
Merger Agreement which beneficially owns more than 20% of any class or series of
capital stock of the Company, or (B) the Company shall have entered into a
definitive agreement or agreement in principle with any person with respect to
an Acquisition Proposal (as defined below) or similar business combination with
the Company; (v) the Board of Directors of the Company (the 'Board' or 'Board of
Directors') shall have withdrawn, or modified or changed in a manner adverse to
WHX or the
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Purchaser, its recommendation of the Offer, the Merger Agreement or the Merger,
shall have recommended another proposal or offer, or shall have resolved to do
any of the foregoing; or (vi) there shall occurred (A) a decline of at least 25%
in either the Dow Jones Average of Industrial Stocks or the Standard & Poor's
500 Index from the date of the Merger Agreement, or (B) the declaration and
continuation of a banking moratorium or any limitation or suspension of payments
in respect of the extension of credit by banks or other lending institutions in
the United States; which in the reasonable judgment of WHX or the Purchaser, in
any such case, and regardless of the circumstances giving rise to such
condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment or payments.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, the Purchaser will be merged with and into the Company (the
'Merger'), with the Company continuing to be governed by New York law as the
Surviving Corporation and a wholly owned subsidiary of WHX, and each issued and
outstanding Share (other than Shares owned by WHX, the Purchaser or any other
wholly owned subsidiary of WHX, Shares held by the Company as treasury stock, or
Shares held by shareholders who properly exercise their appraisal rights under
the New York Business Corporation Law (the 'NYBCL')) will be converted into the
right to receive the Offer Price, without interest. The Merger Agreement also
provides that (i) the directors and officers of the Purchaser at the effective
time of the Merger (the 'Effective Time') will be the initial directors and
officers, respectively, of the Surviving Corporation, until their successors
have been duly elected, appointed or qualified in accordance with the Surviving
Corporation's Certificate of Incorporation and By-laws, and (ii) the Certificate
of Incorporation and By-laws of the Purchaser will be the Certificate of
Incorporation and By-laws, respectively, of the Surviving Corporation.
Treatment of Options. The Merger Agreement provides that as of the
Effective Time, the Company's employee and non-employee director stock options
outstanding (the 'Options') will become fully exercisable and vested and the
Options will be cancelled. Unless otherwise agreed upon, (i) the holders of such
cancelled Options will receive the excess, if any, of the Offer Price over the
exercise price of such Options, and (ii) all stock option plans of the Company
will terminate, the provisions of any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect to the
capital stock of the Company or its subsidiaries will be terminated and no
holder of Options or participant in such option plan or other plan, program or
arrangement will have any right to acquire any equity securities of the Company
or the Surviving Corporation. See 'Arrangements with Executive Officers,
Directors or Affiliates of the Company.'
Directors. The Merger Agreement provides that, promptly upon WHX's
purchase of and payment for Shares which represent at least a majority of the
outstanding Shares (on a fully diluted basis), WHX will be entitled to designate
such number of directors, rounded up to the next whole number, on the Board as
shall give WHX, subject to compliance with Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, representation on the Board equal to the
product of the total number of directors on the Board (giving effect to the
directors designated by WHX) multiplied by the percentage that the aggregate
number of Shares beneficially owned by WHX, the Purchaser and any of their
affiliates bears to the total number of Shares then outstanding (such number
being the 'Board Percentage'); provided, however, that if the number of Shares
purchased by WHX or any of its subsidiaries equals or exceeds 50.01% of the
outstanding Shares, the Board Percentage will constitute at least a majority of
the members of the Board. The Company will, upon request of the Purchaser, use
its best efforts to cause WHX's designees to satisfy the Board Percentage,
including without limitation increasing the size of the Board (which, pursuant
to the Company's Restated Certificate of Incorporation, as amended, has a
maximum number of twelve directors) and securing the resignations of incumbent
directors. Notwithstanding the foregoing, until the Effective Time, the Company
will retain on the Board at least two directors who were directors of the
Company on the date of the Merger Agreement; provided, that subsequent to the
purchase of and payment for Shares pursuant to the Offer, WHX will always have
its designees represent at least a majority of the entire Board.
The Merger Agreement also provides that from and after the time, if any,
that WHX's designees constitute a majority of the Board, any amendment of the
Merger Agreement, termination of the Merger Agreement by the Company, extension
of time for performance of any of the obligations of WHX or the Purchaser or
waiver of any condition or any of the Company's rights thereunder may be
effected only by the action of a majority of the directors of the Company then
in office who were directors on the date of the Merger Agreement, which action
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shall be deemed to constitute the action of the full Board; provided, that if
there are no such directors, such actions may be effected by majority vote of
the entire Board.
Shareholders' Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call, give
notice of, convene and hold a special meeting of its shareholders (the 'Special
Meeting') as soon as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and adoption of
the Merger Agreement.
The Merger Agreement also provides that the Company will, if required by
applicable law in order to consummate the Merger, (i) prepare and file with the
SEC a preliminary proxy or information statement relating to the Merger and the
Merger Agreement and will use its best efforts (A) to obtain and furnish the
information required by the SEC to be included in the Proxy Statement (as
defined below) and, after consultation with WHX, to respond promptly to any
comments made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement (the 'Proxy
Statement') to be mailed to its shareholders and (B) to obtain the necessary
approvals of the Merger and the Merger Agreement by its shareholders and (ii)
subject to the fiduciary obligations of the Board under applicable law as
advised by independent counsel, include in the Proxy Statement the
recommendation of the Board that shareholders of the Company vote in favor of
the approval of the Merger and adoption of the Merger Agreement. WHX agrees that
it will vote, or cause to be voted, all of the Shares owned by it, the Purchaser
or any of its subsidiaries and affiliates in favor of the approval of the Merger
and adoption of the Merger Agreement. In the event that WHX, the Purchaser or
any other subsidiary of WHX acquires, together with the Shares owned by them
collectively, at least 90% of the outstanding Shares pursuant to the Offer or
otherwise, the parties will take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of the Company's shareholders (a 'Short-Form Merger').
Representations and Warranties. The Merger Agreement contains customary
representations and warranties of the Company and WHX with respect to, among
other things, (i) organization, (ii) authority to execute and deliver the Merger
Agreement, (iii) no conflict with any agreement, governmental authorization or
charter document, (iv) receipt of antitrust approvals and (v) accuracy of
information to be supplied for inclusion in Schedule 14D-1 or Schedule 14D-9.
Additional representations of the Company relate to, among other things, (i)
capitalization, (ii) accuracy of documents and reports filed with the SEC,
including financial statements, (iii) absence of undisclosed liabilities,
litigation and material adverse changes, (iv) employee benefit plans/ERISA
(including the overfunding of the Company's pension plans), (v) compliance with
applicable laws, (vi) taxes, (vii) amount of precious metal inventories, (viii)
environmental matters, (ix) voting requirements for the Merger and (x) receipt
of fairness opinion. Additional representations of WHX and the Purchaser relate
to, among other things, (i) financing, (ii) ownership of Shares, (iii)
operations of the Purchaser and (iv) limitation of liability for information
supplied.
Interim Operations. In the Merger Agreement, the Company has agreed that,
among other things, between the date of the Merger Agreement and prior to the
time the Purchaser's designees have been elected to, and constitute a majority
of, the Board, unless WHX otherwise agrees in writing and except as otherwise
contemplated by the Merger Agreement, (a) the Company and its subsidiaries will
conduct business only in the ordinary and usual course and (b) the Company will
not, directly or indirectly, (i) sell, transfer or pledge or agree to sell,
transfer or pledge any Shares or capital stock of any of its subsidiaries
beneficially owned by it, either directly or indirectly; (ii) amend its
Certificate of Incorporation or By-laws or similar organizational documents; or
(iii) split, combine or reclassify the outstanding Shares or any outstanding
capital stock of any of its subsidiaries.
In addition, neither the Company nor any of its subsidiaries will (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock (other than its regular
quarterly cash dividend); (ii) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or its subsidiaries, other
than Shares reserved for issuance on the date of the Merger Agreement upon
exercise of outstanding Rights pursuant to the Rights Agreement or issuances
pursuant to the exercise of Options outstanding on the date of the Merger
Agreement;
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(iii) transfer, lease, license, sell, mortgage, pledge, dispose of or encumber
any material assets other than in the ordinary and usual course of business and
consistent with past practice including, without limitation, the transfer or
sale of certain precious metal inventories, provided that any permanent
reduction, liquidation or increase of such precious metals inventory is not made
without WHX's consent; (iv) incur or modify any material indebtedness or
liability other than in the ordinary and usual course of business and consistent
with past practice; (v) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock other than redemption of the outstanding
Rights pursuant to the Rights Agreement; (vi) modify, amend or terminate any of
its material agreements or waive, release or assign any material rights or
claims, except in the ordinary course of business and consistent with past
practice; (vii) permit any material insurance policy naming the Company as a
beneficiary or a loss payable payee to be cancelled or terminated without notice
to WHX, except in the ordinary course of business and consistent with past
practice; (viii) (A) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the material
obligations of any other person (other than subsidiaries of the Company), except
in the ordinary and usual course of business; (B) make any material loans,
advances or capital contributions to, or investments in, any other person (other
than to subsidiaries of the Company), other than in the ordinary and usual
course of business; or (C) enter into any material commitment or transaction
with respect to any of the foregoing (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets); (ix)
change any of the accounting methods used by the Company unless required by
GAAP; (x) except as permitted in connection with the termination of the Merger
Agreement, adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its subsidiaries; (xi) except as required by law, enter into,
adopt, create or amend in any material respect or terminate any benefit plans
maintained or contributed to by the Company or any of its subsidiaries; (xii)
make or agree to make any capital expenditures other than in accordance with the
Company's 1998 capital expenditure program or in the ordinary course of business
consistent with past practice; (xiii) increase the compensation of any director,
executive officer or other key employee of the Company or pay any benefit or
amount not required by a plan, agreement, understanding or arrangement as in
effect on the date of the Merger Agreement to any such person; (xiv) cause a
material change in investment policy or investment vehicles related to the
pension plan assets, other than in the ordinary course of business or consistent
with or required by its fiduciary duties; (xv) take, or agree to commit to take,
any action that would make any representation or warranty of the Company
contained in the Merger Agreement inaccurate in any material respect at, or as
of any time prior to, the Effective Time (except for representations made as of
a specific date); or (xvi) authorize or enter into an agreement to do any of the
foregoing.
Actions Regarding the Rights. The Company has agreed in the Merger
Agreement that it will (a) in accordance with the terms and provisions of the
Rights Agreement, take all reasonable actions necessary to cause the
postponement of the Distribution Date (as defined in the Rights Agreement) as
necessary to prevent the Merger Agreement or the consummation of any of the
transactions contemplated thereby, including without limitation, the publication
or other announcement of the Offer and the consummation of the Offer and the
Merger, from resulting in (i) the distribution of separate Rights certificates,
(ii) the occurrence of a Distribution Date, or (iii) being deemed a Triggering
Event (as defined in the Rights Agreement); (b) take all further action
reasonably requested in writing by WHX in order to render the Rights
inapplicable to the Offer, the Merger and the other transactions contemplated
thereby to the extent provided in the Merger Agreement and the amendment to the
Rights Agreement; and (c) not amend the Rights Agreement without WHX's prior
consent. On March 1, 1998, the Board amended the Rights Agreement to prevent the
Purchaser from becoming an Acquiring Person (as defined in the Rights Agreement)
and to prevent a Triggering Event (as defined in the Rights Agreement), Stock
Acquisition Date (as defined in the Rights Agreement) or Distribution Date from
occurring as a result of the Offer, the Merger or the other transactions
contemplated by the Merger Agreement. A copy of the Amendment to the Rights
Agreement is filed as Exhibit 3 hereto and is incorporated herein by reference.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that neither it, any of its subsidiaries or affiliates, nor its officers,
directors or affiliates, will directly or indirectly solicit, participate in or
initiate negotiations or discussions with, or furnish any information to any
third party relating to an Acquisition Proposal (as defined below); provided,
however, that if, at any time prior to the purchase of Shares by the Purchaser
in the Offer, the Board determines in good faith, after receiving formal advice
from its financial advisor and outside counsel, that such action is reasonably
necessary for the Board to comply with its fiduciary duties to the Company's
shareholders under applicable law, the Company may, in response to a bona fide
written Acquisition
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Proposal which did not result from a breach of the foregoing and which the Board
determines is superior to the Offer and which in the event of an all or part
cash transaction is not subject to financing (any such bona fide written
Acquisition Proposal being referred to as a 'Superior Proposal'), (i) furnish
information or provide access with respect to the Company and each of its
subsidiaries to such third party pursuant to a customary confidentiality
agreement (as determined by the Company after consultation with its outside
counsel) and (ii) participate in discussions and negotiations regarding such
Acquisition Proposal. For purposes of the Merger Agreement, 'Acquisition
Proposal' means any proposal concerning a merger, consolidation, tender offer,
exchange offer, sale of all or substantially all of the Company's assets, sale
of shares of capital stock or similar business combination transactions
involving the Company or its principal operating or business units.
In the event that prior to the completion of the Offer, the Board
determines in good faith, after the Company has received a Superior Proposal and
after consultation with its financial advisor and outside counsel, that it is
reasonably necessary to do so in order to comply with its fiduciary duties to
the Company's shareholders under applicable law, the Board may withdraw or
modify its approval or recommendation of the Offer, the Merger or the Merger
Agreement, approve or recommend a Superior Proposal or terminate the Merger
Agreement, provided that prior to any such termination, the Company (i) gives
WHX at least two business days' notice of the effectiveness of such termination
and (ii) simultaneously with the termination of the Merger Agreement, pays the
$8 million termination fee to WHX (see '--Effect of Termination; Termination
Fee'). The foregoing provisions will not prohibit the Company or the Board from
taking and disclosing to the Company's shareholders a position with respect to a
tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making such disclosure to the
Company's shareholders or otherwise which, in the judgment of the Board with the
advice of independent legal counsel, may be required under applicable law or
rules of any stock exchange.
Employee Benefits. The Merger Agreement provides that WHX and the
Purchaser will continue, as of the Effective Time, the employment of all persons
who, immediately prior to the Effective Time, were employees of the Company or
its subsidiaries ('Retained Employees'). WHX and the Purchaser have also agreed
that effective as of the Effective Time and for a three-year period following
the Effective Time, the Surviving Corporation and its subsidiaries and
successors will provide the Retained Employees with employee plans and programs
which provide benefits that are no less favorable in the aggregate than those
provided to such employees immediately prior to the date of the Merger
Agreement. With respect to such benefits, service accrued by such employees with
the Company and its subsidiaries prior to the Effective Time will be recognized
for all purposes, except to the extent necessary to prevent duplication of
benefits. Nothing in the foregoing will be deemed to require the continued
employment of any Retained Employee for any particular period of time after the
Effective Time. See 'Arrangements with Executive Officers, Directors or
Affiliates of the Company.'
WHX and the Purchaser have agreed to honor, and cause the Surviving
Corporation to honor, without modification, all employment and severance
agreements and arrangements, as amended through the date of the Merger
Agreement, with respect to employees and former employees of the Company. The
Merger Agreement provides that if any payments are required to be made under any
employment or severance agreement or arrangement with respect to employees and
former employees of the Company as a result of the consummation of the
transactions contemplated by the Merger Agreement, such payments will be made on
the date on which the Shares are accepted for payment pursuant to the Offer. WHX
and the Purchaser have also agreed that at or prior to the Effective Time, the
Board (or the Compensation Committee thereof) after consultation with the Chief
Executive Officer of the Company, may allocate to officers and selected
corporate management participants of the Company the 1998 Bonus Pool (as defined
below) in a manner consistent with past practice, and, to the extent payments in
respect of such allocated amounts have not been made prior to the Effective
Time, WHX and the Purchaser have agreed to make payments, or to cause the
Surviving Corporation to make payments, in respect of such allocated amounts
within five days after the Effective Time. The amount of the '1998 Bonus Pool'
will equal the aggregate amount of bonuses paid in respect of the Company's 1997
fiscal year under the Company's Management Incentive Plan for officers and
selected corporate management participants multiplied by a fraction, the
numerator of which is the number of days which have elapsed during fiscal 1998
and the denominator of which is 365. In the event WHX or the Purchaser or any of
their successors or assigns (i) consolidates with or merges into any other
person and will not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any
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person, then, and in each such case, proper provision will be made so that the
successors and assigns of WHX and the Purchaser assume the obligations set forth
above and none of the actions described in clauses (i) or (ii) will be taken
until such provision is made.
Directors' and Officers' Insurance and Indemnification. The Merger
Agreement provides that (a) from and after the consummation of the Offer, WHX
will, and will cause the Surviving Corporation to, indemnify, defend and hold
harmless any person who is, has been, or will become, prior to the Effective
Time, an officer or director (the 'Indemnified Party') of the Company and its
subsidiaries against all losses, claims, damages, liabilities, costs and
expenses (including attorneys' fees and expenses), judgments, fines, losses, and
amounts paid in settlement in connection with any actual or threatened action,
suit, claim, proceeding or investigation (each a 'Claim') to the extent that any
such Claim is based on, or arises out of, (i) the fact that such person is or
was a director, officer, employee or agent of the Company or any subsidiaries or
is or was serving at the request of the Company or any of its subsidiaries as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) the Merger Agreement, or any of the
transactions contemplated thereby, in each case to the extent that any such
Claim pertains to any matter or fact arising, existing, or occurring prior to or
at the Effective Time, regardless of whether such Claim is asserted or claimed
prior to, at or after the Effective Time, to the fullest extent permitted under
New York law or the Company's Certificate of Incorporation, By-laws or
indemnification agreements in effect as of the date of the Merger Agreement,
including provisions relating to advancement of expenses incurred in the defense
of any action or suit; provided, that in the event any Indemnified Party becomes
involved in any capacity in any Claim, then from and after consummation of the
Offer, WHX will, or will cause the Company (or the Surviving Corporation if
after the Effective Time) to, periodically advance to such Indemnified Party its
legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by such
Indemnified Party of an undertaking to reimburse the amounts so advanced in the
event of a final non-appealable determination by a court of competent
jurisdiction that such Indemnified Party is not entitled thereto; (b) WHX and
the Company have agreed that all rights to indemnification and all limitations
on liability existing in favor of the Indemnified Party as provided in the
Company's Certificate of Incorporation and By-laws as in effect as of the date
of the Merger Agreement will survive the Merger and continue in full force and
effect, without any amendment thereto, for a period of six years from the
Effective Time to the extent such rights are consistent with the NYBCL;
provided, that in the event any claims are asserted or made within such six year
period, all rights to indemnification in respect of any such claims will
continue until disposition of any and all such claims; provided, further, that
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under New York law, the
Company's Certificate of Incorporation or By-laws or such agreements, as the
case may be, will be made by independent legal counsel selected by the
Indemnified Party and reasonably acceptable to WHX; (c) in the event WHX or the
Purchaser or any of their successors or assigns (i) consolidates with or merges
into any other person and will not be the continuing or surviving corporation or
entity of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
WHX and the Purchaser assume the obligations set forth above and none of the
actions described in clauses (i) or (ii) will be taken until such provision is
made; and (d) WHX or the Surviving Corporation will maintain the Company's
existing officers' and directors' liability insurance policy ('D&O Insurance')
for a period of not less than six years after the Effective Date; provided, that
WHX may substitute therefor policies of substantially similar coverage and
amounts containing terms no less advantageous to the covered former directors or
officers; provided, further, if the existing D&O Insurance expires or is
cancelled during such period, WHX or the Surviving Corporation will use their
best efforts to obtain substantially similar D&O Insurance; provided, however,
that if the aggregate annual premiums for such insurance at any time during such
period exceed 200% of the per annum rate of premiums currently paid by the
Company and its subsidiaries for such insurance on the date of the Merger
Agreement, then WHX will cause the Surviving Corporation to, and the Surviving
Corporation will, provide the maximum coverage that shall then be available at
an annual premium equal to 200% of such rate.
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Repayment of Borrowings under Credit Agreement. At the Closing, unless the
Company has obtained the lenders' consent to the Merger and a waiver of the
change in control provisions in the Credit Agreement, WHX will repay all
outstanding borrowings under the Credit Agreement in accordance with the terms
thereof such that no event of default will exist as a result of the consummation
of the transactions contemplated by the Merger Agreement.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of each party to effect the Merger are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions: (a)
if required by applicable law and the Certificate of Incorporation, the Merger
Agreement will have been approved and adopted by the requisite vote of the
Company's shareholders in order to consummate the Merger; (b) no statute, rule,
order, decree or regulation will have been enacted or promulgated by any
Governmental Entity or authority of competent jurisdiction which prohibits
consummation of the Merger and all governmental consents, orders and approvals
required for the consummation of the Merger and the transactions contemplated by
the Merger Agreement will have been obtained and be in effect at the Effective
Time; (c) there will be no order or injunction of a court or other governmental
authority of competent jurisdiction in effect precluding, restraining, enjoining
or prohibiting consummation of the Merger; and (d) WHX, the Purchaser or their
affiliates will have purchased Shares pursuant to the Offer.
Termination. The Merger Agreement provides that it may be terminated and
the Merger abandoned at any time prior to the Effective Time: (a) by mutual
consent of WHX and the Company; (b) by either the Company or WHX (i) if the
Shares have not been purchased pursuant to the Offer on or prior to July 1,
1998, provided, however, that a party may not terminate the Merger Agreement
pursuant to this clause (i) if such party's failure to fulfill any obligation
under the Merger Agreement was the cause of, or resulted in, the failure of WHX
or the Purchaser to purchase the Shares pursuant to the Offer on or prior to
such date or (ii) if any Governmental Entity has issued an order, decree or
ruling or taken any other action (which the parties will use their reasonable
efforts to lift) permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement, and such order, decree,
ruling or other action has become final and non-appealable; (c) by the Company
(i) if, prior to the purchase of Shares pursuant to the Offer, the Board has (A)
withdrawn, or modified or changed in a manner adverse to WHX or the Purchaser
its approval or recommendation of the Offer, the Merger Agreement or the Merger
in order to approve and permit the Company to execute an agreement relating to a
Superior Proposal, and (B) determined in good faith, after consultation with
independent legal counsel to the Company, that the failure to take such action
as set forth in the preceding clause (A) would be inconsistent with its
fiduciary duties to the Company's shareholders under applicable law, provided,
however, that prior to any such termination, the Company will give WHX at least
two business days notice of the effectiveness of such termination and
simultaneously with the termination of the Merger Agreement will pay the $8
million termination fee to WHX; (ii) if, prior to the purchase of Shares
pursuant to the Offer, WHX or the Purchaser breaches or fails in any material
respect to perform or comply with any of its material covenants and agreements
or breaches its representations and warranties in any material respect; or (iii)
if WHX or the Purchaser has terminated the Offer, or the Offer has expired,
without WHX or the Purchaser purchasing any Shares; provided, that the Company
may not terminate the Merger Agreement pursuant to this clause (iii) if the
Company is in material breach of the Merger Agreement; or (d) by WHX if, prior
to the purchase of Shares pursuant to the Offer, the Board has withdrawn, or
modified or changed in a manner adverse to WHX or the Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger, or has
recommended an Acquisition Proposal or has executed an agreement in principle or
definitive agreement relating to an Acquisition Proposal or similar business
combination with a person or entity other than WHX, the Purchaser or their
affiliates (or the Board resolves to do any of the foregoing).
Effect of Termination; Termination Fee. In the event of the termination of
the Merger Agreement as provided above, written notice thereof will promptly be
given to the other parties specifying the provision pursuant to which such
termination is made, the Merger Agreement will become null and void and there
will be no liability on the part of WHX or the Company, except for fraud or
willful breach of the Merger Agreement. If the Merger Agreement is terminated by
the Company pursuant to the provision described in clause (c)(i) or terminated
by WHX pursuant to the provision described in clause (d) under 'Termination'
above (provided that at the time of such termination by WHX, WHX and the
Purchaser were not in material breach of the Merger Agreement), the Company will
concurrently with such termination pay WHX the $8 million termination fee.
8
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ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY
Employment/Change in Control Agreements. In 1989, the Company entered into
an agreement with Mr. Daniel (the 'Daniel Agreement') which replaced a prior
agreement with Mr. Daniel. The Daniel Agreement provides for a three-year period
of employment commencing on May 1, 1989, which was extended May 1 of each year
from 1992 to 1996 for an additional three-year term. In May 1997, the Daniel
Agreement was further extended for a term ending on April 30, 2000. If not
further extended, the Daniel Agreement will terminate at the end of its current
term. Effective October 1, 1995, the Board set Mr. Daniel's base salary at
$470,000 per annum, which amount may be increased at the discretion of the
Board. Mr. Daniel is also entitled to participate in the Company's benefit
plans, including the Handy & Harman Management Incentive Plan (the 'Bonus Plan')
and the 1995 Omnibus Stock Incentive Plan (the 'Option Plan'). Prior to a recent
amendment to the Daniel Agreement discussed below, the Daniel Agreement provided
that if the Company terminates the Daniel Agreement other than for Cause (as
defined therein) or Mr. Daniel terminates it for Good Reason (as defined
therein), the Company is obligated to pay Mr. Daniel a lump sum amount equal to
the sum of (i) the base salary he would receive to the end of the then current
employment period and (ii) an amount equal to the Bonus Plan payments he
received with respect to the most recent calendar year, multiplied by the
remaining years of the employment period or portions thereof. Under the Daniel
Agreement, he also becomes entitled to additional pension benefits under the
Company's pension plans (the 'Pension Plan') and to receive title to a Company
car (estimated to have a value of $44,500, which value is not included in the
amount set forth below). In addition, the Daniel Agreement provides that if any
payments under the Daniel Agreement or any other payments or benefits received
or to be received by Mr. Daniel would be subject to the excise tax imposed by
Section 280G and Section 4999 of the Internal Revenue Code of 1986, as amended
(the 'Code'), the Company will reimburse Mr. Daniel for any such excise tax (and
any income and excise tax due with respect to such reimbursement). The Company
has also agreed to an amendment to the Daniel Agreement providing that, when his
employment by the Company ends for whatever reason (other than for Cause), he
and his wife would be entitled to medical benefits during their lives without
cost to them in the same manner as then currently provided for active senior
officers of the Company (the cost of which is not included in the amount set
forth below). On January 26, 1998, the Company amended the Daniel Agreement to
provide that in the event that Mr. Daniel's employment is terminated by the
Company (other than for Cause) or by Mr. Daniel for Good Reason, then the
employment term shall continue through the third anniversary of the date of
termination of Mr. Daniel's employment. On February 26, 1998, the Company
restated the January 26th amendment to the Daniel Agreement to provide that any
dispute or controversy between the Company and Mr. Daniel will be settled by
arbitration, and that the Company will pay any fees incurred by Mr. Daniel in
good faith in connection with such arbitration. Pursuant to the terms of the
Daniel Agreement, upon consummation of the Offer, Mr. Daniel will receive
approximately $4,873,984 (which amount includes reimbursement for any excise tax
due (and any income and excise tax due with respect to such reimbursement)
pursuant to Section 280G and Section 4999 of the Code). Copies of the Daniel
Agreement and the amendments thereto are filed as Exhibits 4, 5, 6 and 7 hereto
and are incorporated herein by reference.
The Company entered into an agreement with Frank E. Grzelecki as of July 1,
1989 (the '1989 Agreement') providing for the employment of Mr. Grzelecki. The
1989 Agreement provides that Mr. Grzelecki is entitled to an annual base salary,
currently set at $430,000, as well as participation in the Bonus Plan, the
Pension Plan and the other employee benefit and insurance plans of the Company.
The 1989 Agreement also provides that if, after a Change in Control of the
Company (as defined in the 1989 Agreement), Mr. Grzelecki's position, duties,
responsibilities, status with the Company, base salary, employee benefits or
location are changed in a manner materially adverse to his interest, then he may
designate such change as an event which 'triggers' a three-year period of
guaranteed employment by the Company. If the Company terminates Mr. Grzelecki
without cause within such three-year period, or if Mr. Grzelecki elects to
terminate his employment for any reason, the Company is obligated to pay Mr.
Grzelecki a lump sum amount equal to the sum of (i) the base salary he would
receive to the end of the employment period and (ii) an amount equal to the
bonus payment he received for the last calendar year, multiplied by the number
of years (or portions thereof) remaining in the employment period. Mr. Grzelecki
also becomes entitled to additional pension benefits under the Pension Plan. The
Company entered into an amendment to the 1989 Agreement, dated as of July 1,
1989, to: (i) conform the definition of 'change in control' to the broader
definition contained in the Company's employee benefit plans; and (ii) provide
that the Company would reimburse Mr. Grzelecki for any excise tax (and any
income and excise tax due with respect to
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<PAGE>
such reimbursement) imposed on payments made to Mr. Grzelecki in connection with
a 'Change in Control' of the Company pursuant to Section 280G and Section 4999
of the Code. Pursuant to the terms of the 1989 Agreement, upon consummation of
the Offer, Mr. Grzelecki will receive approximately $4,222,616. Copies of the
1989 Agreement and the amendment thereto are filed as Exhibits 8 and 9 hereto
and are incorporated herein by reference.
In November 1995, the Company entered into a new amended and restated
agreement with Mr. Grzelecki (the '1995 Agreement') which replaced a 1994
agreement with Mr. Grzelecki but did not supersede or replace the 1989
Agreement. The 1995 Agreement provides that, when his employment by the Company
ends, he will be entitled to severance rights of one year's salary as well as:
(i) medical benefits for him and his wife during their lives without cost to
them in the same manner as then currently provided for active senior officers of
the Company (the cost of which is not included in the amount set forth above),
(ii) certain adjustments of the exercise periods of outstanding stock options
and (iii) subject to limitations, office space and secretarial services for a
four-year period (the cost of which is not included in the amount set forth
above). On January 26, 1998, the Company entered into a Confirmation Agreement
with Mr. Grzelecki which confirmed that both the 1989 Agreement and amendment
thereto and the 1995 Agreement remained in effect and that if Mr. Grzelecki's
employment terminated under circumstances entitling him to a severance payment
following a Change in Control under the 1989 Agreement and amendment thereto, he
would not also be entitled to a severance payment equal to one year's salary
under the 1995 Agreement (although he would remain entitled to the other
benefits provided by the 1995 Agreement). On February 26, 1998, the Company
restated the Confirmation Agreement to provide that any dispute or controversy
between the Company and Mr. Grzelecki will be settled by arbitration, and that
the Company will pay any fees incurred by Mr. Grzelecki in good faith in
connection with such arbitration. Copies of the 1995 Agreement and the Restated
Confirmation Agreement are filed as Exhibits 10 and 11 hereto and are
incorporated herein by reference.
In 1996, the Company entered into an employment agreement with Robert D.
LeBlanc, President of the Company (the 'LeBlanc Agreement'), which provided for
a 30-month period of employment commencing on November 11, 1996 as Executive
Vice President of the Company (Mr. LeBlanc was appointed President of the
Company in July 1997). Mr. LeBlanc received a signing bonus of $85,000, and
receives a salary under the contract of $300,000 per annum, which amount may be
increased at the discretion of the Board. Mr. LeBlanc is entitled to participate
in the Bonus Plan, the 1988 Long-Term Incentive Plan (the 'LTIP ') and the
Option Plan, as well as in the Supplemental Executive Retirement Plan (the
'SERP'), the Executive Post-Retirement Life Insurance Program (the 'Life
Insurance Program') and all of the Company's employee benefit plans. If the
Company should terminate the LeBlanc Agreement other than for Cause or
Disability (each as defined therein) or death, the Company will continue to pay
Mr. LeBlanc's salary for the longer of twelve months and the remaining term of
the agreement. Mr. LeBlanc will also continue to participate in the SERP, the
Life Insurance Program and in all other employee benefit plans of the Company
for the remainder of the employment period. The LeBlanc Agreement is filed as
Exhibit 12 hereto and is incorporated herein by reference. If Mr. LeBlanc were
to receive payments under the LeBlanc Agreement, he would not be entitled to
receive any payments under the Supplemental Agreement (as hereinafter defined).
Pursuant to the terms of the LeBlanc Agreement, upon consummation of the Offer,
Mr. LeBlanc will be entitled to receive approximately $330,349.
In May 1997, the Company entered into an additional agreement (the
'Supplemental Agreement') with Mr. LeBlanc, providing that if at any time within
two years following a Change in Control of the Company (as defined in the
Supplemental Agreement) the Company terminates Mr. LeBlanc's employment (other
than for Disability or Cause, as such terms are defined in the Supplemental
Agreement), or if Mr. LeBlanc terminates his employment for Good Reason (as
defined in the Supplemental Agreement), Mr. LeBlanc will be entitled to receive
a lump sum cash payment equal to one year's base salary, and to receive, for
twelve months following his termination of employment, life, medical and dental
insurance benefits substantially similar to those which he was receiving
immediately prior to the notice of termination given with respect to such
termination. The Supplemental Agreement also provides that if any payment made
to Mr. LeBlanc under the Supplemental Agreement is subject to the excise tax
provisions of Section 280G or Section 4999 of the Code, the Company will reduce
such payment to the extent necessary to avoid such payment being subject to such
excise tax. On February 26, 1998, the Company amended the Supplemental Agreement
to provide that any dispute or controversy between the Company and Mr. LeBlanc
will be settled by arbitration, and that the Company will pay
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<PAGE>
any fees incurred by Mr. LeBlanc in good faith in connection with such
arbitration. Copies of the Supplemental Agreement and the amendment thereto are
filed as Exhibits 13 and 14 hereto and are incorporated herein by reference.
In May 1997, the Company also entered into certain agreements (the 'Change
in Control Agreements'), with each of Paul E. Dixon, Senior Vice President,
General Counsel and Secretary of the Company, Robert F. Burlinson, Vice
President and Treasurer of the Company and Dennis C. Kelly, Controller of the
Company, and in February 1998, entered into a Change in Control Agreement with
Dennis R. Kuhns, Corporate Vice President (each, an 'Executive'), providing that
if, at any time within two years following a Change in Control of the Company
(as defined in the Change in Control Agreements), the Company terminates the
Executive's employment (other than for Disability or Cause, as such terms are
defined in the Change in Control Agreements) or if the Executive terminates his
employment for Good Reason (as defined in the Change in Control Agreements), the
Executive will be entitled to receive a lump sum cash payment equal to one
year's base salary, and to receive, for twelve months following the Executive's
termination of employment, life, medical and dental insurance benefits
substantially similar to those which the Executive was receiving immediately
prior to the notice of termination given with respect to such termination. Each
Change in Control Agreement also provides that if any payment made to the
Executive under the Executive's Change in Control Agreement is subject to the
excise tax provisions of Section 280G and Section 4999 of the Code, the Company
will reduce such payment to the extent necessary to avoid such payment being
subject to such excise tax. On February 26, 1998, the Company amended and
restated each Change in Control Agreement to conform the definition of 'Change
in Control' to the broader definition contained in the Company's employee
benefits plans and to provide that any dispute or controversy between the
Company and an Executive will be settled by arbitration (and that the Company
will pay any fees incurred by such Executive in good faith in connection with
such arbitration). At the February 26, 1998 meeting of the Compensation
Committee of the Board of Directors, the Compensation Committee resolved to
amend Mr. Dixon's Change in Control Agreement to provide for a bonus equal to
$250,000 to be paid to Mr. Dixon within three business days following a Change
in Control (as defined in Mr. Dixon's Change in Control Agreement). Copies of
the amended and restated Change in Control Agreements for each of Messrs. Dixon,
Burlinson, Kelly and Kuhns are filed as Exhibits 15, 16, 17 and 18 hereto and
are incorporated herein by reference. Pursuant to the terms of each amended and
restated Change in Control Agreement, upon consummation of the Offer, each
Executive will receive approximately the following amounts: Mr. Dixon, $387,644;
Mr. Burlinson, $171,373; Mr. Kelly, $135,980; and Mr. Kuhns, $160,610.
In 1986, the Company entered into an agreement with Robert M. Thompson (the
'Thompson Agreement'), providing for the employment of Mr. Thompson at an annual
base salary, currently set at $175,000, as well as participation in the Bonus
Plan, the Pension Plan and the other employee benefit and insurance plans of the
Company. The Thompson Agreement also provides that if, after a Change in Control
of the Company (as defined in the Thompson Agreement), Mr. Thompson's position,
duties, responsibilities, status with the Company, base salary, employee
benefits or location are changed in a manner materially adverse to Mr.
Thompson's interest, then he may designate such change as an event which
'triggers' a three-year period of guaranteed employment by the Company. If the
Company terminates Mr. Thompson without cause within such three-year period, or
if Mr. Thompson elects to terminate his employment for any reason, the Company
is obligated to pay Mr. Thompson a lump sum amount equal to the sum of (i) the
base salary he would receive to the end of the employment period and (ii) an
amount equal to the bonus payment he received for the last calendar year,
multiplied by the number of years (or portions thereof) remaining in the
employment period. Mr. Thompson also becomes entitled to continued participation
in the Company's medical and accident insurance programs for three years after
the change in control as well as additional pension benefits under the Pension
Plan (the cost of which is not included in the amount set forth below). In
December 1988, the Board authorized amendments to the Thompson Agreement to (i)
conform the definition of 'change in control' to the broader definition
contained in the Company's employee benefit plans; and (ii) provide that the
Company reimburse Mr. Thompson for any excise tax (and any income and excise tax
due with respect to such reimbursement) imposed on payments made to him in
connection with a change in control of the Company pursuant to Section 280G and
Section 4999 of the Code. On February 26, 1998, the Company amended the Thompson
Agreement to provide that any dispute or controversy between the Company and Mr.
Thompson will be settled by arbitration, and that the Company will pay any fees
incurred by Mr. Thompson in good faith in connection with such arbitration. A
copy of the Thompson Agreement and the amendments to the Thompson Agreement are
filed as Exhibits 19, 20 and 21
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hereto and are incorporated herein by reference. Pursuant to the terms of the
Thompson Agreement, as amended, upon consummation of the Offer, Mr. Thompson
will receive approximately $928,614 (which amount includes reimbursement to Mr.
Thompson for any excise tax (and any income and excise tax due with respect to
such reimbursement) imposed on payments made to him in connection with a Change
in Control of the Company).
The Company believes that the Merger Agreement provides that payments under
the employment and severance agreements are required to be made at the
consummation of the Offer, since the Merger Agreement provides that the officers
of the Purchaser will be the officers of the Surviving Corporation. The
Purchaser has advised the Company that it intends to re-appoint the officers of
the Company to their respective positions simultaneously with the consummation
of the Merger, and in its view no payments under the employment/severance
agreements would be required at the time of the consummation of the Offer.
Supplemental Pension Arrangements. In the event of a Change in Control of
the Company (as defined in the SERP), each participant will be 100% vested in
the amount of the benefits due to him; and the Company will contribute the
aggregate amount of all such benefits to a grantor trust established by the
Company. At its May 1995 meeting, the Board resolved to amend the SERP and, as
of January 1, 1998, restated the SERP to provide that upon termination of a
participant's employment, such participant can elect to receive a lump sum
payment in the amount of his or her benefits, calculated on the same basis as
under the Pension Plan, except that the interest rate reflected in the
calculation would be 80% of the applicable interest rate used in the Pension
Plan. The Board also resolved to amend the SERP (and, as of January 1, 1998,
restated the SERP) to provide that upon a Change in Control of the Company (as
defined in the SERP), (i) the Company will pay, out of the grantor trust, a lump
sum to each participant in the amount of each such participant's benefits
calculated on the same basis as the Pension Plan; provided, however, that the
lump sum factor reflecting 80% of the interest rate would be applied to the full
amount of the pension determined under the SERP before the offset for the
Pension Plan, which would then be reduced by the lump sum payment, as determined
under the Pension Plan, reflecting 100% of the interest rate, (ii) with respect
to any participant who had not yet attained the age of 60 and thus would not be
eligible for an early retirement pension, the lump sum value of the full amount
of pension would reflect commencement of the full amount of accrued pension
starting at age 60 and (iii) if any lump sum payment made to a participant under
the SERP is subject to the excise tax provisions of Section 280G and Section
4999 of the Code, the Company will reimburse such participant such that the net
amount retained by the participant will equal the lump sum payment without
regard to such excise tax. For purposes of calculating their benefits under the
SERP, Messrs. Daniel, Grzelecki and Thompson are credited with three (3)
additional years of service under their individual employment/severance
agreements and Mr. LeBlanc is credited with one (1) additional year of service
under his agreement. A copy of the SERP is filed as Exhibit 22 hereto and is
incorporated herein by reference. Upon consummation of the Offer, the
approximate amounts to be paid out to participants under the SERP will be as
follows: Mr. Daniel, $2,341,198; Mr. Grzelecki, $1,174,695; Mr. LeBlanc,
$111,758; Mr. Dixon, $126,082; Mr. Kelly, $96,557; and Mr. Thompson, $284,478.
In 1992, the Company adopted a supplemental executive plan (the
'Supplemental Plan') to provide the Company a further means to retain and
encourage the productive efforts of Mr. Grzelecki. The Supplemental Plan, filed
as Exhibit 23 hereto and incorporated herein by reference, provides for the
accrual and immediate vesting of a monthly pension of $6,000 per month for Mr.
Grzelecki, to be paid for life commencing on the later of July 1, 1997 and Mr.
Grzelecki's departure from the Company. The pension provides for benefits on the
basis of a ten year certain payment and for life thereafter. The Company and Mr.
Grzelecki have agreed to convert the term of the payment pursuant to the
Supplemental Plan from the longer of his life or ten years to the longer of his
life or the life of his spouse, at an actuarially equivalent monthly amount. By
action of the Compensation Committee, the Company has waived the requirement
that Mr. Grzelecki depart the Company and authorized payments to begin effective
March 1, 1998. The Company has purchased annuity policies to provide a source of
funds to satisfy the Company's obligation to pay Mr. Grzelecki, although the
Company continues to be responsible for payments under the Supplemental Plan.
Certain Insurance Arrangements. At its May 1997 meeting, the Board
resolved to implement a Long-Term Health Care Plan (the 'Health Care Plan'),
under which the Company provides annual premiums to each officer (and his or her
spouse) selected for participation by the Board's Compensation Committee to
purchase a health care policy covering such officer (and spouse), such premiums
to be paid for the life of each policyholder. In order to be eligible for
participation, an officer must have at least five years of service with the
Company and be at least age 55. At the September 1997 meetings of the
Compensation Committee and the Board of Directors, the Compensation Committee
and Board determined that following a change in control of the Company, the
Health Care Plan may not be terminated for those persons who are eligible to
participate in the Health Care Plan prior to the change in control and will be a
continuing obligation of the Company. The only persons covered by this program
are Mr. Daniel, Mr. Grzelecki and Mr. Grzelecki's spouse.
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Effective as of February 1, 1995, the Company implemented the Life
Insurance Program, filed as Exhibit 24 hereto and incorporated herein by
reference, whereby each executive officer designated by the Compensation
Committee and determined to be insurable to the satisfaction of the insurance
provider will be provided with two life insurance policies on such executive
officer's life (the 'Insured Executive'). Each Insured Executive will have one
life insurance policy on his or her life during the time that he or she is
employed by the Company (the 'Pre-Retirement Policy'), which Pre-Retirement
Policy will be in an amount equal to four times the Insured Executive's annual
base salary in effect from time to time, and a second life insurance policy on
his or her life (the 'Post-Retirement Policy'), which Post-Retirement Policy
will be in an amount equal to two times the Insured Executive's annual base
salary. Upon the Insured Executive's death while employed by the Company, the
Company shall pay to the designated beneficiary a lump sum cash payment in the
amount of the Pre-Retirement Policy, and upon Retirement (as defined in the
Pension Plan) by the Insured Executive, the Company will transfer to such
Insured Executive the ownership rights in such Insured Executive's
Post-Retirement Policy and, to the extent such transfer results in federal,
state or local income taxes to the Insured Executive, the Company will gross up
such Insured Executive for such income taxes. Upon separation from service by an
Insured Executive who has not attained Retirement age but who is vested in his
SERP, the Company shall transfer to such Insured Execution the ownership rights
of such Insured Executive's Post-Retirement Policy; provided, however, that the
Company may require, upon such transfer, that the Insured Executive reimburse
the Company in an amount equal to the cash surrender value of such
Post-Retirement Policy.
At the September and December 1997 meetings of the Compensation Committee,
the Compensation Committee determined to amend the Life Insurance Program to
provide that upon a Change in Control of the Company (as defined in the Life
Insurance Program) the Post-Retirement Policy may not be terminated and the
Company will transfer to each Insured Executive the ownership rights in each
such Insured Executive's Post-Retirement Policy. However, at the March 5, 1998
meeting of the Compensation Committee, the Compensation Committee determined to
rescind such amendment. Accordingly, upon consummation of the Offer, the
estimated cash surrender value of the Insured Executive Post-Retirement Policies
for the Executives who have attained Retirement age, plus the income tax
gross-ups, will be approximately as follows: Mr. Daniel, $180,899; Mr.
Grzelecki, $114,853; and Mr. Thompson, $94,293.
Bonus Plan. The Company maintains the Bonus Plan, which is an annual
incentive program that rewards selected officers and other key employees each
year based on their contributions to the profits of the Company. Prior to the
start of each Bonus Plan year, the Chief Executive Officer recommends those
officers designated as participants for the upcoming year. Final selection of
each participant is the responsibility of the Compensation Committee. For the
1997 fiscal year, all officers were selected for participation in the Plan.
Copies of the Bonus Plan and an amendment thereto are filed hereto as Exhibits
25 and 26 hereto and are incorporated herein by reference.
The available incentive pool for officers and selected corporate management
participants is determined by a formula that represents 7 1/2% of consolidated
pre-tax earnings in excess of 15% of shareholders' equity. An individual
participant's award may not exceed 100% of the participant's salary in the
fiscal year for which the Bonus Plan award was earned. If the excess earnings
criterion is not met, at the sole discretion of the Committee, based upon the
recommendation of the Chief Executive Officer, an amount may be provided for
awards to participants to recognize overall effort of achieving objectives which
enhance the Company's long-term growth potential. However, any discretionary
award may not increase an employee's total award under the Bonus Plan to an
amount in excess of 25% of the participant's base salary. For the 1997 fiscal
year, the available incentive pool for officers and selected corporate
management participants was approximately $1,359,000.
At the December 23, 1997 meeting of the Compensation Committee, the
Compensation Committee resolved that a portion of the payments that otherwise
would be made in 1998 under the Bonus Plan to certain individuals be accelerated
into 1997. The portion paid in 1997 was to be 80% of the estimated available
incentive pool relating to 1997, with the remaining portion to be paid after the
February 26, 1998 meeting of the Board of Directors. Accordingly, the following
individuals received the following amounts in 1997: Mr. Daniel, $216,000; Mr.
Grzelecki, $196,000; Mr. LeBlanc, $136,000; Mr. Dixon, $96,000; Mr. Burlinson,
$60,000; Mr. Kelly, $57,600; and Mr. Thompson, $28,000. At the February 26, 1998
meeting of the Compensation Committee, as a result of the fact that the
Company's year-end audited financial statements were higher than estimated, the
following individuals received the following remaining amounts in respect of
their 1997 bonus: Mr. Daniel, $106,000; Mr. Grzelecki, $99,000; Mr. LeBlanc,
$62,000; Mr. Dixon, $46,000; Mr. Burlinson, $24,000;
13
<PAGE>
Mr. Kelly, $28,400; and Mr. Thompson, $7,000. In addition, Mr. Kuhns received a
1997 bonus of $70,000 as part of the Company's Subsidiary, Division, Group or
Unit Management Incentive Plan, as amended.
Pursuant to the Merger Agreement, at or prior to the Effective Time, the
Compensation Committee, after consultation with the Chief Executive Officer,
will allocate to officers and selected corporate management participants of the
Company the 1998 Bonus Pool (as defined below) in a manner consistent with past
practice, and to the extent payments relating to such allocated amounts have not
been made prior to the Effective Time, WHX and the Purchaser agreed to make
payments, or to cause the Surviving Corporation to make payments, relating to
such allocated amounts within five days after the Effective Time. The amount of
the '1998 Bonus Pool' will equal the aggregate amount of bonuses paid to
officers and selected corporate management participants relating to the
Company's 1997 fiscal year under the Bonus Plan multiplied by a fraction, the
numerator of which is the number of days which have elapsed during fiscal 1998
and the denominator of which is 365.
Options. The Handy & Harman Outside Director Stock Option Plan (the
'Directors' Plan'), which was approved by the shareholders in 1990 and is filed
hereto as Exhibit 27 and incorporated herein by reference, provides for the
granting of options to each non-employee member of the Company's Board of
Directors. The purpose of the Directors' Plan is to foster and promote the long
term financial success of the Company and materially increase shareholder value
by enabling the Company to attract and retain the services as directors of
outstanding individuals whose judgment, interest and special effort are
essential to the successful conduct of the Company's business and affairs.
The Directors' Plan provides for the granting of options to non-employee
directors of the Company to acquire an aggregate of 100,000 shares of common
stock of the Company. The Directors' Plan provides that annual grants of options
to be made on the first business day of each year to purchase an amount of
Shares determined by dividing 50% of the annual retainer fee of each outside
Director by the fair market value of a Share on the date of grant. The options
are exercisable for ten years after the date of grant. The exercise price is
$1.00 per Share, and upon exercise payment must be made in full in cash or cash
equivalents.
Pursuant to the Merger Agreement, each option granted to a director
pursuant to the Directors' Plan will be cancelled at the Effective Time and each
director shall receive, in exchange for such cancellation, an amount equal to
the number of Shares subject to each option so cancelled multiplied by $34.25.
The Handy & Harman 1995 Omnibus Stock Incentive Plan (the 'Option Plan'),
filed hereto as Exhibit 37 and incorporated herein by reference, was adopted at
the 1995 Annual Meeting of Stockholders. The Option Plan is intended to promote
the interests of the Company and its shareholders by providing officers and
other employees of the Company (including directors who are also employees of
the Company) with appropriate incentives and rewards to encourage them to enter
into and continue in the employ of the Company and to acquire a proprietary
interest in the long term success of the Company.
The Compensation Committee of the Board of Directors may grant options,
stock appreciation rights (tandem or standalone), 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 Option Plan.
The Company's 1991 Long-Term Incentive Stock Option Plan, which covered a
maximum of 1,000,000 Shares, was approved at the 1991 Annual Meeting of
Shareholders. Such plan permitted the grant of non-qualified stock options and
SAR's. Outstanding Shares under option for this plan were incorporated into the
successor Option Plan.
Upon consummation of the Offer, all outstanding options will become fully
exercisable and vested. Each option will at the Effective Time be cancelled and
the holder of the option will receive an amount equal to the product of (A) the
excess of $35.25 over the exercise price per Share of each such option and (B)
the number of Shares relating to such option.
Set forth below is a table disclosing the treatment in the Merger of
currently outstanding options held by executive officers and non-employee
directors of the Company. For purposes of the table, it has been assumed that
outstanding options will not be exercised.
14
<PAGE>
<TABLE>
<CAPTION>
AMOUNTS PAYABLE RELATING TO OPTIONS
IN THE MERGER
-------------------------------------------
AMOUNT PAYABLE
NUMBER OF UPON CANCELLATION
OPTIONS/EXERCISE PRICE OF OPTIONS
----------------------- -----------------
<S> <C> <C>
EXECUTIVE OFFICERS
Richard N. Daniel....................................................... 100,000/$14.125 $6,898,612
37,500/$12.937
25,000/$16.625
30,000/$15.125
50,000/$17.75
160,000/$22.71875
Frank E. Grzelecki...................................................... 100,000/$14.125 $5,869,037
13,500/$12.937
20,000/$16.625
25,000/$15.125
40,000/$17.75
150,000/$22.71875
Robert D. LeBlanc....................................................... 50,000/$18.625 $1,332,500
40,000/$22.71875
Paul E. Dixon........................................................... 2,000/$12.5625 $ 985,313.50
2,000/$12.937
5,000/$16.625
11,250/$15.125
15,000/$17.75
25,000/$22.71875
Dennis C. Kelly......................................................... 6,000/$12.937 $ 709,940
4,000/$16.625
10,000/$15.125
10,000/$17.75
10,000/$22.71875
Robert F. Burlinson..................................................... 15,000/$17.75 $ 387,812
10,000/$22.71875
Dennis R. Kuhns......................................................... 5,000/$16.625 $ 657,344
10,000/$15.125
10,000/$17.75
15,000/$22.71875
Robert M. Thompson...................................................... 18,000/$12.625 $ 496,502
4,000/$12.937
NON-EMPLOYEE DIRECTORS
Clarence A. Abramson.................................................... 748/$1.00 $ 130,698
685/$1.00
658/$1.00
699/$1.00
683/$1.00
343/$1.00
Robert E. Cornelia...................................................... 683/$1.00 $ 35,140.50
343/$1.00
Gerald G. Garbacz....................................................... 343/$1.00 $ 11,747.75
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AMOUNTS PAYABLE RELATING TO OPTIONS
IN THE MERGER
-------------------------------------------
AMOUNT PAYABLE
NUMBER OF UPON CANCELLATION
OPTIONS/EXERCISE PRICE OF OPTIONS
----------------------- -----------------
<S> <C> <C>
Gouverneur M. Nichols................................................... 683/$1.00 $ 35,140.50
343/$1.00
Hercules P. Sotos....................................................... 685/$1.00 $ 105,079
658/$1.00
699/$1.00
683/$1.00
343/$1.00
Elliot J. Sussman....................................................... 699/$1.00 $ 59,081.25
683/$1.00
343/$1.00
Roger E. Tetrault....................................................... -- --
</TABLE>
LTIP. Handy & Harman's Long-Term Incentive Plan (the 'LTIP') is a
performance-based restricted stock plan pursuant to which in every other year
key executives earn the right to receive Shares based on achievement of
pre-established financial and individual performance goals. LTIP participants
are selected by the Compensation Committee.
The LTIP establishes overlapping cycles, with each cycle encompassing five
fiscal years. Shares of restricted stock are awarded based on the results
obtained from selected performance measures over the first three years of a
cycle ('Performance Period'). During the subsequent two-year period the
restrictions lapse and the stock is earned ('Earn-out Period'); restrictions
lapse at the rate of 50% per year. Awards are made in the year immediately
following the third year of each Performance Period. During the Earn-out Period,
the Shares are held by the Company in escrow for the executive, but the
executive receives dividends on the restricted stock during such time. At the
end of each three-year cycle, the Compensation Committee determines the number
of Shares to be awarded to each executive based upon the actual performance
compared to the objectives. A copy of the LTIP and amendments thereto are filed
as Exhibits 28, 29, 30 and 31 hereto and are incorporated herein by reference.
At the December 30, 1997 meeting of the Compensation Committee, the
Compensation Committee determined that the expiration of the Earn-out Period on
those Shares of restricted stock granted under the LTIP which would otherwise
expire on January 2, 1998 be accelerated effective as of December 30, 1997.
Consequently, the following individuals received, in 1997, awards of the
following number of Shares, with a total compensation value in the following
amounts: Mr. Daniel, 6,075 Shares ($209,208); Mr. Grzelecki, 5,225 Shares
($179,936); Mr. Dixon, 1,675 Shares ($57,683); and Mr. Kelly, 725 Shares
($24,967). A portion of the Shares were converted to cash and withheld for
income tax purposes. As a result, the net Shares actually received was as
follows: Mr. Daniel, 3,135 Shares; Mr. Grzelecki, 2,696 Shares; Mr. Dixon, 864
Shares; and Mr. Kelly, 725 Shares.
At the January 22, 1998 meeting of the Compensation Committee, the
Compensation Committee determined that, with respect to the fifth cycle awards
under the LTIP, all restrictions will lapse upon a Change in Control (as defined
in the LTIP, as amended on January 22, 1998). The awards with respect to the
fifth cycle (which were made at the February 26, 1998 meeting of the
Compensation Committee) were as follows: Mr. Daniel, 30,134 Shares; Mr.
Grzelecki, 25,724 Shares; Mr. Dixon, 6,836 Shares; Mr. Kelly, 2,840 Shares; Mr.
Kuhns, 2,169 Shares; and Mr. Thompson, 5,770 Shares.
The Compensation Committee further agreed that, with respect to the sixth
cycle, upon a Change in Control, a prorated portion of the granted Shares will
be made based on the time that had lapsed in the cycle as of the date of the
Change in Control. Such prorated portion will be paid in a cash equivalent of
the prorated Shares at the Change in Control price. It is anticipated that the
following individuals would receive the following grants and awards with respect
to the sixth cycle assuming a Change in Control on April 15, 1998: Mr. Daniel,
11,528 Shares; Mr. Grzelecki, 10,056 Shares; Mr. LeBlanc, 5,886 Shares; Mr.
Dixon, 3,074 Shares; Mr. Burlinson, 2,832 Shares; Mr. Kelly, 1,446 Shares; and
Mr. Kuhns, 2,266 Shares.
16
<PAGE>
Deferred Fee Plan. The Handy & Harman Deferred Fee Plan for Directors (the
'Deferred Fee Plan'), effective as of December 1, 1980 and amended and restated
as of January 1,1995, is attached hereto as Exhibit 35 and is incorporated
herein by reference. Pursuant to the Deferred Fee Plan, a member of the Board
who is a participant in the Deferred Fee Plan (a 'Participant') may elect to
defer receipt of all or any portion of the compensation payable to such
Participant for serving on the Board (or any committee of the Board). Such
deferred amounts will be paid to the Participant upon his or her separation from
service, at the Participant's election, in a lump sum or in annual installments
over a period of between three and twenty years. At the February 26, 1998
meeting of the Compensation Committee, the Compensation Committee resolved to
amend the Deferred Fee Plan to include a lump sum election for distribution upon
a change in control of the Company.
Certain Provisions in the Merger Agreement. As described above, the Merger
Agreement provides that, during the three-year period following the Effective
Time, employees of the Company will receive employee benefits that are no less
favorable in the aggregate than those provided to such employees immediately
prior to the date of the Merger Agreement. With respect to such benefits,
service accrued with the Company and its subsidiaries by such employees will be
recognized for all purposes except to the extent necessary to prevent
duplication of benefits. The Merger Agreement further provides that WHX will
honor all employment and severance agreements with employees and former
employees of the Company.
The Merger Agreement also provides for WHX to, and to cause the Company (or
the Surviving Corporation if after the Effective Time) to, indemnify, defend and
hold harmless, among other persons, the Company's officers and directors against
claims, losses, and liability arising out of, among other things, (i) the fact
that such person was a director or officer of the Company or (ii) the Merger
Agreement or any of the transactions contemplated thereby, in each case, to the
full extent permitted under New York law or the Company's Restated Certificate
of Incorporation or By-laws or existing indemnification agreements. WHX also
agreed in the Merger Agreement that all rights to indemnification and all
limitations on liability provided to directors and officers in the Company's
Restated Certificate of Incorporation or By-laws as in effect as of the date of
the Merger Agreement will survive the Merger and continue in full force and
effect, without any amendment thereto, for six years from the Effective Time to
the extent such rights are consistent with the NYBCL. Additionally, WHX has
agreed that either it or the Surviving Corporation will maintain the Company's
existing officers' and directors' liability insurance policy for a period of not
less than six years after the Effective Date; provided, that, the aggregate
annual premiums for such insurance at any time during such period will not
exceed 200% of the per annum rate of premiums paid by the Company and its
subsidiaries on the date of the Merger Agreement. See 'The Merger
Agreement--Directors' and Officers' Insurance and Indemnification.'
17
<PAGE>
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS HAS UNANIMOUSLY (WITH ONE DIRECTOR ABSENT) APPROVED
THE MERGER AGREEMENT, THE OFFER AND THE MERGER, HAS DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
SHAREHOLDERS, AND RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES IN THE OFFER.
A letter to the Company's shareholders communicating the Board's
recommendation and a press release announcing the execution of the Merger
Agreement are filed herewith as Exhibits 38 and 39, respectively, and are
incorporated herein by reference.
(b) BACKGROUND; REASONS FOR THE BOARD'S RECOMMENDATION
Background
On December 15, 1997, Ronald LaBow, Chairman of WHX, telecopied, without
any prior contact with the Company, the following letter to Richard N. Daniel,
Chairman and Chief Executive Officer of the Company:
December 15, 1997
Richard N. Daniel, Chairman
Handy & Harman
250 Park Avenue
New York, New York 10177
Dear Mr. Daniel:
I will be calling you later this morning to discuss WHX's interest
in acquiring your company for $30.00 per share in cash. As you
recognize this offer represents a very attractive premium to the
company's current and historic market price. I hope we can have an
amicable and productive dialogue on the merits of this offer and the
benefits which a combination of our companies would bring to your
senior management team, employees at large and the company's
shareholders. We also look forward to having an opportunity to discuss
this offer directly with your Board of Directors.
Attached for your information is a press release which we will be
issuing later today. It outlines our plan to commence an any and all
cash tender offer tomorrow at $30.00 per share, subject to a number of
conditions including approval by your Board of Directors under the
Shareholder Rights Plan and the Business Combination statute (Section
912) of the New York law. The tender offer will not be subject to
financing. The complete details of the tender offer will be set forth
in a filing to be made on Tuesday with the SEC.
I am available to meet with you or your representatives to discuss
this matter at your earliest convenience.
Very truly yours,
Ronald LaBow
Chairman
18
<PAGE>
On December 16, 1997, WHX filed with the SEC a Tender Offer Statement on
Schedule 14D-1 relating to its tender offer to purchase any and all shares of
the Company at a price of $30 per Share in cash (the 'Initial WHX Offer').
On December 18, 1997, the Board of Directors of the Company held a meeting
at which it reviewed with members of the Company's senior management, Goldman,
Sachs & Co., the Company's financial advisor ('Goldman Sachs'), and Skadden,
Arps, Slate, Meagher & Flom LLP, special counsel to the Company ('Skadden
Arps'), the Initial WHX Offer and its terms and conditions. In addition, Skadden
Arps reviewed the legal responsibilities and duties of the Board in light of the
Initial WHX Offer.
On December 23, 1997, the Board of Directors held a meeting at which the
Board again reviewed the Initial WHX Offer and its terms and conditions with
members of the Company's senior management and Skadden Arps. The Board of
Directors reviewed the Company's business strategy and the strategic
repositioning of the Company which had occurred during the prior two years and
considered the potential benefits both with and without a transaction with WHX.
At this meeting, Goldman Sachs presented a financial analysis of the Initial WHX
Offer and reviewed the reaction of the financial markets to the Initial WHX
Offer. The Board of Directors unanimously concluded that the Initial WHX Offer
was inadequate and not in the best interests of the Company and its
shareholders. After lengthy discussions with Goldman Sachs, Skadden Arps and the
Company's senior management, the Board of Directors determined that the best
means for providing value to shareholders of the Company was for the Company to
continue to pursue its strategic initiatives and business plans and not to be
sold at that time. On December 24, 1997, the Company issued a press release
announcing the Board's determination and filed with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 describing the Board's
determination and recommendation and the reasons therefor.
The Initial WHX Offer expired at 12:00 midnight on January 16, 1998, and on
January 20, 1998, WHX announced that it had purchased 425,152 Shares
(subsequently revised to 425,052 Shares) pursuant to the Initial WHX Offer.
Immediately following the expiration of the Initial WHX Offer, WHX owned
1,011,152 Shares, representing approximately 8.4% of the outstanding Shares.
On January 20 and 22, 1998, the Board of Directors of the Company met to
consider and discuss, with members of the Company's senior management, Goldman
Sachs and Skadden Arps, the Company's strategic alternatives to enhance
shareholder value. The Board reviewed, among other things, the possibility of
entering into transactions with third parties involving all or a material part
of the Company and strategic alternatives not involving a sale of all or a
material part of the Company, including among others, a recapitalization, share
repurchases, acquisitions and dispositions of certain assets. After
presentations from Goldman Sachs, Skadden Arps and the Company's senior
management and a discussion of the potential benefits of such strategic
alternatives, the Board unanimously determined on January 22, 1998 to instruct
the Company's management, with the assistance of Goldman Sachs, to explore all
strategic alternatives that could enhance shareholder value, including
transactions with third parties involving the sale of all or a material part of
the Company. Prior to the opening of business on January 23, 1998, the Company
issued a press release announcing the Board's decision.
Following such announcement, Goldman Sachs contacted various third parties
to ascertain whether they would be interested in exploring a transaction with
the Company, and provided certain public and confidential information regarding
the Company to such parties upon their execution of confidentiality/standstill
agreements. Goldman Sachs also contacted WHX in early February to determine if
WHX was interested in participating in this process but WHX declined to execute
a confidentiality agreement with a standstill clause at that time.
19
<PAGE>
On January 27, 1998, WHX reported that it had purchased an additional
638,403 Shares following the termination of the Initial WHX Offer, bringing its
aggregate ownership to approximately 13.7% of the outstanding Shares. Also on
January 27, Ronald LaBow sent the following letter to Richard N. Daniel:
January 27, 1998
Richard N. Daniel, Chairman
Handy & Harman
250 Park Avenue
New York, New York 10177
Dear Mr. Daniel:
On behalf of WHX Corporation, I am writing to express our pleasure
with the press announcement this past Friday that Handy & Harman
intends to pursue strategic alternatives to enhance shareholder value.
In that regard, please consider the following:
o WHX now owns 1,649,455 shares of Handy & Harman common stock, or
approximately 13.7%. We are now one of your two largest
shareholders. Depending on market conditions, we may choose to
further increase our ownership, or to sell shares.
o WHX remains interested in acquiring all of Handy & Harman in an
amicable transaction which would be mutually beneficial to WHX and
Handy & Harman shareholders, employees at large and the senior
management team.
o WHX has now retained DLJ as its financial adviser to assist in
negotiating such a transaction.
o WHX stands ready, willing and able to meet with you or your
representatives to discuss an amicable transaction. However, we
would NOT be pleased if last week's announcement is used as an
excuse to delay the upcoming annual meeting, which is traditionally
held in early May, or to otherwise deprive Handy & Harman
shareholders of the opportunity to express their views about the
future management and ownership of their company in a timely manner.
Sincerely,
Ronald LaBow
Chairman
On February 13, 1998, Messrs. Daniel and Grzelecki and representatives of
Goldman Sachs, at the request of WHX, met with Mr. LaBow and representatives of
WHX and Donaldson, Lufkin and Jenrette, WHX's financial advisor ('DLJ'). At the
meeting, WHX indicated that it continued to be interested in a possible
transaction with the Company and that, subject to certain confirmatory due
diligence, might be willing to propose a cash acquisition of the Company's
remaining outstanding Shares in the range of $33-$35 per Share. After additional
discussions, WHX indicated that it may be prepared to make an offer at the high
end of such range. Representatives of the Company advised WHX that the Board
would be meeting in the near future to discuss developments since the Company's
January 23 announcement and would respond to WHX in due course.
During the weeks of February 16 and 23, 1998, representatives of Goldman
Sachs participated in preliminary financial due diligence telephone conferences
with WHX and DLJ in connection with WHX's consideration of a possible
transaction with the Company. During such period, Goldman Sachs, on behalf of
the Company, continued to solicit other third party interest in a possible
transaction involving all or a material part of the Company.
During the week of February 23, 1998, Goldman Sachs advised WHX and other
interested third parties that proposals to acquire all or a material portion of
the Company should be submitted by the close of business on Friday, February 27,
1998.
A regularly scheduled meeting of the Board of Directors of the Company was
held on February 26, 1998, during which representatives of Goldman Sachs
reviewed the solicitation process and developments that had occurred since the
Company's January 23 announcement, as well as the discussions that had occurred
with WHX and other interested third parties since the Board's previous meeting.
Goldman Sachs advised the Board of the
20
<PAGE>
status of the expressions of interest received by Goldman Sachs for the entire
Company, as well as that it had received expressions of interest from a number
of third parties regarding a potential acquisition of certain of the Company's
business units and certain other assets of the Company. Following discussion,
the Board's consensus was to defer consideration of any decision with respect to
any third party or other transaction until the next meeting of the Board, which
was scheduled for the evening of February 27, 1998.
Late in the afternoon of February 27, 1998, representatives of Olshan
Grundman Frome & Rosenzweig LLP ('Olshan Grundman'), counsel to WHX, delivered
to Skadden Arps comments on the form of merger agreement previously provided to
WHX and stated that WHX was willing to pay $35 net per Share in cash for all of
the Company's remaining outstanding Shares. At a telephonic meeting of the Board
of Directors on the evening of February 27, 1998, Goldman Sachs advised the
Board that WHX had submitted a $35 per Share proposal and advised the Board of
the status of discussions with other third parties that continued to express an
interest in an acquisition of or merger with the Company. The Board, with the
assistance of Skadden Arps and Goldman Sachs, reviewed various business and
legal issues raised by Olshan Grundman's comments on the form of merger
agreement and then instructed Goldman Sachs to commence negotiations with WHX.
Commencing on the evening of February 27, 1998 and continuing through March
1, 1998, representatives of Goldman Sachs and Skadden Arps, in concert with
senior management of the Company, negotiated with senior management of WHX and
representatives of DLJ and Olshan Grundman with respect to the terms, including
price, of a possible acquisition by WHX of all of the Company's remaining
outstanding Shares, including the terms of the Merger Agreement. During such
negotiations, WHX agreed to increase its offer to $35.25 net per Share. WHX
entered into the Confidentiality Agreement on February 28, 1998 and conducted a
due diligence investigation of the Company between February 28 and March 1,
1998.
On the evening of March 1, 1998, the Board of Directors of the Company met
to review with the Company's financial and legal advisors the terms and
conditions of the proposed merger agreement with WHX and the Purchaser based on
the above negotiations. At the meeting, Goldman Sachs and Skadden Arps reviewed
such negotiations and the consideration and other terms of the Merger Agreement.
Goldman Sachs also updated the Board as to the status of discussions with other
third parties which had expressed interest in the Company. Goldman Sachs also
presented its financial analyses of the WHX proposal and provided its opinion
that as of March 1, 1998 the $35.25 per Share in cash to be received by the
Company's shareholders (excluding WHX and its subsidiaries) in the Offer and the
Merger was fair from a financial point of view to such shareholders. Following
the Board's review of the final terms of the Offer and the Merger, the Board
unanimously determined (with one director absent) that the Merger Agreement and
the transactions contemplated thereby, including the Offer and Merger, are fair
to and in the best interests of the Company's shareholders, approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, authorized the execution and delivery of the Merger Agreement, and
recommended that the Company's shareholders accept the Offer and tender their
Shares pursuant to the Offer and approve and adopt the Merger Agreement and the
transactions contemplated thereby.
Following this Board meeting, the Company, WHX and the Purchaser executed
and delivered the Merger Agreement.
Prior to the opening of business on March 2, 1998, the Company and WHX
issued a joint press release announcing the execution of the Merger Agreement.
Reasons for the Transaction; Factors Considered by the Board
In approving the Merger Agreement, the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, and recommending that the
Company's shareholders accept the Offer and tender their Shares, the Board of
Directors considered a variety of factors, including:
1. The financial condition, results of operations, cash flows,
business opportunities, current strategies, business plans,
competitive position and prospects of the Company (and the risks
involved in achieving such prospects), and current economic and
market conditions.
2. The presentations of Goldman Sachs at the February 26, February 27
and March 1, 1998 meetings of the Board of Directors with respect
to, among other things, the Offer and the Merger, and the opinion
of Goldman Sachs delivered at the March 1, 1998 meeting to the
effect that as of such date the $35.25 per Share in cash to be
received by the Company's shareholders (excluding WHX and
21
<PAGE>
its subsidiaries) pursuant to the Offer and the Merger was fair
from a financial point of view to such shareholders. THE FULL TEXT
OF GOLDMAN SACHS' OPINION DATED MARCH 1, 1998, WHICH SETS FORTH
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS
ANNEX B AND FILED HEREWITH AS EXHIBIT 40 AND SHAREHOLDERS ARE
URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
3. The fact that on January 23, 1998 the Company issued a press
release stating that the Board had directed management, with the
assistance of Goldman Sachs, to explore all strategic alternatives
to enhance shareholder value, including transactions with third
parties involving all or a material part of the Company, and that
since such time Goldman Sachs and senior management of the Company
had engaged in discussions with a substantial number of parties
interested in a possible transaction involving all or part of the
Company. Based on such discussions and the views of members of
senior management of the Company, the Board believed that it was
unlikely that any party would propose an acquisition or strategic
business combination involving the entire Company that would be
more favorable to the Company and its shareholders than the Offer
and the Merger. In addition, while Goldman Sachs and senior
management of the Company had also identified a significant number
of parties interested in transactions involving certain of the
Company's existing businesses and assets, the Board determined
that such transactions, if successfully carried to completion,
were not likely to provide value to the Company's shareholders
greater than that provided by the Offer and the Merger.
4. The Board's review of strategic alternatives to the Offer and the
Merger not involving a sale of the Company to a third party,
including a recapitalization, share repurchases, acquisitions and
dispositions of certain assets, and the Board's belief, based on
numerous factors including presentations by Goldman Sachs and
senior management of the Company, that none of such alternatives,
if successfully carried to completion, was likely to provide
greater value to the Company's shareholders than that provided by
the Offer and the Merger.
5. Historical market prices and trading data relating to the Shares,
including the fact that the consideration of $35.25 per Share to
be received by the Company's shareholders pursuant to the Offer
and the Merger represents (a) a premium of approximately 58.4%
over the reported closing price of $22 1/4 per Share on the New
York Stock Exchange ('NYSE') on the last full trading day
preceding the public announcement of the Initial WHX Offer and (b)
a premium of approximately 17.5% over the $30 per Share price
offered in the Initial WHX Offer. The Board was aware that since
the Company's January 23, 1998 announcement that it would explore
all strategic alternatives to enhance shareholder value a
substantial number of Shares had traded on the NYSE at prices
above $35.25 per Share, and, in this regard, the Board believed
that a large portion of such Shares may have traded at such levels
based on speculation as to the price at which the Company would be
sold. In view of, among other things, the fact that no other party
had expressed an interest in acquiring the entire Company at a
price above that proposed by WHX, the Board believed that it was
in the best interests of the Company and its shareholders to
accept WHX's proposal of $35.25 per Share.
6. The arm's-length negotiations between representatives of the
Company and WHX with respect to the consideration and other terms
of the Merger Agreement, and the Board's belief that $35.25 per
Share represents the highest per Share consideration that could be
negotiated with WHX.
7. The fact that the structure of the Offer and the Merger provides
for a cash tender offer for all Shares to be followed by a
second-step merger at the same consideration, thereby enabling the
Company's shareholders (other than WHX and its subsidiaries) to
obtain cash for their Shares at the earliest possible time.
8. The fact that the Merger Agreement permits the Company to provide
access and furnish information to, and participate in discussions
or negotiations with, third parties in response to a Superior
Proposal if the Board of Directors determines in good faith, after
receiving formal advice from its financial advisor and outside
counsel, that taking such action is reasonably necessary for the
Board to comply with its fiduciary duties to the Company's
shareholders under applicable law.
22
<PAGE>
9. The fact that the Board of Directors is permitted, upon payment to
WHX of an $8 million termination fee, to terminate the Merger
Agreement if prior to the purchase of Shares pursuant to the
Offer, the Board of Directors of the Company has (a) withdrawn,
modified or changed in a manner adverse to WHX, its approval or
recommendation of the Offer, the Merger Agreement or the Merger in
order to approve and permit the Company to execute an agreement
relating to a Superior Proposal and (b) determined in good faith,
after consultation with independent legal counsel, that the
failure to take such action would be inconsistent with its
fiduciary duties to the Company's shareholders under applicable
law. The Board noted that termination fees are customary in
transactions of this type and the Board did not believe that the
termination fee provision would deter a more attractive offer for
the Company in the event another third party was interested in
acquiring the Company, especially in view of the process conducted
by the Company in exploring strategic alternatives.
10. The other terms and conditions of the Merger Agreement, including
the fact that the obligations of Parent and the Purchaser to
consummate the Offer and the Merger are not conditioned upon
financing and are subject to relatively few conditions.
11. The limited regulatory approvals required to be obtained to
consummate the Offer and the Merger, including the fact that WHX
has already obtained clearance under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 in connection with the Initial
WHX Offer.
12. The Board was aware that, pursuant to the Merger Agreement, WHX
and the Purchaser are required to honor all employment and
severance agreements and arrangements with employees and former
employees of the Company, and to provide the Company's employees,
for a three-year period after the Effective Time, with employee
benefits that are no less favorable in the aggregate than those
provided to such employees prior to the date of execution of the
Merger Agreement.
13. The fact that, as a result of the Initial WHX Offer and purchases
prior and subsequent thereto, WHX beneficially owned approximately
13.6% of the outstanding Shares and that, following completion of
the Initial WHX Offer, WHX indicated that it remained interested
in acquiring all of the remaining Shares on an amicable basis.
The foregoing discussion of the information and factors considered by the
Board of Directors is not intended to be exhaustive, but includes the material
factors considered by the Board of Directors. In view of the variety of factors
considered in connection with its evaluation of the Offer and the Merger, the
Board did not find it practicable to, and did not, quantify or otherwise assign
relative weights to the specific factors considered in reaching its
determination and recommendation. In addition, individual directors may have
given differing weights to different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Goldman Sachs was retained, pursuant to the terms of a letter agreement,
dated as of December 18, 1997 (the 'Letter Agreement'), to serve as the
Company's exclusive financial advisor with respect to (i) the Initial WHX Offer,
(ii) the possible purchase of all or a portion of the stock or assets of the
Company, (iii) a Company Transaction (as defined below) or (iv) the sale of the
Company through a tender offer, merger or other transaction. Goldman Sachs also
agreed to render an opinion as to the fairness of the financial consideration to
be received by shareholders of the Company or the Company, as the case may be,
in connection with the sale of 50% or more of the outstanding Shares.
The Company agreed to pay Goldman Sachs a fee of $500,000 in cash on the
date the Letter Agreement was executed. The Company also agreed to pay Goldman
Sachs a fee, in connection with any transaction in which at least 20% of the
outstanding Shares are acquired by WHX or any other person or group, including
the Company, in one or a series of transactions by means of a tender offer or
merger, private or open market purchases of Shares or otherwise, equal to
$3,200,000 plus 3.5% of the amount by which the aggregate value of all such
transactions exceeds $30.00 times the number of Shares acquired in all such
transactions. If at least 50% of the outstanding Shares is acquired by WHX or
any other person or group, including the Company, the aggregate value will be
determined as if such acquisition were of 100% of the Shares (including
contingently issuable shares). The Company also agreed to pay Goldman Sachs a
fee if the Company or any other entity formed or owned in substantial part or
controlled by the Company or one or more members of senior management of the
Company or
23
<PAGE>
any employee benefit plan of the Company or any of its subsidiaries (a 'Related
Entity') effects a transaction or series of transactions not covered by the
second sentence of this paragraph in which (i) at least 20% of the aggregate
market value of the Company as of December 18, 1997 is transferred to the
shareholders of the Company through a (A) merger with, purchase of assets by, or
other combination with, a Related Entity, (B) reclassification of stock, (C)
purchase of stock, (D) distribution of cash, securities or other assets
(including, without limitation, a distribution of all or a portion of stock in
one or more of its subsidiaries), (E) plan of partial liquidation or (F) similar
transaction or combination of the foregoing, and (ii) the public shareholders of
the Company retain an equity interest in the Company or, if the Company does not
survive in the transactions described above, in the surviving entity (a 'Company
Transaction'), equal to $3,200,000 plus 3.5% of the amount by which the
aggregate value of the Company Transaction, defined as the per Share value in
cash, securities and other assets received by the shareholders of the Company
(including Shares continued to be held by the shareholders) times the number of
Shares included in the Company Transaction exceeds $30.00 times the number of
Shares included in the Company Transaction. In the event that a transaction of
the types described in either the preceding sentence or the second sentence of
this paragraph is not consummated by any of March 30, 1998, June 30, 1998,
September 30, 1998, December 30, 1998, March 30, 1999, June 30, 1999, September
30, 1999 or December 30, 1999, the Company will pay to Goldman Sachs a financial
advisory fee of $337,500 on each such date, as applicable. In the event that the
Company sells, distributes or liquidates all or a portion of its assets,
including any pension-related assets, or sells or distributes securities of the
Company, whether such distribution is made by dividend or otherwise, and no fee
has become payable or been paid to Goldman Sachs with respect to a transaction
pursuant to the second and fourth sentence of this paragraph, then the Company
will pay, or cause to be paid, a fee to Goldman Sachs based upon the aggregate
value of such transaction in accordance with a schedule specified in the Letter
Agreement. Such fee will range from 3.0% of the aggregate value of the
transaction if such aggregate value is $50 million or less to 0.6% of the
aggregate value of the transaction if such aggregate value is $1 billion or
more. The initial $500,000 fee payable on execution of the Letter Agreement and
any fees payable in the event a transaction is not consummated by certain
specified dates (as described above) which have been previously paid will be
credited against any fee payable to Goldman Sachs in connection with any
transaction described in the second, fourth or sixth sentence of this paragraph.
The Company also agreed to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of its
counsel, and to indemnify Goldman Sachs for certain liabilities arising out of
actions taken under the Letter Agreement.
In the ordinary course of its business, Goldman Sachs or its affiliates may
actively trade or otherwise effect transactions in the securities of the Company
and WHX both for its own account and the account of its customers and,
accordingly, may at any time hold long or short positions in such securities.
Goldman Sachs has provided investment banking services to the Company from
time to time in the past for which it has received customary compensation.
Based on the value of the transactions contemplated by the Offer and the
Merger, the fees payable to Goldman Sachs upon consummation of the Offer will
amount to approximately $5,700,000 (which amount includes the $500,000 paid
following execution of the Letter Agreement).
The Company also retained Kekst & Company as public relations advisor in
connection with the Offer and the Merger. The Company will pay Kekst & Company
reasonable and customary fees for their services, reimburse them for their
reasonable out-of-pocket expenses and provide customary indemnities.
Except as disclosed herein, neither the Company nor any person acting on
its behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer.
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<PAGE>
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) To the extent currently known to the Company, no transactions in the
Shares have been effected during the past 60 days by the Company or, to the best
of the Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company, except that (i) on February 26, 1998, 92,973 Shares
were granted to executive officers of the Company for the Fifth Cycle of the
Company's Long-Term Incentive Plan, (ii) on February 26, 1998, 156,139 Shares
were allocated for the Sixth Cycle of the Company's Long-Term Incentive Plan
(which allocation would amount to a grant of 69,395 Shares assuming a May 1,
1998 proration date in the event of a Change in Control as defined in the
Long-Term Incentive Plan), (iii) options to purchase 343 Shares at an exercise
price of $1.00 per Share were granted to each of the Company's non-employee
directors on January 2, 1998 pursuant to the Handy & Harman Outside Director
Stock Option Plan, (iv) on February 5, 1998, Roger E. Tetrault, a director of
the Company, exercised options to purchase 343 shares at an exercise price of $1
per Share, and (v) ordinary course purchases of Shares have been made for the
accounts of participating employees, including executive officers, pursuant to
the Company's 401(k) Plan and Employee Stock Purchase Plan. The Company is
currently verifying its response to this Item 6(a), and will update its response
if other information comes to its attention.
(b) To the extent currently known to the Company, each executive officer,
director, affiliate or subsidiary of the Company currently intends to tender,
pursuant to the Offer, all Shares which are held of record or beneficially owned
by such person (other than options which are subject to cash-out pursuant to the
Merger Agreement).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiations in response to the Offer that relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as described in Item 3(b) or 4 above (the provisions of which
are hereby incorporated herein by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the matters referred to
in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Shareholder Litigation Relating to Initial WHX Offer
William Steiner v. Handy & Harman et al. On December 26, 1997, in
connection with the Initial WHX Offer, William Steiner, individually and on
behalf of all other shareholders of the Company similarly situated, filed a
purported class action complaint in the Supreme Court of the State of New York
for the County of New York against the Company and each of the Company's
directors. The complaint alleges, among other things, that the defendants
breached their fiduciary duties to the Company and its shareholders by (i) not
appointing an independent committee to evaluate the Initial WHX Offer and to
explore business opportunities with WHX, (ii) refusing to negotiate with WHX,
(iii) not pursuing alternative transactions, and (iv) amending the Company's
By-laws to provide that the annual meeting of shareholders be held on such date
and at such time as the Company's Board of Directors so determine. The plaintiff
seeks as relief, among other things, (i) an order from the court requiring that
the individual defendants (A) undertake an independent evaluation of strategic
alternatives to maximize value for the Company's shareholders, (B) take actions
to ensure that no conflicts of interest exist between defendants' own interests
and their fiduciary obligations to the Company's shareholders and (C) utilize
the Company's shareholder rights plan in a manner that will maximize shareholder
value; (ii) a declaration that the December 23, 1997 amendment to the Company's
By-laws is null and void; and (iii) unspecified monetary damages and attorneys'
fees and expenses. The defendants believe that the lawsuit is without merit and
intend to defend themselves vigorously. The foregoing description is qualified
in its entirety by reference to the full text of the complaint which is filed
herewith as Exhibit 41 and is incorporated herein by reference.
25
<PAGE>
Harbor Finance Partners v. Handy & Harman et al. On January 7, 1998, in
connection with the Initial WHX Offer, Harbor Finance Partners, on behalf of
itself and all other shareholders of the Company similarly situated, filed a
purported class action complaint in the Supreme Court of the State of New York
for the County of New York against the Company and certain of the Company's
directors. The complaint alleges, among other things, that the individual
defendants have breached their fiduciary duties to the Company and its
shareholders by (i) failing to properly consider the Initial WHX Offer on a
fully informed basis, (ii) failing and refusing to negotiate with
representatives of WHX and (iii) impairing the franchise rights of the Company's
shareholders by, among other things, amending the Company's By-laws to permit
the Board of Directors to schedule the date and time of the annual meeting of
shareholders. The plaintiff seeks as relief, among other things, (i) an order
from the court requiring that the individual defendants (a) cooperate fully with
any entity or person, including WHX, having a bona fide interest in proposing
any transaction that would maximize shareholder value, (b) immediately undertake
an appropriate evaluation of, and take appropriate steps to enhance, the
Company's value as a merger or acquisition candidate, (c) take certain steps to
expose the Company to the marketplace in an effort to create an active auction
of the Company, (d) act independently so that the interests of the Company's
public shareholders will be protected, and (e) ensure that no conflicts of
interest exist between the individual defendants' own interests and their
fiduciary obligation to maximize shareholder value or, if such conflicts of
interest exist, ensure that such conflicts of interest are resolved in the best
interests of the Company's public shareholders; and (ii) unspecified monetary
damages, including a reasonable allowance for attorneys' and experts' fees. The
defendants believe that the lawsuit is without merit and intend to defend
themselves vigorously. The foregoing description is qualified in its entirety by
reference to the full text of the complaint which is filed herewith as Exhibit
42 and is incorporated herein by reference.
SECTION 912 OF THE NEW YORK BUSINESS CORPORATION LAW
Section 912 of the NYBCL regulates certain business combinations, including
mergers, of a New York corporation, such as the Company, with a person that has,
individually or with or through its affiliates or associates, acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding voting stock of such corporation. Since the Company's Board has
approved the Merger Agreement, the Offer and the Merger, Section 912 of the
NYBCL will not apply to the Offer and the Merger.
CHANGE IN CONTROL PROVISIONS IN BANK DEBT
The Company is party to a Revolving Credit Agreement, dated as of September
29, 1997 (the 'Credit Agreement'), with certain financial institutions as
lenders and The Bank of Nova Scotia as Administrative Agent. Under the Credit
Agreement, an 'Event of Default' will occur if there is a 'Change in Control',
which would be deemed to occur if any person, or two or more persons acting in
concert, acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of 30% or more of the outstanding shares of voting stock of the
Company. Unless waived, the occurrence of an Event of Default (i) prohibits the
Company from borrowing additional money under the Credit Agreement and (ii)
permits certain of the lenders under the Credit Agreement to declare all or any
portion of the outstanding borrowings under the Credit Agreement to be due and
payable. The Note Agreements relating to the Company's $125,000,000 7.31% Senior
Notes due 2001 (the 'Notes'), each dated as of April 17, 1997, by and between
the Company and the purchasers listed therein (collectively, the 'Note
Agreements'), do not contain any 'change of control' provisions. However, under
the Note Agreements, an Event of Default will occur if (i) the Company is in
default in the performance or compliance with any term of any evidence of any
debt (other than debt under the Note Agreements) with an outstanding principal
amount of at least $5,000,000 or any other condition exists, and as a
consequence of such default or condition, such debt becomes due and payable
before its stated maturity or (ii) the Company becomes obligated to purchase or
repay any debt (other than debt under the Note Agreements) before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of at
least $5,000,000 (unless the Company simultaneously offers to purchase a
proportionate amount of Notes). Pursuant to the Merger Agreement, the Company
has agreed to use its reasonable efforts to obtain any consent required to avoid
a default or breach of the Credit Agreement and the Note Agreements resulting
from the Merger Agreement, the Offer or the Merger. In addition, pursuant to the
provisions of the Merger Agreement, WHX has agreed, at the closing of the
Merger, unless the Company has obtained the lenders' consent to the Merger and a
waiver of the change in control provision of the Credit Agreement, to repay all
outstanding borrowings under the Credit Agreement in
26
<PAGE>
accordance with the terms thereof such that no event of default will exist as a
result of the transactions contemplated by the Merger Agreement.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. -- Confidentiality Agreement, dated as of February 28, 1998, between the Company and WHX Corporation.
2. -- Agreement and Plan of Merger, dated as of March 1, 1998, by and among WHX Corporation, HN
Acquisition Corp. and the Company.
3. -- Amendment, dated as of March 1, 1998, to the Rights Agreement, dated as of January 27, 1989, as
amended as of April 25, 1996 and October 22, 1996.
4. -- Agreement dated as of May 1, 1989 between the Company and Richard N. Daniel.
5. -- Amendment to Agreement dated as of May 1, 1989 between the Company and Richard N. Daniel approved
by the Company's Board of Directors on May 11, 1993.
6. -- Amendment to Agreement dated as of May 1, 1989 between the Company and Richard N. Daniel approved
by the Company's Board of Directors on September 28, 1995.
7. -- Restated Amendment to Agreement with Richard N. Daniel, dated February 26, 1998.
8. -- Executive Agreement, dated as of July 1, 1989, between the Company and Frank E. Grzelecki.
9. -- Amendment, dated as of July 1, 1989, to Agreement, dated as of July 1, 1989 between the Company
and Frank E. Grzelecki.
10. -- Amended and Restated Agreement, dated as of November 3, 1995, between the Company and Frank E.
Grzelecki.
11. -- Restated Confirmation Agreement with Frank E. Grzelecki, dated February 26, 1998.
12. -- Employment Agreement, dated as of October 22, 1996, between the Company and Robert D. LeBlanc.
13. -- Supplemental Agreement, dated as of May 14, 1997, between the Company and Robert D. LeBlanc.
14. -- Amendment, dated February 26, 1998, to Supplemental Agreement with Robert D. LeBlanc.
15. -- Amended and Restated Agreement with Paul E. Dixon, dated February 26, 1998.
16. -- Amended and Restated Agreement with Robert F. Burlinson, dated February 27, 1998.
17. -- Amended and Restated Agreement with Dennis C. Kelly, dated February 26, 1998.
18. -- Amended and Restated Agreement with Dennis R. Kuhns, dated February 26, 1998.
19. -- Form of Executive Agreement dated as of September 2, 1986, between the Company and Robert M.
Thompson.
20. -- Amendment to the Form of Executive Agreement approved in December 1988.
21. -- Amendment dated February 26, 1998 to Executive Agreement with Robert M. Thompson.
22. -- Amended and Restated Supplemental Executive Retirement Plan as of January 1, 1998, approved on
February 26, 1998.
23. -- Handy & Harman Supplemental Executive Plan.
24. -- Handy & Harman Executive Post-Retirement Life Insurance Program.
25. -- Handy & Harman Management Incentive Plan-Corporate Group.
26. -- Amendment to Management Incentive Plan, approved January 22, 1998.
27. -- Handy & Harman Outside Director Stock Option Plan.
28. -- Handy & Harman 1988 Long-Term Incentive Plan.
29. -- Amendment to Handy & Harman 1988 Long-Term Incentive Plan approved in December 1988.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
30. -- Amendment to Handy & Harman 1988 Long-Term Incentive Plan approved in June 1989.
31. -- Amendment to Long-Term Incentive Plan approved January 22, 1998.
32. -- Handy & Harman 1982 Stock Option Plan.
33. -- Amendment to Handy & Harman 1982 Stock Option Plan.
34. -- Subsidiary, Division, Group or Unit Management Incentive Plan, as amended and restated on December
15, 1994.
35. -- Handy & Harman Deferred Fee Plan for Directors, as amended and restated on December 15, 1994,
effective as of January 1, 1995.
36. -- Handy & Harman Long-Term Incentive Stock Option Plan.
37. -- Handy & Harman 1995 Omnibus Stock Incentive Plan.
38. -- Letter to Shareholders, dated March 6, 1998.*
39. -- Text of Joint Press Release issued by the Company and WHX Corporation, dated March 2, 1998.
40. -- Opinion of Goldman, Sachs & Co., dated March 1, 1998.*
41. -- Complaint filed in action entitled William Steiner, individually and on behalf of all other
shareholders similarly situated v. Handy & Harman et al.
42. -- Complaint filed in action entitled Harbor Finance Partners, on behalf of itself and all other
shareholders similarly situated v. Handy & Harman et al.
</TABLE>
- ------------------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
28
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: March 6, 1998
HANDY & HARMAN
BY: _________/S/ PAUL E. DIXON________
Paul E. Dixon
Senior Vice President,
General Counsel and Secretary
29
<PAGE>
ANNEX A
HANDY & HARMAN
250 PARK AVENUE
NEW YORK, NY 10177
------------------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------------------
This Information Statement is being mailed on or about March 6, 1998 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
'Schedule 14D-9') of Handy & Harman, a New York corporation (the 'Company'), to
the holders of record of shares of common stock, par value $1.00 per share, of
the Company (the 'Shares'). You are receiving this Information Statement in
connection with the possible election of persons designated by WHX Corporation,
a Delaware corporation ('WHX'), to a majority of the seats on the Board of
Directors of the Company (the 'Board' or 'Board of Directors').
Pursuant to an Agreement and Plan of Merger, dated as of March 1, 1998, by
and among WHX, HN Acquisition Corp., a New York corporation and a wholly owned
subsidiary of WHX (the 'Purchaser'), and the Company, the Purchaser has
commenced a tender offer (the 'Offer') for all of the issued and outstanding
Shares at a price of $35.25 per Share, net to the seller in cash, and following
consummation of the Offer, the Purchaser will be merged with and into the
Company (the 'Merger'), with the Company surviving as a wholly owned subsidiary
of WHX.
The Merger Agreement provides that, promptly after the purchase of and
payment for a majority of the outstanding Shares pursuant to the Offer, WHX will
be entitled to designate such number of directors as will give WHX
representation on the Board proportionate to its ownership interest in the
Shares, rounded up to the next whole number. The Merger Agreement requires the
Company to use its best efforts to cause the WHX designees (the 'WHX Designees')
to be elected to the Board under the circumstances described therein. This
Information Statement is being mailed to shareholders of the Company pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'), and Rule 14f-1 thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning WHX, the
Purchaser and the WHX Designees has been furnished to the Company by WHX. The
Company assumes no responsibility for the accuracy or completeness of such
information.
A-1
<PAGE>
CERTAIN INFORMATION REGARDING THE COMPANY
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each issued and outstanding Share is entitled to one vote. As of
March 1, 1998, 12,132,288 Shares were issued and outstanding and 1,370,104
Shares were reserved for issuance upon the exercise of certain options
outstanding.
RIGHT TO DESIGNATE DIRECTORS; THE WHX DESIGNEES
The Merger Agreement provides that, subject to compliance with applicable
law, promptly upon the purchase of and payment by WHX for Shares pursuant to the
Offer which represent at least a majority of the outstanding Shares (on a fully
diluted basis), WHX will be entitled to designate such number of directors on
the Board as is equal to the product of the total number of directors on the
Board (determined after giving effect to the directors elected pursuant to this
sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser, WHX and any of their affiliates bears to the
total number of Shares then outstanding (such number being the 'Board
Percentage'); provided, however, that if the number of Shares purchased by WHX
or any of its subsidiaries equals or exceeds 50.01% of the outstanding Shares,
the Board Percentage will constitute at least a majority of the members of the
Board. The Company will, upon request of the Purchaser, use its best efforts to
cause the WHX Designees to satisfy the Board Percentage, including, without
limitation, increasing the size of the Board (which, pursuant to the Company's
Restated Certificate of Incorporation, as amended, has a maximum number of
twelve directors) and securing the resignations of incumbent directors.
Notwithstanding the foregoing, until the effective time of the Merger, the
Company will retain on the Board at least two directors who were directors of
the Company on the date of the Merger Agreement; provided, that subsequent to
the purchase of and payment for Shares pursuant to the Offer, WHX will always
have its designees represent at least a majority of the entire Board.
Set forth below is certain information with respect to the initial WHX
Designees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD
NAME AND PRINCIPAL BUSINESS ADDRESS AGE DURING THE PAST FIVE YEARS
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Paul W. Bucha .................................. 54 Director of WHX; President of Paul W. Bucha &
Paul W. Bucha and Company, Inc. Company, Inc., an international marketing
Foot of Chapel Avenue consulting firm; President of BLHJ, Inc., an
Jersey City, New Jersey 07305 international consulting firm; President of
Congressional Medal of Honor Society of U.S.
since September 1995.
Robert A Davidow ............................... 55 Director of WHX; Private Investor; Director of
11601 Wilshire Boulevard Arden Group, Inc.
Suite 1940
Los Angeles, California 90025
Ronald LaBow ................................... 63 Chairman of the Board and Director of WHX;
110 East 59th Street President of Stonehill Investment Corp.;
New York, New York 10022 Director of Regency Equities Corp., a real
estate company.
Howard Mileaf .................................. 61 Vice President, Special Counsel of WHX since
110 East 59th Street April 1993; Trustee/Director of Neuberger &
New York, New York 10022 Berman Equity Mutual Funds.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD
NAME AND PRINCIPAL BUSINESS ADDRESS AGE DURING THE PAST FIVE YEARS
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Stewart E. Tabin ............................... 41 Assistant Treasurer of WHX; Vice President of
110 East 59th Street Stonehill Investment Corp.
New York, New York 10022
Neale X. Trangucci ............................. 40 Assistant Treasurer of WHX; Vice President of
110 East 59th Street Stonehill Investment Corp.
New York, New York 10022
Marvin L. Olshan ............................... 70 Director and Secretary of WHX; Partner, Olshan
Olshan Grundman Frome & Rosenzweig LLP Grundman Frome & Rosenzweig LLP.
505 Park Avenue
New York, New York 10022
</TABLE>
WHX has advised the Company that each of the initial WHX Designees has
consented to serve on the Board of Directors of the Company and that, to the
best of its knowledge, none of the WHX Designees (i) has a family relationship
with any of the directors or executive officers of the Company, (ii)
beneficially owns any securities (or rights to acquire securities) of the
Company or (iii) has been involved in any transactions, or has any business
relationships with the Company or any of its directors, executive officers or
affiliates, of the type required to be disclosed pursuant to Rule 14f-1 under
the Exchange Act.
A-3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Certain information concerning the current directors and executive officers
of the Company as of March 1, 1998 is set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR OR OR OFFICER
EXECUTIVE OFFICER AGE POSITION WITH THE COMPANY SINCE
- ---------------------------------- --- ------------------------------------------------------------------- ----------
<S> <C> <C> <C>
Richard N. Daniel(1).............. 62 Chairman of the Board, Chief Executive Officer and Director 1974
Frank E. Grzelecki(1)............. 60 Vice Chairman of the Board and Director 1988
Robert D. LeBlanc................. 48 President, Chief Operating Officer and Director 1996
Clarence A. Abramson(3)........... 65 Director 1991
Robert E. Cornelia(1)(3).......... 64 Director 1991
Gerald G. Garbacz(2).............. 61 Director 1988
Gouverneur M. Nichols(1)(2)....... 79 Director 1973
Hercules P. Sotos(1)(3)........... 64 Director 1993
Elliot J. Sussman(2).............. 46 Director 1995
Roger E. Tetrault(2)(3)........... 56 Director 1996
Robert F. Burlinson............... 58 Vice President and Treasurer 1996
Paul E. Dixon..................... 53 Senior Vice President, General Counsel and Secretary 1992
Dennis C. Kelly................... 45 Controller 1993
Robert M. Thompson................ 65 Vice President 1984
Dennis R. Kuhns................... 39 Corporate Vice President 1997
</TABLE>
- ------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
RICHARD N. DANIEL has been a director of the Company since 1974 and
Chairman of the Board and Chief Executive Officer of the Company since May 1992.
Previously, Mr. Daniel was Chairman of the Board, President and Chief Executive
Officer of the Company. Mr. Daniel is also a director of the Treasurer's Fund,
Inc.
FRANK E. GRZELECKI has been a director of the Company since 1988 and Vice
Chairman of the Board since 1997. Previously, Mr. Grzelecki was President and
Chief Operating Officer of the Company from 1992 to 1997 and prior thereto, Vice
Chairman of the Board of the Company from 1989 to 1992. Mr. Grzelecki is also a
director of Chartwell Re Corporation, Barnes Group Inc., The Morgan Group, Inc.
and Spinnaker Industries, Inc.
ROBERT D. LEBLANC has been a director of the Company since 1997 and
President and Chief Operating Officer of the Company since 1997. Mr. LeBlanc was
Executive Vice President of the Company from 1996 to 1997. Prior to 1996, Mr.
LeBlanc was Executive Vice President of Elf Atochem North America, Inc.
CLARENCE A. ABRAMSON has been a director of the Company since 1991. Mr.
Abramson has been a healthcare industry consultant since January 1994 and is
President of Healthcare Ventures International, Inc., where he also serves as a
director. Mr. Abramson is also a director of PolyPharm Corp., Acorda
Therapeutics, Inc. and Gulfstream Pharmaceuticals, LLC. Previously, Mr. Abramson
was Vice President and Secretary of Merck & Co., Inc. (a major pharmaceutical
company) from 1990 to 1993.
ROBERT E. CORNELIA has been a director of the Company since 1991 and has
been a management consultant for over five years.
GERALD G. GARBACZ has been a director of the Company since 1988. Mr.
Garbacz has been President and Chief Executive Officer of Nashua Corporation
since January 1996, the Chairman of Nashua Corporation since June 1996 and the
Chairman of Cerion Technologies since May 1996. Previously, Mr. Garbacz was
Chairman, Chief Executive Officer and a director of Baker & Taylor, Inc. (a
distributor of books, video and other media materials) from March 1992 to July
1994 and Executive Vice President of W. R. Grace & Co. (a multinational company)
since prior to March 1992.
A-4
<PAGE>
GOUVERNEUR M. NICHOLS has been a director of the Company since 1973 and has
been a business consultant for over five years.
HERCULES P. SOTOS has been a director of the Company since 1993. Prior to
his retirement in 1995, Mr. Sotos was President of International Playtex Inc.
and Vice Chairman and a director of Playtex Products, Inc. (a manufacturer of
health and beauty aid products) since prior to January 1991. Mr. Sotos is also a
director of PNC Bank, New England.
ELLIOT J. SUSSMAN has been a director of the Company since 1995. Dr.
Sussman has been President and Chief Executive Officer and a director of Lehigh
Valley Health Network, Inc. and Lehigh Valley Hospital, Inc. since 1993 and has
been a Professor of Medicine at Pennsylvania State University since 1994.
Previously, Dr. Sussman was Associate Dean and Professor of Medicine at
University of Chicago since prior to January 1991. Dr. Sussman is also the
Chairman of the Board and President of PennHEALTH, Inc. d.b.a. PennCARE.
ROGER E. TETRAULT has been a director of the Company since 1996. Mr.
Tetrault has been Vice Chairman and Chief Executive Officer of McDermott
International, Inc. and J. Ray McDermott, S.A. since March 1997. Previously, Mr.
Tetrault was President of General Dynamics Land Systems, Inc. from 1993 to 1997
and President of the Electric Boat Division of General Dynamics Corporation from
1991 to 1993.
ROBERT F. BURLINSON has been Vice President of the Company since 1996 and
Vice President and Treasurer of the Company since 1997. Previously, Mr.
Burlinson was Senior Vice President, Chief Financial Officer and Treasurer of
The National Guardian Corporation from 1986 to 1995 and a director from 1991 to
1995.
PAUL E. DIXON has been Senior Vice President, General Counsel and Secretary
of the Company since 1997. Previously, Mr. Dixon was Vice President, General
Counsel and Secretary of the Company from 1993 to 1997, Vice President and
General Counsel of the Company from 1992 to 1993 and Senior Vice President and
General Counsel of The Warnaco Group, Inc. since prior to 1990.
DENNIS C. KELLY has been Controller of the Company since 1993. Previously,
Mr. Kelly was Assistant Controller of the Company from 1989 to 1993.
ROBERT M. THOMPSON has been Vice President of the Company since 1994.
Previously, Mr. Thompson was Group Vice President of the Company from 1984 to
1994.
DENNIS R. KUHNS has been Corporate Vice President since 1997. Previously,
Mr. Kuhns was President of the Specialty Wire Group of Maryland Specialty Wire,
a wholly owned subsidiary of the Company, since 1996.
FAMILY RELATIONSHIPS
There are no family relationships between any of the directors or executive
officers of the Company. The regular term of office for all directors and
executive officers is one year. There are no arrangements or understandings
between any director or executive officer and any other person pursuant to which
such director or officer was elected to be a director or officer.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a standing Executive Committee, Audit Committee
and Compensation Committee. The Board does not have a Nominating Committee.
The Executive Committee is empowered by the By-laws to act during the
intervals between meetings of the Board and to exercise all powers of the Board
in the management and direction of the business of the Company, except such
powers that by law or the Company's Certificate of Incorporation or By-laws may
not be delegated to the Executive Committee. The Executive Committee did not
meet during 1997.
The Audit Committee is empowered by the Board, under the Company's By-laws,
to review the scope and procedures to be followed in the conduct of the audit by
the Company's independent auditors and also to review the findings and
recommendations by the auditors resulting from the audit. The Committee also
meets with the auditors to review the adequacy of the Company's internal
controls and any significant changes in the accounting practices or audit
reporting requirements followed. The Committee also functions to approve the
professional services provided by the independent auditors, review the
independence of the auditors and consider the amount
A-5
<PAGE>
and relationships of the non-audit fees to the audit fees of the auditors. The
Audit Committee met two times during 1997.
The Compensation Committee, whose powers are discussed under 'Executive
Compensation' below, met seven times during 1997.
BOARD MEETINGS
The Board conducted eight meetings in person during 1997. Two additional
meetings were conducted by teleconference. During 1997, all of the directors
attended, in person or by teleconference, at least 75% of the total number of
meetings of the Board and of the Committees on which they serve.
COMPENSATION OF DIRECTORS
Each director of the Company, other than each officer who was also a
director, was compensated quarterly for all services as a director including
regular Board attendance at the rate of $23,400 per annum. Effective from
December 18, 1997, directors are also compensated $1,000 for each special
meeting of the Board attended in person and $500 for each special meeting
attended by telephone. Also, $1,000 is paid for each committee meeting attended
in person and $500 for each committee meeting attended by telephone if the
meeting is held on a date separate from a Board meeting.
The Company carries insurance providing indemnification, under certain
circumstances, to all the directors and officers of the Company for claims
against them by reason of, among other things, any act or failure to act in
their capacities as directors or officers. No sums have been paid to any past or
present director or officer of the Company under this or any prior
indemnification insurance policy.
The Handy & Harman Outside Director Stock Option Plan (the 'Directors'
Plan'), which was approved by the Company's shareholders in 1990, provides for
the granting of options to each non-employee member of the Board. The purpose of
the Directors' Plan is to foster and promote the long-term financial success of
the Company and materially increase shareholder value by enabling the Company to
attract and retain the services as directors of outstanding individuals whose
judgment, interest and special effort are essential to the successful conduct of
the Company's business and affairs.
The Directors' Plan provides for the granting of options to directors of
the Company (who are not employees of the Company) to acquire an aggregate of
100,000 Shares. The Directors' Plan provides that annual grants of options are
to be made on the first business day of each year to purchase an amount of
Shares determined by dividing 50% of the annual retainer fee of each outside
director by the fair market value of a Share on the date of grant. The options
are exercisable for ten years after the date of grant. The exercise price is
$1.00 per Share and upon exercise, payment must be made in full in cash or cash
equivalents. No options may be granted after September 28, 1999.
A-6
<PAGE>
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL HOLDERS & MANAGEMENT
The following table sets forth, as of March 1, 1998, certain information as
to those persons who were beneficial owners of more than 5% of the 12,132,288
Shares issued and outstanding as of such date and as to the Shares beneficially
owned by each of the Company's directors and named executive officers and by all
the Company's executive officers and directors as a group (as defined in Section
13(d)(3) of the Exchange Act):
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
OWNERSHIP CLASS
NAME OF BENEFICIAL OWNER (1)(6)(7) OUTSTANDING
- --------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
Gabelli Funds, Inc. and affiliates(2) ............................... 1,225,426 10.1%
One Corporate Center
Rye, New York 10580-1434
Kennedy Capital Management, Inc.(3) ................................. 606,475 5.0
10829 Olive Blvd.
St. Louis, Missouri 63141
Neuberger & Berman, LLC and affiliates(4) ........................... 617,908 5.1
605 Third Avenue
New York, New York 10158-3698
WHX Corporation(5) .................................................. 1,649,455 13.6
HN Acquisition Corp.
110 East 59th Street
New York, New York 10022
Richard N. Daniel.................................................... 513,454 4.1
Frank E. Grzelecki................................................... 388,642 3.1
Clarence A. Abramson................................................. 5,264 *
Robert E. Cornelia................................................... 5,264 *
Gerald G. Garbacz.................................................... 7,177 *
Robert D. LeBlanc.................................................... 100,111 *
Gouverneur M. Nichols(6)............................................. 51,338 *
Hercules P. Sotos.................................................... 5,068 *
Elliot J. Sussman.................................................... 3,725 *
Roger E. Tetrault.................................................... 3,026 *
Robert F. Burlinson.................................................. 25,136 *
Paul E. Dixon........................................................ 68,340 *
Dennis C. Kelly...................................................... 45,178 *
Robert M. Thompson................................................... 39,924 *
Dennis R. Kuhns...................................................... 42,463 *
All Executive Officers and Directors as a Group (15 persons)......... 1,304,110 9.9
</TABLE>
- ------------------
* Less than 1%.
(1) As used herein, 'beneficial ownership' means the sole or shared power to
vote, or to direct the voting of, a security or the sole or shared
investment power with respect to a security (i.e., the power to dispose
of, or to direct the disposition of, a security) held by contract,
arrangement, understanding, relationship or otherwise. In addition, for
purposes hereof, a person is deemed, as of any date, to have 'beneficial
ownership' of any security that such person has the right to acquire
within 60 days after such date.
(2) Based upon information obtained from the Statement on Schedule 13G, dated
February 23, 1998, filed by Gabelli Funds, Inc. and affiliates.
(3) Based upon information obtained from the Statement on Schedule 13G, dated
February 11, 1998, filed by Kennedy Capital Management, Inc.
(Footnotes continued on next page)
A-7
<PAGE>
(Footnotes continued from previous page)
(4) Based upon information obtained from the Statement on Schedule 13G, dated
January 27, 1998, filed by Neuberger & Berman, LLC and affiliates.
(5) Based upon information obtained from the Statement on Schedule 13D, dated
March 3, 1998, filed by WHX Corporation and HN Acquisition Corp.
(6) The Shares set forth in the table do not include 52,470 Shares owned by
the wife of a director, as to which the director has disclaimed beneficial
ownership.
(7) Figures shown include Shares issuable upon exercise of options (including
options which will become exercisable upon consummation of the Offer) as
follows: 402,500 Shares for Mr. Daniel, 90,000 Shares for Mr. LeBlanc,
348,500 Shares for Mr. Grzelecki, 60,250 Shares for Mr. Dixon, 25,000
Shares for Mr. Burlinson, 40,000 Shares for Mr. Kelly, 22,000 Shares for
Mr. Thompson, 40,000 Shares for Mr. Kuhns, 3,816 Shares for Mr. Abramson,
343 Shares for Mr. Garbacz, 3,068 Shares for Mr. Sotos, 1,725 Shares for
Mr. Sussman and 1,026 Shares for each of Mr. Cornelia and Mr. Nichols.
A-8
<PAGE>
EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee, which is comprised of four independent, non-employee
directors of the Company. The Compensation Committee is empowered by the Board
to review the salaries paid to the Company's officers each year and recommend to
the Board any adjustments that it deems appropriate. It also reviews the nature
and scope of the services rendered each year by the participants in the Handy &
Harman Management Incentive Plan of the Company and the corresponding benefits
derived by the Company from such services. Then, based on the review of
management recommendations, the Compensation Committee awards bonuses to the
participants in accordance with the Handy & Harman Management Incentive Plan.
The Committee also reviews and recommends to the Board the granting and awarding
of restricted stock under the Company's 1988 Long-Term Incentive Plan and the
granting of stock options and Stock Appreciation Rights (SARs) under the
Company's 1995 Omnibus Stock Incentive Plan.
SUMMARY COMPENSATION TABLE
The following table provides information on the compensation provided by
the Company to the Company's Chief Executive Officer and the next four most
highly paid executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ---------------------
COMPENSATION RESTRICTED
------------------ STOCK OPTIONS ALL OTHER
SALARY BONUS AWARDS (3) SHARES COMPENSATION (1)
NAME & POSITION YEAR ($) ($) ($) (#) ($)
- ----------------------------------------------- ---- ------- ------- ---------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
R. N. Daniel................................... 1997 470,000 322,000 -- 160,000 8,660
Chairman and CEO 1996 470,000 170,000 208,069 50,000 7,834
1995 423,862 215,000 -- 30,000 6,186
F. E. Grzelecki................................ 1997 422,862 295,000 -- 150,000 6,795
Vice Chairman 1996 410,000 150,000 178,956 40,000 6,186
1995 363,860 190,000 -- 25,000 5,008
P. E. Dixon.................................... 1997 195,700 142,000 -- 25,000 3,446
Senior Vice President, 1996 179,000 70,000 57,369 15,000 3,195
General Counsel & Secretary 1995 164,346 80,000 -- 15,000 1,995
R. D. LeBlanc.................................. 1997 300,000 198,000 -- 40,000 109,690(2)
President and COO 1996 34,617 -- -- 50,000 70,000(2)
1995 -- -- -- -- --
R. F. Burlinson................................ 1997 165,000 84,000 -- 10,000 4,560
Vice President and Treasurer 1996 41,250 -- -- 15,000 10,000(3)
1995 -- -- -- -- --
</TABLE>
- ------------------
(1) Company matching contributions under the 401(k) Savings Plan for Messrs.
Daniel, Grzelecki, Dixon, LeBlanc and Burlinson: (A) for 1997 were $2,400,
$2,400, $2,400, $2,400 and $2,400; (B) for 1996 were $2,250, $2,250, $2,250,
$0 and $0; and (C) for 1995 were $2,250, $2,250, $1,282, $0 and $0,
respectively.
The Company maintains a supplemental life insurance program for its officers
providing a variable, appreciable life insurance policy on each participant
in an amount equal to four times annual base salary up to retirement and two
times such annual base salary after retirement. The program was funded by
the Company's purchasing individual insurance policies on the life of each
officer. The costs of this program for Messrs. Daniel, Grzelecki, Dixon,
LeBlanc and Burlinson: (A) for 1997 were $6,260, $4,395, $1,046, $1,200 and
$2,160; (B) for 1996 were $5,584, $3,936, $945, $0 and $0, respectively; and
(C) for 1995 were $3,936, $2,758, $713, $0 and $0, respectively.
(2) In connection with his employment with the Company, Mr. LeBlanc received
$91,090 for relocation in 1997 and a signing bonus which was received in the
amounts of $15,000 in 1997 and $70,000 in 1996. Mr. LeBlanc joined the
Company in November 1996.
(3) In connection with his employment with the Company, Mr. Burlinson received a
signing bonus of $10,000. Mr. Burlinson joined the Company in September
1996.
A-9
<PAGE>
BASE SALARIES
The base salary of each officer was increased based on the recommendations
of the Compensation Committee and an outside independent report. These increases
reflected input submitted by the Company's Chief Executive Officer and the
Compensation Committee's assessment of the individual performance contributions
of each officer over the past year. The base salary of each officer is
determined by the Compensation Committee annually. While the Committee uses the
benchmarks as a reference point, a particular officer's base salary may vary
depending upon his salary history, experience, performance and salary guidelines
imposed by the budget.
ANNUAL INCENTIVE AWARDS FOR 1997
The Company maintains the Handy & Harmon Management Incentive Plan (the
'Bonus Plan'), which is an annual incentive program that rewards selected
officers and other key employees each year based on their contributions to the
profits of the Company. Prior to the start of each Bonus Plan year, the Chief
Executive Officer recommends those officers designated as participants for the
upcoming year. Final selection of each participant rests with the Compensation
Committee. For the 1997 fiscal year, all officers were selected for
participation in the Bonus Plan.
The available incentive pool for officers and selected corporate management
participants is determined by a formula that represents 7 1/2% of consolidated
pre-tax earnings in excess of 15% of shareholders' equity. An individual
participant's award may not exceed 100% of the participant's salary in the
fiscal year for which the incentive award was earned. If the excess earnings
criterion is not met, at the sole discretion of the Compensation Committee,
based upon the recommendation of the Chief Executive Officer, an amount may be
provided for awards to participants to recognize overall effort of achieving
objectives which enhance the Company's long-term growth potential. However, any
discretionary award may not increase an employee's total incentive award under
this provision to an amount in excess of 25% of the participant's base salary.
For the 1997 fiscal year, corporate pre-tax earnings were in excess of the
minimum shareholders' equity requirement and incentive awards to officers ranged
from 20% to 69% of base salary.
STOCK OPTIONS
HANDY & HARMAN 1995 OMNIBUS STOCK INCENTIVE PLAN
(SUCCESSOR TO THE HANDY & HARMAN LONG-TERM INCENTIVE STOCK OPTION PLAN ADOPTED
IN 1991)
The Handy & Harman 1995 Omnibus Stock Incentive Plan (the 'Option Plan') is
intended to promote the interests of the Company and its shareholders by
providing officers and other employees of the Company (including directors who
are also employees of the Company) with appropriate incentives and rewards to
encourage them to enter into and continue in the employ of the Company and to
acquire a proprietary interest in the long-term success of the Company.
After incorporating remaining 'shares available for options' from the
predecessor plan (i.e., the Company's 1991 Long-Term Incentive Stock Option
Plan), the combined number of Shares subject to award under this Option Plan
adopted at the 1995 Annual Meeting of Shareholders shall not exceed 1,000,000
Shares. The Compensation Committee of the Board of Directors may grant options,
stock appreciation rights (tandem or standalone), 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 Option Plan. Through 1997 only options have been awarded under
the successor and predecessor plans. Certain shares under option with a term of
3 years become exercisable based on the Company's stock attaining specific
trading prices. The remaining Shares under option with terms of 7 years and 10
years become exercisable cumulatively at the
A-10
<PAGE>
rate of 50% and 25% per year (20% for predecessor plan awarded options),
respectively. Successor and predecessor plan transactions are as follows:
<TABLE>
<CAPTION>
SHARES SHARES UNDER OPTION WEIGHTED
AVAILABLE --------------------------- AVERAGE
FOR OPTION SHARES RANGE OF PRICE EXERCISE PRICE
---------- --------- -------------- --------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995............................... 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
Options granted........................................ (581,200) 581,200 16.565-22.719 21.77
Options exercised...................................... -- (112,750) 9.625-17.75 13.24
Options expired........................................ 45,050 (45,050) 12.063-17.75 15.16
---------- --------- -------------- --------------
Balance, December 31, 1997............................. 118,850 1,383,100 $12.563-22.719 $ 18.157
---------- --------- -------------- --------------
---------- --------- -------------- --------------
</TABLE>
During 1997, options to purchase 581,200 Shares were awarded. As of
December 31, 1997, options to purchase 1,383,100 Shares were outstanding and no
SARs had been issued. The exercise price of each option cannot be less than 100%
of the fair market value of a Share at the time the option is granted.
The predecessor plan, which covered a maximum of 1,000,000 Shares, was
approved at the 1991 Annual Meeting of Shareholders. Such plan permitted the
grant of non-qualified stock options and SARs. Outstanding Shares under option
for this plan were incorporated into the Plan, as stated above.
During 1997, options were granted to the executive officers named below.
SARs may be granted under the Option Plan, but no such rights are outstanding.
Set forth below is information concerning stock option grants to any named
executive officer who was granted a stock option during 1997:
STOCK OPTION GRANTS 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES
------------------------------------------------------------ OF STOCK PRICE
# OF % OF TOTAL APPRECIATION
SECURITIES OPTIONS FOR OPTION
UNDERLYING GRANTED TO TERM(1)($)
OPTION/ EMPLOYEES IN EXERCISE OR EXPIRATION --------------------
SARS GRANTED FISCAL YEAR BASE PRICE($) DATE 5% 10%
------------- ------------ ------------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
R. N. Daniel.................... 100,000 17 22.71875 09/25/00 -- 188,000
60,000 10 22.71875 09/25/04 555,000 1,293,000
F. E. Grzelecki................. 100,000 17 22.71875 09/25/00 -- 188,000
50,000 9 22.71875 09/25/04 462,500 1,077,500
P. E. Dixon..................... 25,000 4 22.71875 09/25/04 231,250 538,750
R. D. LeBlanc................... 40,000 7 22.71875 09/25/04 370,000 862,000
R. F. Burlinson................. 10,000 2 22.71875 09/25/04 92,500 215,500
</TABLE>
- ------------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the SEC and, therefore, are not intended to forecast
possible future appreciation, if any, of the Company's stock price.
(Footnote continued on next page)
A-11
<PAGE>
(Footnote continued from previous page)
No gain to the optionee is possible without an increase in stock price which
will benefit all shareholders commensurately.
The exercise price of the options granted is equal to the market value of the
Shares on the date of the grant. Options with expiration date of 9/25/00
become exercisable based on the Company's stock attaining specified trading
prices. Options with an expiration date of 9/25/04 become exercisable at the
cumulative rate of 50% per year on each of the first anniversary dates.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FOR YEAR-END OPTION/SAR VALUES
The following table provides information with respect to options exercised
by any named executive officer during 1997. In addition, this table provides the
number and information with respect to unexercised options to purchase Shares as
of December 31, 1997:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY(2)
OPTIONS/SARS(1) OPTIONS/SARS
AT YEAR-END(#) AT YEAR-END($)
--------------------- ---------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------ --------------- ----------- --------------------- ---------------------
<S> <C> <C> <C> <C>
R. N. Daniel........................ -- -- 197,500/205,000 3,747,000/2,850,000
F. E. Grzelecki..................... 19,000 172,322 166,500/182,000 3,107,000/2,501,000
P. E. Dixon......................... 7,750 44,345 12,500/47,750 233,000/707,000
R. D. LeBlanc....................... -- -- 12,500/77,500 198,500/1,066,500
R. F. Burlinson..................... -- -- 3,750/21,250 62,800/306,300
</TABLE>
- ------------------
(1) No stock appreciation rights are outstanding.
(2) The value of the unexercised in-the-money options is calculated by
multiplying the number of underlying Shares by the difference between the
closing price of the Shares on the New York Stock Exchange at December 31,
1997 ($34.50) and the exercise price for these Shares. These values have not
been realized.
LONG-TERM INCENTIVE PLAN
The Company's 1988 Long-Term Incentive Plan (the 'LTIP') is a
performance-based restricted stock plan where every other year key executives
earn the right to receive Shares based on achievement of pre-established
financial and individual performance goals. LTIP participants are selected by
the Compensation Committee and include the Chief Executive Officer and the next
four highest paid officers. No Shares of restricted stock were awarded in 1997.
The LTIP establishes overlapping cycles with each cycle encompassing five
fiscal years. Shares of restricted stock are awarded based on the results
attained on the selected performance measures over the first three years of a
cycle (the 'Performance Period'). The subsequent two-year time frame represents
the period when restrictions lapse and the stock is earned (the 'Earn-out
Period'). Shares are earned-out at the rate of 50% per year. Awards are
generally made in the year immediately following the third year of each
Performance Period. During the Earn-out Period, the Shares are held by the
Company in escrow for the executive. The executive receives dividends on the
restricted stock during the two-year Earn-out Period. See 'Identity and
Background-- Arrangements with Executive Officers, Directors or Affiliates of
the Company' in the attached Schedule 14D-9.
The number of restricted Shares granted for each cycle is determined by a
formula that considers the executive's base salary, the market value of the
Shares and the executive's duties and responsibilities. The grant guidelines
were developed by an independent compensation consultant hired by the Company.
Long-term objectives are established under the LTIP which reflect both
quantitative and qualitative measures. Results achieved on the quantitative
component determine 70% of the restricted Share award and results achieved on
the qualitative component determine 30% of the award.
A-12
<PAGE>
The quantitative measures include the following:
-- Average Annual Return on Shareholders' Equity
-- Average Annual Operating Income
Qualitative performance measures include specific goals developed under
several categories. Each goal is also weighted according to its relative
importance to the executive's position.
At the end of each three year cycle, the Compensation Committee determines
the number of Shares to be awarded to each executive based upon the actual
performance compared to the objectives.
Based on the four cycles completed under the LTIP covering the ten year
period from 1987 through 1997, a total of 135,775 Shares have been awarded, net
of forfeitures as of December 31, 1997. The number of key management
participants in each cycle has been between 20 and 35. Additional information
for the fifth and sixth cycles under the LTIP is contained in the attached
Schedule 14D-9.
PENSIONS
The Company maintains the Handy & Harman Pension Plan, a defined benefit
pension plan, which provides benefits generally to most salaried employees. The
annual benefit for each participant that retires at normal retirement age (age
65) with at least 25 years of service is equal to 50% of career average pay
minus $1,125. A proportionately reduced benefit is provided for retirement at
age 65 with less than 25 years of service. The formula is applied to earnings
averaged over the period from January 1, 1998 to retirement, with a minimum of
five years of earnings included in the average. This definition of average
earnings was amended in 1997. Prior to the amendment, the benefit was based on
the earnings averaged over the period from January 1, 1993 to retirement, with a
minimum of five years of earnings included in the average. Plan benefits accrued
prior to October 31, 1992 are subject to annual cost of living adjustments up to
a maximum of 4% per year.
Career average pay under the Handy & Harman Pension Plan only includes
salary and excludes bonuses or other incentive compensation. The Company
maintains the Supplemental Executive Retirement Plan (the 'SERP') to provide
corporate officers the amount of reduction in their formula pension benefits
under the Handy & Harman Pension Plan on account of the limitation on pay under
Section 401(a)(17) of the Internal Revenue Code (which for 1998 is $160,000),
and the limitation on benefits under Section 415 of the Internal Revenue Code of
1986, as amended (the 'Code') (which for 1998 is $130,000). The SERP also
applies the Handy & Harman Pension Plan formula to the Career Average Pay (as
defined in the SERP) after including 25% of the amounts received under the
Company's Bonus Plan for services in 1995 and subsequently (50% for services
prior to 1995). Amounts received under the SERP are not subject to cost of
living increases.
The following table shows the projected annual retirement benefits, payable
on the basis of ten years of certain payments and thereafter for life, to each
of the individuals listed in the 'Summary Compensation Table' above at age 65
assuming continuation of employment to age 65. The amounts shown under the
Salary column below reflect the current rate of salary as plan compensation for
Messrs. Daniel, Grzelecki, Dixon, LeBlanc and Burlinson of $470,000, $430,000,
$205,000, $300,000 and $165,000, respectively, and include the benefits payable
under both the Handy & Harman Pension Plan and the SERP. The amount of benefits
shown under the Bonus column below would be payable under the SERP and assumes
continuation of the amount of bonus for 1997 shown in the 'Summary Compensation
Table' above.
<TABLE>
<CAPTION>
SERVICE AT ANNUAL RETIRMENT BENEFITS FROM:
NORMAL RETIREMENT NORMAL -------------------------------
NAME DATE RETIREMENT DATE SALARY BONUS TOTAL
- ------------------------------------- ----------------- --------------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
R. N. Daniel......................... October 1, 2000 29 yrs. $233,875 $33,780 $267,655
F. E. Grzelecki...................... July 1, 2002 13 yrs. 111,215 19,188 130,403
P. E. Dixon.......................... September 1, 2009 16 yrs. 10 mos. 68,256 11,951 80,207
R. D. LeBlanc........................ July 1, 2014 17 yrs. 8 mos. 105,210 17,491 122,701
R. F. Burlinson...................... December 1, 2004 8 yrs. 3 mos. 26,854 3,465 30,319
</TABLE>
In 1992, the Company adopted a supplemental executive plan (the
'Supplemental Plan') to provide the Company a further means to retain and
encourage the productive efforts of Mr. Grzelecki. The Supplemental Plan
provides for the accrual and immediate vesting of a monthly pension of $6,000
per month for Mr. Grzelecki, to be paid for life commencing on the later of July
1, 1997 and Mr. Grzelecki's departure from the Company. The
A-13
<PAGE>
pension provides for benefits on the basis of a ten year certain payment and for
life thereafter. The Company and Mr. Grzelecki have agreed to convert the term
of the payment pursuant to the Supplemental Plan from the longer of his life or
ten years to the longer of his life or the life of his spouse, at an actuarially
equivalent monthly amount. By action of the Compensation Committee, the Company
has waived the requirement that Mr. Grzelecki depart the Company and authorized
payments to begin effective March 1, 1998. The Company has purchased annuity
policies to provide a source of funds to satisfy the Company's obligation to pay
Mr. Grzelecki, although the Company continues to be responsible for payments
under the Supplemental Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
AGREEMENTS
In 1989, the Company entered into an agreement with Mr. Daniel (the 'Daniel
Agreement') which replaced a prior agreement with Mr. Daniel. The Daniel
Agreement provides for a three-year period of employment commencing on May 1,
1989, which was extended May 1 of each year from 1992 to 1996 for an additional
three-year term. In May 1997, the Daniel Agreement was further extended for a
term ending on April 30, 2000. If not further extended, the Daniel Agreement
will terminate at the end of its current term. Effective October 1, 1995, the
Board set Mr. Daniel's base salary at $470,000 per annum, which amount may be
increased at the discretion of the Board. Mr. Daniel is also entitled to
participate in the Company's benefit plans, including the Bonus Plan and the
Option Plan. Prior to a recent amendment to the Daniel Agreement discussed
below, the Daniel Agreement provided that if the Company terminates the Daniel
Agreement other than for Cause (as defined therein) or Mr. Daniel terminates it
for Good Reason (as defined therein), the Company is obligated to pay Mr. Daniel
a lump sum amount equal to the sum of (i) the base salary he would receive to
the end of the then current employment period and (ii) an amount equal to the
Bonus Plan payments he received with respect to the most recent calendar year,
multiplied by the remaining years of the employment period or portions thereof.
Under the Daniel Agreement, he also becomes entitled to additional pension
benefits under the Company's pension plans (the 'Pension Plan') and to receive
title to a Company car. In addition, the Daniel Agreement provides that if any
payments under the Daniel Agreement or any other payments or benefits received
or to be received by Mr. Daniel would be subject to the excise tax imposed by
Section 280G and Section 4999 of the Code, the Company will reimburse Mr. Daniel
for any such excise tax (and any income and excise tax due with respect to such
reimbursement). The Company has also agreed to an amendment to the Daniel
Agreement providing that, when his employment by the Company ends for whatever
reason (other than for Cause), he and his wife would be entitled to medical
benefits during their lives without cost to them in the same manner as then
currently provided for active senior officers of the Company. On January 26,
1998, the Company amended the Daniel Agreement to provide that in the event that
Mr. Daniel's employment is terminated by the Company (other than for Cause) or
by Mr. Daniel for Good Reason, then the employment term shall continue through
the third anniversary of the date of termination of Mr. Daniel's employment. On
February 26, 1998, the Company restated the January 26th amendment to the Daniel
Agreement to provide that any dispute or controversy between the Company and Mr.
Daniel will be settled by arbitration, and that the Company will pay any fees
incurred by Mr. Daniel in good faith in connection with such arbitration.
The Company entered into an agreement with Frank E. Grzelecki as of July 1,
1989 (the '1989 Agreement') providing for the employment of Mr. Grzelecki. The
1989 Agreement provides that Mr. Grzelecki is entitled to an annual base salary,
currently set at $430,000, as well as participation in the Bonus Plan, the
Pension Plan and the other employee benefit and insurance plans of the Company.
The 1989 Agreement also provides that if, after a Change in Control of the
Company (as defined in the 1989 Agreement), Mr. Grzelecki's position, duties,
responsibilities, status with the Company, base salary, employee benefits or
location are changed in a manner materially adverse to his interest, then he may
designate such change as an event which 'triggers' a three-year period of
guaranteed employment by the Company. If the Company terminates Mr. Grzelecki
without cause within such three-year period, or if Mr. Grzelecki elects to
terminate his employment for any reason, the Company is obligated to pay Mr.
Grzelecki a lump sum amount equal to the sum of (i) the base salary he would
receive to the end of the employment period and (ii) an amount equal to the
bonus payment he received for the last calendar year, multiplied by the number
of years (or portions thereof) remaining in the employment period. Mr. Grzelecki
also becomes entitled to additional pension benefits under the Pension Plan. The
Company entered into an amendment to the 1989 Agreement, dated as of July 1,
1989, to: (i) conform the definition of 'change in control' to the broader
definition contained in the Company's employee benefit plans; and (ii) provide
that the Company would reimburse Mr. Grzelecki for any excise tax (and any
income and excise tax due with respect to
A-14
<PAGE>
such reimbursement) imposed on payments made to Mr. Grzelecki in connection with
a 'Change in Control' of the Company pursuant to Section 280G and Section 4999
of the Code.
In November 1995, the Company entered into a new amended and restated
agreement with Mr. Grzelecki (the '1995 Agreement') which replaced a 1994
agreement with Mr. Grzelecki but did not supersede or replace the 1989
Agreement. The 1995 Agreement provides that, when his employment by the Company
ends, he will be entitled to severance rights of one year's salary as well as:
(i) medical benefits for him and his wife during their lives without cost to
them in the same manner as then currently provided for active senior officers of
the Company, (ii) certain adjustments of the exercise periods of outstanding
stock options and (iii) subject to limitations, office space and secretarial
services for a four-year period. On January 26, 1998, the Company entered into a
Confirmation Agreement with Mr. Grzelecki which confirmed that both the 1989
Agreement and amendment thereto and the 1995 Agreement remained in effect and
that if Mr. Grzelecki's employment terminated under circumstances entitling him
to a severance payment following a Change in Control under the 1989 Agreement
and amendment thereto, he would not also be entitled to a severance payment
equal to one year's salary under the 1995 Agreement (although he would remain
entitled to the other benefits provided by the 1995 Agreement). On February 26,
1998, the Company restated the Confirmation Agreement to provide that any
dispute or controversy between the Company and Mr. Grzelecki will be settled by
arbitration, and that the Company will pay any fees incurred by Mr. Grzelecki in
good faith in connection with such arbitration.
In 1996, the Company entered into an employment agreement with Robert D.
LeBlanc, President of the Company (the 'LeBlanc Agreement'), which provided for
a 30-month period of employment commencing on November 11, 1996 as Executive
Vice President of the Company (Mr. LeBlanc was appointed President of the
Company in July 1997). Mr. LeBlanc received a signing bonus of $85,000 and
receives a salary under the contract of $300,000 per annum, which amount may be
increased at the discretion of the Board. Mr. LeBlanc is entitled to participate
in the Bonus Plan, the LTIP and the Option Plan, as well as in the SERP, the
Executive Post-Retirement Life Insurance Program (the 'Life Insurance Program')
and all of the Company's employee benefit plans. If the Company should terminate
the LeBlanc Agreement other than for Cause or Disability (each as defined
therein) or death, the Company will continue to pay Mr. LeBlanc's salary for the
longer of twelve months and the remaining life of the agreement. Mr. LeBlanc
will also continue to participate in the SERP, the Life Insurance Program and in
all other employee benefit plans of the Company for the remainder of the
employment period. If Mr. LeBlanc were to receive payments under the LeBlanc
Agreement, he would not be entitled to receive any payments under the
Supplemental Agreement (as hereinafter defined).
In May 1997, the Company entered into an additional agreement (the
'Supplemental Agreement') with Mr. LeBlanc, providing that if at any time within
two years following a Change in Control of the Company (as defined in the
Supplemental Agreement) the Company terminates Mr. LeBlanc's employment (other
than for Disability or Cause, as such terms are defined in the Supplemental
Agreement), or if Mr. LeBlanc terminates his employment for Good Reason (as
defined in the Supplemental Agreement), Mr. LeBlanc will be entitled to receive
a lump sum cash payment equal to one year's base salary, and to receive, for
twelve months following his termination of employment, life, medical and dental
insurance benefits substantially similar to those which he was receiving
immediately prior to the notice of termination given with respect to such
termination. The Supplemental Agreement also provides that if any payment made
to Mr. LeBlanc under the Supplemental Agreement is subject to the excise tax
provisions of Section 280G or Section 4999 of the Code, the Company will reduce
such payment to the extent necessary to avoid such payment being subject to such
excise tax. On February 26, 1998, the Company amended the Supplemental Agreement
to provide that any dispute or controversy between the Company and Mr. LeBlanc
will be settled by arbitration, and that the Company will pay any fees incurred
by Mr. LeBlanc in good faith in connection with such arbitration.
In May 1997, the Company also entered into certain agreements (the 'Change
in Control Agreements'), with each of Paul E. Dixon, Senior Vice President,
General Counsel and Secretary of the Company, Robert F. Burlinson, Vice
President and Treasurer of the Company and Dennis C. Kelly, Controller of the
Company, and in February 1998, entered into a Change in Control Agreement with
Dennis R. Kuhns, Corporate Vice President (each, an 'Executive'), providing that
if, any time within two years following a Change in Control of the Company (as
defined in the Change in Control Agreements), the Company terminates the
Executive's employment (other than for Disability or Cause, as such terms are
defined in the Change in Control Agreements) or if the Executive terminates his
employment for Good Reason (as defined in the Change in Control Agreements), the
Executive will be entitled to receive a lump sum cash payment equal to one
year's base salary,
A-15
<PAGE>
and to receive, for twelve months following the Executive's termination of
employment, life, medical and dental insurance benefits substantially similar to
those which the Executive was receiving immediately prior to the notice of
termination given with respect to such termination. Each Change in Control
Agreement also provides that if any payment made to the Executive under the
Executive's Change in Control Agreement is subject to the excise tax provisions
of Section 280G and Section 4999 of the Code, the Company will reduce such
payment to the extent necessary to avoid such payment being subject to such
excise tax. On February 26, 1998, the Company amended and restated each Change
in Control Agreement to conform the definition of 'Change in Control' to the
broader definition contained in the Company's employee benefits plans and to
provide that any dispute or controversy between the Company and an Executive
will be settled by arbitration (and that the Company will pay any fees incurred
by such Executive in good faith in connection with such arbitration). At the
February 26, 1998 meeting of the Compensation Committee of the Board of
Directors, the Compensation Committee resolved to amend Mr. Dixon's Change in
Control Agreement to provide for a bonus equal to $250,000 to be paid to Mr.
Dixon within three business days following a Change in Control (as defined in
Mr. Dixon's Change in Control Agreement).
In 1986, the Company entered into an agreement with Robert M. Thompson (the
'Thompson Agreement'), providing for the employment of Mr. Thompson at an annual
base salary, currently set at $175,000, as well as participation in the Bonus
Plan, the Pension Plan and the other employee benefit and insurance plans of the
Company. The Thompson Agreement also provides that if, after a Change in Control
of the Company (as defined in the Thompson Agreement), Mr. Thompson's position,
duties, responsibilities, status with the Company, base salary, employee
benefits or location are changed in a manner materially adverse to Mr.
Thompson's interest, then he may designate such change as an event which
'triggers' a three-year period of guaranteed employment by the Company. If the
Company terminates Mr. Thompson without cause within such three-year period, or
if Mr. Thompson elects to terminate his employment for any reason, the Company
is obligated to pay Mr. Thompson a lump sum amount equal to the sum of (i) the
base salary he would receive to the end of the employment period and (ii) an
amount equal to the bonus payment he received for the last calendar year,
multiplied by the number of years (or portions thereof) remaining in the
employment period. Mr. Thompson also becomes entitled to continued participation
in the Company's medical and accident insurance programs for the three years
after the change in control as well as additional pension benefits under the
Pension Plan. In December 1988, the Board authorized amendments to the Thompson
Agreement to (i) conform the definition of 'change in control' to the broader
definition contained in the Company's employee benefit plans; and (ii) provide
that the Company reimburse Mr. Thompson for any excise tax (and any income and
excise tax due with respect to such reimbursement) imposed on payments made to
him in connection with a change in control of the Company pursuant to Section
280G and Section 4999 of the Code. On February 26, 1998, the Company amended the
Thompson Agreement to provide that any dispute or controversy between the
Company and Mr. Thompson will be settled by arbitration, and that the Company
will pay any fees incurred by Mr. Thompson in good faith in connection with such
arbitration.
For certain information with respect to payments that may be required to be
made to senior executives of the Company pursuant to the foregoing agreements in
connection with the consummation of the Offer, the Merger and other transactions
contemplated by the Merger Agreement, see the attached Schedule 14D-9 of the
Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the issued and
outstanding Shares, to file with the SEC and the New York Stock Exchange initial
reports of ownership and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company, officers, directors and
greater than 10% shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
officers, directors and greater than 10% beneficial owners were complied with
during 1997, other than Dr. Elliot Sussman, who inadvertently filed a late Form
4 on February 3, 1998.
A-16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C>
1. -- Confidentiality Agreement, dated as of February 28, 1998, between the Company and WHX Corporation.
2. -- Agreement and Plan of Merger, dated as of March 1, 1998, by and among WHX Corporation, HN
Acquisition Corp. and the Company.
3. -- Amendment, dated as of March 1, 1998, to the Rights Agreement, dated as of January 27, 1989, as
amended as of April 25, 1996 and October 22, 1996.
4. -- Agreement dated as of May 1, 1989 between the Company and Richard N. Daniel.
5. -- Amendment to Agreement dated as of May 1, 1989 between the Company and Richard N. Daniel approved
by the Company's Board of Directors on May 11, 1993.
6. -- Amendment to Agreement dated as of May 1, 1989 between the Company and Richard N. Daniel approved
by the Company's Board of Directors on September 28, 1995.
7. -- Restated Amendment to Agreement with Richard N. Daniel, dated February 26, 1998.
8. -- Executive Agreement, dated as of July 1, 1989, between the Company and Frank E. Grzelecki.
9. -- Amendment, dated as of July 1, 1989, to Agreement, dated as of July 1, 1989 between the Company
and Frank E. Grzelecki.
10. -- Amended and Restated Agreement, dated as of November 3, 1995, between the Company and Frank E.
Grzelecki.
11. -- Restated Confirmation Agreement with Frank E. Grzelecki, dated February 26, 1998.
12. -- Employment Agreement, dated as of October 22, 1996, between the Company and Robert D. LeBlanc.
13. -- Supplemental Agreement, dated as of May 14, 1997, between the Company and Robert D. LeBlanc.
14. -- Amendment, dated February 26, 1998, to Supplemental Agreement with Robert D. LeBlanc.
15. -- Amended and Restated Agreement with Paul E. Dixon, dated February 26, 1998.
16. -- Amended and Restated Agreement with Robert F. Burlinson, dated February 27, 1998.
17. -- Amended and Restated Agreement with Dennis C. Kelly, dated February 26, 1998.
18. -- Amended and Restated Agreement with Dennis R. Kuhns, dated February 26, 1998.
19. -- Form of Executive Agreement dated as of September 2, 1986, between the Company and Robert M.
Thompson.
20. -- Amendment to the Form of Executive Agreement approved in December 1988.
21. -- Amendment dated February 26, 1998 to Executive Agreement with Robert M. Thompson.
22. -- Amended and Restated Supplemental Executive Retirement Plan as of January 1, 1998, approved on
February 26, 1998.
23. -- Handy & Harman Supplemental Executive Plan.
24. -- Handy & Harman Executive Post-Retirement Life Insurance Program.
25. -- Handy & Harman Management Incentive Plan-Corporate Group.
26. -- Amendment to Management Incentive Plan, approved January 22, 1998.
27. -- Handy & Harman Outside Director Stock Option Plan.
28. -- Handy & Harman 1988 Long-Term Incentive Plan.
29. -- Amendment to Handy & Harman 1988 Long-Term Incentive Plan approved in December 1988.
30. -- Amendment to Handy & Harman 1988 Long-Term Incentive Plan approved in June 1989.
31. -- Amendment to Long-Term Incentive Plan approved January 22, 1998.
32. -- Handy & Harman 1982 Stock Option Plan.
33. -- Amendment to Handy & Harman 1982 Stock Option Plan.
34. -- Subsidiary, Division, Group or Unit Management Incentive Plan, as amended and restated on December
15, 1994.
35. -- Handy & Harman Deferred Fee Plan for Directors, as amended and restated on December 15, 1994,
effective as of January 1, 1995.
36. -- Handy & Harman Long-Term Incentive Stock Option Plan.
37. -- Handy & Harman 1995 Omnibus Stock Incentive Plan.
38. -- Letter to Shareholders, dated March 6, 1998.*
39. -- Text of Joint Press Release issued by the Company and WHX Corporation, dated March 2, 1998.
40. -- Opinion of Goldman, Sachs & Co., dated March 1, 1998.*
41. -- Complaint filed in action entitled William Steiner, individually and on behalf of all other
shareholders similarly situated v. Handy & Harman et al.
42. -- Complaint filed in action entitled Harbor Finance Partners, on behalf of itself and all other
shareholders similarly situated v. Handy & Harman et al.
</TABLE>
- ------------------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
<PAGE>
PERSONAL AND CONFIDENTIAL
February 28, 1998
WHX Corporation
110 East 59th Street
New York, NY 10022
Attention: Steven Wolosky
Assistant Secretary
Gentlemen:
In connection with your consideration of a possible transaction with Handy &
Harman (the "Company"), you have requested information concerning the Company.
As a condition to your being furnished such information, you agree to treat
any information (whether written or oral) concerning the Company (whether
prepared by the Company, its advisors or otherwise) which is furnished to you
by or on behalf of the Company or its affiliates or its or their directors,
officers, employees, affiliates, representatives (including financial
advisors, attorneys or accountants) or agents (collectively,
"Representatives") to you and your Representatives, and all analyses,
compilations, forecasts, studies or other notes or documents prepared by you
or your Representatives which contain or reflect or are generated from any
such information (herein collectively referred to as the "Evaluation
Material") in accordance with the provisions of this letter to take or abstain
from taking certain other actions herein set forth. The term "Evaluation
Material" does not include information which (i) is already in your possession
(other than information provided to you or your Representatives by the
Company or its Representatives), or (ii) becomes generally available to the
public other than as a result of a disclosure by you or your Representatives
(but only with respect to the period after which such information becomes
publicly available), or (iii) becomes available to you on a non-confidential
basis from a source other than the Company or its Representatives, provided
that such source is not
<PAGE>
known by you, after due inquiry, to be bound by a confidentially agreement
with or other obligation of secrecy to the Company or another party.
You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible transaction between the Company and you, that
such informa tion will be kept confidential by you and your Representatives,
and that you and your Representatives will not disclose in any manner
whatsoever such information or the fact that you have received such
information, provided, however, that (i) any of such information may be
disclosed to your directors, officers and employees and representatives of
your advisors who need to know such information for the purpose of evaluating
any such possible transaction between the Company and you (it being understood
that such directors, officers, employees and representative shall be informed
by you of the confidential nature of such information and shall agree to treat
such information confidentially), and (ii) any disclosure of such information
may be made to which the Company consents in writing. You agree that you will
be responsible for any breach of this letter by any of your Representatives.
You hereby acknowledge that you are aware, and that you will advise such
directors, officers, employees and representatives who are informed as to the
matters which are the subject of this letter, that the United States
securities laws prohibit any person who has received from an issuer material,
non-public information concerning the matters which are the subject of this
letter from purchasing or selling securities of such issuer or from
communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.
In addition, without the prior written consent of the Company, you will not,
and will direct your Representatives not to, disclose to any person either the
fact that discussions or negotiations are taking place concerning a possible
transaction between the Company and you or any of the terms, conditions or
other facts with respect to any such possible transaction, including the
status thereof.
In the event that you or any of your Representatives are requested or required
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand, or any informal or formal investigation
by any govern ment or governmental agency or authority) to disclose any of the
Evaluation Material or any of the other information referred to in this
letter, you will notify the Company promptly in writing so that the Company
may seek a protective order or other appropriate remedy or, in the Company's
sole discretion, waive compliance with the terms of this letter. You agree not
to oppose any action by the Company to obtain such protective order or other
remedy. Whether or not such protective order or other remedy is obtained or
the Company waives compliance with the terms of this letter, you agree that
you and your Representatives will furnish only that portion of the
<PAGE>
Evaluation Material or other information which you are advised by counsel is
legally required to be furnished.
You agree that for a period of one year from the date of this letter, without
the Company's prior written consent, you will not and will direct your
Representatives not to solicit for employment or hire any person who is now
employed by the Company or any of its subsidiaries whom you initially meet as
a result of your investigation of the Company.
You also agree that the Company shall be entitled to specific performance or
other equitable relief, including injunction, in the event of any breach or
threatened breach of the provisions of this letter and that you shall not
oppose the granting of such relief. Such remedy shall not be deemed to be the
exclusive remedy for a breach of this letter but shall be in addition to all
other remedies at law or in equity.
You understand that (a) the Company shall be free to conduct the process
relating to the consideration of a possible transaction (including, without
limitation, by negotiation with any prospective buyer and entering into a
definitive agreement relating to a possible transaction without prior notice
to you or any other person) and (b) any procedures established with respect to
such possible transaction may be changed at any time without notice to you or
any other person and you agree to be bound by such procedures.
Although the Company has endeavored to include in the Evaluation Material
information known to it which it believes to be relevant for the purpose of
you investigation, you understand that neither the company nor any of its
Representatives has made or makes any representation or warranty as to the
accuracy or completeness of the Evaluation material. You agree that neither
the company nor its representatives shall have any liability to you or any of
your representatives resulting from the use of the Evaluation Material.
Immediately upon the Company's request, you shall promptly redeliver to the
Company all written Evaluation Material and any other written material
containing or reflecting any information in the Evaluation Material (whether
prepared by the company, its advisors or otherwise) and will not retain any
copies, extracts or other reproductions in whole or in part of such written
material. All documents, memoranda, notes and other writings whatsoever
prepared by you or your Representatives based on the information in the
Evaluation material shall be retained by you and will continue to be subject
to this letter.
You agree that unless and until a definitive agreement between the company and
you with respect to any transaction referred to in the first paragraph of this
letter has been executed and delivered, neither the company nor you will be
under any legal obliga-
<PAGE>
tion of any kind whatsoever with respect to such a transaction by virtue of
this or any written or oral expression with respect to such a transaction by
the Company or any of its Representatives except, in the case of this letter,
for the matters specifically agreed to herein.
This letter shall be governed by, and construed in accordance with, the laws
of the State of New York, without regard to the principles of conflicts of
laws thereof. It is further agreed that any suit, action or proceeding arising
under or relating to this letter shall be brought either in the United States
District Court located in, or a new York state court located in, the County
which includes New York, New York, and that you and the Company (a) consent to
the jurisdiction of any such court, (b) agree to service of process in any
such suit and agree that service of any process, summons, notice or document
by U.S. registered or certified mail to your address set forth above shall be
effective service of process for any suit, action or proceeding brought
against you in such court, and (c) agree that any such court will be the
proper and convenient forum for any such suit, action or proceeding.
No modifications of this letter or waiver of the terms and conditions hereof
will be binding upon you or the Company, unless executed in writing by each of
you and the Company. This letter shall inure to the benefit of and be binding
upon our respective successors and assigns; provided, however, that neither
this letter nor any of the rights, interests or obligations hereunder shall be
assigned by either you or the Company without the prior written consent of the
other party.
Very truly yours,
Handy & Harman
By /s/ Goldman, Sachs & Co.
--------------------------------------------
Goldman, Sachs & Co.
on behalf of Handy & Harman
Confirmed and Agreed to:
WHX CORPORATION
By: /s/ Steven Wolosky
----------------------------------
Date: February 28, 1998
----------------------------------
<PAGE>
AGREEMENT AND PLAN OF MERGER
by and among
WHX CORPORATION
HN ACQUISITION CORP.
and
HANDY & HARMAN
March 1, 1998
<PAGE>
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TABLE OF CONTENTS
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<S> <C>
ARTICLE I
THE OFFER AND MERGER.....................................................................................1
Section 1.1 The Offer..........................................................................1
Section 1.2 Company Actions....................................................................4
Section 1.3 Directors..........................................................................6
Section 1.4 The Merger.........................................................................7
Section 1.5 Effective Time.....................................................................8
Section 1.6 Closing............................................................................8
Section 1.7 Directors and Officers of the Surviving
Corporation..........................................................8
Section 1.8 Shareholders' Meeting..............................................................9
Section 1.9 Merger Without Meeting of
Shareholders........................................................10
ARTICLE II
CONVERSION OF SECURITIES................................................................................10
Section 2.1 Conversion of Capital Stock.......................................................10
Section 2.2 Exchange of Certificates..........................................................11
Section 2.3 Lost Certificates.................................................................13
Section 2.4 Dissenting Shares.................................................................13
Section 2.5 Company Option Plans..............................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................15
Section 3.1 Organization......................................................................15
Section 3.2 Capitalization....................................................................16
Section 3.3 Authorization; Validity of Agreement;
Company Action......................................................18
Section 3.4 Consents and Approvals; No Violations.............................................18
Section 3.5 SEC Reports and Financial Statements..............................................20
Section 3.6 No Undisclosed Liabilities........................................................20
Section 3.7 Absence of Certain Changes........................................................21
Section 3.8 Employee Benefit Plans; ERISA.....................................................21
Section 3.9 Litigation........................................................................23
Section 3.10 No Default; Compliance with
Applicable Laws.....................................................24
Section 3.11 Taxes.............................................................................24
Section 3.12 Real Property.....................................................................26
Section 3.13 Environmental Matters.............................................................26
Section 3.14 Information in Schedule 14D-1.....................................................27
Section 3.15 Compliance with Laws..............................................................27
Section 3.16 HSR Approval......................................................................27
Section 3.17 Precious Metals Inventories.......................................................28
Section 3.18 Opinion of Financial Advisor......................................................28
Section 3.19 Voting Requirements...............................................................28
</TABLE>
i
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<S> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
THE PURCHASER.......................................................28
Section 4.1 Organization......................................................................28
Section 4.2 Authorization; Validity of Agreement;
Necessary Action....................................................29
Section 4.3 Consents and Approvals; No Violations.............................................29
Section 4.4 Information in Proxy Statement;
Schedule 14D-9......................................................30
Section 4.5 Financing.........................................................................30
Section 4.6 Share Ownership...................................................................31
Section 4.7 Purchaser's Operations............................................................31
Section 4.8 HSR Approval......................................................................31
Section 4.9 Investigation by Parent and Purchaser.............................................31
ARTICLE V
COVENANTS...............................................................................................32
Section 5.1 Interim Operations of the Company.................................................32
Section 5.2 Approvals and Consents; Cooperation...............................................35
Section 5.3 Actions Regarding the Rights......................................................35
Section 5.4 Access to Information.............................................................35
Section 5.5 Repayment of Borrowings Under Credit
Agreement...........................................................36
Section 5.6 Consents and Approvals............................................................36
Section 5.7 Employee Benefits.................................................................37
Section 5.8 No Solicitation...................................................................39
Section 5.9 Brokers or Finders................................................................40
Section 5.10 Publicity.........................................................................41
Section 5.11 Notification of Certain Matters...................................................41
Section 5.12 Directors' and Officers' Insurance and
Indemnification.....................................................41
Section 5.13 Further Assurances................................................................43
ARTICLE VI
CONDITIONS..............................................................................................44
Section 6.1 Conditions to Each Party's Obligation To
Effect the Merger...................................................44
ARTICLE VII
TERMINATION.............................................................................................45
Section 7.1 Termination.......................................................................45
Section 7.2 Effect of Termination.............................................................47
Section 7.3 Termination Fee...................................................................47
</TABLE>
ii
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<S> <C>
ARTICLE VIII
MISCELLANEOUS...........................................................................................48
Section 8.1 Amendment and Modification........................................................48
Section 8.2 Nonsurvival of Representations
and Warranties......................................................48
Section 8.3 Notices...........................................................................48
Section 8.4 Interpretation....................................................................50
Section 8.5 Counterparts......................................................................50
Section 8.6 Entire Agreement; Third Party
Beneficiaries.......................................................50
Section 8.7 Severability......................................................................50
Section 8.8 Governing Law.....................................................................51
Section 8.9 Jurisdiction......................................................................51
Section 8.10 Assignment........................................................................52
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of March 1, 1998, by
and among WHX Corporation, Delaware corporation ("Parent"), HN Acquisition
Corp., a New York corporation and a direct, wholly owned subsidiary of Parent
(the "Purchaser"), and Handy & Harman, a New York corporation (the "Company").
WHEREAS, Parent and the Purchaser have proposed acquiring all
of the outstanding common stock, par value $1.00 per share, of the Company (the
"Shares" or "Company Common Stock") at a price of $35.25 per Share in cash;
WHEREAS, the Boards of Directors of Parent, the Purchaser and
the Company have approved, and deem it advisable and in the best interests of
their respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
--------------------
Section 1.1 The Offer. (a) As promptly as practicable (but in
no event later than five business days after the public announcement of the
execution hereof), the Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) an offer (the "Offer") to purchase for cash all shares of the issued and
out standing Company Common Stock (together with the related Common Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., dated as of January
26, 1989, as amended as of April 25, 1996 and October 22, 1996 (the "Rights
Agreement"), at a price of $35.25 per Share, net to the seller in cash (such
price, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "Offer Price"),
<PAGE>
subject to there being validly tendered and not withdrawn prior to the
expiration of the Offer, that number of Shares which, together with the Shares
beneficially owned by Parent or the Purchaser, represent at least a majority of
the Shares outstanding on a fully diluted basis (the "Minimum Condition") and to
the other conditions set forth in Annex A hereto. The Purchaser shall, on the
terms and subject to the prior satisfaction or waiver (except that the Minimum
Condition may not be waived) of the conditions of the Offer, accept for payment
and pay for Shares tendered as soon as it is legally permitted to do so under
applicable law. The obligations of the Purchaser to commence the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the Minimum
Condition and the other conditions set forth in Annex A hereto. The Offer shall
be made by means of an offer to purchase (the "Offer to Purchase") containing
the terms set forth in this Agreement, the Minimum Condition and the other
conditions set forth in Annex A hereto. The Purchaser shall not amend or waive
the Minimum Condition and shall not decrease the Offer Price or decrease the
number of Shares sought, or amend any other condition of the Offer in any manner
adverse to the holders of the Shares (other than with respect to insignificant
changes or amendments) without the prior written consent of the Company (such
consent to be authorized by the Board of Directors of the Company or a duly
authorized committee thereof); provided, however, that (i) subject to applicable
legal requirements, Parent may cause Purchaser to waive any condition to the
Offer, as set forth in Annex A, in Parent's reasonable judgment and (ii) the
Offer may be extended in connection with an increase in the consideration to be
paid pursuant to the Offer so as to comply with applicable rules and regulations
of the United States Securities and Exchange Commission ("SEC"). Notwithstanding
the foregoing, the Purchaser shall, and Parent agrees to cause the Purchaser to,
extend the Offer at any time up to May 1, 1998 for one or more periods of not
more than 10 business days, if at the initial expiration date of the Offer, or
any extension thereof, any condition to the Offer is not satisfied or required.
The Purchaser may also, in its sole discretion, extend the expiration date of
the Offer for up to 10 additional business days after the initial expiration
date. In addition, the Offer Price may be increased and the Offer may be
extended to the extent
2
<PAGE>
required by law in connection with such increase in each case without the
consent of the Company.
(b) As soon as practicable on the date the Offer is
commenced, Parent and the Purchaser shall file with the SEC a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer (together with all
amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-1"). The Schedule 14D-1 will include, as exhibits, the Offer to
Purchase and a form of letter of transmittal and summary advertisement
(collectively, together with any amendments and supplements thereto, the "Offer
Documents"). The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by Parent or
the Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. Each of Parent and the Purchaser further
agrees to take all steps necessary to cause the Offer Documents to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Each of Parent and the
Purchaser, on the one hand, and the Company, on the other hand, agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that it shall have become false and misleading in any material
respect and the Purchaser further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
the opportunity to review the initial Schedule 14D-1 before it is filed with the
SEC. In addition, Parent and the Purchaser agree to provide the Company and its
counsel in writing with any comments or other communications that Parent, the
Purchaser or their counsel may receive from time to time from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments or other communications.
3
<PAGE>
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to
the Offer and represents that the Board of Directors, at a meeting duly called
and held, has, subject to the terms and conditions set forth herein, (i)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger (as defined in Section 1.4) (collectively, the
"Transactions"), and such approvals constitute approval of the Offer, this
Agreement and the Merger for purposes of Sections 902 and 912 of the New York
Business Corporation Law (the "NYBCL") and similar provisions of any other
similar state statutes that might be deemed applicable to the transactions
contemplated hereby, (ii) resolved to recommend that the shareholders of the
Company accept the Offer, tender their Shares thereunder to the Purchaser and
approve and adopt this Agreement and the Merger and the Company hereby consents
to the inclusion in the Offer Documents of such recommendation; provided, that
such recommendation may be withdrawn, modified or amended if, in the good faith
opinion of the Board of Directors, after consultation with independent legal
counsel, such recommendation would be inconsistent with its fiduciary duties to
the Company's shareholders under applicable law and (iii) approved the
redemption of the Rights prior to the consummation of the Offer according to the
provisions of the Rights Agreement. The Company represents that the actions set
forth in this Section 1.2(a) and all other actions it has taken in connection
therewith are, assuming the accuracy of, and in reliance upon, the information
received in writing from Parent as to the ownership of Shares by Parent and
their affiliates, sufficient to render the relevant provisions of Section 912 of
the NYBCL inapplicable to the Offer and the Merger. The Company further
represents that Goldman, Sachs & Co. ("Goldman") has delivered to the Board of
Directors of the Company the Fairness Opinion as described in Section 3.18.
(b) Concurrently with the commencement of the Offer,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall, subject to
the fiduciary duties of the Company's directors under applicable law and to the
4
<PAGE>
provisions of this Agreement, contain the recommendation referred to in clause
(ii) of Section 1.2(a) hereof. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or the
Purchaser in writing for inclusion in the Offer Documents. The Company further
agrees to take all steps necessary to cause the Schedule 14D-9 to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Each of the Company, on
the one hand, and Parent and the Purchaser, on the other hand, agrees promptly
to correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that it shall have become false and misleading in any material
respect and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given the
opportunity to review the initial Schedule 14D-9 before it is filed with the
SEC. In addition, the Company agrees to provide Parent, the Purchaser and their
counsel in writing with any comments or other communications that the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments or
other communications. Notwithstanding anything to the contrary contained herein,
if the members of the Board of Directors of the Company determine in the
exercise of their fiduciary duties to withdraw, modify or amend the
recommendation referred to in clause (ii) of Section 1.2(a) hereof, such
withdrawal, modification or amendment shall not constitute a breach of this
Agreement.
(c) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to the Purchaser mailing labels,
security position listings and any available listing or computer file containing
the
5
<PAGE>
names and addresses of the record holders of the Shares as of a recent date, and
shall furnish the Purchaser with such information and assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
shareholders of the Company. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company deliver or cause to be delivered
to the Company all copies of such information then in its possession or the
possession of its agents or representatives.
(d) The Company shall amend the Rights Agreement as
set forth in Annex B hereto, which amendment will be effective as of the date
hereof.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for
Shares by Parent or any of its subsidiaries which represent at least a majority
of the outstanding shares of Company Common Stock (on a fully diluted basis),
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of the total number of directors on such Board (giving effect to the
directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by the
Purchaser, Parent and any of their affiliates bears to the total number of
shares of Company Common Stock then outstanding (such number being the "Board
Percentage") provided, however, that if the number of Shares purchased by
Parent or any of its Subsidiaries equals or exceeds 50.01% of the outstanding
Shares, the Board Percentage will in all events be at least a majority of the
members of the Board of Directors of the Company. The Company shall, upon
request of the Purchaser, use its best efforts to cause Parent's designees to
satisfy the Board Percentage, including without limitation increasing the size
of its Board of Directors (which, pursuant to the Company's Restated Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), has a
6
<PAGE>
maximum number of twelve directors) and securing resignations of such number of
its incumbent directors as is necessary to enable Parent's designees to be so
elected to the Company's Board, and shall promptly cause Parent's designees to
be so elected. Notwithstanding the foregoing, until the Effective Time (as
defined in Section 1.5 hereof), the Company shall retain as members of its Board
of Directors at least two directors who are directors of the Company on the date
hereof (the "Company Designees"); provided, that subsequent to the purchase of
and payment for Shares pursuant to the Offer, Parent shall always have its
designees represent at least a majority of the entire Board of Directors. The
Company's obligations under this Section 1.3(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Parent or the
Purchaser will supply the Company any information with respect to either of them
and their nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1. Upon receipt of such information from Parent or the Purchaser,
the Company shall include in the Schedule 14D-9 (as an annex or otherwise) the
information required by Section 14(f) and Rule 14f-1 as is necessary to enable
Parent's designees to be elected to the Company's Board of Directors.
(b) From and after the time, if any, that
Parent's designees constitute a majority of the Company's Board of Directors,
any amendment of this Agreement, any termination of this Agreement by the
Company, any extension of time for performance of any of the obligations of
Parent or the Purchaser hereunder, any waiver of any condition or any of the
Company's rights hereunder or other action by the Company hereunder may be
effected only by the action of a majority of the directors of the Company then
in office who were directors of the Company on the date hereof, which action
shall be deemed to constitute the action of the full Board of Directors;
provided, that if there shall be no such directors, such actions may be effected
by majority vote of the entire Board of Directors of the Company.
Section 1.4 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.5 hereof), the
Company and the Purchaser shall consummate a merger (the "Merger") pursuant to
which (a) the Purchaser shall be merged with and into the Company and the
separate corporate existence of
7
<PAGE>
the Purchaser shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger (the "Surviving Corporation") and shall
continue to be governed by the laws of the State of New York, and (c) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger.
Pursuant to the Merger, (x) the Certificate of Incorporation of the Purchaser,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such Certificate of Incorporation, and (y) the By-laws of
the Purchaser, as in effect immediately prior to the Effective Time, shall be
the Bylaws of the Surviving Corporation until thereafter amended as provided by
law, the Certificate of Incorporation and such By-laws. The Merger shall have
the effects set forth in the NYBCL.
Section 1.5 Effective Time. Parent, the Purchaser and the
Company will cause an appropriate Certificate of Merger (the "Certificate of
Merger") to be executed and filed on the date of the Closing (as defined in
Section 1.6) (or on such other date as Parent and the Company may agree) with
the Department of State of the State of New York (the "Department of State") as
provided in the NYBCL. The Merger shall become effective on the date on which
the Certificate of Merger has been duly filed with the Department of State or
such time as is agreed upon by the parties and specified in the Certificate of
Merger, and such time is hereinafter referred to as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m., on a date to be specified by the parties, which
shall be no later than the second business day after satisfaction or waiver of
all of the conditions set forth in Article VI hereof (the "Closing Date"), at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New
York, New York, unless another date or place is agreed to in writing by the
parties hereto.
Section 1.7 Directors and Officers of the Surviving
Corporation. The directors and officers of the Purchaser at the Effective Time
shall, from and after the Effective Time, be the directors and officers, respec-
8
<PAGE>
tively, of the Surviving Corporation until their successors shall have been duly
elected or appointed or qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-laws.
Section 1.8 Shareholders' Meeting.
(a) If required by applicable law in order to
consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its shareholders (the "Special Meeting") as
soon as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for
the purpose of considering and taking action upon the approval
of the Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and use its reason able efforts (x) to obtain and
furnish the information required to be included by the SEC in
the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments
made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or
information statement (the "Proxy Statement") to be mailed to
its shareholders and (y) to obtain the necessary approvals of
the Merger and this Agreement by its shareholders; and
(iii) subject to the fiduciary obligations of the
Board under applicable law as advised by independent counsel,
include in the Proxy Statement the recommendation of the Board
that shareholders of the Company vote in favor of the approval
of the Merger and the adoption of this Agreement.
(b) Parent agrees that it will vote, or cause to be
voted, all of the Shares then owned by it, the Purchaser or any of its other
subsidiaries and affil-
9
<PAGE>
iates in favor of the approval of the Merger and the adoption of this Agreement.
Section 1.9 Merger Without Meeting of Shareholders.
Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser or
any other subsidiary of Parent shall acquire, together with the Shares owned by
Parent, the Purchaser or any other subsidiary of Parent, at least 90% of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of shareholders of the
Company, in accordance with Section 905 of the NYBCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and with out any action on the part of the holders
of any shares of Company Common Stock or common stock, par value $0.01 per
share, of the Purchaser (the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and
outstanding share of the Purchaser Common Stock shall be converted into and
become one fully paid and nonassessable share of common stock of the Surviving
Corporation with the result that the Surviving Corporation will be a
wholly-owned subsidiary of Parent.
(b) Cancellation of Treasury Stock and Parent-Owned
Stock. All shares of Company Common Stock that are owned by the Company as
treasury stock and any shares of Company Common Stock owned by Parent, the
Purchaser or any other wholly owned Subsidiary (as defined in Section 3.1
hereof) of Parent shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding
share of Company Common Stock (other than Shares to be cancelled in accordance
with Section 2.1(b)
10
<PAGE>
and any Dissenting Shares (if applicable and as defined in Section 2.4 hereof)),
shall be converted into the right to receive the Offer Price, payable to the
holder thereof, without interest (the "Merger Consideration"), upon surrender of
the certificate formerly representing such share of Company Common Stock in the
manner provided in Section 2.2. All such shares of Company Common Stock, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without interest,
or to perfect any rights of appraisal as a holder of Dissenting Shares that such
holder may have pursuant to Section 623 of the NYBCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for the
holders of shares of Company Common Stock in connection with the Merger (the
"Paying Agent") to receive the funds to which holders of shares of Company
Common Stock shall become entitled pursuant to Section 2.1(c). Such funds shall
be invested by the Paying Agent as directed by Parent or the Surviving
Corporation and any interest or other income resulting from such investments
will be paid to Parent from time to time upon request by Parent.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time but in no event more than three business
days thereafter, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
whose shares were converted pursuant to Section 2.1 into the right to receive
the Merger Consideration, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the
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surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each share of Company Common Stock formerly represented by such Certificate and
the Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid or is not
applicable. Until surrendered as contemplated by this Article II, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash as contemplated by
this Article II. No interest will be paid or will accrue on any cash payable to
the holders of Certificates pursuant to the provisions of this Article II.
(c) Transfer Books; No Further Ownership Rights in
Company Common Stock. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the re cords of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except as
otherwise provided for herein or by applicable law. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time
following one year after the Effective Time, the Surviving Corporation shall be
entitled to require
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the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and there after such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate has not been surrendered prior to the expiration of the applicable
statute of limitations after the Effective Time (or immediately prior to such
earlier date on which any Merger Consideration payable to the holder of such
Certificate representing Shares pursuant to this Article II would otherwise
escheat to or become the property of any Governmental Entity (as hereinafter
defined)), any such Merger Consideration in respect of such Certificate will
become the property of the Surviving Corporation, free and clear of all claims
or interest of any individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other
entity (a "Person") previously entitled thereto.
Section 2.3 Lost Certificates. If any Certificate is
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration, in accordance with the provisions of this
Agreement.
Section 2.4 Dissenting Shares. Notwithstanding
anything in this Agreement to the contrary, Shares outstanding immediately prior
to the Effective Time and held by a holder who has not voted in favor of the
Merger or consented thereto in writing and who has demanded ap-
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praisal for such Shares in accordance with Section 623 of the NYBCL ("Dissenting
Shares") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If, after the Effective Time, such holder fails to
perfect or withdraws or loses his right to appraisal, such Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Consideration, without interest thereon.
Section 2.5 Company Option Plans. Parent and the Company shall
take all actions necessary to provide that, effective as of the Effective Time,
(i) each out standing employee stock option to purchase Shares (an "Employee
Option") granted under the Company's Long-Term Incentive Stock Option Plan (the
"ISO Plan") or the Company's 1995 Omnibus Stock Incentive Plan (the "1995 Option
Plan") and each outstanding non-employee director option to purchase Shares
("Director Options" and collectively with Employee Options, "Options") granted
under the Company's Outside Director Stock Option Plan (the "Director Plan" and
collectively with the ISO Plan and the 1995 Option Plan, the "Option Plans"),
whether or not then exercisable or vested, shall become fully exercisable and
vested, (ii) each Option that is then outstanding shall be cancelled and (iii)
in consideration of such cancellation, and except to the extent that Parent or
the Purchaser and the holder of any such Option otherwise agree, the Company
(or, at Parent's option, the Purchaser) shall pay to such holders of Options an
amount in respect thereof equal to the product of (A) the excess, if any, of the
Offer Price over the exercise price of each such Option and (B) the number of
Shares subject thereto (such payment to be net of applicable withholding taxes).
Except as may be otherwise agreed to by the Parent or the
Purchaser, all stock option plans of the Company shall terminate as of the
Effective Time and the provisions of any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its Subsidiaries shall be terminated as
of the Effective Time and no holder of Options or any participant in any option
plan or any other plan, program or arrangement
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shall have any right thereunder to acquire any equity securities of the Company
or the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser as follows:
Section 3.1 Organization. Each of the Company and its
Subsidiaries (as defined in this Section 3.1) is a corporation, partnership or
other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority, and governmental
approvals would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole. As used in this Agreement, the word "Subsidiary"
means, with respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any other Subsidiary
of such party is a general partner (excluding such partnerships where such party
or any Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
one or more of its Subsidiaries. As used in this Agreement, any reference to any
event, change or effect being material or having a material adverse effect on or
with respect to any entity (or group of entities taken as a whole) means such
event, change or effect that is materially adverse to the consolidated financial
condition, businesses, properties, assets or results of operations of such
entity or a combination thereof (or, if used with respect thereto, of such group
of entities taken as a whole). The Company
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and each of its Subsidiaries is duly qualified or licensed to do business and
in good standing 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 or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not in the aggregate have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
The Company has delivered to Parent prior to the execution of this Agreement
complete and correct copies of its certificate of incorporation and by-laws and
has made available to Parent the certificate of incorporation and by-laws (or
comparable organizational documents) of each of its Subsidiaries, in each case
as amended to date. Exhibit 21 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 includes all subsidiaries of the Company
required to be listed thereon (each a "Subsidiary", and collectively, the
"Subsidiaries"). Except as set forth on Schedule 3.1 hereof, the Company does
not own any minority interests in any other corporation representing at least 5%
of the equity interest of such corporation or participate in joint ventures with
any other party.
Section 3.2 Capitalization. (a) The authorized capital stock
of the Company consists of 60,000,000 shares of Company Common Stock. As of the
date hereof, (i) 12,131,288 shares of Company Common Stock are issued and
outstanding (of which 92,973 shares were granted on February 26, 1998 pursuant
to the Fifth Cycle of the Company's Long-Term Incentive Plan), (ii) 2,480,144
shares of Company Common Stock are issued and held in the treasury of the
Company, (iii) 1,371,104 shares of Company Common Stock are reserved for
issuance upon exercise of then outstanding Options granted under the Option
Plans and (iv) 156,139 shares of Company Common Stock have been allocated for
the Sixth Cycle of the Company's Long-Term Incentive Plan (which allocation
would amount to 69,395 shares of Company Common Stock assuming a May 1, 1998
proration date in the event of a "change in control" (as defined in such Plan)).
Schedule 3.2(a) sets forth the number and weighted average exercise price of
Options outstanding as of the date hereof. As of the date hereof there are
12,131,288 shares of Common Stock reserved for issuance upon exercise of the
Rights. All the outstanding shares of the Company Common Stock are, and all
shares which may be issued pursuant to the exer-
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cise of outstanding Options or Rights when issued in accordance with the
respective terms thereof will be, duly authorized, validly issued, fully paid
and non-assessable and are not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except (a) as set forth
above, and (b) for the transactions contemplated by this Agreement, as of the
date hereof, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment, and
(iii) there are no out standing contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or
capital stock of the Company or any subsidiary or affiliate of the Company.
(b) Except as set forth on Schedule 3.2, all the
outstanding shares of capital stock of each Subsidiary have been validly issued
and are fully paid and nonassessable and are owned directly or indirectly by the
Company, free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens").
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries. None of the Company or its Subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of the Company, or any
of its
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Subsidiaries, respectively, as a result of the transactions contemplated by this
Agreement.
Section 3.3 Authorization; Validity of Agreement; Company
Action. (a) The Company has full corporate power and authority to execute and
deliver this Agreement and, subject to obtaining the necessary approval of its
shareholders, to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this Agreement, and the consummation
by it of the transactions contemplated hereby, have been duly authorized by
its Board of Directors and, except for those actions contemplated by Section
1.2(a) hereof and obtaining the approval of its shareholders as contemplated by
Section 1.8 hereof, no other corporate action on the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by it of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and, subject
to approval and adoption of this Agreement by the Company's shareholders (and
assuming due and valid authorization, execution and delivery hereof by the other
parties there to) is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws, now or hereafter in effect, affecting
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 discretion of the court before which any proceeding therefor
may be brought.
(b) The Board of Directors of the Company has
approved and taken all corporate action required to be taken by the Board of
Directors for the consummation of the transactions contemplated by this
Agreement. The Board of Directors of the Company also has approved the
transactions contemplated by this Agreement for the purposes of rendering the
provisions of Section 912 of the NYBCL inapplicable to such transactions.
Section 3.4 Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, state
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or foreign laws relating to takeovers, state securities or blue sky laws and the
NYBCL, neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws or similar organizational documents of the Company or
of any of its Subsidiaries, (ii) require on the part of the Company any filing
with, or permit, authorization, consent or approval of, any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency (a "Governmental Entity"), except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole, (iii) except for the Revolving Credit Agreement,
dated as of September 29, 1997, among the Company, the lenders party thereto and
the Bank of Nova Scotia, as Administrative Agent (the "Credit Agreement"), and
the Note Purchase Agreement, dated as of April 17, 1997, among the Company and
the Purchasers party thereto (the "Note Agreement"), result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
and which has been filed as an exhibit to the Company SEC Documents (as defined
in Section 3.5) (the "Material Agreements") or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of its Subsidiaries or any of their properties or assets, excluding from the
foregoing clauses (iii) or (iv) such violations, breaches or defaults which
would not, individually or in the aggregate, have a material adverse effect on
the Company and its Subsidiaries taken as a whole, and which will not materially
impair the ability of the Company to consummate the transactions contemplated
hereby.
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Section 3.5 SEC Reports and Financial Statements. Except as
set forth in Schedule 3.5, the Company has filed with the SEC, and has
heretofore made available to Parent true and complete copies of, all forms,
reports, schedules, statements and other documents required to be filed by it
since December 31, 1996 under the Exchange Act that were filed and publicly
available prior to the date of this Agreement (as such documents have been
amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates or, if amended, as of the date of the
last such amendment, the Company SEC Documents, including, without limitation,
any financial statements or schedules included therein did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. None of the
Subsidiaries is required to file any forms, reports or other documents with the
SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements
of the Company (the "1997 Financial Statements") included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996
(including the related notes thereto) (the "1996 Form 10-K") and in the
quarterly reports on Form 10-Q for the three fiscal quarters occur ring since
the 1996 Form 10-K have been prepared from, and are in accordance with, the
books and records of the Company and its consolidated subsidiaries, comply in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto and subject, in the case of
unaudited interim financial statements, to normal year-end adjustments) and
fairly present the consolidated financial position and the consolidated results
of operations and cash flows of the Company and its consolidated subsidiaries as
at the dates thereof or for the periods presented therein.
Section 3.6 No Undisclosed Liabilities. Except (a) as
disclosed in the Company SEC Documents or on Schedule 3.6 hereto, (b) for
liabilities incurred in the ordinary course of business and consistent with past
practice and (c) for liabilities incurred in connection
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with the consummation of the transactions contemplated hereby, since September
30, 1997, neither the Company nor any of its Subsidiaries has incurred any
liabilities which, individually or in the aggregate, would be reason ably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole and would be required by GAAP to be reflected on a consolidated
balance sheet of the Company and its Subsidiaries (including the notes
thereto).
Section 3.7 Absence of Certain Changes. Except as disclosed in
the Company SEC Documents or on Schedule 3.7 hereto, since September 30, 1997,
the Company and its Subsidiaries have conducted their respective businesses in
the ordinary course of business and there has not been (i) any change in the
business of the Company or the amount, character or ownership interests of the
Company's assets that has resulted in a material adverse effect on the Company
and its Subsidiaries, taken as a whole; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of the Company or of any of its
Subsidiaries other than the regular quarterly cash dividends; (iii) any change
by the Company or any of its Subsidiaries in accounting principles or methods,
except insofar as may be required by a change in GAAP; (iv) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of the Company's capital stock
(other than the Rights) or (v) any change by the Company or any of its
Subsidiaries of any actuarial or other assumption used to calculate funding
obligations with respect to any Company pension plans, or change the manner in
which contributions to any Company pension plans are made or the basis on which
such contributions are determined.
Section 3.8 Employee Benefit Plans; ERISA.
(a) Schedule 3.8 hereto sets forth a list of all
material employee benefit plans, (including but not limited to plans described
in section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), maintained by the Company, any of its Subsidiaries or any
trade or business, whether or not incorporated (an "ERISA Affiliate"), which
together with
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the Company would be deemed a "single employer" within the meaning of section
4001(b)(15) of ERISA ("Benefit Plans") and all material employment and severance
agreements with employees of the Company ("Employee Agreements"). True and
complete copies of all Employee Agreements have been made available to Parent
by the Company.
(b) With respect to each Benefit Plan, except as
otherwise disclosed on Schedule 3.8: (i) if intended to qualify under section
401(a) or 401(k) of the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder (the "Code"), such plan has received a
determination letter from the Internal Revenue Service stating that it so
qualifies and that its trust is exempt from taxation under section 501(a) of the
Code; (ii) such plan has been administered in all material respects in
accordance with its terms and applicable law; (iii) no breaches of fiduciary
duty have occurred which might reasonably be expected to give rise to material
liability on the part of the Company; (iv) no disputes are pending, or, to the
knowledge of the Company, threatened that might reasonably be expected to give
rise to material liability on the part of the Company; (v) no prohibited
transaction (within the meaning of Section 406 of ERISA) has occurred that might
reasonably be expected to give rise to material liability on the part of the
Company; and (vi) all contributions required to be made to such plan as of the
date hereof (taking into account any extensions for the making of such
contributions) have been made in full.
(c) No Benefit Plan is a "multiemployer pension
plan," as defined in section 3(37) of ERISA, nor is any Benefit Plan a plan
described in section 4063(a) of ERISA.
(d) No liability under Title IV of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring a material liability under such Title. No
Benefit Plan has incurred an accumulated funding deficiency, as defined in
section 302 of ERISA or section 312 of the Code, whether or not waived.
(e) With respect to each Benefit Plan that is a
"welfare plan" (as defined in section 3(1) of
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ERISA), no such plan provides medical or death benefits with respect to current
or former employees of the Company or any of its Subsidiaries beyond their
termination of employment (other than to the extent required by applicable
law).
(f) Neither the Company nor any of its Subsidiaries
has been reimbursed by the federal government or any other Governmental Entity
relating to any pension or welfare benefits, or any other employee benefits or
fringe benefits maintained or contributed to by the Company.
(g) To the knowledge of the Company, there has been
no violation (or tax incurred under) Section 4980B of the Code or Sections
601-609 of ERISA with respect to any Benefit Plan that could result in material
liability.
(h) Subject to applicable requirements of ERISA, the
Code and collective bargaining agreements, neither any provision of any Benefit
Plan nor any agreement with any employee nor any representation or course of
conduct by or on behalf of the Company or its ERISA Affiliates would prevent the
amendment or termination after the Effective Time of any Benefit Plan without
liability to Parent, the Purchaser, the Company or their ERISA Affiliates.
(i) Based on the valuation as of January 1, 1997, as
appropriately adjusted through December 31, 1997, for purposes of financial
disclosure in the Company's financial statements, the assets of the Handy &
Harman Pension Plan, the Handy & Harman Hourly Pension Plan and the Handy &
Harman Bargain Unit Pension Plan exceed the FAS 87 liabilities (i.e., the
projected benefit obligations) by an amount in excess of $120 million.
(j) Schedule 3.8 identifies all material written
employment agreements and severance agreements with employees of the Company and
its Subsidiaries in effect or committed to be put into effect as of the date
hereof (an "Employee Agreement").
Section 3.9 Litigation. Except as disclosed in the Company
SEC Documents or on Schedule 3.9 hereto, there is no suit, action or proceeding
pending or, to the
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knowledge of the Company, threatened against the Company or any of its
Subsidiaries which, individually or in the aggregate, is reasonably likely to
have a material ad verse effect on the Company and its Subsidiaries, taken as a
whole.
Section 3.10 No Default; Compliance with Applicable Laws.
Except as set forth on Schedule 3.10 hereto, the business of the Company and
each of its Subsidiaries is not in default or violation of any term, condition
or provision of (i) its respective articles of incorporation or by-laws or
similar organizational documents, (ii) any Material Agreement or (iii) any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to the Company or any
of its Subsidiaries, excluding from the foregoing clauses (ii) and (iii),
defaults or violations which would not, individually or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
Section 3.11 Taxes. (a) The Company and its Subsidiaries have
(i) duly filed (or there has been filed on their behalf) with the appropriate
governmental authorities all Tax Returns (as defined in Section 3.11(f))
required to be filed by them on or prior to the date hereof, other than those
Tax Returns the failure of which to file would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries,
taken as a whole, and such Tax Returns are true, correct and complete in all
material respects, and (ii) duly paid in full or made provision in accordance
with generally accepted accounting principles (or there has been paid or
provision has been made on their behalf) for the payment of all Taxes (as
defined in Section 3.11(f)) shown to be due on such Tax Returns.
(b) Except as set forth on Schedule 3.11 hereto,
there are no ongoing federal, state, local or foreign audits or examinations of
any Tax Return of the Company or its Subsidiaries. Except as set forth on
Schedule 3.11, the Company and its Subsidiaries have not received any written
notice of audit, are not undergoing any audit of its Tax Returns, and have not
received any written notice of deficiency or assessment from any
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taxing authority with respect to liability for Taxes of the Company or any
Subsidiary, which has not been fully paid or finally settled, except for such
audits, deficiencies and assessments relating to liabilities which would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries.
(c) Except as set forth on Schedule 3.11 hereto,
there are no outstanding requests, agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against the Company or any of its Subsidiaries, and no power of
attorney granted by either the Company or any of its Subsidiaries with respect
to any Taxes is currently in force. The Company has not filed a request with the
Internal Revenue Service for changes in accounting methods within the last two
years, which change would materially affect the accounting for tax purposes,
directly or indirectly, of the Company.
(d) Except as set forth on Schedule 3.11, neither the
Company nor any of its Subsidiaries is a party to any agreement providing for
the allocation or sharing of Taxes.
(e) "Taxes" shall mean any and all taxes, charges,
fees, levies or other assessments, including, without limitation, income, gross
receipts, excise, real or personal property, sales, withholding, social
security, occupation, use, service, service use, license, net worth, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the United
States Internal Revenue Service or any taxing authority (domestic or foreign),
including, without limitation, any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (domestic or
foreign) with respect to Taxes.
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Section 3.12 Real Property. The Company and the Subsidiaries,
as the case may be, have good and marketable title or valid leasehold rights to
all real property purported to be owned by them or used in the conduct of their
respective businesses as currently conducted with only such exceptions as
individually or in the aggregate would not have a material adverse effect on the
Company and the Subsidiaries, taken as a whole.
Section 3.13 Environmental Matters. (a) Except as set forth in
the Company SEC Documents or in Schedule 3.13:
(i) since December 31, 1996, the Company has not received any
written communication from any person or entity (including any
Governmental Entity) stating or alleging that it may be a potentially
responsible party under Environmental Law (as defined in Section
3.13(b)) with respect to any actual or alleged environmental
contamination; neither the Company nor, to the Company's knowledge, any
Governmental Entity is conducting or has conducted any environmental
remediation or environmental investigation which could reasonably be
expected to result in liability for the Company under Environmental
Law; and the Company has not received any request for information under
Environmental Law from any Governmental Entity with respect to any
actual or alleged environmental contamination, except, in each case,
for communications, environmental remediation and investigations and
requests for information which would not, individually or in the
aggregate, have a material adverse effect;
(ii) since December 31, 1996, the Company has not received any
written communication from any person or entity (including any Govern
mental Entity) stating or alleging that the Company may have violated
any Environmental Law, or that the Company has caused or contributed to
any environmental contamination that has caused any property damage or
personal injury under Environmental Law, except, in each case, for
statements and allegations of violations and statements and allegations
of responsibility for property damage and personal
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injury which would not, individually or in the aggregate, have a
material adverse effect; and
(iii) all underground storage tanks ("UST's") on property
currently owned by the Company comply with applicable Environmental
Law, except for UST's which would not, individually or in the
aggregate, have a material adverse effect.
(b) For purposes of this Section 3.13, "Environmental
Law" means all applicable state, federal and local laws, regulations and rules,
including common law, judgments, decrees and orders relating to pollution, the
preservation of the environment, and the release of materials into the
environment.
Section 3.14 Information in Schedule 14D-1. None of the
information supplied or to be supplied by the Company in writing specifically
for inclusion in the Schedule 14D-1, at the time such document is first
published, sent or given will at the date it is first mailed to the Company's
shareholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading.
Section 3.15 Compliance with Laws. Except as set forth on
Schedule 3.15 or as disclosed in the SEC Documents, neither the Company nor any
Subsidiary is in violation of, or has violated, any law, statute, ordinance,
rule, regulation, arbitral determination, order, writ, decree or injunction that
is applicable to or binding upon the Company, any Subsidiary or any of their
respective properties, other than in each case such violations that,
individually or in the aggregate, have not had a material adverse effect on the
Company and its Subsidiaries taken as a whole.
Section 3.16 HSR Approval. The Company has filed a premerger
notification and report form under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") with respect to the acquisition of the
Company by Parent. The applicable waiting period under the HSR Act has expired.
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Section 3.17 Precious Metals Inventories. Schedule 3.17 sets
forth the aggregate net amount of fine ounces of gold, silver, palladium and
platinum owned by the Company and its wholly-owned Subsidiaries as of February
27, 1998 assuming such precious metals were reduced or refined to a fine ounce
basis.
Section 3.18 Opinion of Financial Advisor. The Company has
received the opinion of Goldman, Sachs & Co. (the "Fairness Opinion") to the
effect that, as of the date thereof, the Merger Consideration to be received by
the Company's shareholders pursuant to this Agreement is fair to the Company's
shareholders (other than Parent and the Purchaser) from a financial point of
view, a copy of which opinion will be made available to Parent.
Section 3.19 Voting Requirements. The affirmative vote of the
holders of 66 2/3% of the voting power of all outstanding Shares, voting as a
single class, at the Company's Stockholders Meeting to adopt this Agreement is
the only vote of the holders of any class or series of the Company's capital
stock necessary to approve and adopt this Agreement and the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and
warrant to the Company as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate or
other power and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have a material
adverse effect on Parent and its Subsidiaries taken as a whole. Parent and the
Purchaser are duly qualified or licensed to do business and in good standing in
each jurisdiction in which the property owned, leased
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or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not, in the aggregate, have a
material adverse effect on Parent and its Subsidiaries, taken as a whole.
Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and the
Purchaser of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by their Boards of Directors and
no other corporate action on the part of Parent and the Purchaser is necessary
to authorize the execution and delivery by Parent and the Purchaser of this
Agreement and the consummation by them of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and the Purchaser,
as the case may be, and, assuming due and valid authorization, execution and
delivery hereof by the Company, is a valid and binding obligation of each of
Parent and the Purchaser, as the case may be, enforceable against them in
accordance with its respective terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting 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
discretion of the court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, state or foreign
laws relating to takeovers, state securities or blue sky laws, the NYBCL, the
laws of other states in which Parent or the Purchaser is qualified to do or is
doing business, neither the execution, delivery or performance of this Agreement
by Parent and the Purchaser nor the consummation by Parent and the Purchaser of
the transactions contemplated hereby nor compliance by Parent and the Purchaser
with any of the provisions hereof will
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(i) conflict with or result in any breach of any provision of the respective
certificate of incorporation or by-laws or similar organizational documents of
Parent, any of its subsidiaries or the Purchaser, (ii) require on the part of
Parent or the Purchaser any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
have a material adverse effect on Parent and its Subsidiaries taken as a whole,
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (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, lease, license, contract,
agreement or other instrument or obligation to which Parent, any of its
Subsidiaries or the Purchaser is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or the Purchaser or any of their properties or as sets, excluding
from the foregoing clauses (iii) or (iv) such violations, breaches or defaults
which would not, individually or in the aggregate, have a material adverse
effect on Parent, its Subsidiaries or the Purchaser taken as a whole and will
not materially impair the ability of Parent or the Purchaser to consummate the
transactions contemplated hereby.
Section 4.4 Information in Proxy Statement; Schedule 14D-9.
None of the information supplied by Parent or the Purchaser for inclusion or
incorporation by reference in the Proxy Statement or the Schedule 14D-9 will, at
the date mailed to shareholders and at the time of the meeting of shareholders
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
Section 4.5 Financing. Either Parent or the Purchaser has
sufficient funds available (through cash on hand and existing credit
arrangements or otherwise) to purchase all of the Shares outstanding on a fully
diluted basis, to repay all amounts outstanding under the Credit
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Agreement and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
Section 4.6 Share Ownership. Except as set forth in the
Statement on Schedule 13D of Parent and the Purchaser dated January 26, 1998,
Parent and the Purchaser do not beneficially own any Shares. Parent and the
Purchaser will not sell, transfer or otherwise dispose of any of the Shares
beneficially owned by them so long as this Agreement is in effect, except
transfers to a direct or indirect wholly owned subsidiary of Parent.
Section 4.7 Purchaser's Operations. The Purchaser has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby or as disclosed in the
Tender Offer Statement of the Purchaser dated December 16, 1997.
Section 4.8 HSR Approval. Parent and the Purchaser have filed
a premerger notification and report form under the HSR Act with respect to their
acquisition of the Company. The applicable waiting period under the HSR Act has
expired.
Section 4.9 Investigation by Parent and Purchaser. Each of
Parent and the Purchaser:
(a) acknowledge that, other than as set forth in this
Agreement, none of the Company, its Subsidiaries or any of their respective
directors, officers, employees, affiliates, agents or representatives makes any
representation or warranty, either express or implied, as to the accuracy or
completeness of any of the information provided or made available to Parent or
the Purchaser or its agents or representatives prior to the execution of this
Agreement, and
(b) agrees, to the fullest extent permitted by law (except
with respect to claims of fraud), that none of the Company, its Subsidiaries or
any of their respective directors, officers, employees, stockholders,
affiliates, agents or representatives shall have any liability or responsibility
whatsoever to Parent or the Purchaser on any basis (including without limitation
in contract, tort or otherwise) based upon any information provided or made
available, or statements made, to Parent or the
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Purchaser prior to the execution of this Agreement.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as contemplated by this Agreement, or (ii)
as agreed in writing by Parent, after the date hereof, and prior to the time the
directors of the Purchaser have been elected to, and shall constitute a majority
of, the Board of Directors of the Company pursuant to Section 1.3 (the
"Appointment Date"):
(a) the business of the Company and its Subsidiaries
shall be conducted only in the ordinary and usual course of business;
(b) the Company will not, directly or indirectly, (i)
sell, transfer or pledge or agree to sell, transfer or pledge any Company Common
Stock or capital stock of any of its Subsidiaries beneficially owned by it,
either directly or indirectly; (ii) amend its Certificate of Incorporation or
By-laws or similar organizational documents; or (iii) split, combine or re
classify the outstanding Company Common Stock or any outstanding capital stock
of any of the Subsidiaries of the Company;
(c) except for those actions contemplated in Section
1.2, neither the Company nor any of its Subsidiaries shall: (i) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock except for its regular quarterly cash
dividend on the Company Common Stock; (ii) issue, sell, pledge, dispose of or
encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than shares of Common Stock reserved for issuance on the
date hereof upon exercise of outstanding Rights pursuant to the Rights Agreement
or issuances pursuant to the exercise of Options outstanding on the date hereof;
(iii) transfer, lease, license, sell, mort-
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gage, pledge, dispose of, or encumber any material assets other than in the
ordinary and usual course of business and consistent with past practice
including, without limitation, any transfer or sale of any precious metal
inventories set forth on Schedule 3.17, except in the ordinary course of
business consistent with past practice, it being understood that any permanent
reduction, liquidation or increase in the Company's precious metals inventory
position will not be made without Parent's consent; (iv) incur or modify any
material indebtedness or other material liability, other than in the ordinary
and usual course of business and consistent with past practice, provided that
the Company may borrow money for use in the ordinary and usual course of
business; or (v) redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock other than redemption of the outstanding Rights
pursuant to the Rights Agreement;
(d) neither the Company nor any of its Subsidiaries
shall modify, amend or terminate any of its Material Agreements or waive,
release or assign any material rights or claims, except in the ordinary course
of business and consistent with past practice;
(e) neither the Company nor any of its Subsidiaries
shall permit any material insurance policy naming it as a beneficiary or a loss
payable payee to be cancelled or terminated without notice to Parent, except in
the ordinary course of business and consistent with past practice;
(f) neither the Company nor any of its Subsidiaries
shall: (i) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the material obligations of
any other person, except in the ordinary course of business and consistent with
past practice; (iii) make any material loans, advances or capital contributions
to, or investments in, any other person (other than to Subsidiaries of the
Company), other than in the ordinary course of business and consistent with past
practice; or (iv) enter into any material commitment or transaction with respect
to any of the foregoing (including, but not limited to, any borrowing, capital
expenditure or purchase, sale or lease of assets);
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(g) neither the Company nor any of its Subsidiaries
shall change any of the accounting methods used by it unless required by GAAP;
(h) except as permitted in connection with the
termination of this Agreement pursuant to Section 7.1(c)(i), neither the Company
nor any of its Subsidiaries will adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of its Subsidiaries (other than
the Merger);
(i) neither the Company nor any of its Subsidiaries
will, except as required by law, enter into, adopt, create or amend in any
material respect or terminate any benefit plans maintained or contributed to by
the Company or any of its Subsidiaries;
(j) neither the Company nor any of its Subsidiaries
will make or agree to make any capital expenditure or capital expenditures other
than capital expenditures in accordance with the Company's 1998 capital
expenditure program or in the ordinary course of business consistent with past
practice;
(k) neither the Company nor any of its Subsidiaries
will increase the compensation of any director, executive officer or other key
employee of the Company or pay any benefit or amount not required by a plan,
agreement, understanding or arrangement as in effect on the date of this
Agreement to any such person;
(l) neither the Company nor any of its Subsidiaries
will cause a material change in investment policy or a material change in
investment vehicles related to the assets in any pension plan, other than
actions taken in the ordinary course of business or that are consistent with or
required by its fiduciary duties;
(m) neither the Company nor any of its Subsidiaries
will take, or agree to commit to take, any action that would make any
representation or warranty of the Company contained herein inaccurate in any
material respect at, or as of any time prior to, the Effective Time (except for
representations made as of a specific date); or
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(n) neither the Company nor any of its Subsidiaries
will authorize or enter into an agreement to do any of the foregoing.
Section 5.2 Approvals and Consents; Cooperation. The parties
hereto shall use reasonable efforts, and cooperate with each other, to obtain
all governmental and third party authorizations, approvals, consents or waivers
required in order to consummate the Offer and the Merger. Each of the parties
hereto agrees to use its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate the Offer and the Merger. The Company further agrees to
use its reasonable efforts to seek to obtain, in connection with Parent and
without cost to the Company, any consent of a third party on Schedule 3.4
required to avoid a default or breach of any such contract resulting from this
Agreement, the Offer or the Merger, including without limitation the Credit
Agreement and the Note Agreement.
Section 5.3 Actions Regarding the Rights. The Company, in
accordance with the terms and provisions of the Rights Agreement, shall take all
reasonable actions necessary to cause the postponement of the Distribution Date
under the Rights Agreement as necessary to prevent this Agreement or the
consummation of any of the transactions contemplated hereby, including without
limitation, the publication or other announcement of the Offer and the
consummation of the Offer and the Merger, from resulting in the distribution of
separate Rights certificates or the occurrence of a Distribution Date or being
deemed a Triggering Event (as defined in the Rights Agreement). The Company's
Board of Directors will take all further action (in addition to that referred to
in Section 1.2(d)) reasonably requested in writing by Parent in order to render
the Rights inapplicable to the Offer and the Merger and the other transactions
contemplated hereby to the extent provided herein and in the Amendment to the
Rights Plan contemplated by Section 1.2(d). So long as this Agreement is in
effect, the Company will not amend the Rights Agreement without Parent's prior
consent.
Section 5.4 Access to Information. Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers,
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employees, accountants, counsel, financing sources and other representatives of
Parent, access, during normal business hours during the period prior to the
Appointment Date, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to the Parent (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. After the Appointment Date the Company shall
provide Parent and such persons as Parent shall designate with all such
information, at such time, as Parent shall request. Unless otherwise required by
law and until the Appointment Date, Parent will hold any such information which
is nonpublic in confidence in accordance with the provisions of the
Confidentiality Agreement between the Company and Parent, dated February 28,
1998 (the "Confidentiality Agreement").
Section 5.5 Repayment of Borrowings Under Credit Agreement. At
the Closing, unless the Company shall have obtained the lenders' consent to the
Merger and a waiver of the change in control provision in the Credit Agreement,
Parent shall repay all outstanding borrowings under the Credit Agreement in
accordance with the terms thereof (through Parent's cash on hand, existing
credit arrangements or otherwise) such that no event of default will exist as a
result of the consummation of the transactions contemplated hereby.
Section 5.6 Consents and Approvals. Each of the Company,
Parent and the Purchaser will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated hereby (which actions shall
include, without limitation, furnishing all information in connection with
approvals of or filings with any Governmental Entity) and will promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them or any of their Subsidiaries in connection
with this Agreement and the transactions contemplated hereby. Each of the
Company, Parent and the Purchaser will, and will cause its Subsidiaries to, take
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all reasonable actions necessary to obtain (and will cooperate with each other
in obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party required to
be obtained or made by Parent, the Purchaser, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
Section 5.7 Employee Benefits.
(a) Parent and the Purchaser shall, as of the
Effective Time, continue the employment of all per sons who, immediately prior
to the Effective Time, were employees of the Company or its Subsidiaries
("Retained Employees"). Parent and the Purchaser agree that, effective as of the
Effective Time and for a three-year period following the Effective Time, the
Surviving Corporation and its Subsidiaries and successors shall provide the
Retained Employees with employee plans and programs which provide benefits that
are no less favorable in the aggregate to those provided to such Retained
Employees immediately prior to the date hereof. With respect to such benefits,
service accrued by such Retained Employees during employment with the Company
and its Subsidiaries prior to the Effective Time shall be recognized for all
purposes, except to the extent necessary to prevent duplication of benefits.
Nothing in this Section 5.7(a) shall be deemed to require the employment of any
Retained Employee to be continued for any particular period of time after the
Effective Time.
(b) Parent and the Purchaser agree to honor, and
cause the Surviving Corporation to honor, without modification, all employment
and severance agreements and arrangements, as amended through the date hereof,
with respect to employees and former employees of the Company, including the
Employee Agreements referred to in Section 3.8(a) hereof (collectively, the
"Severance Agreements"), all Supplemental Retirement and Death Benefit
Agreements, as amended through the date hereof, between the Company and certain
officers (collectively, "Retirement Agreements") and any other Benefit Plan,
agreement or arrangement which provides for the payment or acceleration of
benefits to employees of the Company upon a change in control of the Company.
Parent and the Purchaser acknowledge that the consummation of transac-
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tions contemplated hereby (including the Offer) shall constitute a "change in
control" for purposes of this Section 5.7(b) and the Severance Agreements,
Retirement Agreements and other agreements referred to herein. If any payments
are required to be made under any employment or severance agreement or
arrangement, as amended through the date hereof, with respect to employees and
former employees of the Company (including the Employee Agreements and Severance
Agreements referred to in Section 3.8 or 5.7 hereof), as a result of the
consummation of the transactions contemplated hereby, such payments shall be
made on the date on which the Shares are accepted for payment pursuant to the
Offer.
(c) Parent and the Purchaser agree that at or prior
to the Effective Time, the Board of Directors of the Company (or the
Compensation Committee thereof) after consultation with the Chief Executive
Officer of the Company, may allocate to officers and employees of the Company
and its Subsidiaries the 1998 Bonus Pool (as defined below) in a manner
consistent with past practice, and, to the extent payments in respect of such
allocated amounts have not been made prior to the Effective Time, Parent and the
Purchaser agree to make payments, or to cause the Surviving Corporation to make
payments, in respect of such allocated amounts within five days after the
Effective Time. The amount of the "1998 Bonus Pool" shall equal the aggregate
amount of bonuses paid in respect of the Company's 1997 fiscal year under the
Company's Management Incentive Plan multiplied by a fraction, the numerator of
which is the number of days which have elapsed during fiscal 1998 and the
denominator of which is 365.
(d) In the event Parent or the Purchaser or the
Surviving Corporation or any of their successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary to effectuate
the purposes of this Section 5.7, proper provision shall be made so that the
successors and assigns of Parent, the Purchaser or the Surviving Corporation, as
the case may be, assume the obligations set forth in this Section 5.7
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and none of the actions described in clauses (i) or (ii) shall be taken until
such provision is made.
Section 5.8 No Solicitation. Neither the Company, any of its
Subsidiaries or affiliates nor its officers, directors or affiliates, shall
directly or indirectly, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any merger, consolidation, tender offer, exchange
offer, sale of all or substantially all of the Company's assets, sale of shares
of capital stock or similar business combination transactions involving the
Company or any principal operating or business unit of the Company (an
"Acquisition Proposal"); provided, however, that if, at any time prior to the
purchase of Shares by Purchaser in the Offer, the Company's Board of Directors
determines in good faith, after receiving formal advice from its financial
advisor and outside counsel, that such action is reasonably necessary for the
Company Board to comply with its fiduciary duties to the Company's shareholders
under applicable law, the Company may, in response to a bona fide written
Acquisition Proposal which did not result from a breach of this Section 5.8 and
which the Board determines is superior to the Offer and which in the event of an
all or part cash transaction is not subject to financing (any such bona fide
written Acquisition Proposal being referred to as a "Superior Proposal"), (i)
furnish information or provide access with respect to the Company and each of
its Subsidiaries to such Person pursuant to a customary confidentiality
agreement (as determined by the Company after consultation with its outside
counsel) and (ii) participate in discussions and negotiations regarding such
Acquisition Proposal. In the event that prior to the completion of the Offer,
the Company's Board of Directors determines in good faith, after the Company has
received a Superior Proposal and after consultation with its financial advisor
and outside counsel, that it is reason ably necessary to do so in order to
comply with its fiduciary duties to the Company's shareholders under applicable
law, the Company's Board of Directors may withdraw or modify its approval or
recommendation of the Offer, the Merger or this Agreement, approve or recommend
a Superior Proposal or terminate this Agreement, provided that prior to any
such termination, the Company shall (i)
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have given Parent at least two business days notice of the effectiveness of such
termination, and (ii) simultaneously with the termination of this Agreement, pay
to Parent the termination fee referred to in Section 7.3 hereof. Furthermore,
nothing contained in this Section 5.8 shall prohibit the Company or its Board of
Directors from taking and disclosing to the Company's shareholders a position
with respect to a tender or exchange offer by a third party pursuant to Rules
l4d-9 and l4e-2(a) promulgated under the Exchange Act or from making such
disclosure to the Company's shareholders or otherwise which, in the judgment of
the Board of Directors with the advice of independent legal counsel, may be
required under applicable law or rules of any stock exchange.
Section 5.9 Brokers or Finders. (a) The Company represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except Goldman, Sachs & Co., whose fees and expenses will be paid by the Company
in accordance with the Company's agreement with such firm, which agreement has
been summarized in the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated December 24, 1997; and the Company agrees to indemnify and
hold Parent and the Purchaser harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged to
have been made by such party or its affiliates.
(b) Parent represents, as to itself, its Subsidiaries
and its affiliates, that no agent, broker, investment banker, financial advisor
or other firm or person is or will be entitled to any brokers' or finders' fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement, except Donaldson, Lufkin & Jenrette
Securities Corporation, whose fees and expenses will be paid by Parent in
accordance with the Parent's agreement with such firm; and Parent agrees to
indemnify and hold the Company harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions or
expenses asserted by any person on
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the basis of any act or statement alleged to have been made by such party or its
affiliates.
Section 5.10 Publicity. The initial press release with respect
to the execution of this Agreement shall be a joint press release reasonably
acceptable to Parent and the Company. Thereafter, so long as this Agreement is
in effect, neither the Company, Parent nor any of their respective affiliates
shall issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other transactions
contemplated hereby without the prior consultation of the other party, except as
may be required by law or by any listing agreement with a national securities
exchange.
Section 5.11 Notification of Certain Matters. The Company
shall give prompt notice to Parent and Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence of any event the occurrence,
or non-occurrence of which would cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (ii) any material failure of the Company or Parent, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.11 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.12 Directors' and Officers' Insurance and
Indemnification. (a) From and after the consummation of the Offer, Parent shall,
and shall cause the Surviving Corporation to, indemnify, defend and hold
harmless any person who is now, or has been at any time prior to the date
hereof, or who becomes prior to the Effective Time, an officer or director (the
"Indemnified Party") of the Company and its Subsidiaries against all losses,
claims, damages, liabilities, costs and expenses (including attorneys' fees and
expenses), judgments, fines, losses, and amounts paid in settlement in
connection with any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on, or
arises out of, (i) the fact that such person is or was a director,
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officer, employee or agent of the Company or any Subsidiaries or is or was
serving at the request of the Company or any of its Subsidiaries as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, or (ii) this Agreement, or any of the transactions
contemplated hereby, in each case to the extent that any such Claim pertains to
any matter or fact arising, existing, or occurring prior to or at the Effective
Time, regardless of whether such Claim is asserted or claimed prior to, at or
after the Effective Time, to the full extent permitted under New York law or the
Company's Certificate of Incorporation, By-laws or indemnification agreements in
effect at the date hereof, including provisions relating to advancement of
expenses incurred in the defense of any action or suit. Without limiting the
foregoing, in the event any Indemnified Party becomes involved in any capacity
in any Claim, then from and after consummation of the Offer Parent shall, or
shall cause the Company (or the Surviving Corporation if after the Effective
Time) to, periodically advance to such Indemnified Party its legal and other
expenses (including the cost of any investigation and preparation incurred in
connection therewith), subject to the provision by such Indemnified Party of an
undertaking to reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that such
Indemnified Party is not entitled thereto.
(b) Parent and the Company agree that all rights to
indemnification and all limitations or liability existing in favor of the
Indemnified Party as provided in the Company's Certificate of Incorporation and
By-laws as in effect as of the date hereof shall survive the Merger and shall
continue in full force and effect, with out any amendment thereto, for a period
of six years from the Effective Time to the extent such rights are consistent
with the NYBCL; provided that, in the event any claim or claims are asserted or
made within such six year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims; provided further, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under New York law, the Company's Certificate of Incorporation or
By-laws or such agreements, as the case may be, shall be made by independent
legal
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counsel selected by the Indemnified Party and reasonably acceptable to Parent
and; provided further, that nothing in this Section 5.12 shall impair any rights
or obligations of any present or former directors or officers of the Company.
(c) In the event Parent or the Purchaser or any of
their successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case, to
the extent necessary to effectuate the purposes of this Section 5.12, proper
provision shall be made so that the successors and assigns of Parent and the
Purchaser assume the obligations set forth in this Section 5.12 and none of the
actions described in clauses (i) or (ii) shall be taken until such provision is
made.
(d) Parent or the Surviving Corporation shall
maintain the Company's existing officers' and directors' liability insurance
policy ("D&O Insurance") for a period of not less than six years after the
Effective Date; provided, that the Parent may substitute therefor policies of
substantially similar coverage and amounts containing terms no less advantageous
to such former directors or officers; provided, further, if the existing D&O
Insurance expires or is cancelled during such period, Parent or the Surviving
Corporation will use their best efforts to obtain substantially similar D&O
Insurance; provided, however, that if the aggregate annual premiums for such
insurance at any time during such period exceed 200% of the per annum rate of
premiums currently paid by the Company and its Subsidiaries for such insurance
on the date of this Agreement, then Parent will cause the Surviving Corporation
to, and the Surviving Corporation will, provide the maximum coverage that shall
then be available at an annual premium equal to 200% of such rate.
Section 5.13 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable 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
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and make effective the transactions contemplated by this Agreement. If at any
time after the Closing Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the parties hereto shall take or cause
to be taken all such necessary action, including, without limitation, the
execution and delivery of such further instruments and documents as may be
reason ably requested by the other party for such purposes or otherwise to
consummate and make effective the transactions contemplated hereby.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have
been approved and adopted by the requisite vote of the holders of Company Common
Stock, if required by applicable law and the Certificate of Incorporation, in
order to consummate the Merger;
(b) Statutes; Consents. No statute, rule, order,
decree or regulation shall have been enacted or promulgated by any foreign or
domestic Governmental Entity or authority of competent jurisdiction which
prohibits the consummation of the Merger and all foreign or domestic
governmental consents, orders and approvals required for the consummation of the
Merger and the transactions contemplated hereby shall have been obtained and
shall be in effect at the Effective Time;
(c) Injunctions. There shall be no order or
injunction of a foreign or United States federal or state court or other
governmental authority of competent jurisdiction in effect precluding,
restraining, enjoining or prohibiting consummation of the Merger; and
(d) Purchase of Shares in Offer. Parent, the
Purchaser or their affiliates shall have purchased shares of Company Common
Stock pursuant to the Offer.
44
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ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after shareholder approval thereof:
(a) By the mutual consent of the Board of Directors
of Parent and the Board of Directors of the Company.
(b) By either of the Board of Directors of the
Company or the Board of Directors of Parent:
(i) if shares of Company Common Stock shall not have
been purchased pursuant to the Offer on or prior to July 1,
1998; provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available
to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the
failure of Parent or the Purchaser, as the case may be, to
purchase shares of Company Common Stock pursuant to the Offer
on or prior to such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties hereto shall
use their reasonable efforts to lift), in each case
permanently 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.
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company
Common Stock pursuant to the Offer, the Board of Directors of
the Company shall have (A) withdrawn, or modified or changed
in a
45
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manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger in
order to approve and permit the Company to execute an
agreement relating to a Superior Proposal, and (B) determined
in good faith, after consultation with independent legal
counsel to the Company, that the failure to take such action
as set forth in the preceding clause (A) would be in
consistent with its fiduciary duties to the Company's
shareholders under applicable law, provided, however, that
prior to any such termination the Company shall (i) have given
Parent at least two business days notice of the effectiveness
of such termination, and (ii) simultaneously with the
effectiveness of such termination, pay to Parent the
termination fee referred to in Section 7.3; or
(ii) if, prior to the purchase of Company Common
Stock pursuant to the Offer, Parent or the Purchaser breaches
or fails in any material respect to perform or comply with any
of its material covenants and agreements contained herein or
breaches its representations and warranties in any material
respect; or
(iii) if Parent or the Purchaser shall have
terminated the Offer, or the Offer shall have expired, without
Parent or the Purchaser, as the case may be, purchasing any
shares of Company Common Stock pursuant thereto; provided that
the Company may not terminate this Agreement pursuant to this
Section 7.1(c)(iii) if the Company is in material breach of
this Agreement; or
(iv) if, due to an occurrence that if occurring after
the commencement of the Offer would result in a failure to
satisfy any of the conditions set forth in Annex A hereto,
Parent, the Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the
Offer; provided, that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(iv) if the Company
is in material breach of this Agreement.
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(d) By the Board of Directors of Parent:
(i) if, due to an occurrence that if occurring after
the commencement of the Offer would result in a failure to
satisfy any of the conditions set forth in Annex A hereto,
Parent, the Purchaser, or any of their affiliates shall have
failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the
Offer; provided that Parent may not terminate this Agreement
pursuant to this Section 7.1(d)(i) if Parent is in material
breach of this Agreement; or
(ii) if, prior to the purchase of shares of Company
Common Stock pursuant to the Offer, the Board of Directors of
the Company shall have withdrawn, or modified or changed in a
manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or
shall have recommended an Acquisition Proposal or shall have
executed an agreement in principle (or similar agreement) or
definitive agreement relating to an Acquisition Proposal or
similar business combination with a person or entity other
than Parent, the Purchaser or their affiliates (or the Board
of Directors of the Company resolves to do any of the
foregoing).
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
the Parent or the Company except for fraud or for willful breach of this
Agreement.
Section 7.3 Termination Fee. In the event that the Board of
Directors of the Company terminates this Agreement pursuant to Section 7.1(c)(i)
or Parent terminates this Agreement pursuant to Section 7.1(d)(ii) (provided
that at the time of such termination by Parent, Parent and the Purchaser were
not in material breach of this Agreement), the Company shall concurrently pay to
Parent a termination fee of $8 million.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors (which in the case of the Company shall
include approvals as contemplated in Section 1.3(b)), at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the shareholders of the
Company, no such amendment, modification or supplement shall reduce or change
the Merger Consideration.
Section 8.2 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
WHX Corporation
110 East 59th Street
New York, New York 10022
Attention: Mr. Stewart Tabin
Telephone No.: (212) 355-5200
Telecopy No.: (212) 355-5336
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with a copy to:
Olshan Grundman Frome & Rosenzweig
LLP
505 Park Avenue
New York, New York 10022
Telephone No.: (212) 753-7200
Telecopy No.: (212) 735-1787
Attention: Ilan K. Reich, Esq. and
Steven Wolosky, Esq.
and
(b) if to the Company, to:
Handy & Harman
555 Theodore Fremd Avenue
Rye, New York 10580
Telephone No.: (914) 921-5200
Telecopy No.: (914) 925-4496
Attention: General Counsel
and
Handy & Harman
250 Park Avenue
New York, New York 10177
Telephone No: (212) 661-2400
Telecopy No: (212) 309-0682
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
Telephone No.: (212) 735-2300
Telecopy No.: (212) 735-2000
Attention: Milton G. Strom, Esq.
Section 8.4 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
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"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to March 1, 1998. As
used in this Agreement, the term "affiliate(s)" shall have the meaning set forth
in Rule l2b-2 of the Exchange Act.
Section 8.5 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 8.6 Entire Agreement; Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 2.4, 4.8, 5.7 and 5.12, are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
Section 8.7 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.8 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of New York without
giving effect to the principles of conflicts of law thereof.
Section 8.9 Jurisdiction. Any legal action or proceeding with
respect to this Agreement or any matters
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arising out of or in connection with this Agreement or otherwise, and any action
for enforcement of any judgment in respect thereof shall be brought exclusively
in the courts of the State of New York or of the United States of America for
the Southern District of New York, and, by execution and delivery of this
Agreement, the Company, Parent and the Purchaser each hereby accepts for itself
and in respect of its property, generally and unconditionally, the exclusive
jurisdiction of the aforesaid courts and appellate courts thereof. The Company,
Parent and the Purchaser irrevocably consent to service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies there of by registered or certified mail, postage prepaid, or by
recognized international express carrier or delivery service, to the Company,
Parent or the Purchaser at their respective addresses referred to in Section 8.3
hereof. In addition, each of Parent and the Purchaser hereby designates Olshan
Grundman Frome & Rosenzweig LLP as its respective agent for service of process,
and service upon Parent or the Purchaser shall be deemed to be effective upon
service of Olshan Grundman Frome & Rosenzweig LLP as aforesaid or of its
successor designated in accordance with the following sentence. Parent or the
Purchaser may designate another corporate agent or law firm reasonably
acceptable to the Company and located in the Borough of Manhattan, in the City
of New York, as successor agent for service of process upon 30-days prior
written notice to the Company. The Company, Parent and the Purchaser each hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Agreement or otherwise brought in the courts referred to
above and hereby further irrevocably waives and agrees, to the extent permitted
by applicable law, not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum. Nothing herein shall affect the right of any party hereto to serve
process in any other manner permitted by law.
Section 8.10 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion, any or
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all of its rights, interests and obligations hereunder to Parent or to any
direct or indirect wholly owned Subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
52
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
HANDY & HARMAN
By: /s/ Richard N. Daniel
-------------------------------------------
Name: Richard N. Daniel
Title: Chairman
WHX CORPORATION
By: /s/ Ronald LaBow
-------------------------------------------
Name: Ronald LaBow
Title: Chairman
HN ACQUISITION CORP.
By: /s/ Ronald LaBow
-------------------------------------------
Name: Ronald LaBow
Title: President
<PAGE>
ANNEX A
-------
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provisions of the Offer, and in
addition to (and not in limitation of) the Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Merger Agreement), the Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e- 1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate the Offer if (i) the Minimum Condition has not been
satisfied, (ii) the Rights under the Rights Agreement shall have become
exercisable, or (iii) at any time on or after March 1, 1998 and before the time
of acceptance of Shares for payment pursuant to the Offer, any of the following
events shall occur:
(a) there shall have been any action taken, or any
statute, rule, regulation, judgment, order or injunction promulgated, entered,
enforced, enacted, issued or applicable to the Offer or the Merger by any
domestic or foreign federal or state governmental regulatory or administrative
agency or authority or court or legislative body or commission which (l)
prohibits, or imposes any material limitations on, Parent's or the Purchaser's
ownership or operation of all or a material portion of the Company's businesses
or assets, (2) prohibits, or makes illegal the acceptance for payment, payment
for or purchase of Shares or the consummation of the Offer or the Merger, (3)
results in a material delay in or restricts the ability of the Purchaser, or
renders the Purchaser unable, to accept for payment, pay for or purchase some or
all of the Shares, or (4) imposes material limitations on the ability of the
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's shareholders, provided
that Parent shall have used all reasonable efforts to cause
<PAGE>
any such judgment, order or injunction to be vacated or lifted;
(b) the representations and warranties of the Company
set forth in the Merger Agreement shall not be true and correct as of the date
of consummation of the Offer as though made on or as of such date or the Company
shall have breached or failed to perform or comply with any material obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it except, in each case, (i) for changes specifically permitted
by the Merger Agreement and (ii) (A) those representations and warranties that
address matters only as of a particular date which are true and correct as of
such date or (B) where the failure of such representations and warranties to be
true and correct, or the performance or compliance with such obligations,
agreements or covenants, do not, individually or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries, taken as a whole;
(c) the Merger Agreement shall have been terminated
in accordance with its terms;
(d) (i) it shall have been publicly disclosed that
any person, entity or "group" (as defined in Section 13(d)(3) of the Exchange
Act), shall have acquired beneficial ownership (determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of more than 20% of any class or
series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, other than any
person or group existing on the date hereof which beneficially owns more than
20% of any class or series of capital stock of the Company or (ii) the Company
shall have entered into a definitive agreement or agreement in principle with
any person with respect to an Acquisition Proposal or similar business
combination with the Company;
(e) the Company's Board of Directors shall have
withdrawn, or modified or changed in a manner adverse to Parent or the Purchaser
(including by amendment of the Schedule 14D-9) its recommendation of the Offer,
the Merger Agreement, or the Merger, or recommended another proposal or offer,
or shall have resolved to do any of the foregoing; or
2
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(f) there shall have occurred (i) a decline of at
least 25% in either the Dow Jones Average of Industrial Stocks or the Standard &
Poor's 500 Index from the date of the Merger Agreement, or (ii) the declaration
and continuation of a banking moratorium or any limitation or suspension of
payments in respect of the extension of credit by banks or other lending
institutions in the United States;
which in the reasonable judgment of Parent or the Purchaser, in any such case,
and regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
or payments.
The foregoing conditions are for the sole benefit of the
Purchaser and Parent and may be waived by Parent or the Purchaser, in whole or
in part at any time and from time to time in the reasonable discretion of Parent
or the Purchaser.
3
<PAGE>
ANNEX B
-------
AMENDMENT TO RIGHTS AGREEMENT
-----------------------------
AMENDMENT, dated as of March 1, 1998, to the Rights Agreement,
dated as of January 26, 1989, as amended as of April 25, 1996 and October 22,
1996 (the "Rights Agreement"), between Handy & Harman, a New York corporation
(the "Company"), and ChaseMellon Shareholder Services, L.L.C., as Rights Agent
(the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into the
Rights Agreement specifying the terms of the Rights (as defined therein); and
WHEREAS, the Company and the Rights Agent desire to amend the
Rights Agreement in accordance with Section 26 of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth in the Rights Agreement and this Amendment, the parties
hereby agree as follows:
1. Section 1(a) is amended by adding the following at the end
of said Section:
; provided, further, that none of WHX Corporation, a Delaware
corporation ("WHX"), HN Acquisition Corp., a New York corporation and
wholly-owned subsidiary of WHX (the "Purchaser") and their Affiliates
(the "WHX Persons") shall be deemed to be an Acquiring Person by virtue
of (x) the execution of the Agreement and Plan of Merger, dated as of
March 1, 1998 (the "Merger Agreement," which term shall include any
amendments thereto) by and among WHX, the Purchaser and the Company, or
(y) the consummation of any of the transactions contemplated thereby,
including, without limitation, the publication or other announcement
of the Offer (as defined therein), the consummation of the Offer and
the Merger (as defined therein) (the items set forth in (x) and (y) are
referred to herein as the "WHX Transactions").
2. Section 1(j) is amended by adding the following at the end
of said Section:
; provided, however, that the public announcement of any of
the WHX Transactions shall not constitute a Stock Acquisition Date.
<PAGE>
3. Section 1(l) is amended by adding the following at the end
of said Section:
Notwithstanding anything to the contrary contained in this
Agreement, none of the WHX Transactions shall constitute a Triggering
Event or an event described in Section 11(a)(ii) or Section 13.
4. Section 3(a) is amended by adding the following at the end
of said Section:
Notwithstanding anything to the contrary contained in this
Agreement, neither the announcement nor the consummation of the WHX
Transactions shall constitute or result in the occurrence of a
Distribution Date.
5. The term "Agreement" as used in the Rights Agreement shall
be deemed to refer to the Rights Agreement as amended hereby.
6. The foregoing amendment shall be effective as of the date
first above written, and, except as set forth herein, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected here by.
7. This Amendment may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of this 1st day of March, 1998.
HANDY & HARMAN
By:
---------------------------------------
Name:
Title:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Rights
Agent
By:
---------------------------------------
Name:
Title:
<PAGE>
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of March 1, 1998, to the Rights Agreement,
dated as of January 26, 1989, as amended as of April 25, 1996 and October 22,
1996 (the "Rights Agreement"), between Handy & Harman, a New York corporation
(the "Company"), and ChaseMellon Shareholder Services, L.L.C., as Rights Agent
(the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement specifying the terms of the Rights (as defined therein); and
WHEREAS, the Company and the Rights Agent desire to amend the
Rights Agreement in accordance with Section 26 of the Rights Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth in the Rights Agreement and this Amendment, the parties
hereby agree as follows:
1. Section 1(a) is amended by adding the following at the end of
said Section:
; provided, further, that none of WHX Corporation, a Delaware
corporation ("WHX"), HN Acquisition Corp., a New York corporation and
wholly-owned subsidiary of WHX (the "Purchaser") and their Affiliates
(the "WHX Persons") shall be deemed to be an Acquiring Person by
virtue of (x) the execution of the Agreement and Plan of Merger, dated
as of March 1, 1998 (the "Merger Agreement," which term shall include
any amendments thereto) by and among WHX, the Purchaser and the
Company, or (y) the consummation of any of the transactions
contemplated thereby, including, without limitation, the publication
or other announcement of the Offer (as defined therein), the
consummation of the Offer and the Merger (as defined therein)(the
items set forth in (x) and (y) are referred to herein as the "WHX
Transactions").
2. Section 1(j) is amended by adding the following at the end of
said Section:
; provided, however, that the public announcement of any of the
WHX Transactions shall not constitute a Stock Acquisition Date.
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3. Section 1(l) is amended by adding the following at the end of
said Section:
Notwithstanding anything to the contrary contained in this
Agreement, none of the WHX Transactions shall constitute a Triggering
Event or an event described in Section 11(a)(ii) or Section 13.
4. Section 3(a) is amended by adding the following at the end of
said Section:
Notwithstanding anything to the contrary contained in this
Agreement, neither the announcement nor the consummation of the WHX
Transactions shall constitute or result in the occurrence of a
Distribution Date.
5. The term "Agreement" as used in the Rights Agreement shall be
deemed to refer to the Rights Agreement as amended hereby.
6. The foregoing amendment shall be effective as of the date
first above written, and, except as set forth herein, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected hereby.
7. This Amendment may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of this 1st day of March, 1998.
HANDY & HARMAN
By: /s/ Paul E. Dixon
------------------------
Name: Paul E. Dixon
Title: Senior Vice
President, General Counsel
and Secretary
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Rights
Agent
By: /s/ Robert Kavanaugh
------------------------
Name: Robert Kavanaugh
Title: Assistant Vice
President
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<PAGE>
AGREEMENT
AGREEMENT, dated as of May 1, 1989 between Handy & Harman, a
New York corporation, having its executive offices at 850 Third Avenue, New
York, New York 10022 (the "Company"), and Richard N. Daniel, residing at
Briarcliff Manor, New York (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently employed by the Company as
Chairman of the Board, President and Chief Executive Officer;
WHEREAS, the Company and the Executive desire to enter into an
agreement relating to the continued employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT
1.1 The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to accept employment with the Company and agrees to
serve, upon the terms and conditions herein contained, as the Company's
Chairman, President and Chief Executive Officer.
<PAGE>
1.2 The term of employment under this Agreement shall commence
on May 1, 1989 and, subject to the terms hereof, shall continue through April
30, 1992; provided, however, that commencing in May 1990 and each May thereafter
the term of this Agreement may be extended by the Board of Directors of the
Company for one additional year. If not so extended, this Agreement shall
terminate at the end of the then current 3-year term. Such term of employment is
referred to hereinafter as the "Employment Term."
1.3 The Executive shall serve as Chief Executive Officer of
the Company and shall have such duties, responsibilities and authority as are
generally associated with such position. Throughout the period of his employment
hereunder, the Executive shall devote his best efforts and substantially all his
business time and services to the business and affairs of the Company except for
vacations, illness or incapacity, but nothing in this Agreement shall preclude
the Executive from (i) devoting reasonable periods required for (A) serving as a
director or member of a committee of any organization or company (other than
with respect to activities set forth in (C) below) involving no conflict of
interest with the Company provided that he is such a director or member as of
the date hereof or such directorship or membership has been approved by the
Board of Directors of the Company, (B) delivering lectures and fulfilling
speaking engagements, and (C) engaging in charitable and
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community activities provided that such activities do not materially interfere
with the performance of his duties hereunder or (ii) investing Executive's
assets in other companies so long as such investments do not require the
Executive's services or active management.
2. SALARY
2.1 The Executive shall be entitled to receive a base salary
at a rate of $300,000 per annum payable in accordance with the Company's payroll
policy from time to time in effect.
2.2 The Company may, in its sole discretion, increase the
Executive's base salary (the "Base Salary").
3. INCENTIVES
3.1 The Executive shall be eligible to receive awards on the
terms specified in the Company's Management Incentive Plan and the Company's
Long-Term Incentive Plan or any successor plans (the "Plans").
3.2 The Company may, in its sole discretion, grant awards to
the Executive in addition to those awards granted in Section 3.1.
4. TERMINATION
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4.1 In the event that the Executive's employment is terminated
by the Company (other than for Cause as hereinafter defined) or the Executive
terminates his employment for Good Reason, as hereinafter defined, prior to the
end of the Employment Term, then in either event, after the date of termination
of Executive's employment (the "Termination Date"), Company shall:
(a) Pay the Executive, his estate or beneficiaries in a
lump sum by the fifth business day after the Termination Date:
(i) an amount equal to the Executive's Base Salary
from the Termination Date to the end of the Employment Period,
plus
(ii) an amount equal to (A) the Incentive Pay that
the Executive became entitled to receive for the most recent
calendar year for which the Executive was actually awarded
under the Company's Management Incentive Plan multiplied by
(B) the number of years or portions thereof (computed on the
basis of a 365 day year) from the beginning of the calendar
year in which the Termination Date falls to the end of the
Employment Period.
(b) In addition to any Pension Benefits to which the
Executive is entitled under the Handy & Harman Pension Plan for
Salaried Employees and any supplemental executive retirement plan of
the Company or any successor plans thereto, pay the Executive a lump
sum amount, in cash, equal
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to the actuarial equivalent of the excess of (x) the retirement pension
(determined as a straight life annuity commencing at age 65) which the
Executive would have accrued under the terms of such Plans (without
regard to any amendment to such Plans made subsequent to a Change in
Control and on or prior to the Termination Date, which amendment
adversely affects in any manner the computation of retirement benefits
thereunder), determined as if the Executive had accumulated (after the
Termination Date) additional months of service credit thereunder until
the end of the Employment Term at the Executive's highest annual rate
of compensation during the twelve (12) months immediately preceding the
Termination Date, and (y) the retirement pension (determined as a
straight life annuity commencing at age sixty-five (65) which the
Executive had then accrued pursuant to the provisions of such Plans.
For purposes of this Section 4.1(b), "actuarial equivalent" shall be
determined using the same methods and assumptions utilized under such
Plans immediately prior to the Termination Date.
(c) Arrange to provide the Executive with life,
disability, accident and health insurance benefits substantially
similar to those which the Executive is receiving immediately prior to
the event which gave rise to the Executives termination until the end
of the Employment Period. Benefits otherwise receivable by the
Executive pursuant to this Section 4.1(c) shall be
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reduced to the extent comparable benefits are actually received by the
Executive during such period following the Executives termination of
employment and any such benefits actually received by the Executive
shall be reported to the Company.
(d) Transfer to the Executive all right, title and
interest to any Company car being used by Executive immediately prior
to the event giving rise to the Executive's termination.
4.2 In the event that the Executive's employment is terminated
by the Company (other than for Cause as hereinafter defined) or the Executive
terminates his employment for Good Reason, as hereinafter defined, prior to the
end of the Employment Term, the Executive shall, until the end of the Employment
Term, be entitled to be provided with office space, secretarial services and all
other benefits and entitlements which are afforded to senior executives of the
Company at the time of Executive's termination of employment.
4.3 Change in Control. For purposes of this Agreement, "Change
in Control" means the occurrence of one of the following:
(a) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (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
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owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 25% or more of the combined voting power of
the Company's then outstanding securities;
(b) during any period of two consecutive years (not
including any period prior to the execution of this amendment to the
Executive Agreement), individuals who at the beginning of such period
constitute the Board of Directors of the Company (the "Board"), and any
new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in clause (a), (c) or (d) of this Section) whose election by
the Company'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;
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation; other than (i)
a merger or consolidation which would result in the voting securities
of the
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Company 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 the Company or such surviving
entity outstanding immediately after such merger or consolidation or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
5. DEATH OR PERMANENT DISABILITY
5.1 In the event the Executive becomes totally and permanently
disabled (as defined in the Company's Pension Plan for Salaried Employees as in
effect on the date hereof ("Permanent Disability")) prior to the end of the
Employment Term, the Executive shall continue to receive compensation equal to
the Executive's then current Base Salary until the end of the Employment Term;
provided, however, that any such payments shall be reduced by any disability
benefits
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<PAGE>
actually paid during such period to the Executive under the Company's Pension
Plan for Salaried Employees or other Company plan. The Executive shall also be
entitled to continued participation in the medical plans of the Company
available generally to disabled corporate office salaried employees.
Notwithstanding the foregoing in this Section 5.1, any medical
coverage provided to the Executive under this Section 5.1 shall be secondary to
any similar coverage provided to the Executive by any successor employer, so
that the Executive will only be reimbursed for medical costs under this
Agreement to the extent he is not reimbursed for such costs by a successor
employer.
5.2 In the event of the Executives death during the Employment
Term, the Executive's estate or designated beneficiaries shall continue to
receive compensation equal to the Executives then current Base Salary until the
end of the Employment Term; provided, however, that any such payments shall be
reduced by any survivor benefits payable during such period to the Executives
estate or any designated beneficiary under the Company's Pension Plan for
Salaried Employees, calculated on the assumption that such benefits will be paid
over the longest period for payment of survivor benefits permitted under the
Company's Pension Plan for Salaried Employees and the U.S. Internal Revenue
Code.
5.3 Any termination by the Company on account of the
Executives Permanent Disability shall be communicated by a Notice of Disability
Termination.
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For purposes of this Agreement, a "Notice of Disability Termination" shall mean
a written notice which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under Section 5.1. For purposes of this Agreement, no such purported
termination by the Company shall be effective without such Notice of Disability
Termination.
6. TERMINATION FOR GOOD REASON
6.1 The Executive may terminate his employment hereunder for
Good Reason at any time during the Employment Term. For purposes of this
Agreement, "Good Reason" shall mean any of the following (without the Executives
express prior written consent):
(a) There shall be a material diminution in the
Executive's position, duties, responsibilities and status with Company
as the same are in effect on the date of this Agreement or as the same
may be increased in the future.
(b) The Executive's reporting responsibilities, titles
or offices in effect on the date of this Agreement or as the same may
be increased in the future shall be materially reduced.
(c) The Executive shall be removed from or shall not be
re-elected to the position referred to in Section 1.1, provided that
this Section
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6.1(c) shall not be deemed to include termination of Executive's
employment for Cause or as a result of the Executive's substantial
disability, death or retirement pursuant to a Company sponsored
retirement plan.
(d) The Executive's Base Salary shall be reduced.
(e) Except for awards under Section 3.2, the Company
shall fail to continue in effect any Company plan providing for
Incentive Pay, Pension Benefits, Fringe Benefits or Expense
Reimbursement in effect on the date of this Agreement without adopting
a replacement plan or plans which is or are, in the aggregate, no less
favorable to the Executive than those the Executive enjoys at the date
of this Agreement.
(f) Company's principal executive offices shall be
moved to a location outside New York County or Westchester County, New
York, or Fairfield County, Connecticut.
(g) Company shall require the Executive to be based
anywhere other than at Company's principal executive offices or if the
Executive consents to such required move, Company fails to reimburse
the Executive for moving expenses and any difference between the sale
price of his old principal residence and the purchase price of his new
principal residence in connection with such move.
11
<PAGE>
(h) The number of days per year allowed for the
Executives Vacation is reduced.
(i) Company breaches any provision of this Agreement.
(j) Any successor to Company fails to assume this
Agreement.
(k) Any purported termination of the Executives
employment which is not effected pursuant to a notice of termination
satisfying the requirements of Sections 5 or 7 of this Agreement,
and, for purposes of this Agreement, no such purported termination
shall be effective.
6.2 Any purported termination of the Executive's employment
pursuant to Section 6.1 shall be communicated by written Notice of Termination
for Good Reason. "Notice of Termination for Good Reason" shall mean a notice
indicating the specific termination provision in Section 6.1 relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
7. DISCHARGE FOR CAUSE
7.1 The Company shall have the right to terminate the
employment of the Executive for Cause. If the Company exercises such right, its
obligation under this Agreement to make any further payments to the Executive
shall thereupon cease and terminate. As used herein, the term "Cause" shall be
limited to (a) action by the
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Executive involving willful malfeasance having a material adverse effect on the
Company, (b) substantial and continuing refusal by the Executive in willful
breach of this Agreement to perform the duties ordinarily performed by a chief
executive officer (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness or any such actual or anticipated
failure following a Change in Control of the Company after the issuance of a
Notice of Termination for Good Reason by the Executive after a written demand
for substantial performance is delivered to the Executive by the Board, which
demand specifically identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive's duties), or (c) the
Executive being convicted of a felony; provided that any such action or refusal
by the Executive shall not constitute "Cause" if, in good faith, the Executive
believed such action or refusal to be in or not opposed to the best interests of
the Company, or if the Executive shall be entitled, under applicable law or the
Certificate of Incorporation or By-Laws of the Company, to be indemnified with
respect to such action or refusal. Termination of the Executive pursuant to
Section 7 shall be communicated by a Notice of Termination. For purposes of this
Agreement a "Notice of Termination" shall mean delivery to the Executive of a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Company's Board of Directors at a
meeting of the Board called and held for the purpose (after reasonable notice to
the
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<PAGE>
Executive and reasonable opportunity for the Executive, together with the
Executive's counsel, to be heard before the Board prior to such vote), finding
that in the good faith opinion of the Board the Executive was guilty of conduct
set forth in the third sentence of this Section 7 and specifying the particulars
thereof in detail. For purposes of this Agreement, no such purported termination
of the Executive's employment shall be effective without such Notice of
Termination.
8. EXPENSES
8.1 The Executive is authorized to incur reasonable expenses
for promoting the business of the Company including expenses for travel and
similar items. The Company will reimburse the Executive for all such expenses
upon presentation by the Executive from time to time of an itemized account of
such expenditures in accordance with the Company's procedures in effect at the
commencement of the Employment Term.
9. EMPLOYEE BENEFITS
9.1 In addition to the Plans as specified in Section 3.1, the
Executive shall be included to the extent eligible thereunder under any and all
plans providing benefits for its senior executives.
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<PAGE>
9.2 The Executive shall be included in all incentive, profit
sharing, bonus, stock option, or other similar or comparable plans applicable to
senior executives of the Company in accordance with the terms thereof.
10. NO OBLIGATION TO MITIGATE DAMAGES - NON-COMPETE
10.1 The Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of his employment
hereunder or otherwise.
10.2 In the event that the Executive should terminate his
employment other than for Good Reason and subsequently directly or indirectly
enters into competition with the Company prior to the end of the Employment Term
the Executive shall not be entitled to any payments pursuant to this Agreement
(and shall return any payments so made) after such termination of his
employment.
11. TAX GROSS-UP PAYMENT
11.1 If any payments under this Agreement or any other
payments or benefits received or to be received by the Executive (whether
pursuant to the terms of
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this Agreement or any other plan, arrangement or agreement with the Company)
(the "Severance Payments"), will be subject to the tax (the "Excise Tax")
imposed by section 4999 of the Internal Revenue Code (the "Code") (or any
similar tax that may hereafter be imposed), the Company shall pay at the time
specified below, an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of any Excise Tax on the
Severance Payments and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 11, shall be equal to the
Severance Payments. For purposes of determin ing whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(a) all Severance Payments shall be treated as "parachute payments" within the
meaning of section 28OG(2) of the Code, and all "excess parachute payments"
within the meaning of section 28OG(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to the Executive such Severance payments (in
whole or in part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of section 28OG(b)(4) of the Code in excess
of the base amount within the meaning of section 28OG(b)(3) of the Code, or are
otherwise not subject to the Excise Tax, (b) the amount of the Severance Pay-
ments which shall be treated as subject to the Excise Tax shall be equal to the
lesser
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of (1) the total amount of the Severance Payments or (2) the amount of excess
parachute payments within the meaning of section 28OG(b)(1) (after applying
clause (a), above), and (c) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's independent auditors in
accordance with the principles of section 28OG(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of the Executive's residence on the Termination Date, net of
the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the Excise Tax is
subsequently determined to be less than the amount taken into account hereunder
at the time of termination of the Executive's employment, the Executive shall
repay to the Company at the time that the amount of such reduction in Excise Tax
is finally determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by the Executive if such repayment results in a reduction in Excise
Tax and/or a federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in section
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1274(2)(B) of the Code. In the event that the Excise Tax is determined to exceed
the amount taken into account hereunder at the time of the termination of the
Executives employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in respect of such excess
(plus any interest payable with respect to such excess) at the time that the
amount of such excess is finally determined. Any payment to be made to the
Executive under this Section shall be payable within five (5) days of his
Termination Date.
12. NOTICES
12.1 All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
Handy & Harman
850 Third Avenue
New York, New York 10022
Attention: The Secretary
To the Executive:
Richard N. Daniel
91 Hawthorn Place
Briarcliff Manor, NY 10510
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<PAGE>
Any such notice or communication shall be sent by certified or registered mail,
return receipt requested, postage prepaid, addressed as above (or to such other
address as such party may designate in writing from time to time), and the
actual date of receipt, as shown by the receipt therefor, shall determine the
time at which notice was given.
13. SEPARABILITY; LEGAL FEES
13.1 If any provision of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect. The Company shall pay all legal fees and other
fees and expenses which the Executive may incur in obtaining compensation or
other benefits under this Agreement; provided, however, that the Company shall
not pay such fees and expenses if the Company prevails against the Executive
unless there shall have been a Change in Control prior to the Executive's
termination.
14. ASSIGNMENT
14.1 This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the
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Company, but neither this Agreement nor any rights hereunder shall be assignable
or otherwise subject to hypothecation by the Executive or by the Company.
15. ENTIRE AGREEMENT
15.1 This Agreement represents the entire agreement of the
parties and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Executive with respect to the subject
matter hereof. No provision of this Agreement shall be construed to limit any
rights which the Executive may have under any of the Company's benefit plans.
The Agreement may be amended at any time by mutual written agreement of the
parties hereto.
16. GOVERNING LAW
16.1 This Agreement shall be construed, interpreted, and
governed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed and the Executive has hereunto set his hand, as of the 1st day
of May, 1989.
Dated: Sept. 28, 1989 HANDY & HARMAN
ATTEST: By: _______________________
Group Vice President
/s/ George P. Ekern /s/ R.N. Daniel
- ---------------------------- ------------------------
Secretary Executive
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SECRETARY'S CERTIFICATE
I, PAUL E. DIXON, being the duly elected and acting Secretary of Handy
& Harman, a New York corporation (hereinafter the "Company") DO HEREBY CERTIFY
that the following is a true and complete copy of certain resolutions which were
duly adopted by the Board of Directors of this Company, at a Meeting which was
duly called and held on the 11th day of May 1993, and at which a quorom was
present and acting throughout, AND I DO FURTHER CERTIFY that said resolutions
have not been rescinded or amended and remain in full force and effect at the
date hereof:
RESOLVED, that in order for the Company to continue to benefit
from the knowledge and experience of Richard N. Daniel, Chairman of the
Board and Chief Executive Officer of the Company, and in the best
interests of the Company, the Agreement dated as of May 1, 1989 for the
employment of Mr. Daniel for a 3-year period, be, and it hereby is,
extended for an additional year pursuant to Section 1.2 thereof so that
the term of employment thereunder shall continue through April 30,
1996; and further
RESOLVED, that the Agreement between Richard N. Daniel and
Handy & Harman dated May 1, 1989, be amended in part by adding to
Section 4. Termination, a paragraph (e) on page 6 to read as follows:
"(e) From the end of the Employment Period, the Company will continue
to provide Medical Benefits equivalent to those received by other
Officers of the Company through the year in which the Executive reaches
his 65th Birthday. Thereafter, the Executive will be eligible for the
normal retiree benefits."
IN WITNESS WHEREOF I have hereunto affixed my signature and the seal of
the Company this 19th day of May 1993.
/s/ Paul E. Dixon
-----------------
Secretary
<PAGE>
WHEREAS, Richard N. Daniel (the "Executive") and Handy & Harman (the
"Company") have entered into an Employment Agreement (the "Agreement") dated as
of May 1, 1989; and
WHEREAS, the Board of Directors of the Company deems it advisable for
the Company to amend the Agreement in certain respects; and
WHEREAS, the Executive and the Company have mutually agreed to amend
certain provisions of Agreement as provided herein.
NOW, THEREFORE, in consideration of the Executive's performance of
valuable services for the Company, and for other good and valuable
consideration, the parties hereto agree to amend the Agreement, effective as of
the date hereof, as follows:
1. Section 7A is hereby added to the Agreement to read in its entirety as
follows:
"7A. MEDICAL BENEFIT UPON ANY TERMINATION In the case that the
Executive's employment with the Company terminates at any time, for any
reason [other than for Cause], whether the basis for such action is
instituted by the Company or the Executive, then notwithstanding any
other provision of this Agreement to the contrary and in lieu of any
other post-termination medical benefits provided to the Executive
hereunder, the Executive shall become entitled to continued medical
benefits for himself and his spouse for their respective lives (the
"Medical Benefit"). From and after the date of the Executive's
termination of employment, the Company shall provide the Medical Benefit,
without cost to the Executive and his spouse, over the lives of both the
Executive and his spouse. Such Medical Benefit shall be provided on a
basis no less favorable to the Executive and his spouse than the medical
coverage provided to active senior executive officers of the Company as
of the date of execution of this Agreement; any future improvements in
medical benefits adopted by the Company for active senior executive
officers will be deemed to be in effect for the Executive and his spouse
pursuant to the Medical Benefit, without cost to the Executive or his
spouse, on the date of effectiveness of such future improvements for
active senior officers of the Company.
<PAGE>
2. Section 14.2 is hereby added to the Agreement to read in its entirety
as follows:
"The obligations of the Company under this Agreement shall be binding
upon any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company."
All other provisions of the Agreement shall remain in full force and
effect.
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RESTATED AMENDMENT
Amendment dated as of February 26, 1998 between Handy &
Harman, a New York corporation (the "Company"), and Richard N. Daniel ("Execu
tive").
WHEREAS, the Company and Executive are parties to an Agreement
dated as of May 1, 1989, including the changes thereto approved by resolutions
of the Company's Board of Directors on May 11, 1993 (the "1993 Resolution") and
September 28, 1995 (the "1995 Resolution"), to which changes the Company and
Executive hereby reconfirm their mutual agreement (the "Agreement"), the term of
employment under which will, unless further extended in May of 1998, terminate
on April 30, 2000; and
WHEREAS, the Company and Executive desire to amend the
Agreement as hereinafter provided;
NOW THEREFORE, the Company and Executive agree as follows:
1. The final sentence of Section 1.2 of the Agreement is amended to
read as follows:
"Such term of employment is referred to hereinafter as the "Employment Term";
provided, however, that in the event Executive's employment terminates as
described in Section 4.1 at a time when the provisions of the preceding sentence
have not resulted in the termination of this Agreement at the end of any 3-year
term, the "Employment Term" shall continue through the third anniversary of the
Termination Date."
2. The extension of the Employment Term under the Agreement approved by
resolution of the Company's board of directors on September 30,1990 shall have
the same effect as if approved by resolution of the Company's board of directors
in May of 1990.
3. The reference in Section 4.1 (a)(i) of the Agreement to "Employment
Period," which is a typographical error, is changed to be a reference to
"Employment Term."
4. The provisions of Section 4.1 (c) (insofar as it relates to health
insurance benefits) and (e) of the Agreement have been superseded by the
provisions of Section
<PAGE>
7A of the Agreement, which Section 7A was added to the Agreement by the 1995
Resolution.
5. The following is added as Section 17 of the Agreement:
17. ARBITRATION: CERTAIN COSTS.
17.1 Any dispute or controversy between Company and
the Executive, whether arising out of or relating to this Agreement,
the breach of this Agreement, or otherwise, shall be settled by
arbitration administered by the American Arbitration Association in
accordance with its Commercial Rules then in effect and judgment on the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Such arbitration shall take place in the New York
City metropolitan area. The arbitrator shall have the authority to
award any remedy or relief that a court of competent jurisdic tion
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such
dispute or controversy and seek interim provisional, injunctive or
other equitable relief until the arbitration award is rendered or the
controversy is otherwise resolved. Company shall reimburse the
Executive, upon demand, for all costs and expenses (including without
limitation attorneys' fees) reasonably incurred by the Executive in
good faith in connection with this arbitration provision, including
without limitation in connection with any such applica tion undertaken
by the Executive in good faith, as well as for all such costs and
expenses reasonably incurred by the Executive in connection with
entering and/or enforcing the award rendered by the arbitrator. Except
as necessary in court proceedings to enforce this arbitration provision
or an award rendered hereunder, or to obtain interim relief, neither a
party nor an arbitrator may disclose the existence, content or results
of any arbitration hereunder without the prior written consent of
Company.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Amendment to
be duly executed and Executive has hereunto set his hand, as of the date first
set forth above.
HANDY & HARMAN
By: /s/ Paul E. Dixon
-----------------------------
As Its: Sr. Vice President and General Counsel
By: /s/ Richard N. Daniel
-----------------------------
Executive
<PAGE>
EXECUTIVE AGREEMENT
Agreement dated as of July 1, 1989 between Handy & Harman, a
New York corporation ("Company") and Frank E. Grzelecki ("Executive").
WHEREAS, Company desires to benefit from Executive's
knowledge and experience as a full-time executive employee and considers such
employment a vital element in protecting and enhancing the best interests of the
Com pany, and Executive desires to continue in full-time employment with the
Company.
NOW THEREFORE, in consideration of the continued employment
of Executive by Company, the continued service by Executive to Company, and the
mutual covenants contained herein, the parties agree as follows:
1. Employment. Subject to the right of the Company to take any
and all action of the kind specified in section 3(a) through (h) prior to the
acquisition of 25% or more of the outstanding shares of Company stock as
specified in Section 3, the Company shall continue to employ Executive in his
current capacity as Vice Chairman of the Board and Executive shall continue to
serve to the best of his ability in such capacity, devoting substantially all
his business time thereto.
2. Compensation. Executive's compensation shall consist of:
<PAGE>
(a) A base annual salary at an annual rate at least
equal to Executive's base annual salary on the date of this Agreement and as the
same may be increased from time to time by Company's board of directors ("Base
Salary").
(b) Such additional incentive or bonus compensation
("Incentive Pay") which may be granted to Executive specifically or to which
Executive now or hereafter may be entitled under any plan or arrangement
maintained by Company for its executive or managerial employees including
Company's Management Incentive Plan, or for employees generally, provided that,
for purposes of this Section 2 only, Executive shall not be entitled, except in
the sole discretion of Company's board of directors, to future awards under the
Company's existing stock option plans and any other plan involving stock options
or the purchase of Company shares (collectively, such stock option and share
purchase plans are herein referred to as the "Non-Continuing Benefits").
(c) All benefits to which Executive shall be entitled
in or under any and all pension plans ("Pen sion Benefits"), and in or under any
and all employee benefit plans and group life insurance, group health insurance
and group accident insurance programs ("Fringe Benefits"), maintained by Company
for its executive or managerial employees.
<PAGE>
(d) Reimbursement for all reasonable expenses
("Expense Reimbursement") incurred by Executive in connection with the
performance of duties for the Company, such Expense Reimbursement to be made in
a manner consistent with the policy of Company in force at the time of such
Expense Reimbursement.
(e) Such number of days vacation per year
("Vacation") as Company granted to Executive in the calendar year 198 and as
Company shall hereafter grant to its executive or managerial employees without
any loss of Base Salary, Incentive Pay, Pension Benefits, Fringe Benefits or
Expense Reimbursement to which the Executive is entitled.
3. Trigger Events. If 25% or more of the outstanding shares of
Company stock having voting power to elect a majority of the board of directors
of the Company shall after the date of this Agreement be acquired by one or
more persons, firms, corporations or other entities acting alone or as a
coordinated group, and thereafter, without the express prior written consent of
Executive, any of the following events shall occur, such event shall be deemed a
Trigger Event:
(a) There shall be a material diminution in
Executive's position, duties, responsibilities and status with Company as the
same are in effect on the date
<PAGE>
of this Agreement or as the same may be increased in the future.
(b) Executive's reporting responsibilities, titles
or offices in effect on the date of this Agreement or as the same may be
increased in the future shall be materially reduced.
(c) Executive shall be removed from or shall not be
re-elected to the position referred to in paragraph 1, provided that this
Section 3(c) shall not be deemed to include termination of Executive's
employment for "cause" (defined below) or as a result of Executive's substantial
disability, death or retirement pursuant to a Company sponsored retirement plan.
For all purposes of this Agreement, "cause" shall mean (i) willful malfea sance
in office, or (ii) misconduct by Executive that is demonstrably materially
injurious to the Company monetarily or otherwise.
(d) Executive's Base Salary shall be reduced.
(e) Except for awards under any Non-Continuing
Benefit, the Company shall fail to continue in effect any Company plan providing
for Incentive Pay, Pension Benefits, Fringe Benefits or Expense Reimbursement
in effect on the date of this Agreement without adopting a replacement plan or
plans which is or are, in
<PAGE>
the aggregate, no less favorable to Executive than those Executive enjoys at the
date of this Agreement.
(f) Company's principal executive offices shall be
moved to a location outside New York County or Westchester County, New York, or
Fairfield County, Connecticut.
(g) Company shall require Executive to be based
anywhere other than at Company's principal executive offices or at the location
where Executive is based at the date of this Agreement, or if Executive consents
to such required move, Company fails to reimburse Executive for moving expenses
and any difference between the sale price of his old principal residence and the
purchase price of his new principal residence in connection with such move.
(h) The number of days per year allowed for
Executive's Vacation is reduced.
(i) Company breaches any provision of this Agreement.
(j) Any successor to Company fails to assume this
Agreement.
4. Specified Trigger Event. Upon the occurrence of a Trigger
Event, Executive, at his sole option, may within 90 days after the date of such
Trigger Event, by notice to Company designate such Trigger Event as a Specified
Trigger Event. Failure of Executive to desig-
<PAGE>
nate any Trigger Event as a specified Trigger Event shall not affect, or
constitute a waiver of, the right of Executive to designate any subsequent
Trigger Event of the same or a different nature as a Specified Trigger Event, it
being understood that only one Trigger Event may be designated as a Specified
Trigger Event.
5. Guarantee. In order to protect Company against the loss of
key management executives, if any Trigger Event should occur and be designated
by Executive as a Specified Trigger Event within the 90 day period specified in
Section 4, the Company shall continue to employ Executive for a period of three
years from the first day of the calendar month following the date of the
Specified Trigger Event (the "Employment Period"). During the Employment Period,
Executive shall be entitled to receive, and Company guarantees to pay to
Executive, the same Base Salary, Incentive Pay, Pension Benefits, Fringe
Benefits, Expense Reimbursement and Vacation as Executive was entitled to
receive immediately before the Specified Trigger Event.
6. Termination of Employment. If, on or after the date of a
Specified Trigger Event and before the end of the subsequent Employment Period,
(x) Company shall terminate Executive's employment for any reason other than for
"cause" or (y) Executive shall elect to terminate his employment, then in
either event, after the date
<PAGE>
of termination of Executive's employment (the "Termination Date"), Company
shall:
(a) Pay Executive, his estate or beneficiaries in a
lump sum by the fifth business day after the Termination Date:
(i) an amount equal to Executive's Base
Salary from the Termination Date to the end of the Employment
Period, plus
(ii) an amount equal to (A) the Incentive
Pay that Executive became entitled to receive for the most
recent calendar year for which Executive was actually awarded
Incentive Pay multiplied by (B) the number of years or
portions thereof (computed on the basis of a 365 day year)
from the beginning of the calendar year in which the
Termination Date falls to the end of the Employment Period.
(b) Pay Executive on the date Executive begins to
receive retirement benefits (in addition to any Pension Benefits to which
Executive shall be entitled on the Termination Date) an amount equal to the then
present value of the actuarially determined difference between the aggregate
retirement benefits actually to be received by Executive and those that would
have been received had Executive been employed until the end of the Employment
Period at a Base Salary equal to the Base Salary in
<PAGE>
effect immediately before the date of the Specified Trigger Event.
(c) Continue for the benefit of Executive all Fringe
Benefits to which Executive shall be entitled immediately before the date of the
Specified Trigger Event (or substantially equivalent insurance and benefit
coverage) from such date until the end of the Employment Period.
7. Agreements and Policy Statements. Executive shall execute
or re-execute each of the following agreements and policy statements of the
Company:
"Policy Statement on Integrity in the
Conduct of the Company's Business"
"Agreement Concerning inventions and
Confidential Information"
"Antitrust Compliance Policy of Handy &
Harman and Subsidiaries"
During the period of time coincidental with the Employment Period, Executive
shall not enter into any business directly or indirectly in which the Company or
any of its then subsidiaries is engaged in at the time of the Termination Date.
8. Disputes. Any dispute hereunder as to the existence of
"cause" or of a Trigger Event shall be submitted to arbitration in accordance
with New York law
<PAGE>
and the procedures of the American Arbitration Association.
9. Merger of Company. If Company shall merge into or
consolidate with another corporation, or transfer or sell all or substantially
all of its assets to another corporation or other entity, Company shall require,
as a condition to such transaction, that such successor corporation or entity
assume the obligations of Company hereunder. This Agreement shall thereupon be
binding upon and inure to the benefit of the successor corporation or other
entity which shall be obligated to perform all of the terms and conditions
hereof, whether or not such successor expressly assumes such obligations.
10. Assignability. This Agreement is personal in nature and
neither Executive nor Company shall, without the consent of the other, assign
or transfer this Agreement or any rights or obligations hereunder, except (i) as
provided in Section 9 and (ii) as Executive's right to receive payments
hereunder may extend to his estate and beneficiaries as provided in Section 6.
Executive's right to receive payments hereunder shall not be assignable or
transferable, whether by pledge, creation of a security interest or otherwise,
except for a transfer of any such right by will or by the laws of descent or
distribution. The foregoing shall not prevent Executive from assigning
ownership of or an interest in or
<PAGE>
designating beneficiaries of, any insurance policy or benefit plan except as may
be prohibited by the terms thereof.
11. Governing Law. This Agreement shall in all respects be
construed and enforced in accordance with, and governed by, the laws of the
State of New York, irrespective of the location of Executive's residence or
principal place of employment.
12. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall as to
such jurisdiction be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in any
such jurisdiction. Unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto waive any provision of law which
renders any provision hereof invalid or unenforceable in any respect.
13. Notices and Consents. All notices and consents given by a
party pursuant to this Agreement shall be in writing and shall be delivered by
hand against receipt or sent by certified mail, return receipt requested, to the
other party at the following addresses:
<PAGE>
If to Company:
Handy & Harman
850 Third Avenue
New York, NY 10022
Attention: Secretary
If to Executive:
Frank E. Grzelecki
312 Greenley Road
New Canaan, CT 06840
or to such other address as either party shall give to the other by a notice.
14. Sole Agreement: Changes. This instrument contains the
entire agreement between the parties. It may not be changed orally; it may only
be changed by a written agreement or instrument signed by both parties.
IN WITNESS WHEREOF, the parties thereto have executed this
Agreement as of the date first above written.
HANDY & HARMAN
By /s/ Richard N. Daniel
---------------------
President
Executive
/s/ Frank E. Grzelecki
----------------------
<PAGE>
AMENDMENT TO THE EXECUTIVE AGREEMENT
Amendment dated as of July 1, 1989 between Handy & Harman, a
New York corporation (the "Company") and Frank E. Grzelecki ("Executive").
WHEREAS, the Company and Executive entered into an Executive
Agreement dated as of July 1, 1989, (the "Agreement"); and
WHEREAS, the Company and the Executive wish to amend the
Agreement in the manner hereinafter set forth;
NOW, THEREFORE, effective as of July 1, 1989, the parties
hereto agree as follows:
1. Section 1 of the Agreement is amended to read as follows:
"1. Employment. Subject to the right of the Company to take any and all
action of the kind specified in Section 3(a)-(h) prior to a Change in Control of
the Company as defined in Section 8, the Company shall continue to employ
Executive in his current capacity as vice Chairman of the Board and Executive
shall continue to serve to the best of his ability in such capacity, devoting
substantially all his business time thereto."
2. The first paragraph of Section 3 of the Agreement is amended to read as
follows:
"3. Trigger Events. If after the date of this Agreement, a Change
in Control of the Company as defined in Section 8 occurs, and thereafter,
without the express prior written consent of the Executive, any of the following
events shall occur, such event shall be deemed a Trigger Event."
3. Sections 7, 8, 9, 10, 11, 12, 13, and 14 of the Agreement are redesignated
Sections 9, 10, 11, 12, 13, 14, 15 and 16, including all conforming amendments.
1
<PAGE>
4. A new Section 7 is added to the Agreement to read as follows:
"7. Tax Gross-Up Payment.
If any payments under this Agreement or any other payments or benefits
received or to be received by the Executive (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company, or
any person affiliated with the Company), (the "Severance Payments"), will be
subject to the tax (the "Excise Tax") imposed by section 4999 of the Code (or
any similar tax that may hereafter be imposed), the Company shall pay at the
time specified below, an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction of any Excise Tax on
the Severance Payments and any federal, state and local income tax and Excise
Tax upon the payment provided for by this Section 7, shall be equal to the
Severance Payments. For purposes of determin ing whether any of the Severance
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(a) all Severance Payments shall be treated as "parachute payments" within the
meaning of section 280G(2) of the Code, and all "excess parachute payments"
within the meaning of section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to the Executive such Severance payments (in
whole or in part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4) of the Code in excess
of the base amount within the meaning of section 280G(b)(3) of the code, or are
otherwise not subject to the Excise Tax, (b) the amount of the Severance Pay
ments which shall be treated as subject to the Excise Tax shall be equal to the
lesser of (1) the total amount of the Severance Payments or (2) the amount of
excess parachute payments within the meaning of section 280G(b)(1) (after
applying clause (a), above), and (c) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of section 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, the
executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive's residence on the
Date of Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. In the event
that the Excise Tax is subsequently determined to be less than the amount taken
into account hereunder at the time of termination of the Executive's
2
<PAGE>
employment, the Executive shall repay to the Company at the time that the amount
of such reduction in Excise Tax is finally determined the portion of the
Gross-Up Payment attributable to such reduction (plus the portion of the
Gross-Up Payment attributable to the Excise Tax and federal and state and local
income tax imposed on the Gross-Up Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax and/or a federal and state and
local income tax deduction) plus interest on the amount of such repayment at the
rate provided in section 1274(2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount take into account hereunder at the time
of the termination of the Executive's employment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), of such excess (plus any interest payable with respect to
such excess) at the time that the amount of such excess is finally determined.
Any payment to be made to the Executive under this paragraph shall be payable
within five (5) days of his Termination Date."
5. A new Section 8 is added to the Agreement to read as follows:
"8. Change in Control. For purposes of this Agreement, "Change in
Control" means the occurrence of one of the following:
(a) any "person," as such term is used in Sections 13(d) and
14 (d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary holding securities under
an em ployee benefit plan of the Company or any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the company's then outstanding securities;
(b) during any period of two consecutive years (not including
any period prior to the execution of this amendment to the Executive Agreement),
individuals who at the beginning of such period constitute the Board of
Directors of the Company (the "Board"), and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transac tion described in clause (a), (c) or (d) of this
Section) whose election by the Com pany'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
3
<PAGE>
or 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 the Company approve a merger or
consoli dation of the Company with any other corporation; other than (i) a
merger or consolidation which would result in the voting securities of the
Company outstand ing immediately prior thereto continuing to represent (either
by remaining outstand ing or by being converted into voting securities of the
surviving entity) more than 70% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securi ties; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets."
6. All other provisions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment Agreement to be duly executed as of the date above written.
HANDY & HARMAN
By /s/ Frank E. Grzelecki
----------------------
Executive
4
<PAGE>
AMENDED AND RESTATED AGREEMENT
AGREEMENT, dated as of November 3, 1995 by and between Handy & Harman,
a New York corporation (the "Company") and Frank E. Grzelecki (the "Executive").
WHEREAS, the Company and the Executive entered into a Letter Agreement
dated as of May 23, 1989, as amended (the "Agreement"), an Executive Agreement
dated as of July 1, 1989, as amended (the "Executive Agreement") and an Amended
Agreement dated as of September 22, 1994 (the Amended Agreement"); and
WHEREAS, the Amended Agreement provides that when the Executive's
employment with the Company ends, whether the basis for such action being
instituted on the part of the Company or the Executive, the Executive shall
become entitled to the payment of severance benefits for one year in an amount
equal to the Executive's annual salary at the date of termination (the
"Severance Payment"); to full employee benefits coverage for one year (the
"Severance Benefits"); to continued medical benefits for himself and his spouse
until eligibility for Medicare (the "Medical Benefit"); and to certain
retirement benefits as indicated in an Agreement dated May 12, 1992; and
<PAGE>
WHEREAS, the Company considers its relationship with the Executive a
vital element in protecting and enhancing the best interests of the Company and
wishes to benefit from the Executive's substantial knowledge and experience by
extending its relationship with the Executive, and the Executive desires to
continue such relationship with the Company.
NOW, THEREFORE, in consideration of the foregoing, the Company
and the Executive agree as follows:
1. The Company and the Executive agree that this document,
being entered into this day, shall replace both the Agreement and the Amended
Agreement upon its execution and which shall provide for the payment of an
amount equal to the Severance Payment, such payment to be made in installments
over a five-year period. Notwithstanding any provision to the contrary herein,
the Executive (or his beneficiary) may, upon written notice to the Company, call
for the acceleration of the Severance Payment. Upon such written notice, the
Company shall pay to the Executive (or his beneficiary) a lump sum amount equal
to the remaining balance of the Severance Payment; and
(i) In the case of the death of the Executive during the
five-year period, the remainder of the Severance Payment shall be paid
to his beneficiary; and
2
<PAGE>
(ii) The Executive shall remain entitled to the Supplemental
Retirement Benefits as provided by amendment to the Agreement, dated as
of May 12, 1992, subject to the terms and conditions provided in such
amendment and in the Agreement, which provisions are incorporated by
reference in this Agreement as attached hereto as Exhibit A (a
Certified Copy of the Resolutions of the Board of Directors of Handy &
Harman dated May 12, 1992) to this Agreement; and
(iii) From and after the date of the Executive's termination
of employment, the Company shall provide the Medical Benefit, without
cost to the Executive and his spouse, over the lives of both the
Executive and his spouse. Such Medical Benefit shall be provided on a
basis no less favorable to the Executive and his spouse than the
medical coverage provided to active senior executive officers of the
Company as of the date of execution of this Agreement; any future
improvements in medical benefits adopted by the Company for active
senior executive officers will be deemed to be in effect for the
Executive and his spouse pursuant to the Medical Benefit, without cost
to the Executive or his spouse, on the date of effectiveness of such
future improvements for active senior executive officers of the
Company; and
(iv) The Company shall take all actions necessary and
appropriate to cause all outstanding options to remain outstanding and
continue to vest
3
<PAGE>
and become exercisable pursuant to the terms of the original grant,
subject to the terms of the applicable stock option plan and the
applicable stock option agreement. In addition, the Company shall
extend the post exercise period for the Executive's options granted
under the 1991 Long-Term Incentive Stock Option Plan to no less than
one year from the effective [termination-retirement] date of the
Executive or for the term of the Consulting Agreement, referenced in
paragraph numbered 2 on page 4 of this Agreement, whichever period is
longer, but not beyond the original term of such option.
(v) The Executive shall be entitled to appropriate office
space and related expenses, off of the premises of the Company's
headquarters in Rye, New York, along with appropriate secretarial
services for the four-year period following severance of employment;
which expenses shall not exceed $3,000 per month.
2. The Company and the Executive may enter into a Consulting
Agreement (the "Consulting Agreement"), a copy of which is attached hereto as
Exhibit B.
3. The obligations of the Company under this Agreement shall
be binding upon any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company.
4
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have caused
this Amendment to be duly executed all as of November 3, 1995.
HANDY & HARMAN
By /s/ Paul E. Dixon
-----------------------------
Paul E. Dixon
/s/ Frank E. Grzelecki
-----------------------------
Frank E. Grzelecki
5
<PAGE>
EXHIBIT A
SECRETARY'S CERTIFICATE
I, PAUL E. DIXON, being the duly elected and acting Secretary
of Handy & Harman, a New York corporation (hereinafter the "Company") DO HEREBY
CERTIFY that the attached is a true and complete copy of certain resolutions
duly adopted by the Board of Directors of this Company at a meeting which was
duly called and held on the 12th day of May 1992, and at which a quorum was
present and acting throughout, AND I DO FURTHER CERTIFY that said resolutions
have not been rescinded or amended and remain in full force and effect at the
date hereof:
IN WITNESS WHEREOF I have hereunto affixed my signature and
the seal of the Company this 3rd day of November 1995.
/s/ Paul E. Dixon
--------------------------------
Secretary
6
<PAGE>
RESOLUTION APPROVED BY BOARD OF DIRECTORS
May 12, 1992
RESOLVED, that the agreement dated May 23, 1989, between the
Company and F. E. Grzelecki be amended by adding the following provisions
thereto, subject to the advice of tax counsel with final provisions being
mutually agreed to by both parties:
Supplemental Retirement Benefits: In addition to the benefits provided under the
Handy & Harman Pension Plan, the Supplemental Executive Retirement Plan, and the
Retiree benefits under the Handy & Harman Health Care Benefit Plan, the Company
will provide the following Supplemental Retirement Benefits:
1. Upon the completion of each year of service, the Company will
purchase an annuity to provide a supplemental monthly pension
in an amount equal to $1,000 times the number of years of
service since July 1, 1991 provided, however, that the total
may not exceed $6,000. These monthly payments shall begin July
1, 1997 or upon your separation from the Company as a full
time employee, whichever comes last, and shall continue for
your lifetime with the further provision that in the event of
your death such monthly payments shall be made to your
beneficiary until a total of 120 monthly payments have been
made.
2. The Company will continue to provide Medical Benefits
equivalent to those received by other Officers of the Company
until you become eligible for Medicare. This coverage will be
available if you continue employment until July 1, 1992. Your
monthly premium contribution will be the same as other
Officers of the Company. It is important that you and your
spouse enroll for Medicare Parts A and B as soon as you become
eligible since at that time the benefit described above will
cease and you will be eligible for the normal retiree
benefits. These Retiree Benefits are integrated with Medicare
and, therefore, the Plan benefits will only cover expenses
which are not paid by Medicare. Your monthly cost after you
become Medicare eligible will be the same as other Retirees.
7
<PAGE>
EXHIBIT B
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of ___________________ between
Handy & Harman, a New York corporation (the "Company") and Frank E.
Grzelecki (the "Executive").
WHEREAS, the Company and the Executive desire to enter into a
consulting upon the retirement of the Executive; and
WHEREAS, it is recognized that the Consulting Agreement would
be to the benefit of the Company and the Executive.
NOW, THEREFORE, in consideration of the foregoing the
following terms and conditions shall apply:
1. This Agreement will become effective the day following the
retirement date of the Executive whose written notice of said date will be
communicated to the Company to the attention of the Chairman or Secretary at
250 Park Avenue, New York, New York 10177.
2. In furtherance of this Agreement the Company agrees to
provide a consulting fee equal to $30,000 (the "Annual Fee"), and expenses
incurred with respect to this Agreement. The Annual Fee will be payable in
monthly installments until such time that the Executive terminates his
consultant status or accepts full-time employment elsewhere, and expenses will
be reimbursed, in compliance with the Company's policies, to the Executive.
<PAGE>
3. As part of this Agreement, the Executive agrees to provide
services to the Company for two days each month for a total of 24 days each
year. If the Executive consults or serves in a capacity other than as a Director
of the Company for more than 24 days in any one-year period, then the payments
for the additional days would be made on a pro rata basis for each year.
4. The Company and the Executive may terminate this Agreement
on not less than thirty days written notice, if by the Company to the Executive,
if by the Executive to the Company at 250 Park Avenue, New York, New York 10177
with attention to the Chairman or the Secretary.
5. The Executive shall enter into a noncompetition agreement
substantially in the form of noncompetition agreements between the Company and
other executive officers of the Company, which shall be negotiated by the
parties in good faith and which shall provide that, among other things, (i) the
Executive shall not enter into an employment or consulting arrangement with any
other competing company; and (ii) the Executive shall maintain the
confidentiality of proprietary information of the Company.
2
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have caused
this Amendment to be duly executed all as of _____________, 1994.
HANDY & HARMAN
By:_____________________________
________________________________
Frank E. Grzelecki
3
<PAGE>
RESTATED CONFIRMATION AGREEMENT
Agreement dated as of February 26, 1998 between Handy &
Harman, a New York corporation (the "Company"), and Frank E. Grzelecki
("Executive").
WHEREAS, the Company and Executive have entered into:
(1) a letter agreement dated as of May 23, 1989 (the "Letter
Agreement"), and the changes thereto approved by resolution of the Company's
Board of Directors on May 12, 1992 (the "1992 Resolution");
(2) an Executive Agreement dated as of July l, 1989, as amended by an
Amendment to Executive Agreement dated as of July 1, 1989 (the "Executive
Agreement");
(3) an Agreement dated as of September 22, 1994 (the "1994 Agreement");
and
(4) an Amended and Restated Agreement dated as of November 3, 1995 (the
"1995 Agreement") (the Letter Agreement, the 1992 Resolution, the Executive
Agreement, the 1994 Agreement and the 1995 Agreement being referred to collec-
tively as the "Agreements");
WHEREAS, the Company and Executive have discovered that
certain references in the Agreements entered into subsequent to the Letter
Agreement are confusing and that certain provisions in such Agreements are
inconsistent with their mutual intent in entering into such Agreements and their
mutual understanding regarding the combined effect of the Agreements; and
WHEREAS, such mutual intent and understanding were, in
substance, that the Letter Agreement has no further effect, that the 1992
Resolution remains in effect for purposes of the 1995 Agreement, that the
Executive Agreement remains in effect notwithstanding the 1994 Agreement, that
the 1995 Agreement replaced the 1994 Agreement and that provisions of the 1995
Agreement relating to the Severance Payment provided for therein do not apply in
the event of a termination of Executive's employment with the Company to which
the Executive Agreement applies;
NOW THEREFORE, to accurately reflect their mutual intent and
mutual understanding, the Company and Executive hereby agree that notwithstand-
ing any different characterization of the provisions or effectiveness of any of
the
<PAGE>
Agreements contained in any other Agreement, and notwithstanding any provision
of any of the Agreements to the contrary:
(1) The Letter Agreement was superseded by the 1994 Agreement (and the
1995 Agreement), other than for purposes of references to the Letter Agreement
in the WHEREAS clauses of the 1994 Agreement (and the 1995 Agreement);
(2) the 1992 Resolution remains in full force and effect solely for
purposes of references to it in the 1995 Agreement;
(3) the Executive Agreement was not replaced by the 1994 Agreement, but
instead remains in full force and effect;
(4) the 1994 Agreement was replaced ab initio by the 1995 Agreement;
and
(5) the 1995 Agreement remains in full force and effect, except that it
is expressly understood that:
(A) the term "Amended Agreement" in the second WHEREAS clause
of the 1995 Agreement refers to the Letter Agreement, as changed by the
1992 Resolution, rather than to the 1994 Agreement; and
(B) the provisions of the first three sentences of Section 1
of the 1995 Agreement relating to the Severance Payment (including
without limitation the provisions of clause (i) of such third sentence)
do not apply to any ending of Executive's employment with the Company
on account of any termination described in Section 6 of the Executive
Agreement occurring after the date of a Specified Trigger Event and
before the end of the subsequent Employment Period.
IN ADDITION, the parties agree that any dispute or controversy
between the Company and Executive, whether arising out of or relating to any of
the Agreements or this Confirmation Agreement, the breach of any of the
Agreements or this Confirmation Agreement, or otherwise, shall be settled by
arbitration administered by the American Arbitration Association in accordance
with its Commercial Rules then in effect and judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. Such
arbitration shall take place in the New York City metropolitan area. The
arbitrator shall have the authority to award any remedy or relief that a court
of competent jurisdiction could order or grant, including, without limitation,
the issuance of an injunction. However, either party
<PAGE>
may, without inconsistency with this arbitration provision, apply to any court
having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is
rendered or the controversy is otherwise resolved. The Company shall reimburse
Executive, upon demand, for all costs and expenses (including without limitation
attorneys' fees) reasonably incurred by Executive in good faith in connection
with this arbitration provision, including without limitation in connection with
any such application undertaken by Executive in good faith, as well as for all
such costs and expenses reasonably incurred by Executive in connection with
entering and/or enforcing the award rendered by the arbitrator. Except as
necessary in court proceedings to enforce this arbitration provision or an award
rendered hereunder, or to obtain interim relief, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration
hereunder without the prior written consent of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed and Executive has hereunto set his hand, as of the date first
set forth above.
HANDY & HARMAN
By: /s/ Paul E. Dixon
-----------------------------
As Its: Paul E. Dixon
-------------------------
Sr. Vice President and
General Counsel
/s/Frank E. Grzelecki
--------------------------------
Frank E. Grzelecki
<PAGE>
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>
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, provided, that your level of
participation shall be 40% of your annual base salary (as in effect on January
1, 1997).
2
<PAGE>
(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 nonqualified
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 25i 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 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-Retire-
3
<PAGE>
ment 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 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
4
<PAGE>
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 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.
5
<PAGE>
(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
(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
6
<PAGE>
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, 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
7
<PAGE>
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) or 8(c), you 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
8
<PAGE>
if to the Company:
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Paul E Dixon, Esq.
Vice President
and General Counsel
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.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
HANDY & HARMAN
By: /s/ Frank E. Grzelecki
-------------------------------
Name: Frank E. Grzelecki
Title: President & Chief
Operating Officer
Agreed to this 25 day
of October, 1996
/s/ Robert D. LeBlanc
- ---------------------
10
<PAGE>
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
<PAGE>
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;
(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
2
<PAGE>
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;
(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 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.
3
<PAGE>
(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:
(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.
4
<PAGE>
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.
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
/s/ Robert D. LeBlanc /s/ Frank E. Grzelecki
- --------------------------- ---------------------------
by: Robert D. LeBlanc by: Frank E. Grzelecki
Dated as of this 14th day of May, 1997
5
<PAGE>
AMENDMENT
Amendment dated as of February 26, 1998 between Handy &
Harman, a New York corporation (the "Company"), and Robert D. LeBlanc ("Execu-
tive").
WHEREAS, the Company and Executive are parties to a
supplemental agreement dated as of May 14, 1997 (the "Supplemental
Agreement"), providing for certain payments to be made to Executive on a
Change of Control (as defined in the Supplemental Agreement) of the Company;
WHEREAS, the Company and Executive desire to amend the
Supplemental Agreement as hereinafter provided;
NOW THEREFORE, the Company and Executive agree that the
following shall be added as Section 7 of the Agreement:
7. Arbitration; Certain Costs. Any dispute or controversy
between Company and Executive, whether arising out of or relating to
the Agreement, the breach of the Agreement, or otherwise, shall be
settled by arbitration administered by the American Arbitration
Association in accordance with its Commercial Rules then in effect
and judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. Such arbitration shall take
place in the New York City metropolitan area. The arbitrator shall
have the authority to award any remedy or relief that a court of
competent jurisdiction could order or grant, including, without
limitation, the issuance of an injunction. However, either party may,
without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy and seek
interim provisional, injunctive or other equitable relief until the
arbitration award is rendered or the controversy is otherwise
resolved. Company shall reimburse Executive, upon demand, for all
costs and expenses (including without limitation attorneys' fees)
reason ably incurred by Executive in good faith in connection with
this arbitration provision, including without limitation in
connection with any such application undertaken by Executive in good
faith, as well as for all such costs and expenses reasonably incurred
by Executive in connection with entering and/or enforcing the award
rendered by the arbitrator. Except as necessary in court proceedings
to enforce this arbitration provision or an award rendered hereunder,
or to obtain interim relief, neither a party nor an arbitrator may
disclose
<PAGE>
the existence, content or results of any arbitration hereunder
without the prior written consent of Company.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be duly executed and Executive has hereunto set his hand, as of the date first
set forth above.
HANDY & HARMAN
By: /s/ Frank E. Grzelecki
-----------------------
As its: Vice Chairman
/s/ Robert D. LeBlanc
----------------------
Robert D. LeBlanc
<PAGE>
AMENDED AND RESTATED
AGREEMENT
WHEREAS, Handy & Harman ("H&H") and Paul E. Dixon ("Executive") are parties to
an agreement dated May 14, 1997 providing for certain payments and benefits to
Executive in the event of a Change of Control of H&H;
WHEREAS, Executive is employed by H&H;
WHEREAS, H&H desires to retain Executive's services in the event of a Change of
Control (as defined below) of H&H; and
WHEREAS, the parties desire to amend and restate the Agreement to reflect
certain changes which have been agreed between them;
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, however, that no such notice to terminate may be
given by H&H after such Change of Control, and any such notice given by H&H
before such Change of Control, but which would cause this Agreement to terminate
on a December 31 following the Change of Control, shall have no effect. If a
Change of Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect until all of H&H's obligations hereunder have
been discharged.
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 H&H, any trustee or other fiduciary
holding securities under an employee benefit plan of H&H 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
<PAGE>
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 May 14, 1997), 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;
(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 herein above 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. Change of Control Bonus. At the effective time of a merger or consolidation
constituting a Change of Control described in Section 2(c), or within three (3)
business days following the occurrence of any other event constituting a Change
of Control, H&H shall pay Executive the sum of $250,000.
4. Termination Following Change of Control. If any of the events described in
Section 2 above constituting a Change of Control shall have occurred, Executive
shall be entitled to the benefits provided in Section 5 hereof upon termination
of Executive's employment with H&H during the two (2) year period following the
Change of Control unless such termination is (A) a result of Executive's death
or
<PAGE>
retirement, or (B) Executive's resignation for other than Good Reason, or (C)
Executive's being terminated by H&H for Disability or for Cause.
(a) Cause. For purposes of this Agreement, "Cause" shall mean Execu-
tive's willful breach of duty in the course of Executive's employment,
or Executive's habitual neglect of his employment duties.
(b) Disability. For purposes of this Agreement, "Disability" shall
mean Executive's absence from his duties with H&H for three hundred
sixty-five (365) consecutive days as a result of his physical or
mental illness.
(c) Good Reason. Executive shall be entitled to terminate his
employment for Good Reason. For the purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following
circumstances:
(i) the assignment to Executive of any duties inconsistent
with his status as a Vice President, General Counsel and
Secretary (or any higher position to which Executive has been
promoted at the time) or a substantial diminution in the nature
or status of his responsibilities from those in effect
immediately prior to the Change of Control;
(ii) a reduction in Executive's annual base salary as in
effect on the date the Change of Control;
(iii) the relocation of the office in which Executive is
located prior to the Change of Control to a location more than
sixty (60) miles from New York City;
(iv) Executive's selective exclusion, pursuant to an action
taken by H&H, from a compensation, bonus, stock option or stock
ownership plan either 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 required by law, the failure by H&H to
continue to provide Executive with benefits at least as favorable
as those enjoyed by Executive under the employee benefit and
welfare plans of H&H in which he was participating at the time of
the Change of Control;
<PAGE>
(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 6 hereof; or
(vii) any purported termination of Executive's employment
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 4(d) below; for purposes of this
Agreement, no such purported termination shall be effective.
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination of Executive's employment
by H&H or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 9
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
Executive's 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.
5. Compensation Upon Termination. Following a Change of Control of H&H, as
defined herein, upon termination of Executive's employment by (a) H&H other than
for Cause or for Disability or (b) by Executive for Good Reason, Executive shall
be entitled to the following benefits:
(a) H&H shall pay Executive a severance payment (the "Severance
Payment") equal to one year's full base salary at Executive's highest
rate in effect during the period beginning twelve (12) months before
the date on which the Change of Control occurs and ending on the date
on which the Notice of Termination is given;
(b) For a twelve (12) month period after termination of Executive's
employment, H&H shall arrange to provide Executive with life, medical
and dental insurance benefits substantially similar to those which
Executive is receiving or entitled to receive immediately prior to the
Notice of Termina-
<PAGE>
tion, unless Executive is eligible to receive such benefits from a
subsequent employer or a spouse's employer; and
(c) H&H shall pay Executive the Severance Payment no later than the
fifth (5th) day following the Date of Termination.
6. Successors; Binding Agreement.
(a) 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 Executive to an immediate
lump sum payment equal to the sum of (i) the payment provided for in
Section 3 hereof, (ii) the Severance Payment to which Executive would
be entitled under Section 5(a) hereof if Executive had terminated
Executive's employment for Good Reason following a Change of Control
of H&H and (iii) the present value of the continuing benefits to which
Executive would have been entitled under Section 5(b) hereof if
Executive had terminated his employment for Good Reason following a
Change of Control of H&H. All references to H&H shall be deemed to
include its successors.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Executive dies while any amount is payable to him
hereunder, all such amounts shall be paid in accordance with the terms
of this Agreement to Executive's devisee, legatee or other designee
or, if there is no such designee, to Executive's estate.
7. Section 280G Limitation. Notwithstanding any other provision of this
Agreement, the payments and benefits to which Executive is otherwise entitled
under Sections 3 and 5 hereof will be reduced to the extent necessary so that no
portion thereof is nondeductible under Section 280G of the Internal Revenue Code
of 1986, as amended, (the "Code"). Within five (5) days of the Date of
Termination, H&H shall provide Executive with the calculations undertaken by H&H
for the purposes of applying the previous sentence (the "Calculations"). If
Executive does not agree with the Calculations, Executive may object within
fourteen (14) days of receipt of the Calculations by giving written notice to
H&H, setting forth in reasonable detail the basis of Executive's objection to
the Calculations which shall include a set of
<PAGE>
calculations which Executive believes is correct (the "Recalculations"). If H&H
does not accept Executive's Recalculations, it shall notify Executive of such
disagreement within seven (7) days. The parties shall then attempt to resolve
their disagreement within seven (7) days. If the parties are unable to resolve
their disagreement within such period, the dispute shall be submitted to
arbitration in accordance with Section 8.
8. Arbitration; Certain Costs. Any dispute or controversy between H&H and
Executive, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its Commercial Rules
then in effect and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Such arbitration shall take
place in the New York City metropolitan area. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
or controversy and seek interim provisional, injunctive or other equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved. H&H shall reimburse Executive, upon demand, for all costs and expenses
(including without limitation attorneys' fees) reasonably incurred by Executive
in good faith in connection with this arbitration provision, including without
limitation in connection with any such application undertaken by Executive in
good faith, as well as for all such costs and expenses reasonably incurred by
Executive in connection with entering and/or enforcing the award rendered by
the arbitrator. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of H&H.
9. Notice. For the purposes of this Agreement, notices and all other communica-
tions 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 Chief Executive Officer, 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>
10. 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.
11. Validity. The invalidity or unenforceability of any provision of this Agree-
ment 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 Amended and Restated
Agreement on the 26th day of February, 1998.
Handy & Harman
/s/Paul E. Dixon /s/Frank E. Grzelecki
- -------------------- -----------------------
by: Paul E. Dixon by: Frank E. Grzelecki
Vice Chairman
<PAGE>
AMENDED AND RESTATED
AGREEMENT
WHEREAS, Handy & Harman ("H&H") and Robert F. Burlinson ("Executive") are
parties to an agreement dated May 14, 1997 providing for certain payments and
benefits to Executive in the event of a Change of Control of H&H;
WHEREAS, Executive is employed by H&H;
WHEREAS, H&H desires to retain Executive's services in the event of a Change of
Control (as defined below) of H&H; and
WHEREAS, the parties desire to amend and restate the Agreement to reflect
certain changes which have been agreed between them;
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:
l. 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, however, that no such notice to terminate may be
given by H&H after such Change of Control, and any such notice given by H&H
before such Change of Control, but which would cause this Agreement to terminate
on a December 31 following the Change of Control, shall have no effect. If a
Change of Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect until all of H&H's obligations hereunder have
been discharged.
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 H&H, any trustee or other fiduciary
holding securities under an employee benefit plan of H&H 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
<PAGE>
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 May 14, 1997, 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;
(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 herein above 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, Executive
shall be entitled to the benefits provided in Section 4 hereof upon termination
of Executive's employment with H&H during the two (2) year period following the
Change of Control unless such termination is (A) a result of Executive's death
or retirement, or (B) Executive's resignation for other than Good Reason, or (C)
Executive's being terminated by H&H for Disability or for Cause.
<PAGE>
(a) Cause. For purposes of this Agreement, "Cause" shall mean Execu-
tive's willful breach of duty in the course of Executive's employment,
or Executive's habitual neglect of his employment duties.
(b) Disability. For purposes of this Agreement, "Disability" shall
mean Executive's absence from his duties with H&H for three hundred
sixty-five (365) consecutive days as a result of his physical or
mental illness.
(c) Good Reason. Executive shall be entitled to terminate his
employment for Good Reason. For the purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following
circumstances:
(i) the assignment to Executive of any duties inconsistent
with his status as a Vice President and Treasurer (or any higher
position to which Executive has been promoted at the time) or a
substantial diminution in the nature or status of his
responsibilities from those in effect immediately prior to the
Change of Control;
(ii) a reduction in Executive's annual base salary as in
effect on the date of the Change of Control;
(iii) the relocation of the office in which Executive is
located prior to the Change of Control to a location more than
sixty (60) miles from New York City;
(iv) Executive's selective exclusion, pursuant to an action
taken by H&H, from a compensation, bonus, stock option or stock
ownership plan either 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 required by law, the failure by H&H to
continue to provide Executive with benefits at least as favorable
as those enjoyed by Executive under the employee benefit and
welfare plans of H&H in which he was participating 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
<PAGE>
(vii) any purported termination of Executive's employment
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 4(d) below; for purposes of this
Agreement, no such purported termination shall be effective.
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination of Executive's employment
by H&H or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 8
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
Executive's 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 Executive's employment by (a) H&H other than
for Cause or for Disability or (b) by Executive for Good Reason, Executive shall
be entitled to the following benefits:
(a) H&H shall pay Executive a severance payment (the "Severance Pay-
ment") equal to one year's full base salary at Executive's highest
rate in effect during the period beginning twelve (12) months before
the date on which the Change of Control occurs and ending on the date
on which the Notice of Termination is given;
(b) For a twelve (12) month period after termination of Executive's
employment, H&H shall arrange to provide Executive with life, medical
and dental insurance benefits substantially similar to those which
Executive is receiving or entitled to receive immediately prior to the
Notice of Termination, unless Executive is eligible to receive such
benefits from a subsequent employer or a spouse's employer; and
(c) H&H shall pay Executive the Severance Payment no later than the
fifth (5th) day following the Date of Termination.
<PAGE>
5. Successors; Binding Agreement.
(a) 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 Executive to an immediate
lump sum payment equal to the sum of (i) the Severance Payment to
which Executive would be entitled under Section 4(a) hereof if
Executive had terminated Executive's employment for Good Reason
following a Change of Control of H&H and (ii) the present value of the
continuing benefits to which Executive would have been entitled under
Section 4(b) hereof if Executive had terminated his employment for
Good Reason following a Change of Control of H&H. All references to
H&H shall be deemed to include its successors.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Executive dies while any amount is payable to him
hereunder, all such amounts shall be paid in accordance with the terms
of this Agreement to Executive's devisee, legatee or other designee
or, if there is no such designee, to Executive's estate.
6. Section 280G Limitation. Notwithstanding any other provision of this
Agreement, the payments and benefits to which Executive is otherwise entitled
under Section 4 hereof will be reduced to the extent necessary so that no
portion thereof is nondeductible under Section 280G of the Internal Revenue Code
of 1986, as amended, (the "Code"). Within five (5) days of the Date of
Termination, H&H shall provide Executive with the calculations undertaken by H&H
for the purposes of applying the previous sentence (the "Calculations"). If
Executive does not agree with the Calculations, Executive may object within
fourteen (14) days of receipt of the Calculations by giving written notice to
H&H, setting forth in reasonable detail the basis of Executive's objection to
the Calculations which shall include a set of calculations which Executive
believes is correct (the "Recalculations"). If H&H does not accept Executive's
Recalculations, it shall notify Executive of such disagreement within seven (7)
days. The parties shall then attempt to resolve their disagreement within seven
(7) days. If the parties are unable to resolve their disagreement within such
period, the dispute shall be submitted to arbitration in accordance with Section
7.
<PAGE>
7. Arbitration; Certain Costs. Any dispute or controversy between H&H and
Executive, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its Commercial Rules
then in effect and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Such arbitration shall take
place in the New York City metropolitan area. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
or controversy and seek interim provisional, injunctive or other equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved. H&H shall reimburse Executive, upon demand, for all costs and expenses
(including without limitation attorneys' fees) reasonably incurred by Executive
in good faith in connection with this arbitration provision, including without
limitation in connection with any such application undertaken by Executive in
good faith, as well as for all such costs and expenses reasonably incurred by
Executive in connection with entering and/or enforcing the award rendered by
the arbitrator. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of H&H.
8. Notice. For the purposes of this Agreement, notices and all other communica-
tions 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 Senior Vice President and General
Counsel, 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.
10. 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
<PAGE>
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.
11. Validity. The invalidity or unenforceability of any provision of this Agree-
ment 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 Amended and Restated
Agreement on the 27th day of February, 1998.
Handy & Harman
/s/Robert F. Burlinson /s/Frank E. Grzelecki
- ----------------------- -----------------------
by: Robert F. Burlinson by: Frank E. Grzelecki
Vice Chairman
<PAGE>
AMENDED AND RESTATED
AGREEMENT
WHEREAS, Handy & Harman ("H&H") and Dennis C. Kelly ("Executive") are parties to
an agreement dated May 14, 1997 providing for certain payments and benefits to
Executive in the event of a Change of Control of H&H;
WHEREAS, Executive is employed by H&H;
WHEREAS, H&H desires to retain Executive's services in the event of a Change of
Control (as defined below) of H&H; and
WHEREAS, the parties desire to amend and restate the Agreement to reflect
certain changes which have been agreed between them;
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, however, that no such notice to terminate may be
given by H&H after such Change of Control, and any such notice given by H&H
before such Change of Control, but which would cause this Agreement to terminate
on a December 31 following the Change of Control, shall have no effect. If a
Change of Control shall have occurred during the term of this Agreement, this
Agreement shall continue in effect until all of H&H's obligations hereunder have
been discharged.
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 H&H, any trustee or other fiduciary
holding securities under an employee benefit plan of H&H 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
<PAGE>
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 May 14, 1997), 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;
(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 herein above 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, Executive
shall be entitled to the benefits provided in Section 4 hereof upon termination
of Executive's employment with H&H during the two (2) year period following the
Change of Control unless such termination is (A) a result of Executive's death
or retirement, or (B) Executive's resignation for other than Good Reason, or (C)
Executive's being terminated by H&H for Disability or for Cause.
<PAGE>
(a) Cause. For purposes of this Agreement, "Cause" shall mean Exec-
tive's willful breach of duty in the course of Executive's employment,
or Executive's habitual neglect of his employment duties.
(b) Disability. For purposes of this Agreement, "Disability" shall
mean Executive's absence from his duties with H&H for three hundred
sixty-five (365) consecutive days as a result of his physical or
mental illness.
(c) Good Reason. Executive shall be entitled to terminate his
employment for Good Reason. For the purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following
circumstances:
(i) the assignment to Executive of any duties inconsistent
with his status as a Controller (or any higher position to which
Executive has been promoted at the time) or a substantial
diminution in the nature or status of his responsibilities from
those in effect immediately prior to the Change of Control;
(ii) a reduction in Executive's annual base salary as in
effect on the date of the Change of Control;
(iii) the relocation of the office in which Executive is
located prior to the Change of Control to a location more than
sixty (60) miles from New York City;
(iv) Executive's selective exclusion, pursuant to an action
taken by H&H, from a compensation, bonus, stock option or stock
ownership plan either 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 required by law, the failure by H&H to
continue to provide Executive with benefits at least as favorable
as those enjoyed by Executive under the employee benefit and
welfare plans of H&H in which he was participating 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
<PAGE>
(vii) any purported termination of Executive's employment not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 4(d) below; for purposes of this
Agreement, no such purported termination shall be effective.
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination of Executive's employment
by H&H or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 8
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
Executive's 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 Executive's employment by (a) H&H other than
for Cause or for Disability or (b) by Executive for Good Reason, Executive shall
be entitled to the following benefits:
(a) H&H shall pay Executive a severance payment (the "Severance
Payment") equal to one year's full base salary at Executive's highest
rate in effect during the period beginning twelve (12) months before
the date on which the Change of Control occurs and ending on the date
on which the Notice of Termination is given;
(b) For a twelve (12) month period after termination of Executive's
employment, H&H shall arrange to provide Executive with life, medical
and dental insurance benefits substantially similar to those which
Executive is receiving or entitled to receive immediately prior to the
Notice of Termination, unless Executive is eligible to receive such
benefits from a subsequent employer or a spouse's employer; and
(c) H&H shall pay Executive the Severance Payment no later than the
fifth (5th) day following the Date of Termination.
<PAGE>
5. Successors; Binding Agreement.
(a) 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 Executive to an immediate
lump sum payment equal to the sum of (i) the Severance Payment to which
Executive would be entitled under Section 4(a) hereof if Executive had
terminated Executive's employment for Good Reason following a Change
of Control of H&H and (ii) the present value of the continuing benefits
to which Executive would have been entitled under Section 4(b) hereof
if Executive had terminated his employment for Good Reason following a
Change of Control of H&H. All references to H&H shall be deemed to
include its successors.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Executive dies while any amount is payable to him
hereunder, all such amounts shall be paid in accordance with the terms
of this Agreement to Executive's devisee, legatee or other designee
or, if there is no such designee, to Executive's estate.
6. Section 280G Limitation. Notwithstanding any other provision of this
Agreement, the payments and benefits to which Executive is otherwise entitled
under Section 4 hereof will be reduced to the extent necessary so that no
portion thereof is nondeductible under Section 280G of the Internal Revenue Code
of 1986, as amended, (the "Code"). Within five (5) days of the Date of
Termination, H&H shall provide Executive with the calculations undertaken by H&H
for the purposes of applying the previous sentence (the "Calculations"). If
Executive does not agree with the Calculations, Executive may object within
fourteen (14) days of receipt of the Calculations by giving written notice to
H&H, setting forth in reasonable detail the basis of Executive's objection to
the Calculations which shall include a set of calculations which Executive
believes is correct (the "Recalculations"). If H&H does not accept Executive's
Recalculations, it shall notify Executive of such disagreement within seven (7)
days. The parties shall then attempt to resolve their disagreement within seven
(7) days. If the parties are unable to resolve their disagreement within such
period, the dispute shall be submitted to arbitration in accordance with Section
7.
<PAGE>
7. Arbitration; Certain Costs. Any dispute or controversy between H&H and
Executive, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its Commercial Rules
then in effect and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Such arbitration shall take
place in the New York City metropolitan area. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such dispute
or controversy and seek interim provisional, injunctive or other equitable
relief until the arbitration award is rendered or the controversy is otherwise
resolved. H&H shall reimburse Executive, upon demand, for all costs and expenses
(including without limitation attorneys' fees) reasonably incurred by Executive
in good faith in connection with this arbitration provision, including without
limitation in connection with any such application undertaken by Executive in
good faith, as well as for all such costs and expenses reasonably incurred by
Executive in connection with entering and/or enforcing the award rendered by
the arbitrator. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of H&H.
8. Notice. For the purposes of this Agreement, notices and all other communica-
tions 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 Senior Vice President and General
Counsel, 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.
10. 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
<PAGE>
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.
11. Validity. The invalidity or unenforceability of any provision of this Agree-
ment 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 Amended and Restated
Agreement on the day of February, 1998.
Handy & Harman
/s/Dennis C. Kelly /s/Frank E. Grzelcki
- -------------------- -----------------------
by: Dennis C. Kelly by: Frank E. Grzelecki
Vice Chairman
<PAGE>
AMENDED AND RESTATED
AGREEMENT
WHEREAS, Handy & Harman ("H&H") and Dennis R. Kuhns ("Executive") are parties
to an agreement dated January 26, 1998 providing for certain payments and
benefits to Executive in the event of a Change of Control of H&H;
WHEREAS, Executive is employed by H&H;
WHEREAS, H&H desires to retain Executive's services in the event of a Change
of Control (as defined below) of H&H; and
WHEREAS, the parties desire to amend and restate the Agreement to reflect
certain changes which have been agreed between them;
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, however, that no such notice to terminate may
be given by H&H after such Change of Control, and any such notice given by H&H
before such Change of Control, but which would cause this Agreement to
terminate on a December 31 following the Change of Control, shall have no
effect. If a Change of Control shall have occurred during the term of this
Agreement, this Agreement shall continue in effect until all of H&H's
obligations hereunder have been discharged.
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 H&H, any trustee or other fiduciary
holding securities under an employee benefit plan of H&H 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
<PAGE>
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 January 26, 1998), 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;
(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 herein above 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,
Executive shall be entitled to the benefits provided in Section 4 hereof upon
termination of Executive's employment with H&H during the two (2) year period
following the Change of Control unless such termination is (A) a result of
Executive's death or retirement, or (B) Executive's resignation for other than
Good Reason, or (C) Executive's being terminated by H&H for Disability or for
Cause.
<PAGE>
(a) Cause. For purposes of this Agreement, "Cause" shall mean Execu-
tive's willful breach of duty in the course of Executive's
employment, or Executive's habitual neglect of his employment duties.
(b) Disability. For purposes of this Agreement, "Disability" shall
mean Executive's absence from his duties with H&H for three hundred
sixty-five (365) consecutive days as a result of his physical or
mental illness.
(c) Good Reason. Executive shall be entitled to terminate his
employment for Good Reason. For the purposes of this Agreement, "Good
Reason" shall mean the occurrence of any of the following
circumstances:
(i) the assignment to Executive of any duties
inconsistent with his status as a Corporate Vice President
(or any higher position to which Executive has been promoted
at the time) or a substantial diminution in the nature or
status of his responsibilities from those in effect
immediately prior to the Change of Control;
(ii) a reduction in Executive's annual base salary
as in effect on the date of the Change of Control;
(iii) the relocation of the office in which
Executive is located prior to the Change of Control to a
location more than sixty (60) miles from Cockeysville,
Maryland;
(iv) Executive's selective exclusion, pursuant to
an action taken by H&H, from a compensation, bonus, stock
option or stock ownership plan either 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 required by law, the failure by H&H
to continue to provide Executive with benefits at least as
favorable as those enjoyed by Executive under the employee
benefit and welfare plans of H&H in which he was
participating 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
<PAGE>
(vii) any purported termination of Executive's
employment not effected pursuant to a Notice of Termination
satisfying the requirements of Section 4(d) below; for
purposes of this Agreement, no such purported termination
shall be effective.
Executive's continued employment shall not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason
hereunder.
(d) Notice of Termination. Any termination of Executive's employment
by H&H or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 8
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
Executive's 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 Executive's employment by (a) H&H other
than for Cause or for Disability or (b) by Executive for Good Reason,
Executive shall be entitled to the following benefits:
(a) H&H shall pay Executive a severance payment (the "Severance
Payment") equal to one year's full base salary at Executive's highest
rate in effect during the period beginning twelve (12) months before
the date on which the Change of Control occurs and ending on the date
on which the Notice of Termination is given;
(b) For a twelve (12) month period after termination of Executive's
employment, H&H shall arrange to provide Executive with life, medical
and dental insurance benefits substantially similar to those which
Executive is receiving or entitled to receive immediately prior to
the Notice of Termination, unless Executive is eligible to receive
such benefits from a subsequent employer or a spouse's employer; and
(c) H&H shall pay Executive the Severance Payment no later than the
fifth (5th) day following the Date of Termination.
<PAGE>
5. Successors; Binding Agreement.
(a) 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
Executive to an immediate lump sum payment equal to the sum of (i)
the Severance Payment to which Executive would be entitled under
Section 4(a) hereof if Executive had terminated Executive's employ-
ment for Good Reason following a Change of Control of H&H and (ii)
the present value of the continuing benefits to which Executive would
have been entitled under Section 4(b) hereof if Executive had
terminated his employment for Good Reason following a Change of
Control of H&H. All references to H&H shall be deemed to include its
successors.
(b) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Executive dies while any amount is payable to him
hereunder, all such amounts shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee or other
designee or, if there is no such designee, to Executive's estate.
6. Section 280G Limitation. Notwithstanding any other provision of this
Agreement, the payments and benefits to which Executive is otherwise entitled
under Section 4 hereof will be reduced to the extent necessary so that no
portion thereof is nondeductible under Section 280G of the Internal Revenue
Code of 1986, as amended, (the "Code"). Within five (5) days of the Date of
Termination, H&H shall provide Executive with the calculations undertaken by
H&H for the purposes of applying the previous sentence (the "Calculations").
If Executive does not agree with the Calculations, Executive may object within
fourteen (14) days of receipt of the Calculations by giving written notice to
H&H, setting forth in reasonable detail the basis of Executive's objection to
the Calculations which shall include a set of calculations which Executive
believes is correct (the "Recalculations"). If H&H does not accept Executive's
Recalculations, it shall notify Executive of such disagreement within seven
(7) days. The parties shall then attempt to resolve their disagreement within
seven (7) days. If the parties are unable to resolve their disagreement within
such period, the dispute shall be submitted to arbitration in accordance with
Section 7.
<PAGE>
7. Arbitration; Certain Costs. Any dispute or controversy between H&H and
Executive, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its Commercial Rules
then in effect and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Such arbitration shall take
place in the New York City metropolitan area. The arbitrator shall have the
authority to award any remedy or relief that a court of competent jurisdiction
could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this
arbitration provision, apply to any court having jurisdiction over such
dispute or controversy and seek interim provisional, injunctive or other
equitable relief until the arbitration award is rendered or the controversy
is otherwise resolved. H&H shall reimburse Executive, upon demand, for all
costs and expenses (including without limitation attorneys' fees) reasonably
incurred by Executive in good faith in connection with this arbitration
provision, including without limitation in connection with any such
application undertaken by Executive in good faith, as well as for all such
costs and expenses reasonably incurred by Executive in connection with
entering and/or enforcing the award rendered by the arbitrator. Except as
necessary in court proceedings to enforce this arbitration provision or an
award rendered hereunder, or to obtain interim relief, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration
hereunder without the prior written consent of H&H.
8. Notice. For the purposes of this Agreement, notices and all other communica-
tions 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 Senior Vice President
and General Counsel, 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.
10. 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 the Agreement. The validity,
<PAGE>
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.
11. Validity. The 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 Amended and Restated
Agreement on the day of February, 1998.
Handy & Harman
/s/ Dennis R. Kuhns /s/ Frank E. Grzelecki
- ---------------------- --------------------
by: Dennis R. Kuhns by: Frank E. Grzelecki
Vice Chairman
<PAGE>
EXECUTIVE AGREEMENT
Agreement dated as of September 2, 1986 between Handy & Harman, a New
York corporation ("Company") and __________________ ("Executive").
WHEREAS, Executive has been employed by Company continuously for many
years and has rendered valuable services to Company; and
WHEREAS, Company desires to continue to benefit from Executive's
knowledge and experience as a full-time executive employee and considers such
employment a vital element in protecting and enhancing the best interests of the
Company, and Executive desires to continue in full-time employment with the
Company.
NOW THEREFORE, in consideration of the continued employment of Executive
by Company, the continued service by Executive to Company, and the mutual
covenants contained herein, the parties agree as follows:
1. Employment. Subject to the right of the Company to take any and all
action of the kind specified in Section 3(a) through (h) prior to the
acquisition of 25% or more of the outstanding shares of Company stock as
specified in Section 3, the Company shall continue to employ Executive in his
current capacity as Vice President-Precious Metals and Executive shall continue
to serve to the best of his ability in such capacity, devoting substantially all
his business time thereto.
2. Compensation. Executive's compensation shall consists of:
(a) A base annual salary at an annual rate at least equal to
Executive's base annual salary on the date of this Agreement and as
the same
<PAGE>
may be increased from time to time by Company's board of directors
("Base Salary").
(b) Such additional incentive or bonus compensation
("Incentive Pay") which may be granted to Executive specifically or to
which Executive now or hereafter may be entitled under any plan or
arrangement maintained by Company for its executive or managerial
employees including Company's Management Incentive Plan, or for
employees generally, provided that, for purposes of this Section 2
only, Executive shall not be entitled, except in the sole discretion
of Company's board of directors, to future awards under the Company's
existing stock option plans and any other plan involving stock options
or the purchase of Company shares (collectively, such stock option and
share purchase plans are herein referred to as the "Non-Continuing
Benefits").
(c) All benefits to which Executive shall be entitled in or
under any and all pension plans ("Pension Benefits"), and in or under
any and all employee benefit plans and group life insurance, group
health insurance and group accident insurance programs ("Fringe
Benefits"), maintained by Company for its executive or managerial
employees.
(d) Reimbursement for all reasonable expenses ("Expense
Reimbursement") incurred by Executive in connection with the
performance of duties for the Company, such Expense Reimbursement to
be made in a manner consistent with the policy of Company in force at
the time of such Expense Reimbursement.
(e) Such number of days vacation per year ("Vacation") as
Company granted to Executive in the calendar year 1985 and as Company
shall hereafter grant to its executive or managerial employees without
any
2
<PAGE>
loss of Base Salary, Incentive Pay, Pension Benefits, Fringe Benefits
or Expense Reimbursement to which the Executive is entitled.
3. Trigger Events. If 25% or more of the outstanding shares of Company
stock having voting power to elect a majority of the board of directors of the
Company shall after the date of this Agreement be acquired by one or more
persons, firms, corporations or other entities acting alone or as a coordinated
group, and thereafter, without the express prior written consent of Executive,
any of the following events shall occur, such event shall be deemed a Trigger
Event:
(a) There shall be a material diminution in Executive's
position, duties, responsibilities and status with Company as the same
are in effect on the date of this Agreement or as the same may be
increased in the future.
(b) Executive's reporting responsibilities, titles or
offices in effect on the date of this Agreement or as the same may be
increased in the future shall be materially reduced.
(c) Executive shall be removed from or shall not be
re-elected to the position referred to in paragraph 1, provided that
this Section 3(c) shall not be deemed to include termination of
Executive's employment for "cause" (defined below) or as a result of
Executive's substantial disability, death or retirement pursuant to a
Company-sponsored retirement plan. For all purposes of this Agreement,
"cause" shall mean (i) willful malfeasance in office, or (ii)
misconduct by Executive that is demonstrably materially injurious to
the Company monetarily or otherwise.
(d) Executive's Base Salary shall be reduced.
(e) Except for awards under any Non-Continuing Benefit, the
Company shall fail to continue in effect any Company plan providing
for
3
<PAGE>
Incentive Pay, Pension Benefits, Fringe Benefits or Expense
Reimbursement in effect on the date of this Agreement without adopting
a replacement plan or plans which is or are, in the aggregate, no less
favorable to Executive than those Executive enjoys at the date of this
Agreement.
(f) Company's principal executive offices shall be moved to
a location outside New York County or Westchester County, New York, or
Fairfield County, Connecticut.
(g) Company shall require Executive to be based anywhere
other than at Company's principal executive offices or at the location
where Executive is based at the date of this Agreement, or if
Executive consents to such required move, Company fails to reimburse
Executive for moving expenses and any difference between the sale
price of his old principal residence and the purchase price of his new
principal residence in connection with such move.
(h) The number of days per years allowed for Executive's
Vacation is reduced.
(i) Company breaches any provision of this Agreement.
(j) Any successor to Company fails to assume this Agreement.
4. Specified Trigger Event. Upon the occurrence of a Trigger Event,
Executive, at his sole option, may within 90 days after the date of such Trigger
Event, by notice to Company designate such Trigger Event as a Specified Trigger
Event. Failure of Executive to designate any Trigger Event as a Specified
Trigger Event shall not affect, or constitute a waiver of, the right of
Executive to designate any subsequent Trigger Event of the same or a different
nature as a
4
<PAGE>
Specified Trigger Event, it being understood that only one Trigger Event may be
designated as a Specified Trigger Event.
5. Guarantee. In order to protect Company against the loss of key
management executives, if any Trigger Event should occur and be designated by
Executive as a Specified Trigger Event within the 90 day period specified in
Section 4, the Company shall continue to employ Executive for a period of three
years from the first day of the calendar month following the date of the
Specified Trigger Event (the "Employment Period"). During the Employment Period,
Executive shall be entitled to receive, and Company guarantees to pay to
Executive, the same Base Salary, Incentive Pay, Pension Benefits, Fringe
Benefits, Expense Reimbursement and Vacation as Executive was entitled to
receive immediately before the Specified Trigger Event.
6. Termination of Employment. If, on or after the date of a Specified
Trigger Event and before the end of the subsequent Employment Period, (x)
Company shall terminate Executive's employment for any reason other than for
"cause" or (y) Executive shall elect to terminate his employment, then in either
event, after the date of termination of Executive's employment (the "Termination
Date"), Company shall:
(a) Pay Executive, his estate or beneficiaries in a lump sum
by the fifth business day after the Termination Date:
(i) an amount equal to Executive's Base Salary
from the Termination Date to the end of the Employment
Period, plus
(ii) an amount equal to (A) the Incentive Pay that
Executive became entitled to receive for the most recent
calendar year for which Executive was actually awarded
Incentive Pay multiplied by (B) the number of years or
portions thereof (computed on the basis
5
<PAGE>
of a 365 day year) from the beginning of the calendar year
in which the Termination Date falls to the end of the
Employment Period.
(b) Pay Executive on the date Executive begins to receive
retirement benefits (in addition to any Pension Benefits to which
Executive shall be entitled on the Termination Date) an amount equal
to the then present value of the actuarially determined difference
between the aggregate retirement benefits actually to be received by
Executive and those that would have been received had Executive been
employed until the end of the Employment Period at a Base Salary equal
to the Base Salary in effect immediately before the date of the
Specified Trigger Event.
(c) Continue for the benefit of Executive all Fringe
Benefits to which Executive shall be entitled immediately before the
date of the Specified Trigger Event (or substantially equivalent
insurance and benefit coverage) from such date until the end of the
Employment Period.
7. Agreements and Policy Statements. Executive shall execute or
re-execute each of the following agreements and policy statements of the
Company:
"Policy Statement on Integrity in the Conduct of the
Company's Business"
"Agreement Concerning Inventions and Confidential
Information"
"Antitrust Compliance Policy of Handy & Harman and
Subsidiaries"
During the period of time coincidental with the Employment Period, Executive
shall not enter into any business directly or indirectly in which the Company or
any of its then subsidiaries is engaged at the time of the Termination Date.
6
<PAGE>
8. Disputes. Any dispute hereunder as to the existence of "cause" or of a
Trigger Event shall be submitted to arbitration in accordance with New York law
and the procedures of the American Arbitration Association.
9. Merger of Company. If Company shall emerge into or consolidate with
another corporation, or transfer or sell all or substantially all of its assets
to another corporation or other entity, Company shall require, as a condition to
such transaction, that such successor corporation or entity assume the
obligations of Company hereunder. This Agreement shall thereupon be binding upon
and inure to the benefit of the successor corporation or other entity which
shall be obligated to perform all of the terms and conditions hereof, whether or
not such successor expressly assumes such obligations.
10. Assignability. This Agreement is personal in nature and neither
Executive nor Company shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except (i) as
provided in Section 9 and (ii) as Executive's right to receive payments
hereunder may extend to his estate and beneficiaries as provided in Section 6.
Executive's right to receive payments hereunder shall not be assignable or
transferable, whether by pledge, creation of a security interest or otherwise,
except for a transfer of any such right by will or by the laws of descent or
distribution. The foregoing shall not prevent Executive from assigning ownership
of or an interest in or designating beneficiaries of, any insurance policy or
benefit plan except as may be prohibited by the terms thereof.
11. Governing Law. This Agreement shall in all respect be construed and
enforced in accordance with, and governed by, the laws of the State of New York,
irrespective of the location of Executive's residence or principal place of
employment.
7
<PAGE>
12. Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof in any such jurisdiction.
Unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which renders
any provision hereof invalid or unenforceable in any respect.
13. Notices and Consents. All notices and consents given by a party
pursuant to this Agreement shall be in writing and shall be delivered by hand
against receipt or sent by certified mail, return receipt requested, to the
other party at the following addresses:
If to Company:
Handy & Harman
850 Third Avenue
New York, NY 10022
Attention: Secretary
If to Executive:
[ ]
[ ]
[ ]
or to such other address as either party shall give to the other by a notice.
14. Sole Agreement; Changes. This instrument contains the entire
agreement between the parties. It may not be changed orally; it may only be
changed by a written agreement or instrument signed by both parties.
8
<PAGE>
IN WITNESS WHEREOF, the parties thereto have executed this Agreement as
of the date first above written.
HANDY & HARMAN
By
---------------------------------
President
Executive
------------------------------------
9
<PAGE>
Amendments to the Form of Executive Agreement between
the Company and its Corporate Officers
1. Section 1 is amended to read as follows:
"1. Employment. Subject to the right of the Company to take any and all
action of the kind specified in Section 3(a)-(h) prior to a Change in Control of
the Company as defined in Section 8, the Company shall continue to employ
Executive in his current capacity as [Vice President-Precious Metals] and
Executive shall continue to serve to the best of his ability in such capacity,
devoting substantially all his business time thereto."
2. The first paragraph of Section 3 is amended to read as follows:
"2. Trigger Events. If after the date of this Agreement, a Change in
Control of the Company as defined in Section 8 occurs, and thereafter, without
the express prior written consent of the Executive, any of the following events
shall occur, such event shall be deemed a Trigger Event:"
3. Sections 7, 8, 9, 10, 11, 12, 13 and 14 are redesignated Sections 9, 10, 11,
12, 13, 14, 15 and 16 including all conforming amendments.
4. A new Section 7 is added to read as follows:
7. Tax Gross-Up Payment
If any payments under this Agreement or any other payments or benefits
received or to be received by the Executive (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company, or
any person affiliated with the Company), (the "Severance Payments"), will be
subject to the tax (the "Excise Tax") imposed by section 4999 of the Code (or
any similar tax that may hereafter be imposed), the Company shall pay at the
time specified below, an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction of any Excise Tax on
the Severance Payments and any federal, state and local income tax and Excise
Tax upon the payment provided for by this Section 7, shall be equal to the
Severance Payments. For purposes of determining whether any of the Severance
Payments will be subject to the Excise Tax and the
<PAGE>
amount of such Excise Tax, (a) all Severance Payments shall be treated as
"parachute payments" within the meaning of section 280G(2) of the Code, and all
"excess parachute payments" within the meaning of section 280G(b)(1) shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by the Company's independent auditors and acceptable to the Executive
such Severance Payments (in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code in excess of the base amount within the meaning
of section 280G(b)(3) of the Code, or are otherwise not subject to the Excise
Tax, (b) the amount of the Severance Payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of (1) the total amount of the
Severance Payments or (2) the amount of excess parachute payments within the
meaning of section 280G(b)(1) (after applying clause (a), above), and (c) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance with the
principles of section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of termination of the Executive's employment, the Executive shall repay to the
Company at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the Excise Tax and
federal and state and local income tax imposed on the Gross-Up Payment being
repaid by the Executive if such repayment results in a reduction in Excise Tax
and/or a federal and state and local income tax deduction) plus interest on the
amount of such repayment at the rate provided in section 1274(2)(B) of the Code.
In the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an
additional gross-up payment in respect of such excess (plus any interest payable
with respect to such excess) at the time that the amount of such excess is
finally determined. Any payment to be made to the Executive under this paragraph
shall be payable within five (5) days of his Termination Date.
2
<PAGE>
5. A new Section 8 is added to read as follows:
"8. Change in Control. For purposes of this Agreement, "Change in
Control" means the occurrence of one of the following:
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (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 the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities;
(b) during any period of two consecutive years (not including any
period prior to the execution of this amendment to the Executive Agreement),
individuals who at the beginning of such period constitute the Board of
Directors of the Company (the "Board"), and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (a), (c) or (d) of this
Section) whose election by the Board or nomination for election by the Company'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;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation; other than (i) a merger or
consolidation which would result in the voting securities of the Company
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 the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
3
<PAGE>
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets."
4
<PAGE>
AMENDMENT
Amendment dated as of February 26, 1998 between Handy &
Harman, a New York corporation (the "Company"), and Robert M. Thompson
("Executive").
WHEREAS, the Company and Executive are parties to an agreement
dated as of September 2, 1986 (the "Agreement"), providing for certain payments
to be made to Executive on a Change of Control (as defined in the Agreement) of
the Company;
WHEREAS, the Company and Executive desire to amend the
Agreement as hereinafter provided;
NOW THEREFORE, the Company and Executive agree that the
following shall be added as Section 15 of the Agreement:
15. Arbitration: Certain Costs. Any dispute or controversy
between Company and Executive, whether arising out of or relating to
the Agreement, the breach of the Agreement, or otherwise, shall be
settled by arbitration administered by the American Arbitration
Association in accordance with its Commercial Rules then in effect and
judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof. Such arbitration shall take place
in the New York City metropolitan area. The arbitrator shall have the
authority to award any remedy or relief that a court of competent
jurisdiction could order or grant, including, without limitation, the
issuance of an injunction. However, either party may, without
inconsistency with this arbitration provision, apply to any court
having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the
arbitration award is rendered or the controversy is otherwise
resolved. Company shall reimburse Executive, upon demand, for all
costs and expenses (including without limitation attorneys' fees)
reasonably incurred by Executive in good faith in connection with this
arbitration provision, including without limitation in connection with
any such application undertaken by Executive in good faith, as well as
for all such costs and expenses reasonably incurred by Executive in
connection with entering and/or enforcing the award rendered by the
arbitrator. Except as necessary in court proceedings to enforce this
arbitration provision
<PAGE>
or an award rendered hereunder, or to obtain interim relief, neither a
party nor an arbitrator may disclose the existence, content or results
of any arbitration hereunder without the prior written consent of Com-
pany.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be duly executed and Executive has hereunto set his hand, as of the date first
set forth above.
HANDY & HARMAN,
By: /s/ Paul E. Dixon
-------------------------------------------
As its: Sr. Vice President and General Counsel
/s/ Robert M. Thompson
----------------------------------------------
Robert M. Thompson
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Amended and Restated as of January 1, 1998)
This Supplemental Executive Retirement Plan (the "Supplemental
Plan") was adopted and established, effective September 28, 1989 and amended and
restated effective as of January 1, 1995, by Handy & Harman, a New York corpora-
tion (the "Company"), for Eligible Executives who participate in the Handy &
Harman Pension Plan (the "Pension Plan") which Pension Plan is intended to
satisfy the requirements of the Internal Revenue Code of 1986, as amended (the
"Code"). The Supplemental Plan is hereby amended and restated, effective as of
January 1, 1996.
1. Purpose. The Supplemental Plan shall provide for the
payment of supplementary retirement benefits to compensate an Eligible Executive
for the amount of the reduction, if any, in his benefits under the Pension Plan
on account of (i) the application of Section 401(a)(17) or Section 415 of the
Code, or (ii) the exclusion from "Pay," as defined in Section 3.10 of the
Pension Plan of amounts received under the Company's Management Incentive Plan
("MIP").
2. Participation. As used in the Supplemental Plan, the term
"Eligible Executive" shall mean any corporate officer of the Company who
participates in the Pension Plan and is designated by the Committee (as defined
in Section 6 hereof) to participate herein. Subject to the provisions of Section
10 hereof, (i) no payment of any benefit accrued hereunder shall commence to a
Participant prior to the time payments would otherwise commence under the terms
of the Pension Plan and (ii) no payment shall be payable hereunder to any
Participant who has not been a corporate officer of the Company for at least
five (5) years.
3. Retirement Benefits. The Participant's Accrued Monthly
Pension under the Supplemental Plan shall be equal to the excess, if any, of (a)
over (b), where:
(a) equals to Participant's Accrued Monthly Pension
pursuant to the Pension Plan determined without
regard to the limits of Section 401(a)(17) or Section
415 of the Code and including within the definition
of "Pay" under the Pension Plan either (x) fifty
percent (50%) of the amounts awarded to the Eligible
Executive pursuant to the MIP in respect of MIP plan
years up to and including 1994, or (y) twenty-five
percent (25%) of the amounts awarded to the Eligible
Executive pursuant to the
<PAGE>
MIP in respect of MIP plan years including 1995
and thereafter (with the MIP award included in Pay
for the plan year in which it is paid); and
(b) equal the Participant's Accrued Monthly Pension as
calculated under the Pension Plan.
Except as provided in Section 10 hereof, the pension under the
Supplemental Plan shall become payable at the same time as the pension under the
Pension Plan.
A Participant may elect a form of payment under the
Supplemental Plan that is different than the pension payable under the Pension
Plan. The following forms of pensions are available under the Supplemental Plan.
(i) the optional forms of pension benefit listed
in the Pension Plan
(ii) the lump sum option described in Section 11
of the Supplemental Plan
(iii) any other form of monthly pension that is
approved by the Committee
Upon the death of an Eligible Executive who has been a
corporate officer of the Company for at least five years and has been
married for the one year period ending on the date of his death, a
monthly pension will be payable to his surviving spouse during the same
period that the preretirement spouse pension is payable to the surviving
spouse under the Pension Plan. The amount of the monthly pension to the
surviving spouse will be equal to the excess, if any, of (c) over (d),
where:
(c) equals the monthly pension that is based on the
amount of the Participant's Accrued Monthly Pension
as described in (a) above and converted to a
Preretirement Spouse Pension as described in the
Pension Plan assuming that the spouse pension is
payable on the 100% Joint and Survivor Pension basis,
and
<PAGE>
(d) equals the amount of monthly pension payable under
the Pension Plan.
The amount of Supplemental Plan pension payable to the
Participant or to the surviving spouse shall not be adjusted by cost of living
increases provided under the Pension Plan and the Supplemental Plan pension
shall not be decreased by any increase in the Pension Plan pension due to cost
of living increases under the Pension Plan.
4. Source of Benefits. The benefits payable under the
Supplemental Plan shall be paid exclusively from the Company's general assets.
In this regard, the Company may create a grantor trust (within the meaning of
section 671 of the Code) in connection with the Supplemental Plan to which is
shall from time to time contribute amounts to accumulate a reserve against its
obligations hereunder. Such trust and any assets held by such trust to assist
the Company in meeting its obligations under the Supplemental Plan shall
conform to the terms of the model trust as described in Internal Revenue Service
Procedure 92-64 (I.R.B. 1992-33). Notwithstanding the creation of such trust,
the benefits hereunder shall be a general obligation of the Company. Payment of
benefits from such trust shall, to that extent, discharge the Company's
obligations under this Supplemental Plan. Eligible Executives shall have only a
contractual right as general creditors of the Company to the amounts, if any,
payable hereunder and such right shall not be secured by any assets of the
Company or the trust.
5. Construction. The Company intends the Supplemental Plan to
be a benefit plan which is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees, within the meaning of Title 1 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any
ambiguities in construction shall be resolved in favor of interpretations which
will effectuate such intention. The Supplemental Plan shall be governed by and
construed in accordance with the laws of the State of New York to the extent
such laws are not preempted by ERISA.
6. Administration of the Supplemental Plan. The Supplemental
Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company (the "Committee"). The Committee shall have authority
to make, amend, interpret and enforce all appropriate rules and regulations for
the administration of the Supplemental Plan and decide or resolve any and all
questions including interpretations of the Supplemental Plan as may arise in
connection with the Supple-
<PAGE>
mental Plan. The Committee shall designate from time to time those eligible for
inclusion in the Supplemental Plan. The Committee may employ agents and delegate
to them such administrative duties as it sees fit and may consult with counsel
who may be counsel to the Company. The decision or action of the Committee in
respect of any question arising out of or in connection with the administration,
interpretation and application of the Supplemental Plan and the rules and
regulations thereunder shall be final and conclusive and binding upon all
persons having any interest therein.
7. Termination, Suspension or Amendment. The Board of
Directors of the Company in its sole discretion may terminate, suspend or amend
the Supplemental Plan at any time or from time to time, in whole or in part;
provided, however, that no such termination, suspension or amendment shall
adversely affect the benefits of any corporate officer of the Company who is
vested or eligible for Disability Retirement under the Pension Plan, or the
pension to the surviving spouse of such a corporate officer who is then entitled
to a spouse pension.
8. Effective Date. The effective date of the Supplemental Plan
shall be September 28, 1989, as amended December 13, 1993, as amended and
restated as of January 1, 1995, and as amended and restated as of January 1,
1996.
9. General Conditions. No interest of any person and no
benefit payable hereunder shall be assigned as security for a loan and any such
purported assignment shall be null, void and of no effect. No such interest or
benefit shall be subject in any manner, either voluntarily or involuntarily, to
anticipation, sale, transfer, assignment or encumbrance by or through any person
and any such purported action shall be null, void and of no effect.
No Eligible Executive and no other person shall have
any legal or equitable right or interest in the Supplemental Plan which
are not expressly granted hereunder. Participation hereunder does not
give any person any right to be retained in the service of the Company
or to continue in its employ, the right and power of the Company to
dismiss or discharge any executive is expressly reserved.
10. Acceleration of Payments. In the event a "change of
control" of the Company (as hereinafter defined) shall occur, the lump sum
payment (as herein after defined) of the amount of benefits hereunder shall be
determined for each Eligible Executive and each such person shall be deemed to
be 100% vested.
<PAGE>
The aggregate amount of all such lump sum payments shall be
paid into a grantor trust (which may include the grantor trust referred to in
Section 4 hereof) established by the Company for payment to such Eligible
Executives in accordance with the terms of such trust fund. Such amount to be
paid shall be reduced by the value of the assets in such grantor trusts at the
time of the payment with respect to the persons reflected in the lump sum
amounts. Such amount shall be paid to the trusts immediately upon the occurrence
of the change of control.
Each participant will receive the amount of lump sum payment
calculated on his behalf within 30 days of the change of control. The lump sum
payment to each participant under this Supplemental Plan shall be equal to the
excess of (i) over (ii), where:
(i) equals the lump sum present value of the amount of
monthly pension described in subsection (a) of
Section 3 of this Supplemental Plan, determined as
of the date of the change of control, in accordance
with the methodology set forth in Section 1.1 of the
Pension Plan except that the interest rate for the
Supplemental Plan will be equal to 80% of the
applicable interest rate for Pension Plan, and the
lump sum payment will be calculated on the assumption
that the pension would have commenced on the first
day of the month following the participant's 60th
birthday (current age if older) and that the Partici-
pant would have been entitled to receive such
benefits as an Early Retirement Benefit on such date,
and
(ii) equals the lump sum present value of the amount of
monthly pension described in subsection (b) of
Section 3 of this Supplemental Plan, determined as
of the date of the change of control, in accordance
with the methodology set forth in Section 1.1 of the
Pension Plan.
In addition to the lump sum payment described above, the
Company shall reimburse each participant who receives such a lump sum payment
for any excise tax (and any income and excise tax due with respect to such
reimbursement) imposed on such lump sum payments in connection with a change of
control of the Company pursuant to Section 4999 of the Internal Revenue Code of
1986, as amended. The basis for such reimbursement calculation shall be
consistent with similar calculations described in change of control agreements
of the Company.
<PAGE>
For purposes of the Supplemental Plan, a "change of control"
shall occur if:
(a) any "Person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as
amended (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 the Company in substantially the same
proportions as their ownership of stock in the Com-
pany), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power
of the Company's then outstanding securities;
(b) during any period of two consecutive years (not
including any period prior to the adoption of the
Supplemental Plan), individuals who at the beginning
of such period constitute the Board of Directors of
the Company, and any new director (other than a
director designated by a person who has entered into
an agreement with the Company to effect a transaction
described in clause (a), (c) or (d) of this Section)
whose election by the Company'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;
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation; other than (i) a merger or consolidation
which would result in the voting securities of the
Company 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
the Company or such surviving entity outstanding
immediately after such merger or consolidation or
(ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar
transaction) in which no "Person" (as herein above
defined) acquires more than 50% of
<PAGE>
the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets.
11. Lump Sum Option. Unless his benefit is accelerated under
Section 10 hereunder, a participant who has a valid lump sum payment election in
effect at his termination of employment date will receive his benefits under the
Supplemental Plan in a lump sum payment within the 30-day period following his
termination of employment date or, if later, upon attainment of age 60. The
payment will be made as soon as practical thereafter. A lump sum payment
election will be valid if approved by trustee or if either (i) it has been in
effect for at least 12 months and is on a form authorized by the Committee or
(ii) in the event of extraordinary circumstances, it has been approved by the
Committee, in its sole discretion, upon application by the participation in
accordance with such procedures established by the Committee.
The amount of the lump sum payment will be equal to the
monthly pension that is the excess of (a) over (b) as described in Section 3
multiplied by the applicable lump sum factor. The applicable lump sum factor
shall be the same factor as determined for single sum amounts in Section 1.1 of
the Pension Plan except that the applicable interest rate reflected in the
calculation for the Supplemental Plan will be equal to 80% of the applicable
interest rate for the Pension Plan.
<PAGE>
HANDY & HARMAN
SUPPLEMENTAL EXECUTIVE PLAN
Purpose. The purpose of this Supplemental Executive Plan (the
"Plan") is to provide a further means whereby Handy & Harman (the "Company") may
retain and encourage the productive efforts of Frank E. Grzelecki (the
"Executive"), President and Chief Operating Officer of the Company, who renders
valuable service to the Company and its subsidiaries, and contributes toward the
Company's continued growth and success.
Benefit Accrual. Commencing on June 30, 1992, and on each June
30th thereafter, until and including June 30, 1997, so long as the Executive is
in active employment as a full-time employee as of such date, the Executive
shall accrue and be vested in a monthly pension benefit in the amount of $1,000,
with a maximum monthly accrual of $6,000.
Benefit Commencement. The Executive's benefit shall commence
on the later of July 1, 1997, or the Executive's separation from service with
the Company as a full-time employee.
Form of Payment. The Executive's benefit shall be paid monthly
for the remainder of the Executive's life; provided, however, that if the
Executive dies prior to receiving 120 monthly payments, payments shall be paid
to the Executive's beneficiary until a total of 120 monthly payments have been
made to the Executive and his beneficiary.
Death Benefit. If the Executive dies prior to commencement of
payment under the Plan (whether or not the Executive was employed with the
Company at the time of death), benefits accrued as of the June 30 coincident
with or preceding the Executive's death shall be paid to the Executive's
beneficiary for 120
<PAGE>
months. Such payments shall commence on the first day of the month immediately
following the Executive's death.
Grantor Trust. The Company shall create a grantor trust
(within the meaning of section 671 of the Internal Revenue Code of 1986, as
amended, hereinafter the "Code") in connection with the adoption of the Plan to
which it shall from time to time contribute amounts to accumulate an appropriate
reserve against its obligations hereunder. Such trust and any assets held by
such trust to assist the Company in meeting its obligations under the Plan shall
conform to the terms of the model trust as described in the Internal Revenue
Service Revenue Procedure 92-64 (I.R.B. 1992-33). Notwithstanding the creation
of such trust, the benefits hereunder shall be a general obligation of the
Company. Payment of benefits from such trust shall, to that extent, discharge
the Company's obligations under this Plan. The Executive shall have only a
contractual right as a general creditor of the Company to the amounts, if any,
payable hereunder and such right shall not be secured by any assets of the
Company or the trust.
No Right to Company Assets. The Plan is intended to be
unfunded for purposes of the Code and Title I of the Employee Retirement Income
Security Act of 1974, as amended, and the Executive shall not acquire, by reason
of the Plan, any right in or title to any assets, funds or property of the
Company whatsoever, including, without limiting the generality of the foregoing,
any specific funds or assets which the Company may set aside in anticipation of
a liability hereunder, nor in or to any policy or policies of insurance on the
life of the Executive owned by the Company.
No Employment Rights. Nothing herein shall constitute a
contract of continuing employment or in any manner obligate the Company to
continue the service of the Executive or obligate the Executive to continue in
the service of the
2
<PAGE>
Company, and nothing herein shall be construed as fixing or regulating the
compensation paid to the Executive.
No Third Party Rights. Nothing in the Plan or any trust
established pursuant to the Plan shall be construed to create any rights
hereunder in favor of the beneficiary of the Executive prior to the Executive's
death or in favor of any other person (other than the Company and the Executive)
or to limit the Company's right to amend or terminate the Plan in any manner,
subject to the consent of the Executive, notwithstanding that such amendment or
termination might result in the Executive's beneficiary receiving no benefits
under the Plan.
Nonassignability. No rights or payments under the Plan shall
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and
no attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge the same shall be valid, nor shall any such benefit or payment be in
any way liable for or subject to levy, garnishment, attachment, execution or
other legal or equitable process. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments or separate maintenance owed by the Executive or any other
person, nor be transferable by operation of law in the event of the Executive's
or any other person's bankruptcy or insolvency.
Withholding. To the extent required by law, the Company shall
be entitled to withhold from any payments due hereunder any federal, state and
local taxes required to be withheld in connection with such payment.
Validity. In the event any provision of the Plan is held
invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of the Plan.
3
<PAGE>
Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of New York.
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this HANDY & HARMAN
SUPPLEMENTAL EXECUTIVE PLAN to be executed by its duly authorized officers and
its corporate seal to be hereunto affixed on the 11th day of November, 1992.
Attest: ______________________ HANDY & HARMAN
[Seal] By: /s/ R. N. Daniel
------------------------------
Its: Chairman and Chief Executive Officer
5
<PAGE>
Handy & Harman
Executive Post-Retirement Life Insurance Program
1. Establishment and Purpose. Handy & Harman (the "Company")
hereby establishes the Handy & Harman Executive Post-Retirement Life Insurance
Program (the "Program"), effective as of February 1, 1995. The purpose of the
Program is to benefit the Company and its stockholders by providing incentive to
eligible key employees of the Company to remain employed with the Company until
their retirement by providing life insurance benefits at the Company's expense.
2. Eligibility. The Program is available to those executive
officers of the Company ("Participants") who are (i) designated by the
Compensation Committee of the Board of Directors of the Company (the
"Committee") as eligible for participation in the Company's Supplemental
Executive Retirement Plan (the "SERP"), and (ii) determined to be insurable to
the satisfaction of the Program's then current insurance provider.
Notwithstanding anything contained herein to the contrary, it is contemplated
that a Participant may elect to irrevocably assign all benefits and rights
arising hereunder to a trust established by such Participant (an "Insurance
Trust") and, in such case, certain benefits and rights arising hereunder
attributed to a Participant shall be construed as benefit and rights attributed
to such Insurance Trust.
3. Life Insurance Benefit. (a) The Company shall cause to be
maintained a variable appreciable life insurance policy (the "Pre-Retirement
Policy") on the life of each participant in an amount (the "Pre-Retirement
Benefit") equal to four (4) times the Participant's annual base salary as in
effect from time to time ("Annual Base Salary"). The Beneficiary (as defined
below) of each participant with respect to whom the Company's obligations have
not ceased under Section 4 hereof shall be entitled to receive (as soon as
practicable following the Participant's death) a lump-sum cash payment equal to
the Pre-Retirement Benefit. All amounts contributed by the Company towards the
funding of the Pre-Retirement Policy shall, at all times, be determined on an
actuarially sound basis.
(b) The Company shall cause to be maintained an adjustable
life insurance policy (the "Post-Retirement Policy") on the life of each
Participant in an amount (the "Post-Retirement Benefit") equal to two (2) times
the Participant's Annual Base Salary. Until the Participant's Retirement (as
defined below), the "Company shall have all of the ownership rights in the
Post-Retirement Policy and shall be designated the beneficiary of the
Post-Retirement Benefit. As soon as
<PAGE>
practicable following the Participant's Retirement, the Company shall transfer
its ownership rights (including, without limitation, the right to designate a
beneficiary) in the Post-Retirement Policy to each Participant (or, an Insurance
Trust, if applicable) with respect to whom the Company's obligations have not
ceased under Section 5 hereof, in accordance with the terms and conditions
contained in Section 5 hereof. All amounts contributed by the Company towards
the funding of the Post-Retirement Policy shall, at all times, be determined on
an actuarially sound basis.
4. Conditions to Receipt of the Pre-Retirement Benefit. (a)
The Company shall have no obligation to maintain the Pre-Retirement Policy or to
provide the Pre-Retirement Benefit in respect of any participant who separates
from service with the Company, for any reason whatsoever, effectively
immediately following such separation from service with the Company.
(b) The Company shall have the right to condition the payment
of the Pre-Retirement Benefit and continued participation in the Program on the
annual payment to the Company of an amount equal to the "economic benefit"
received by such Participant, calculated in accordance with U.S. Department of
Treasury regulations, in respect of the Pre-Retirement Policy. The payment of
such economic benefit portion by the Participant (or, an Insurance Trust, if
applicable) to the Company shall be made pursuant to procedures established by
the Company. Upon the receipt of the economic benefit portion by the Company,
the Company may pay to such Participant additional compensation in an amount
equal to the economic benefit portion.
5. Conditions to Receipt of the Post-Retirement Benefit. (a)
The Company shall have no obligation to maintain the Post-Retirement Policy or
to provide the Post-Retirement benefit under the Program in respect of any
participant who separates from service with the Company, for any reason
whatsoever, prior to such Participant's Retirement (as such term is defined in
the Handy & Harman Pension Plan or any successor plan thereto.). Notwithstanding
the foregoing, (i) if a Participant separates from service with the Company
prior to Retirement and is vested in the SERP at such time, the Company shall
transfer to such Participant (or, an Insurance Trust, if applicable) its
ownership rights in the Post-Retirement Policy (including, without limitation,
the right to designate a beneficiary) effective upon such separation from
service; provided, however, that the Company may, in its sole discretion,
require such Participant (or an Insurance Trust, if applicable) to pay to the
Company an amount equal to the cash surrender value of such Post-Retirement
Policy as a condition precedent to such transfer, and (ii) if a Participant
separates
2
<PAGE>
from service with the Company prior to Retirement and is not then vested in the
SERP, the Company shall have no further obligations to such Participant but may,
in its sole discretion, provide such participant (or, an Insurance Trust, if
applicable) with the option to receive a transfer from the Company of its
ownership rights in the Post-Retirement Policy (including, without limitation,
the right to designate a beneficiary); provided, however, that the payment to
the Company of an amount equal to the cash surrender value of the
Post-Retirement Policy shall be a condition precedent to such transfer. Upon a
transfer described in this paragraph (a), the Company shall have no obligation
to pay premiums on the Post-retirement Policy and shall have no further
obligations to the Participant under the Program.
(b) In the event that a Participant separates from service
with the Company after Retirement, the Company shall transfer its ownership
rights in the Post-Retirement Policy (including, without limitation, the right
to designate a beneficiary) to such Participant (or, an Insurance Trust, if
applicable). Upon a transfer described in this paragraph (b), to the extent that
such transfer shall cause the Participant to incur additional federal, state or
local income taxes, the Company shall pay to such Participant an amount (the
"Tax Reimbursement") such that the net amount of the Tax Reimbursement retained
by such Participant after deduction of any federal, state and local taxes
attributable to (i) the transfer of the Post-Retirement Policy from the Company
to the Participant (or, an Insurance Trust, if applicable) and (ii) the payment
of the Tax Reimbursement by the Company to the Participant, shall equal zero.
Upon a transfer described in this paragraph (b) but subject to Section 6 hereof,
the Company shall continue to make all required premium payments on the
Post-Retirement Policy on behalf of the Participant. Any and all determinations
to be made in calculating the Tax Reimbursement shall be made by the Company, in
its sole discretion.
6. Amendment and Termination of the Program. The Company,
through its Board of Directors, shall maintain at all times complete authority
to terminate the Program or amend or modify the provisions thereof at any time;
provided, that any such termination, modification or amendment which will
adversely affect the rights of a Participant shall become effective no less than
two years after notice of such termination, modification or amendment is
provided to such affected Participant; further, provided, that any purported
termination of the Program shell be effective only to the extent that it
equivalently affects the rights of each respective Participant, similarly
situated, whether or not actively employed with the Company at such time; and
further, provided, that this Section 6 may not be deleted
3
<PAGE>
or amended in any manner without the consent of each Participant who is then
actively employed with the Company.
The Company's authority includes the right to discontinue the
PreRetirement and Post-Retirement Benefits at any time. In the event that any
Participant shall no longer remain a Participant, for any reason whatsoever,
including, without limitation, by reason of a termination of the Program (i) the
Company shall not cause to maintain any policy issued in respect of such
Participant pursuant to the Program unless such former Participant (or, an
Insurance Trust, if applicable) remains entitled, at all times, to designate the
Beneficiary of such policy, (ii) the Company shall borrow the maximum amount
under the Pre-Retirement Policy and such policy (net of any outstanding loans
thereof) shall be transferred to the Participant (or, an Insurance Trust, if
applicable), (iii) if the former Participant was then Retired, the Company shall
cease making premium payments on the Post-Retirement Policy, and (iv) if the
former Participant was not then Retired, the Company shall transfer its
ownership rights (including, without limitation, the right to designate a
beneficiary) in the Post-Retirement Policy to such former Participant (or, an
Insurance Trust, if applicable) and such former Participant shall be entitled
to receive from the Company the Tax Reimbursement determined in accordance with
Section 5(b) hereof.
7. Named Fiduciary and Plan Administrator. Paul E. Dixon, R.N.
Daniel and Stephen B. Mudd are hereby designated the "Named Fiduciaries". The
Named Fiduciaries (i) shall be responsible for the management, control and
administration of the Program and (ii) may allocate to others certain aspects of
the management and operational responsibilities of the Program, including the
employment of advisors and the delegation of any ministerial duties to
qualified individuals. Additional information concerning the Program may be
obtained upon written or oral request from Stephen B. Mudd (the "Plan
Administrator"), Handy & Harman, 250 Park Avenue, New York, New York 10177,
telephone number (212) 309-0682.
8. Claims Procedure. Claims for Benefits may be filed on forms
provided by the Plan Administrator. If a claim for the Benefit is wholly or
partially denied, the Beneficiary shall receive written notice explaining the
reason for the denial and the Program provision on which it was based. The
Beneficiary shall also be notified of any additional material or information
necessary to submit to perfect the claim and the reasons such information is
necessary. In order to appeal a denial of a claim, the Beneficiary may request
review of the claim by submitting written application not later than 60 days
after receiving written notification of the claim
4
<PAGE>
denial. The Beneficiary may also review pertinent documents and submit issues
and comments in writing. These requests should be sent to the Plan
Administrator. They will be reviewed within 60 days after the Plan
Administrator's receipt of such request and a decision will be communicated to
the Beneficiary in writing not later than 120 days after receipt of such
request.
9. No Right to Continued Employment. Nothing in the Program or
any other agreement entered into pursuant hereto shall confer upon any
Participant the right to continue in the employ of the Company or to be entitled
to any remuneration or benefits not set forth in the Program or such other
agreement or to interfere with or limit in any way the right of the Company to
terminate such Participant's employment.
10. Interpretation. The Company shall at all times have the
sole authority, in its absolute discretion, to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the administration
of the Program, to construe and interpret the Program, and to make all other
determinations deemed necessary or advisable for the administration of the
Program. All decisions, determinations and interpretations of the Company shall
be final and binding on all Participants, Beneficiaries and other interested
parties.
11. Beneficiary. A Participant (or, an Insurance Trust, if
applicable) may select a beneficiary (the "Beneficiary") by filing with the
Plan Administrator a written designation of a Beneficiary on such form as may
be prescribed by the Committee and may, from time to time, amend or revoke such
designation; provided that the Participant (or, an Insurance Trust, if
applicable) may elect to irrevocably designate the Beneficiary. Except in the
case of an irrevocable designation of a Beneficiary, if no Beneficiary survives
the Participant, the executor or administrator of the Participant's estate or,
in the case where the participant has assigned all benefits and rights arising
hereunder to an Insurance Trust, the then trustee of such Insurance Trust, as
the case may be, shall be deemed to be the Beneficiary.
5
<PAGE>
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
The name of this Plan is "The Handy & Harman Management Incentive Plan
- - Corporate Group Participants". The purpose of this Plan is to promote the
interests of the stockholders of the Company and to provide incentive to those
officers and management employees who can contribute to the profits of the
Company. Effective as of January 1, 1994, the Plan is amended and restated with
respect to any and all Incentive Awards earned beginning in the 1994 Fiscal Year
(except as set forth in the Regulations) as follows:
SECTION I. - Definitions.
The terms herein used will have the following definitions:
a. The term "Plan" means The Handy & Harman Management Incentive
Plan - Corporate Group Participants, as amended from time to
time.
b. The term "Company" means Handy & Harman, a New York corpora-
tion.
c. The term "Board of Directors" means the Board of Directors of
the Company.
d. The term "Salary" shall mean the highest rate of basic
compensation, expressed as an annual rate, paid to a
Participant during the Fiscal Year.
e. The term "Employee" means any person who is a regular, full
time and active employee of the Company, including officers
and directors, and who is paid by the Company on a salary
basis, but excluding any person who is a regular and full time
employee of a subsidiary or
<PAGE>
division of the Company having a separate Management Incentive
Plan.
f. The term "Participant" means any person selected to
participate in the Plan for any Fiscal Year.
g. The term "Corporate Group Participant" means any Participant
who is designated by the Committee to participate in the
Corporate Group Incentive Plan Provisions for any Fiscal Year.
h. The term "Committee" means the Management Incentive Committee
or the Incentive Awards Committee provided for in Section II.
i. The term "Incentive Award" means an award under the Plan to a
Participant, and either paid currently or paid on a deferred
basis.
j. The term "Incentive Plan Provisions" means monies out of the
Net Earnings or Consolidated Net Earnings of the Company, as
the case may be, for any Fiscal Year, which are made available
for distribution as Incentive Awards as the result of the
operation of this Plan or any Subsidiary, Division, Group or
Unit Management Incentive Plan.
k. The term "Fiscal Year" shall mean the fiscal year of the
Company, January 1 to December 31.
SECTION II. - The Committee.
a. The Compensation Committee of the Board of Directors shall
comprise the "Management Incentive Committee" or the
"Incentive Awards Committee". The Committee shall have full
power and authority to interpret and administer the Plan in
accordance with the terms of the Plan and the Regulations (as
defined herein).
b. The Committee shall select one of its members as Chairman and
shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a
quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced
to writing and signed by a majority of the members of the
Committee shall be as fully effective as if it had
2
<PAGE>
been made by a majority vote at a meeting of the Committee
duly called and held. The members of the Committee may receive
such compensation for their services as the Board of Directors
may determine.
SECTION III. - Regulations.
The Board of Directors shall have the power to adopt rules and
regulations (the "Regulations") not inconsistent with the provisions of the
Plan, governing the selection and eligibility of Participants of the Plan, and
for the administration of the Plan and to alter, amend or revoke any Regulation
so adopted.
SECTION IV. - Participants.
Participants in the Plan shall be limited to those Employees selected
by the Committee in accordance with the Regulations.
SECTION V. - Determination of Incentive Plan Provision.
The amount of the Incentive Plan Provisions for Corporate Group
Participants shall be seven and one-half percent (7.5%) of the Consolidated Net
Earnings in excess of fifteen percent (15%) of Shareholders Equity, or such
lesser percentages of Consolidated Net Earnings in excess of fifteen percent
(15%) of Shareholders Equity, as may be fixed and determined by the Committee in
accordance with the Regulations.
The term "Consolidated Net Earnings" means, for the purpose of
computing the amount which may be fixed and determined by the Committee as the
Corporate Group Incentive Plan Provision, the consolidated earnings of the
Company and its subsidiaries for such Fiscal Year, exclusive of LIFO adjustments
and before deducting taxes based upon income and the amount of any Incentive
Plan Provisions for such Fiscal Year, as reported to the President of the
Company by the Company's independent auditors.
The term "Shareholders Equity" means, for the purpose of computing the
amount which may be fixed and determined by the Committee as the Corporate Group
Incentive Plan Provision for any Fiscal Year, the sum of items 1-3 below, less
the sum of items 4-6 below, as of the close of business of the preceding Fiscal
Year
3
<PAGE>
as shown by the Consolidated Balance Sheet of the Company and its subsidiaries
for such preceding Fiscal Year as prepared by the Company's independent
auditors.
1. Common Stock of the Company outstanding.
2. Capital Surplus.
3. Retained Earnings.
4. Treasury Stock.
5. Foreign Currency Translation Adjustments.
6. Unearned Compensation.
SECTION VI. - Report of Chief Executive.
As soon as possible after the close of each Fiscal Year, the Chief
Executive Officer of the Company shall determine and report in writing to the
Committee the Consolidated Net Earnings of the Company and its subsidiaries for
such Fiscal Year and the maximum amount of the Corporate Group Incentive Plan
Provision available for such fiscal year out of the Consolidated Net Earnings as
reported. The Committee shall rely upon and be bound by such report.
SECTION VII. - Incentive Awards.
a. Upon the fixing of the formula for determining the amount of
the Corporate Group Incentive Plan Provision, the Committee
may allot, in such manner as it may determine in accordance
with the Regulations, such shares or percentages of the
amounts available in the Incentive Plan Provision to each of
the Participants as it may select from those designated to
participate in the Incentive Plan Provisions. At the sole
discretion of the Committee, based upon the recommendation
of the Chief Executive Officer of the Company, an Incentive
Plan Provision may be determined for Incentive Awards to
recognize outstanding overall effort applied to the
enhancement of the long-term growth potential of the
Company. The total amount of the Incentive Plan Provision
which may be made available for Incentive Awards under the
preceding sentence shall not exceed 25% of the aggregate of
4
<PAGE>
the salaries of Participants to whom Incentive Awards are
granted under the preceding sentence.
b. The Committee's selection of the Participants to whom
Incentive Awards shall be made and its determination of the
amounts and method of payment of such Incentive Awards shall
be final.
c. No Participant shall receive an Incentive Award greater than
100% of the Participant's Salary in the Fiscal Year for
which the Incentive Award was earned.
SECTION VII. - Expenses; Forfeitures of Incentive Awards.
a. All expenses incurred by the Committee in interpreting and
administering the Plan shall be charged against Plan
reserves.
b. The amount of any Incentive Award forfeited by a Participant
shall be retained by the Company and shall not be
re-credited to the Incentive Plan Provision.
SECTION VIII. - Termination of Plan.
The Board of Directors may suspend or discontinue the Plan
at any time.
SECTION IX. Effective Date.
This Plan shall become effective in accordance with the resolution of
the Board of Directors or the preamble hereto.
5
<PAGE>
EXHIBIT A
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
ELECTION NOTICE
As provided in the Handy & Harman Management Incentive Plan - Corporate
Group Participants, as amended and restated (the "Plan"), I hereby elect to
defer payment of all or a portion of any Incentive Award for the year 19__ in
the following manner:
Amount of Deferral (fill in one)
$-----------------
(amount)
or
------------------%
(percentage)
Payment Option: The compensation deferred is to be paid to me in (choose
one):*
_______ one lump sum.
- ------------------------------------
* If you have previously elected a Payment Option and Retirement Date,
your prior election will apply and you need not complete these
Sections. If you wish to change either or both of your Payment Option
and Retirement Date, you may do so (subject to the terms and conditions
of the Plan and Regulations).
6
<PAGE>
_______ quarter-annual installments (choose 3-20 years). Payments
begin on the first day of next calendar quarter following
Retirement Date.
Retirement Date: If the lump sum payment option is chosen, the lump sum
is to be paid on (choose one):*
_______ the last day of the month in which I become age 65.
_______ _________, 19__ (some other date which must be
after the earlier of (i) three years from the date
of this election, or (ii) your termination of
employment with the Company).
Date:
-------------------------- -------------------------
(Signature)
-------------------------
(Print Name)
7
<PAGE>
EXHIBIT B
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
INVESTMENT ELECTION
I hereby direct that amounts credited to my Account under the Handy &
Harman Management Incentive Plan - Corporate Group Participants, as amended and
restated, be invested as follows:
% Pooled Account - Company selected investment manager
- -----
% T. Rowe Price International Stock Fund
- -----
% T. Rowe Price Prime Reserve Fund
- -----
% T. Rowe Price GNMA Fund
- -----
% T. Rowe Price Capital Appreciation Fund
- -----
% T. Rowe Price Spectrum Growth Fund
- -----
% T. Rowe Price Stable Value Fund
- -----
100% Total
- -----
Future deferrals will be allocated as shown above or a different
allocation of the Reserve Account may be selected by notifying the committee in
writing. No more than four changes may be made in any calendar year.
Date:
--------------------- ---------------------------
(Signature)
-------------------------
(Print Name)
8
<PAGE>
EXHIBIT C
HANDY & HARMAN
MANAGEMENT INCENTIVE PLAN
CORPORATE GROUP PARTICIPANTS
DESIGNATION OF BENEFICIARY(IES)
In accordance with the provisions of the Handy & Harman Management
Incentive Plan - Corporate Group Participants, as amended and restated (the
"Plan"), I hereby designate the person (or persons) named below my beneficiary
(or beneficiaries) to receive any amounts in my deferred compensation account
in the event of my death, hereby revoking all prior designations of
beneficiary(ies), if any, made by me under the Plan.
NAME ADDRESS
Date:
--------------------------- -------------------------
(Signature)
-------------------------
(Print Name)
9
<PAGE>
EXHIBIT C
---------
Page 1 of 2
AMENDMENT TO MANAGEMENT INCENTIVE PLAN
Add to definitions:
"Change of Control" means the occurrence of any of the following:
(a) any "Person" as such term is used in Sections 1 3(d) and 14(d) of
the Securities Exchange Act of 1934, as amended ("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 stock holders of the Company in substantially the same proportions as their
ownership of stock in the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-2 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities;
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company, and
any new director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in clause
(a), (c) or (d) of this definition) whose election by the Company'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;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
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 the Company or such surviving entity outstanding immediately after
such merger or consolidation; or
<PAGE>
EXHIBIT C
---------
Page 2 of 2
(d) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
Add to Section VII:
d. If the Committee anticipates a Change of Control, it may elect to make
interim Incentive Awards. Such interim Incentive Awards shall be made
according to the terms of this Plan and the Regulations, except that
the Incentive Plan Provision for such interim Incentive Awards shall
be the Incentive Plan pool for the Fiscal Year preceding the Fiscal
Year in which the Committee anticipates the Change of Control will
occur (the "Change of Control Year"), pro-rated by the number of days
elapsed in the Change of Control Year on the date (as anticipated by
the Committee) of the Change of Control.
Such interim Incentive Plan Provision shall be deducted from the final
Incentive Plan Provision for the Change of Control Year. The
allocation of final Incentive Awards for the Change of Control Year
shall not be affected by the interim Incentive Awards, provided that
no participant shall receive less in total than his or her interim
Incentive Award (and the final Incentive Plan Provision shall be
increased to the extent, if any, necessary to give effect to this
proviso).
AMENDMENT TO MANAGEMENT INCENTIVE PLAN REGULATIONS
Delete Regulation 14 and replace with the following:
14) Unless deferred as provided herein, (i) Incentive Awards for any Fiscal Year
shall be paid as directed by the Committee on or after February 1st, but not
later than March 15th, of the following year, and (ii) interim Incentive Awards
made as a result of an anticipated Change of Control shall be paid on such date
as the Committee shall specify, which date shall be prior to the anticipated
Change of Control.
<PAGE>
Add to Regulation 17:
If the Committee anticipates a Change of Control, it shall distribute to the
balance in a Participant's Deferred Account. Such balance shall be paid in a
lump sum on such date as the Committee shall specify, which date shall be prior
to the anticipated Change of Control.
<PAGE>
HANDY & HARMAN
OUTSIDE DIRECTOR STOCK OPTION PLAN
SECTION 1.
Purpose
1.1 The purpose of the HANDY & HARMAN OUTSIDE DIRECTOR STOCK
OPTION PLAN (the "Plan") is to foster and promote the long-term financial
success of the Company and materially increase shareholder value by enabling the
Company to attract and retain the services of outstanding Outside Directors
whose judgment, interest, and special effort is essential to the successful
conduct of its operations.
SECTION 2.
Definitions
2.1. Definitions. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Annual Award" means an Option for the number of
shares of Stock determined pursuant to Section 5.
(b) "Annual Retainer Fee" means the annual fee payable
to an Outside Director for services as a member of the Board, but
exclusive of any fees paid for services as a member of a committee of
the Board, for attending meetings or for other special services proved
to the Company.
(c) "Board" means the Board of Directors of the
Company.
<PAGE>
(d) "Company" means Handy & Harman, a New York
corporation, and any successor thereto.
(e) "Disability" means total disability, which if the
Outside Director were an employee of the Company, would be treated as a
total disability under the terms of the Company's long-term disability
plan for employees, as in effect from time to time.
(f) "Fair Market Value" on any date means the closing
price of the Stock as reported by the consolidated tape of the New York
Stock Exchange (or on such other recognized quotation system on which
the trading prices of the stock are quoted at the relevant time) on
such date. In the event that there are no Stock transactions reported
on such tape (or such other system) on such date, Fair Market Value
shall mean the closing price on the immediately preceding date on which
Stock transactions were so reported.
(g) "Option" means the right to purchase Stock at a
stated price for a specified period of time.
(h) "Outside Director" means any member of the Board
who is not an employee of the Company or of any of its subsidiaries.
(i) "Stock" means the common stock of the Company, par
value $1.00 per share.
2.2. Gender and Number. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.
SECTION 3.
Eligibility and Participation
Each Outside Director shall participate in the plan.
2
<PAGE>
SECTION 4.
Stock Subject to Plan
4.1. Number. The total number of shares of Stock subject to
Awards under the Plan may not exceed 100,000 shares, subject to adjustment
pursuant to Section 4.3. The shares to be delivered under the Plan may consist,
in whole or in part, of treasury Stock or authorized but unissued Stock, not
reserved for any other purpose.
4.2. Cancelled, Terminated, or Forfeited Awards. Any shares of
Stock subject to an Option which for any reason is cancelled or terminated
without the issuance of any Stock shall again be available for Awards under the
Plan.
4.3. Adjustment in Capitalization. In the event of any Stock
dividend or Stock split, recapitalization (including, without limitation, the
payment of an extraordinary dividend), merger, consolidation, combination,
spin-off, distribution of assets to stockholders, exchange of shares, or other
similar corporate change, the aggregate number of shares of Stock available for
issuance hereunder or subject to Options and the respective exercise prices of
outstanding Option may be appropriately adjusted by the Board, whose
determination shall be conclusive; provided, however, that any fractional shares
resulting from any such adjustment shall be disregarded.
SECTION 5.
Stock Options
5.1. Grant of Options.
(a) Annual Awards. During each calendar year during the
term of the Plan, each Outside Director shall be granted an Annual
Award on
3
<PAGE>
the first business day of the year; provided, however, that for 1990
such award shall be subject to the approval of the Plan by the
stockholders of the Company.
(b) Number of Shares. Each Outside Director shall be
granted an Annual Award covering the number of shares of Stock which
are equal to the number of whole shares determined by dividing (i)
fifty percent (50%) of the amount of the Outside Director's Annual
Retainer Fee by (ii) the Fair Market Value of a share of Stock of the
date of grant.
(c) Option Agreement. Each Option shall be evidenced by
an Option agreement that shall specify the exercise price, the term of
the Option, and the number of shares of Stock to which the Option
pertains.
5.2. Option Price. Options granted pursuant to Section 5.1(a)
as an Annual Award shall have an exercise price equal to One Dollar ($1.00) per
share of stock.
5.3. Exercise of Options. Options awarded under the Plan
shall be fully and immediately exercisable. Each Option shall be exercisable for
10 years after the date on which it is granted.
5.4. Payment. Options may be exercised by written notice of
exercise accompanied by payment in full of the Option price in cash or cash
equivalents, including by personal check. As soon as practicable after receipt
of such written exercise notice and full payment of the Option price, the
Company shall deliver to the Outside Director a certificate or certificates
representing the acquired shares of stock.
4
<PAGE>
SECTION 6.
Termination of Duties as a Director
6.1. Termination of Duties Due to Retirement. In the event an
Outside Director's membership on the Board ceases on or after he has attained
age 72, any Options then held by such Outside Director may be exercised at any
time prior to the expiration of the term of the Options or within three (3)
years following his cessation of Board membership, whichever period is shorter.
6.2. Termination of Duties Due to Death or Disability. In the
event an Outside Director's membership on the Board ceases by reason of his
death or Disability, any Options then held by such Outside Director may be
exercised by the Outside Director or his legal representative at any time prior
to the expiration date of the terms of the Options or within one (1) year
following his cessation of Board membership, whichever period is shorter.
6.3. Termination of Duties for Any Other Reason. In the event
an Outside Director's membership on the Board ceases for any reason other than
one described in Section 6.1 or Section 6.2, any Options then held by such
Outside Director shall be cancelled.
6.4. Services as an Employee. If an Outside Director becomes
an employee of the Company or of any of its subsidiaries, the Outside Director
shall be treated as continuing in service for purposes of this Plan, but shall
not be eligible to receive future grants while an employee. If the Outside
Director's services as an employee terminate without his again becoming an
Outside Director, the provisions of this Section 6 shall apply as though such
termination of employment were the termination of the Outside Director's
membership on the Board.
5
<PAGE>
SECTION 7.
Amendment, Modification, and Termination of Plan
The Board at any time may terminate or suspend the Plan, and from
time to time may amend or modify the Plan, but any amendment that materially
increases the benefits to be provided to Outside Directors shall be subject to
approval by the Company's stockholders. No amendment, modification, or
termination of the Plan shall in any manner adversely affect any Option
theretofore granted under the Plan, without the consent of the Outside Director.
SECTION 8.
Miscellaneous Provisions
8.1. Nontransferability of Awards. No options may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. All rights with respect
to Options granted to an Outside Director shall be exercisable during his
lifetime only by him.
8.2. Beneficiary Designation. Each Outside Director may from
time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) by whom any Option granted under the Plan is to be
exercised in case of his death. Each designation will revoke all prior
designations by such Outside Director and will be effective only when filed by
the Outside Director during his lifetime in writing with the Secretary of the
Company. In the absence of any such designation, Options outstanding at the time
of an Outside Director's death shall be exercised by the Outside Director's
surviving spouse, if any, or otherwise by his estate.
8.3. No Guarantee of Membership. Nothing in the Plan shall
confer upon an Outside Director the right to remain a member of the Board.
6
<PAGE>
8.4. Requirements of Law. The granting of Options and the
issuance of shares of Stock upon the exercise of Options shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
8.5. Administration. The Plan shall, to the maximum extent
possible, be self-effectuating. Any determinations necessary or advisable for
the administration and interpretation of the Plan in order to carry out its
provisions and purposes shall be made by the Company.
8.6. Term of Plan. The Plan shall be effective upon its
adoption by the Board, subject to approval by the Company's stockholders at
their next annual meeting. The Plan shall continue in effect, unless sooner
terminated pursuant to Section 7, until the tenth anniversary of the date on
which it is adopted by the Board.
8.7. Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
New York.
7
<PAGE>
HANDY & HARMAN
Long-Term Incentive Plan
SECTION 1 - Purpose and Term of Plan
The Long-Term Incentive Plan is designed to attract and retain
the services of selected key employees who are in a position to make a material
contribution to the successful operation of the business of Handy & Harman or
one or more of its subsidiaries. Awards under the Plan shall be made to selected
Participants in the form of shares of Restricted Stock. The Plan shall become
effective on January 1, 1988, subject to approval by the shareholders of Handy &
Harman. No awards may be made under the Plan subsequent to December 31, 1997.
SECTION 2 - Definitions
For the purposes of the Plan, the following terms shall have
the following meanings:
(a) "Board of Directors" means the Board of Directors of the
Corporation.
(b) "Change in Control" means the occurrence of one of the
following:
(x) A change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or, if Item
6(e) is no longer in effect, any regulation issued by the
Securities and Exchange Commission which serves similar
purposes; or
(y) Any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the 1934 Act) is or becomes a beneficial
owner, directly or indirectly, of securities of the
Corporation representing twenty-five
<PAGE>
percent (25%) or more of the combined voting power of the
Corporation's then outstanding securities.
(c) "Code" means the U.S. Internal Revenue Code,
as amended.
(d) "Committee" means the Compensation Committee
of the Board of Directors or such other committee as may be designated by the
Board of Directors.
(e) "Corporation" means Handy & Harman, a New York
corporation.
(f) "Common Stock" means the common stock, $1.00 par
value, of the Corporation.
(g) "Disability" means a physical or mental
impairment sufficient to make the individual eligible for benefits under the
Long-Term Disability Plan of the Corporation, so long as such impairment also
constitutes a disability within the meaning of Section 105(d)(4) of the Code.
(h) "Participant" means a key employee of the
Corporation or a Subsidiary who has been selected by the Committee to
participate in the Plan, including directors of the Corporation who are also
salaried officers of the Corporation.
(i) "Plan" means the Long-Term Incentive
Plan of Handy & Harman, as amended from time to time.
(j) "Restricted Period" means the period of years
selected by the Committee pursuant to Section 4.2.
(k) "Restricted Stock" means the Common Stock which
has been awarded to a Participant subject to the restrictions referred to in
Section 4, so long as such restrictions are in effect.
(l) "Retirement" means normal or early retirement
under the terms of a pension plan of the Corporation or a Subsidiary or
voluntary termination of employment; PROVIDED, HOWEVER, that in either case, the
Committee must have given its prior consent to treat the individual's
termination of employment as a retirement.
2
<PAGE>
(m) "Subsidiary" means any corporation or other legal entity,
domestic or foreign, more than 50 percent of the voting power of which is owned
or controlled, directly or indirectly, by the Corporation.
SECTION 3 - General Provisions
3.1 The Committee shall from time to time:
(a) Designate those persons to be granted awards under the
Plan.
(b) Determine the performance conditions under which awards of
Restricted Stock will be made.
(c) Communicate the performance conditions to the Partici-
pants in a timely manner.
(d) Determine the number of shares of Common Stock which shall
be granted to each such person.
(e) Determine the Restricted Period with respect to the awards
and any other conditions relating to the awards as it may deem appropriate,
consistent with the provisions of the Plan.
3.2 Participants shall be selected by the Committee from among
the key employees of the Corporation and its subsidiaries who are in a position
to have a material impact on the results of the operations of the Corporation
and its Subsidiaries in future years.
3.3 (a) Shares of Common Stock which may be issued under the
Plan may be either treasury shares or authorized and unissued shares of Common
Stock.
(b) Any shares of Common Stock returned to the Corporation as
the result of the forfeiture of Restricted Stock shall again be available for
award under the terms of the Plan.
3
<PAGE>
(c) Subject to Section 7.6, the aggregate number of shares of
Common Stock that may be awarded under the Plan is 400,000.
3.4 In making any determination as to Participants to whom
awards of Restricted Shares may be made and as to the number of Restricted
Shares to be allocated to any Participant, the Committee shall take into account
the duties of the respective Participants, their contribution to the success of
the Corporation and its Subsidiaries over a period specified by the Committee
but more than one (1) year and such other factors as the Committee may deem
relevant in connection with accomplishing the purposes of the Plan.
SECTION 4 - Restricted Stock
4.1 An award of Restricted Stock shall entitle a Participant
to receive, on the date or dates designated by the Committee, the number or
shares of Common Stock selected by the Committee. Restricted Stock awards shall
be expressly subject to the terms and conditions described in this Section 4.
4.2 During the Restricted Period selected by the Committee,
shares of Restricted Stock awarded to the Participant may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter provided.
Except for such restrictions, the Participant, as owner of such shares, shall
have all the rights of a shareholder, including (but not limited to) the right
to receive all dividends paid on such shares (subject to the provisions of
Sections 7.6 and 7.7) and the right to vote such shares.
4.3 In the event of a Change in Control of the Corporation
during the Restricted Period, all restrictions imposed on the Restricted Stock
under Section 4.2 shall be removed and the Participant shall be the owner of
such shares free of any restrictions.
4.4 If a Participant ceases to be an employee of the
Corporation or its Subsidiaries during the Restricted Period for any reason
other than death, Disability or Retirement, all shares of Restricted Stock
theretofore awarded to him which are still subject to the restrictions imposed
by Section 4.2 shall upon such termination of employment be forfeited and
returned to the Corporation.
4.5 If a Participant ceases to be an employee of the
Corporation or its Subsidiaries during the Restricted Period by reason of death,
Disability or Retirement, shares of Restricted Stock shall become free of the
restrictions imposed by
4
<PAGE>
Section 4.2 to the extent determined by the Committee in its sole discretion and
the Corporation will deliver to him or his beneficiary, as the case may be,
within sixty (60) days, such shares of Common Stock pursuant to Section 4.8. Any
shares of common Stock which do not become free of restrictions shall be
forfeited and returned to the Corporation.
4.6 Each Participant awarded shares of Restricted Stock shall
enter into an Agreement with the Corporation in a form specified by the
Committee, agreeing to the terms and conditions of the award and such other
matters as the Committee shall in its sole discretion determine. Failure by the
Participant to comply with the provisions of the Agreement shall cause the
shares of Restricted Stock to be forfeited and returned to the Corporation.
4.7 Each certificate issued in respect of shares of Restricted
Stock awarded under the Plan shall be registered in the name of the Participant,
shall be deposited by him with the corporation together with a stock power
endorsed in blank and shall bear the following (or similar) legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) contained in Section 4 of
the Long-Term Incentive Plan of Handy & Harman and an
Agreement entered into between the registered owner and Handy
& Harman."
4.8 When the restrictions imposed by Section 4.2 or other
similar restrictions expire, terminate or have otherwise been satisfied with
respect to one or more shares of Restricted Stock, the Corporation shall deliver
to the Participant (or his legal representative, beneficiary or heir) a
certificate or certificates representing one share of Common Stock for each such
share of Restricted Stock deposited with it by the Participant pursuant to
Section 4.7. Such certificate or certificates shall not bear the legend referred
to in Section 4.7. At that time, the Agreement referred to in Section 4.6, as it
relates to such shares, shall be terminated.
SECTION 5 - Administration
5.1 The Plan shall be administered by the Committee, which
shall be composed of such members (not less than three) of the Board of
Directors as shall be appointed from time to time by the Board. At all times the
Committee shall be composed of directors, no member of which shall be eligible
to be a Participant. Any
5
<PAGE>
member of the Committee may resign at any time. The Board of Directors may
remove any member of the Committee at any time and may fill any vacancy in the
Committee.
5.2 Subject to the provisions of the Plan, the Committee shall
have exclusive power to select the key employees who shall be Participants and
to determine the amount of, or method of determining, the awards to be made to
each such Participant.
5.3 The Committee's interpretation of the Plan or of any award
granted pursuant thereto shall be final and binding on all Participants.
5.4 The Committee shall have the authority to establish, adopt
or revise such rules or regulations relating to the Plan as it may deem
necessary or advisable for the operation and administration of the Plan.
5.5 The Committee shall appoint a secretary thereof who will
be responsible for maintaining records of the minutes of meetings of the
Committee and other actions of the Committee throughout the term of the Plan and
continuing thereafter while any shares of Restricted Stock are outstanding.
SECTION 6 - Amendment or Termination
6.1 Upon recommendation by the Committee, the Board of
Directors may amend any provision of the Plan or any agreement thereunder at any
time; provided, however, that no such amendment may increase the number of
shares of Common Stock as indicated in section 3.3 which may be awarded under
the Plan, change the class of employees eligible to participate in the Plan, or
materially increase the benefits accruing to Participants of the Plan, unless
such amendment is approved by the holders of a majority of the outstanding
shares of Common Stock entitled to vote.
6.2 The Board of Directors shall also have the right to
terminate the Plan at any time. If the Plan is terminated, any awards of
Restricted Stock made prior to the date of termination shall not be affected and
shall continue in effect in accordance with the provisions of the Plan,
including the provisions relating to the authority of the Committee to
administer and interpret the Plan.
6
<PAGE>
Except with the consent of the Participant, no amendment,
suspension or termination shall impair the rights of any Participant in any
Common Stock awarded to such Participant under the Plan.
6.3 The Committee may refrain from designating any
Participants or from making any awards at any time during the term of the Plan,
but such action shall not be deemed a termination of the Plan. No Participant or
officer shall have any claim or right to be granted awards under the Plan.
SECTION 7 - Miscellaneous
7.1 The fact that a key employee has been designated as a
Participant shall not confer on him any right to be retained in the employ of
the Corporation or one or more of its subsidiaries, or to continue to be
designated as a Participant.
7.2 No award under the Plan shall be taken into account in
determining a Participant's compensation for the purposes of any group life
insurance or other employee benefit or pension plan of the Corporation or a
Subsidiary.
7.3 The Plan shall not be deemed an exclusive method of
providing incentive compensation for the officers and employees of the
Corporation and its Subsidiaries, nor shall it preclude the Board of Directors
from authorizing or approving other forms of incentive compensation.
7.4 All expenses and costs in connection with the operation of
the Plan shall be borne by the Corporation.
7.5 Restricted Stock awarded pursuant to the Plan shall not be
transferable by the Participant other than by will or the laws of descent and
distribution.
7.6 In the event of any change in the outstanding shares of
Common Stock in the Corporation by reason of any stock dividend or split,
recapitalization, merger, consolidation, combination or exchange of shares or
other similar corporate change other than a Change in Control, the maximum
aggregate number and class of shares from which awards of Restricted Stock may
be granted under the Plan shall be appropriately adjusted by the Committee,
whose determination shall be conclusive. Any new shares of Restricted Stock
which are issued to a Participant will continue to be subject to the same
restrictions that were in force prior to any such change.
7
<PAGE>
7.7 The Corporation shall be entitled to withhold from any
awards made under the Plan the amount of taxes the Corporation deems necessary
to satisfy any applicable Federal, state and local income tax withholding
obligations arising from the award or to make other appropriate arrangements
with Participants to satisfy such obligations.
8
<PAGE>
Amendment to the Handy & Harman Long-Term Incentive Plan
1. Subsection 2(b) is amended to read as follows:
"(b) "Change in Control" means the occurrence of one of the following:
(i) any "person", as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than the
Corporation, any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation or any corporation owned, directly or
indirectly, by the stockholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding securities;
(ii) during any period of two consecutive years (not including any period
prior to the execution of this amendment to 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 the Corporation to effect a transaction described in clause (i), (iii) or
(iv) of this Section) whose election by the Board of Directors or nomination for
election by the Corporation'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;
(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation; other than (A) a
merger or consolidation which would result in the voting securities of the
Corporation 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 the Corporation or such surviving entity outstanding immediately
after such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Corporation (or similar transaction) in
which no "person" (as hereinabove defined) acquires more than 50% of the
combined voting power of the Corporation's then outstanding securities; or
<PAGE>
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition
by the Corporation of all or substantially all of the Corporation's assets."
2
<PAGE>
RESOLVED, that a new sentence be added to Section 4.3 of the Company's
Long-Term Incentive Plan reading as follows:
In the event of a Change in Control of the Corporation subsequent to
shares of Common Stock being allocated to a Participant but prior to
such shares being granted as Restricted Stock, such shares of Common
Stock shall be deemed to have been earned by the Participant and
certificates representing such shares of Common Stock shall be
delivered to the Participant in accordance with Section 4.8.
<PAGE>
EXHIBIT D
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Page 1 of 2
Amendment to Long-Term Incentive Plan
Delete the existing definition of "Change of Control" and replace with the
following:
"Change of Control" means the occurrence of any of the following:
(a) any "Person" as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended ("the Exchange Act") (other than
the Corporation, any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any corporation owned directly or
indirectly, by the stockholders of the Corporation in substantially the same
proportions as their ownership of stock in the Corporation), is or becomes the
"beneficial owner" (as defined in Rule 13d-2 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding securities;
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Corporation,
and any new director (other than a director designated by a person who has
entered into an agreement with the Corporation to effect a transaction described
in clause (a), (c) or (d) of this definition) whose election by the
Corporation'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;
(c) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation; other than (i) a
merger or consolidation which would result in the voting securities of the
Corporation 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 the Corporation or such surviving entity outstanding immediately
after such merger or consolidation or
<PAGE>
EXHIBIT D
---------
Page 2 of 2
(d) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or disposition by
the Corporation of all or substantially all of the Corporation's assets.
Add to Section 4.3:
Notwithstanding anything in Section 3.4, if the Committee anticipates a Change
in Control during the period between a determination of performance conditions
for a Participant under Section 3.1 (b) and an award of Restricted Stock to that
Participant relating to those performance conditions (the "Performance Period"),
such Participant shall be entitled to an immediate award equivalent to a number
of shares of Restricted Stock based upon the number of shares the Participant
would have been awarded if all the performance conditions specified had been
achieved over the Performance Period, prorated by the number of days in the
Performance Period elapsing through the Change of Control. The Committee shall
pay each such Participant an amount in cash equal to the anticipated value of
such number of shares of Restricted Stock on the date of the Change of Control
(calculated on the basis that such Restricted Stock is not subject to a
Restricted Period under Section 4.2). Such payment shall be made on a date
specified by the Committee, which date shall be prior to the anticipated Change
of Control.
<PAGE>
HANDY & HARMAN
1982 STOCK OPTION PLAN
1. Purpose. The purpose of the 1982 Stock Option Plan (the "Plan") is
to benefit Handy & Harman and its subsidiaries (the "Company") by providing for
the acquisition of a greater personal and financial interest in the Company by
key employees upon whom the Company is dependent for success.
2. Participants. Options shall be granted under the Plan to key
employees of the Company, including directors of the Company who are also
salaried officers, who perform services of special importance to the management,
operation and development of the Company.
3. Administration of the Plan. The Plan shall be administered by a
Committee (the "Committee") appointed by and responsible to the Board of
Directors. The Committee shall consist of not less than three directors who
shall not be eligible to participate in the Plan while members of the Committee.
It shall have the power to select optionees, to establish the number of shares
and the other terms applicable to each option, to construe the provisions of the
Plan, and to adopt rules and regulations governing the administration of the
Plan.
The Committee shall have the authority to amend the Plan without the
necessity of obtaining further approval of the stockholders, unless such
approval is required by law.
4. Effective Date and Termination of the Plan. The effective date of
the Plan shall be February 1, 1982, and the Plan shall terminate on January 1,
1992, or at such earlier time as the Board of Directors may determine. Any
option outstanding under the Plan at the time of its termination shall remain in
effect until it shall have been exercised or shall have expired or otherwise
terminated pursuant to the provisions of the Plan.
5. Stock Subject to Options. The number of shares to be subject to
options hereunder shall not exceed 500,000 shares of the Common Stock, $1.00 par
value, of the Company ("Common Stock"), subject to adjustment as provided in
Section II hereof. Any shares subjected to an option under the Plan, which
option expires or is terminated unexercised as to such shares, may again be
subjected to an
<PAGE>
option under the Plan. The Committee may require the surrender of outstanding
options as a condition precedent to the grant of new options under the Plan.
6. Payment of Purchase Price. The purchase price of each share acquired
pursuant to the exercise of any option shall be paid in full at the time of such
purchase, and a certificate representing shares so purchased shall be delivered
to the persons entitled thereto. The Committee shall have the sole discretion to
determine at the time of grant of the option the form (cash, shares of Common
Stock, or a combination thereof) in which payment of the purchase price may be
made.
7. Types of Options. Options granted under the Plan shall be in the
form of (i) incentive stock options as defined in Section 422A of the Internal
Revenue Code, and (ii) options not qualifying under such section ("nonqualified
options").
8. Terms and Conditions of Incentive Stock Options. An incentive stock
option granted under the Plan shall contain such terms and conditions as are
determined by the Committee, subject to the following provisions:
(a) Such option by its terms shall not be exercisable after the
expiration of ten years from the date such option is granted.
(b) The option price shall not be less than 100 percent of the fair
market value of the Common Stock at the time such option is granted.
(c) Such option by its terms shall not be transferable by the optionee
otherwise than by will or the laws of descent and distribution and shall be
exercisable, during his lifetime, only by him.
(d) If the optionee's employment by the Company shall terminate for any
reason other than death, the option shall terminate three months after the date
the optionee ceases to be an employee of the Company (one year after such date
if the optionee was disabled within the meaning of Section 105(d)(4) of the
Internal Revenue Code on such date), or on the option's expiration date if
earlier.
(e) No option shall be granted after ten years from the effective date
of the Plan, as set forth in Section 4.
(f) No option shall be granted to any individual who, at the time of
the proposed grant, owns Common Stock possessing more than ten percent of the
voting
2
<PAGE>
power of all classes of stock of the Company or any of its subsidiary
corporations unless (i) the option price of such option is, at the time of the
grant, at least 110 percent of the fair market value of the Common Stock subject
thereto and (ii) such option is by its terms not exercisable after more than
five years from the date of grant.
(g) Each new incentive stock option by its terms shall not be
exercisable while there is outstanding any incentive stock option which was
granted, before the granting of such new option, to a participant to purchase
Common Stock of the Company or stock of any parent or subsidiary corporation. An
option shall be deemed outstanding for purposes of this subsection (g) until
such option or a related stock appreciation right is exercised in full or
expires by reason of lapse of time.
(h) The aggregate fair market value of Common Stock (determined as of
the date each incentive stock option is granted) for which any employee may be
granted incentive stock option in any calendar year under the Plan (or any other
plan of the Company or a parent or subsidiary thereof) shall not exceed $100,000
(the "$100,000 Annual Limit") plus the amount of any "Unused Limit Carryover"
(as hereinafter defined) available for such year. If the aggregate fair market
value of Common Stock subject to incentive stock options granted to an optionee
in a calendar year after 1980 is less than the $100,000 Annual Limit, one-half
of the difference (the "Unused Limit Carryover") may be carried forward and
taken into account in each of the three succeeding calendar years, but only to
the extent that such Unused Limit Carryover has not been used in prior calendar
years. The amount of incentive stock options granted during any calendar year
shall be treated as first using up the $100,000 Annual Limit and then using up
any available Unused Limit Carryovers in the order of the calendar years in
which such Unused Limit Carryovers arose.
9. Terms and Conditions of Nonqualified Options. A nonqualified option
granted under the Plan shall be subject to the provisions of subsections (a),
(b), (c) and (e) of Section 8 hereof, and such other terms and conditions as are
determined by the Committee.
10. Stock Appreciation Rights. Stock appreciation rights may be granted
by the Committee in connection with any stock option at the time of grant of
such option. Stock appreciation rights shall be subject to the following terms
and conditions and to such other terms and conditions, not inconsistent with
the Plan, as the Committee shall determine:
3
<PAGE>
(a) Stock appreciation rights shall be exercisable, in whole
or in part, at such time or times and to the extent that the option to which
they relate shall be exercisable, and shall expire simultaneously with the
option to which they relate.
(b) Upon exercise of a stock appreciation right, the related
option or portion thereof shall be surrendered to the Company in exchange for
payment by the Company of shares of Common Stock (at the fair market value
thereof) or cash or a combination thereof in an amount equal to the excess of
the aggregate fair market value of the shares subject to the option or portion
thereof being surrendered over the aggregate option price thereof; provided,
however, that fractional shares shall not be issued. Any option, to the extent
surrendered, shall thereupon cease to be exercisable.
(c) The Committee shall have the sole discretion to determine
the form in which payment (i.e., cash, shares of Common Stock, or any
combination thereof) will be made.
(d) Stock appreciation rights shall be transferable only when
the options to which they relate are transferable, and under the same
conditions.
(e) A stock appreciation right may be exercised only when the
market price of Common Stock exceeds the option price of the option to which the
stock appreciation right relates.
11. Adjustment in Event of Recapitalization of the Company. In the
event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of the Company, the Board of
Directors shall make an appropriate adjustment in the number and the kind of
shares that may be subjected to options under the Plan and the number and kind
of shares covered by options granted, and in the option price.
4
<PAGE>
Amendment to the Handy & Harman 1982 Stock Option Plan
1. A new Section 12 is added to read as follows:
"12. Change in Control. (a) Notwithstanding anything in the Plan
to the contrary, upon a Change in Control of the Company, all outstanding
options granted under the Plan shall become immediately exercisable.
(b) For purposes of this Section, a Change in Control of the Company
shall be deemed to have occurred if:
(i) any "person," as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (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 the Company in
substantially the same proportions as their ownership of stock of the Company),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company's then outstanding
securities;
(ii) during any period of two consecutive years (not
including any period prior to the execution of this amendment to 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 the Company to effect a transaction
described in clause (i), (iii) or (iv) of this Section) whose election by the
Board of Directors or nomination for election by the Company'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;
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation; other than
(A) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than
<PAGE>
70% of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation or
(B) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as hereinabove defined)
acquires more than 50% of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets."
<PAGE>
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
The name of this Plan is "Subsidiary, Division, Group or Unit
Management Incentive Plan." The purpose of this Plan is to promote the interests
of Subsidiary, Division, Group or Unit (the "Company") and to provide incentive
to those Officers and management employees who can contribute to the profits of
the Company. Effective as of January 1, 1994, the Plan is amended and restated
with respect to any and all Incentive Awards earned beginning in the 1994 Fiscal
Year (except as otherwise set forth in the Regulations) as follows:
SECTION I. DEFINITIONS
The terms herein used will have the following definitions:
A. The term "Plan" means this Management Incentive Plan.
B. The term "Salary" shall mean the highest rate of basic
compensation, expressed as an annual rate, paid to a Participant
during the fiscal year.
C. The term "Employee" means any person who is a regular and full
time and active employee of the Company, or of any wholly-owned
subsidiary thereof, including Officers and Directors, and who is
paid on salary basis.
D. The term "Participant" means any person selected to participate
in the Plan for any fiscal year.
E. The term "Committee" means the Incentive Awards Committee provided
for in Section II.
F. The term "Incentive Award" means an award under the Plan to a
Participant, and either paid currently or paid on a deferred basis.
G. The term "Incentive Plan Provision" means monies which are made
available for distribution as Incentive Awards as the result of
the operation of the Plan.
H. The term "Fiscal Year" shall mean the fiscal year of the Company,
January 1 to December 31.
I. The term "Operating Profit" shall be the amount reported in the
audited financial statements in accordance with Generally
Accepted Accounting Principals (GAAP) and shall exclude (i)
interest (except interest
<PAGE>
charged on precious metals which are used by the business, and not
included in the assets of the business), (ii) provision for
payments of Management Incentive Plan (MIP) bonuses, and (iii)
other income and deduction items approved for exclusion by the
President of Handy & Harman. Examples of items which may be
excluded in this category are as follows:
a. Gain or loss on sale of fixed assets.
b. Timing differences and special reserves.
c. Windfall profits from settlement of an insurance
claim.
J. The term "Capital Employed" shall mean total assets of
the business minus non-interest bearing debt. This is
also the same as Shareholders' Equity plus interest
bearing debt which includes the Cash Management Ac-
counts.
K. The term "Return on Capital" shall mean annual Operat-
ing Profit divided by monthly average Capital Employed.
SECTION II. THE COMMITTEE
The Board of Directors of Handy & Harman, the Parent Company, shall
appoint a Committee, who shall be Directors of Handy & Harman, to be known as
the "Incentive Awards Committee." The Committee shall have full power and
authority to interpret and administer the Plan in accordance with the terms of
the Plan and the Regulations (as hereinafter defined). The Committee shall
select one of its members as Chairman and shall hold its meetings at such times
and places as it may determine. A majority of its members shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by a
majority of the members of the Committee shall be as fully effective as if it
had been made by a majority vote at a meeting of the Committee duly called and
held. The members of the Committee may receive such compensation for their
services as the Board of Directors of Handy & Harman may determine.
SECTION III. REGULATIONS
The Board of Directors of Handy & Harman shall have the power to
adopt rules and regulations (the "Regulations") not inconsistent with the
provisions of the Plan, governing the selection and eligibility of the
Participants of the Plan, and for the administration of the Plan and to alter,
amend or revoke any Regulation so adopted.
2
<PAGE>
SECTION IV. PARTICIPANTS
Participants in the benefits of the Plan shall be limited to those
Employees selected by the Committee in accordance with the Regulations.
SECTION V. DETERMINATION OF INCENTIVE PLAN PROVISION
The Incentive Plan Provision shall consist of two parts, hereinafter
referred to as "Part A" and "Part B," respectively. Although most Participants
will be included in both the A & B portion of the Plan at the discretion of the
President of the Company, some individuals will only participate in either the A
or B portion. The maximum amount made available for distribution as Incentive
Awards under the respective Parts shall be determined as follows:
A. DETERMINATION OF PART A
1. Operating Profit and Return on Capital Goals shall
be established for the Company for such fiscal
year by the beginning of such year, or as soon
thereafter as is possible.
2. Upon approval of the Operating Profit and Return
on Capital Goals by the President of Handy & Harman
such Goals shall be the basis for calculating
the Incentive Plan Provision under Part A, by
utilizing the Operating Profit and Return on Capi-
tal of the Company for such fiscal year and apply-
ing the formula set forth in Appendix A attached
hereto. The Incentive Plan Award under Part A in
accordance with the Chart listed as Appendix A
will be calculated in two steps:
(a) The percent of Operating Profit Goal
achieved (75% of A).
(b) The percent of Return on Capital Goals
achieved (25% of A).
These two, calculated separately and added to-
gether, will represent the Provision under Part A.
3. The amount of the Incentive Plan Provision deter-
mined under this Part A shall not exceed a sum
equal to 4% of the Company's Operating Profit for
such fiscal year, notwithstanding the fact that
the calculation made pursuant to sub-section 2,
above, may produce a greater sum.
3
<PAGE>
4. In the event that the President of Handy & Harman
approves an Operating Goal for a fiscal year which
projects a net operating loss, he may submit to
the Committee as soon as possible after the end of
the fiscal year a recommendation for the determi-
nation of an appropriate Incentive Plan Provision
under Part A for such fiscal year. The Committee
shall consider such recommendation and establish
such Incentive Plan Provision, if any, as it may
deem appropriate and proper under the circum-
stances, without regard to the limitations stated
in sub-section 3 of this Section or by the formula
set forth in Appendix A.
B. DETERMINATION OF PART B
At the sole discretion of the Committee based upon the
recommendation of the President of Handy & Harman, an
Incentive Plan Provision may be determined under this
Part B for Incentive Awards to recognize outstanding
overall effort applied to the enhancement of the long-
term growth potential of the Company. The total amount
of the Incentive Plan Provision which may be made
available for Incentive Awards under this Part B shall
not exceed 25% of the aggregate of the salaries of
Participants to whom Incentive Awards are granted under
this Part B.
C. Except as provided in paragraph D, below, the total
amount of the Incentive Plan Provision, whether deter-
mined under Part A, Part B or both of such Parts, shall
not exceed a sum equal to 7% of the Company's Operating
Profit for such fiscal year, notwithstanding the fact
that the calculations made pursuant to the above provi-
sions of this Section may produce a greater sum.
D. In the extraordinary circumstance where the President
of Handy & Harman determines that an exceptionally high
level of performance in the area of achievement of
long-term future growth potentia1 for the Company has
been accomplished during a fiscal year, the Committee
may determine an amount of Incentive Plan Provision to
be made available for Incentive Awards to the Partici-
pants responsible for such achievement under Part B,
notwithstanding the limitation set forth in paragraph
C, above.
E. No Participant shall receive an Incentive Award that
exceeds 75% of his Salary for the Fiscal Year for which
the Incentive Award was earned.
4
<PAGE>
SECTION VI. REPORT TO INCENTIVE AWARD COMMITTEE
As soon as possible after the close of the Fiscal Year, the
President of Handy & Harman shall report, in writing, to the Committee (i) the
Operating Profit (or Loss) of the Company for such fiscal year, and (ii) the
determination of the Incentive Plan Provision for such fiscal year under Part A,
made in accordance with the procedure set forth above. The President shall
also include in such report any recommendation as to Incentive Awards to be made
available pursuant to Part B, with such supporting information as may be deemed
appropriate to enable the Committee to make its determination of an Incentive
Plan Provision under said Part B. The Committee may rely upon the factual
information set forth in such report.
SECTION VII. INCENTIVE AWARDS
A. Upon the receipt of the Report referred to in Section
VI containing the determination of the amount of the
Incentive Plan Provision under Part A for the Fiscal
Year, an amount not exceeding such amount may be allot-
ted by the Committee as Incentive Awards under Part A
for such fiscal year to such Employees as it may select
as Participants.
B. The Committee may determine an amount of Incentive Plan
Provision to be made available as Incentive Awards
under Part B, pursuant to the recommendation of the
President of Handy & Harman. Any such amount shall be
allotted by the Committee as Incentive Awards to such
Employees as it may select as Participants.
C. The Committee's selection of the Participants to whom
Incentive Awards shall be made in accordance with the
Plan and the Regulations and its determination of the
amounts and method of payment of such Incentive Awards
shall be final.
SECTION VIII. FORFEITURE OF INCENTIVE AWARDS
The amount of any Incentive Award forfeited by a
Participant shall be retained by the Company and shall not be re-
credited to the Incentive Plan Provision.
SECTION IX. TERMINATION OF PLAN
The Board of Directors of Handy & Harman may suspend or
discontinue the Plan at any time.
5
<PAGE>
SECTION X. EFFECTIVE DATE
This Plan shall become effective in accordance with the
resolution of the Board of Directors of Handy & Harman or the
preamble hereto.
* * *
6
<PAGE>
APPENDIX A
MANAGEMENT INCENTIVE PLAN
FORMULA FOR DETERMINATION OF
INCENTIVE PLAN PROVISION UNDER
PART A
INCENTIVE PLAN PROVISION
(APPLICABLE % OF TOTAL OF
PARTICIPANTS' SALARIES)
<TABLE>
<CAPTION>
PERCENT OF
GOAL ACHIEVED OPERATING PROFIT RETURN ON
------------- ---------------- CAPITAL
---------
<S> <C> <C>
Less than - 80% 0 0
Over 80% - 82% 1.50% .50%
" 82% - 84% 2.25% .75%
" 84% - 86% 3.00% 1.00%
" 86% - 88% 5.25% 1.75%
" 88% - 90% 7.50% 2.50%
" 90% - 92% 9.00% 3.00%
" 92% - 94% 11.25% 3.75%
" 94% - 96% 12.75% 4.25%
" 96% - 98% 15.00% 5.00%
" 98% - 100% 17.25% 5.75%
" 100% - 102% 18.00% 6.00%
" 102% - 104% 18.75% 6.25%
" 104% - 106% 19.50% 6.50%
" 106% - 108% 21.00% 7.00%
" 108% - 110% 21.75% 7.25%
" 110% - 112% 23.25% 7.75%
" 112% - 114% 24.00% 8.00%
" 114% - 116% 24.75% 8.25%
" 116% - 118% 26.25% 8.75%
" 118% - 120% 27.00% 9.00%
" 120% - 122% 27.75% 9.25%
" 122% - 124% 29.25% 9.75%
" 124% - 126% 30.00% 10.00%
" 126% - 128% 30.75% 10.25%
" 128% - 130% 31.50% 10.50%
" 130% 32.25% 10.75%
</TABLE>
7
<PAGE>
MANAGEMENT INCENTIVE PLAN
RULES AND REGULATIONS
Set forth below are the Rules and Regulations under which the
Management Incentive Plan is to be administered. The terms used herein
are as defined in the Plan.
1. Participation in the Plan shall be limited to officers and
those employees holding positions as heads of major depart-
ments or operational functions, or who perform other impor-
tant duties, and who can contribute substantially to the
Company's profitability and growth.
2. An Incentive Award granted to a Participant shall be based
upon the relative contribution made by the Participant
during the Fiscal Year toward total corporate earnings and
growth. If a Participant's work performance has been unsat-
isfactory, no Incentive Award will be made to that Partici-
pant for the fiscal year.
3. Not all officers need be selected as Participants. The
selection of an employee as a Participant one year does not
require selection of that employee as a Participant in
subsequent years.
4. At the beginning of each fiscal year the President of the
Company shall submit to the Corporate Group Vice President
of Handy & Harman (or the person holding the equivalent
position) a written list of his recommendations as to the
employees who should be selected as Participants in the Plan
for that year. The Corporate Group Vice President shall
review such list with the President of Handy & Harman,
following which an approved list of recommendations shall be
submitted to the Committee in writing.
5. Upon receipt of such list of approved recommendations from
the President of Handy & Harman, Participants shall be
selected for such year by the Committee. Participants shall
be notified in writing by the President of the Company of
their selection as Participants for that fiscal year.
6. At the end of each fiscal year, the President of the Company
shall submit to the Corporate Group Vice President of Handy
& Harman (or the person holding the equivalent position) a
written list of his recommendations as to the amount of
Incentive Award each Participant should receive for that
fiscal year. The Corporate Group Vice President shall
review such list with the President of Handy & Harman,
following which an approved list of recommendations shall be
submitted to the Committee in writing.
8
<PAGE>
7. As soon as possible following receipt of the report of the
President of Handy & Harman showing the determination of the
Incentive Plan Provision under Part A of Section V of the
Plan for the fiscal year and the list of approved recommen-
dations as to the amount of Incentive Award for each Partic-
ipant, the Committee shall fix and determine the portion or
percentage of the available amount in the Incentive Plan
Provision to be allotted as Incentive Awards under said Part
A to the respective Participants for such fiscal year.
8. In the event that the President of Handy & Harman shall
submit to the Committee a recommendation that an Incentive
Plan Provision should be determined under Part B of Section
V of the Plan for the fiscal year, the Committee may, in its
sole discretion, fix and determine the amount of such Incen-
tive Plan Provision under said Part B and the portion or
percentage of the available amount in such Incentive Plan
Provision to be allotted as Incentive Awards for such fiscal
year to the respective Participants.
9. Incentive Awards which are less than 10% of the Partici-
pant's annual salary rate shall be paid in cash in full.
Incentive Awards which are 10% or more of the Participant's
annual salary rate may either be paid in cash in full, or on
a deferred basis in accordance with the terms of these
Regulations.
10. Except as otherwise provided herein, for all or any portion
of an Incentive Award to be paid to a Participant, the
Participant (a) must be an Employee of the Company, or of a
wholly-owned subsidiary thereof, or (b) must have retired
under the Company's retirement plan as of the date the
Incentive Award, or portion thereof, is payable. Incentive
Awards, or portions thereof, shall not be made or paid to
individuals who resign from their position with the Company,
or whose employment is terminated by the Company, or by a
wholly-owned subsidiary thereof, prior to the date the
Incentive Award, or portion thereof, is payable, unless
otherwise provided herein or determined by the Committee.
11. In the event of the death of a Participant, all unpaid
portions of Incentive Awards shall be considered payable,
and shall be paid (a) to the Participant's estate, or (b) as
provided herein, or (c) to or among such relatives (by blood
or marriage) of the deceased Participant as the Committee
may determine, in its sole discretion.
12. No excess of the Plan Provision, over and above the total of
the Incentive Awards approved by the Committee for such
year, shall be carried forward to a following fiscal year.
9
<PAGE>
13. Unless deferred as provided herein, Incentive Awards for any
Fiscal Year shall be paid as directed by the Committee on or
after February 1st, but not later than March 15th of the
following year. Any Incentive Award, or portion thereof,
which is to be paid on a deferred basis shall be placed in
the Reserve Account (as hereinafter defined) of the Partici-
pant pursuant to the terms hereof.
14. The Committee shall keep minutes of its actions and shall
report all action taken to the Board of Directors of Handy &
Harman.
15. A Participant may elect to defer all or any portion of his
or her Incentive Award for a Fiscal Year (subject to Section
9 of these Regulations), by giving written notice to the
Committee specifying: (1) the amount to be deferred; (2) an
election of payment in either a single lump sum or annual
installments, as provided in Section 17 (each, a "Payment
Option"); and (3) a Retirement Date (as hereinafter de-
fined), which, in the case of a lump sum distribution, must
be no earlier than the earlier of (a) three years after the
date of such election or (b) the Participant's termination
of employment with the Company. A form of notice is at-
tached as Exhibit A. Any such election shall be made by the
Participant prior to the end of the Fiscal Year with respect
to which such Incentive Award is to be earned. Separate
deferral elections may be made with respect to Incentive
Awards attributable to different Fiscal Years; provided,
however, that a single Payment Option and a single Retire-
ment Date shall apply to amounts deferred by a Participant
hereunder. Such election may be revoked by the Participant,
and a new election of a Payment Option and/or a Retirement
Date may be made, provided that such new election shall be
null and void and of no force and effect unless (1) such new
election is made at least one year prior to the Partici-
pant's termination of employment with the Company, (2) in
the event the new election involves a revocation of an
annual installment Payment Option and the election of a lump
sum distribution Payment Option, the newly elected Retire-
ment Date is at least three years after the date of the new
election, and (3) in the event the new election involves a
change in the Retirement Date applicable to a previous lump
sum distribution election, (a) the new election is made at
least one year prior to the Retirement Date previously in
effect and (b) the new Retirement Date is at least three
years after the date of the new election. If more than one
election notice has been filed, the election in the most
recent valid notice shall control. An amount equal to the
portion of any Incentive Award so deferred shall be credited
to the Participant on the Company's books in a reserve
account (the "Reserve Account"). Deferred amounts credited
to a Participant's Reserve Account shall, except as other-
10
<PAGE>
wise provided in Section 16, 17, 21, 22, 23 or 26 hereof,
commence to be paid on the last day of the month in which
the Participant becomes age 65, or on such other date as the
Participant shall designate in his or her election hereunder
(the "Retirement Date").
16. Notwithstanding anything to the contrary herein, the Commit-
tee, in its sole discretion and in accordance with rules as
it may prescribe, may permit distribution of all or any
portion of deferred amounts in the case of the Participant's
hardship and may determine to cause distributions on the
Retirement Date to be made in a lump sum.
17. Except as otherwise provided herein, deferred amounts cred-
ited to the Participant's Reserve Account shall be paid in
one of the following Payment Options, as elected by the
Participant:
(a) Lump-Sum Distribution. The Participant may elect to
receive the value of his or her Reserve Account in a
lump sum distribution.
(b) Annual Installments. The Participant may elect to
receive the value of his or her Reserve Account in
quarter-annual installments over a period of between
three and twenty years, as elected by the Participant.
The first payment shall be made on the first day of the
next calendar quarter following the Retirement Date and
shall be equal to the amount credited to the Partici-
pant in the Reserve Account as of the date of such
payment, divided by the total number of payments to be
made; and the succeeding installment payments, in
amounts equal to the amount credited to the Participant
in the Reserve Account as of the date of payment divided
by the number of remaining installment payments
to be made, shall continue to be made thereafter at
quarter-annual intervals until the last such payment,
equal to the entire amount then credited to the
Participant in the Reserve Account, is made.
Amounts so paid shall be subtracted as
paid from the amount credited to
the Participant in the Reserve Account.
18. The Committee shall appoint a committee of three, which may
include the Participant, to administer the Participants'
Reserve Accounts and any of the Company's funds invested in
connection therewith. The Company or Handy & Harman may
create a grantor trust (within the meaning of section 671 of
the Internal Revenue Code of 1986, as amended (the "Code")),
for this purpose to which it shall from time to time con-
tribute amounts equal to the amounts deferred hereunder.
Such trust shall conform to the terms of the model trust as
described in the Internal Revenue Service Revenue Procedure
11
<PAGE>
92-64 (I.R.B. 1992-33). Payment of benefits from such trust
shall, to that extent, discharge the Company's obligations
under this Plan. The Participant shall elect that amounts
credited to his or her Reserve Account be invested in one or
more investment funds which shall be made available for such
purposes under such trust or otherwise. A form of such
investment election is attached as Exhibit B. The Partici-
pant may amend his or her investment election no more than
four times per calendar year, subject to any restrictions
which the committee may impose from time to time. Notwith-
standing the existence of any such trust or other funding
vehicle, it is expressly understood that neither the Partic-
ipant nor his or her beneficiary (the "Beneficiary") shall
have any present or future interest in the funds so in-
vested, which, together with the dividend and interest
income thereon and any capital gains realized with respect
thereto, shall constitute assets of the Company or Handy &
Harman, as the case may be. It is further understood that
neither the Plan nor these Regulations create any fund or
trust for the benefit of the Participant or his or her
Beneficiary, that the Company's obligation hereunder is
limited to the contractual obligation to make payments to
the Participant or to his or her Beneficiary as provided
herein, and that with respect to such payments the rights of
the Participant or his or her Beneficiary shall be those of
an unsecured creditor of the Company. Amounts equal to the
dividend or interest income from such investments shall be
added to the amount credited to the Participant in the
Reserve Account as such income is earned or reported to the
committee by the investment manager. Amounts equal to
unrealized gains and losses with respect to such investments
shall be added to or subtracted from the amount so credited
as such gains and losses are realized or reported, as the
case may be. The corporation income tax on any income
earned by funds so invested shall be paid by the Company and
shall not be a charge against the Participant's Reserve
Account.
19. The amount credited to the Participant in the Reserve Ac-
count on any date for which a computation is made shall be
equal to the sum of (i) the cash credited to such account at
the opening of business on such date as provided in Section
18 hereof, plus (ii) the closing market value of the securi-
ties, if any, in which the Company's (or Handy & Harman's)
funds are invested in connection with such account, as
hereinabove provided, as of the close of business on the
last business day prior to the date of computation. If any
portion of such funds are deposited with a bank in a discre-
tionary investment management account, the amount credited
to the Participant on any computation date shall include an
amount equal to the value on such date, or on the preceding
day, of the investments in such account, as verified by the
12
<PAGE>
bank in a quarterly summary value statement issued in its
capacity as investment manager. If funds invested in con-
nection with the Reserve Accounts of two or more Partici-
pants are commingled in an account for any investment pur-
pose, the amount credited to the Participant in the Reserve
Account shall include an amount equal to a proportionate
share of the value of such account.
20. The Participant shall file with the Company a Beneficiary
statement designating an individual or the Participant's
estate as Beneficiary. If no Beneficiary statement is
filed, the Beneficiary shall be the Participant's estate.
If more than one Beneficiary statement has been filed, the
Beneficiary designated in the Beneficiary statement bearing
the most recent date shall be the Beneficiary. A form of
designation of Beneficiary is attached as Exhibit C.
21. If the Participant's employment with the Company shall
terminate before the Retirement Date due to:
(a) permanent and total disability which prevents the
Participant from engaging in any occupation for wage or
profit; or
(b) physical or mental disability which prevents the Par-
ticipant from performing his duties in a manner satis-
factory to the Company,
the amount credited to the Participant in the Reserve Ac-
count as of the date of the disability shall be distributed,
commencing as of such date, based on the Payment Option then
in effect with respect to the Participant. For the purpose
of this paragraph, a determination by the Board of Directors
of Handy & Harman that such disability exists shall be
conclusive.
22. In the event the Participant shall die before the Retirement
Date and while employed by the Company, the amount credited
to the Participant in the Reserve Account as of the date of
the Participant's death shall be distributed to the Benefi-
ciary, if an individual, based on the Payment Option then in
effect with respect to the Participant. If the Beneficiary
is the Participant's estate, the amount credited to the
Participant in the Reserve Account as of the date of the
Participant's death shall be paid to the Participant's
estate in one lump sum.
If distribution is being made to a Participant in install-
ments (as provided in Section 17 hereof) and such Partici-
pant dies before all installment payments have been made,
the amount credited to the Participant in the Reserve Ac-
count as of the date of the Participant's death shall be
13
<PAGE>
distributed to the Beneficiary, if an individual, by contin-
uation of the remaining installment payments. If the Bene-
ficiary is the Participant's estate, the amount credited to
the Participant in the Reserve Account as of the date of the
Participant's death shall be paid to the Participant's
estate in one lump sum.
If distribution is being made to a Beneficiary in install-
ments and such Beneficiary dies before all installment
payments have been made, the amount credited to the Partici-
pant in the Reserve Account as of the date of the Benefi-
ciary's death shall be paid to the estate of the Beneficiary
in one lump sum.
23. In the event that the Participant's employment with the
Company shall terminate before the Retirement Date for
reasons other than death or disability, the Reserve Account
shall be credited as hereinabove provided with an amount
equal to all or a portion of the Incentive Award, if any,
made for the year of such termination. In the event of such
termination, the Reserve Account shall continue to be admin-
istered, and payments with respect thereto shall be made, as
otherwise provided herein. In the event that, following
such termination, the Participant shall die, whether before
or after the Retirement Date, distribution shall be made,
commencing as soon as practicable following the Partici-
pant's death, to the Participant's Beneficiary, if an indi-
vidual, in accordance with the Payment Option then in effect
with respect to the Participant or, if the Beneficiary is
the Participant's estate, in a lump sum. In the event that
the Beneficiary shall die prior to the complete distribution
of the Reserve Account, the amount credited to the Reserve
Account as of the date of the Beneficiary's death shall be
paid to the estate of the Beneficiary in one lump sum.
24. The Company's obligation hereunder to make payments to the
Participant with respect to amounts credited to the Partici-
pant in the Reserve Account shall terminate forthwith if,
prior to or following his termination from the Company, the
Participant shall without the prior written consent of the
Company, directly or indirectly engage in any business which
is substantially similar to the business of the Company,
either as a proprietor, stockholder, partner, officer,
employee, consultant or otherwise, provided that the owner-
ship of less than two percent (2%) of the stock in any
corporation engaged in a business which is similar to that
of the Company shall not be deemed the occurrence of such an
event.
25. Neither the Participant, his or her spouse, nor any Benefi-
ciary shall have the power to transfer, assign, anticipate,
mortgage or otherwise encumber in advance any of the bene-
14
<PAGE>
fits payable hereunder, nor shall said benefits be subject
to seizure for the payment of any debts or judgments of any
of them, or be transferable by operation of law in the event
of bankruptcy, insolvency or otherwise of the Participant,
his or her spouse or Beneficiary.
26. Notwithstanding anything to the contrary provided herein, a
Participant may, with the consent of the Company, continue
in active employment after the Retirement Date. In such
event, the Committee may defer the start of the payments
provided for in Section 15 until the first day of the next
calendar quarter following the Participant's termination of
employment. If this is done, appropriate adjustments may be
made in the amounts payable or in the number of installment
payments (if applicable), to take into account the effect of
the delay.
27. Deferral elections made pursuant to the terms and conditions
of these Regulations shall supersede any prior elections in
effect under applicable Deferred Compensation Agreements
between a Participant and the Company with respect to
amounts earned in respect of Fiscal Years prior to 1994. In
the absence of any deferral election by a Participant in
respect of the 1994 Fiscal Year, such Participant shall
nevertheless make a new deferral election hereunder with
respect to such pre-1994 amounts, which election shall
supersede such prior elections.
15
<PAGE>
EXHIBIT A
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
ELECTION NOTICE
As provided in the Subsidiary, Division, Group or Unit Management
Incentive Plan, as amended and restated (the "Plan"), I hereby
elect to defer payment of all or a portion of any Incentive Award
for the year 19__ in the following manner:
Amount of Deferral (fill in one)
$______________________
(amount)
or
_____________________%
(percentage)
Payment Option: The compensation deferred is to be paid to me in (choose
one): (1)
________ one lump sum.
________ quarter-annual installments (choose 3-20 years).
Payments begin on first day of next calendar quarter
following Retirement Date.
Retirement Date: If the lump sum payment option is chosen, the lump sum is to
be paid on (choose one):*
________ the last day of the month in which I become age 65.
________________, 19_ (some other date which must be after the earlier of (i)
three years from the date of this election, or (ii) your termination of
employment with the Company).
Date: ------------------------------
(Signature)
------------------------------
(Print Name)
- ---------------
(*) If you have previously elected a Payment Option and Retire-
ment Date, your prior election will apply and you need not com-
plete these Sections. If you wish to change either or both of
your Payment Option and Retirement Date, you may do so (subject
to the terms and conditions of the Plan and Regulations).
16
<PAGE>
EXHIBIT B
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
INVESTMENT ELECTION
I hereby direct that amounts credited to my Account under the Subsidiary,
Division, Group or Unit Management Incentive Plan, as amended and restated, be
invested as follows:
_____% Pooled Account - Company selected investment manager
_____% T. Rowe Price International Stock Fund
_____% T. Rowe Price Prime Reserve Fund
_____% T. Rowe Price GNMA Fund
_____% T. Rowe Price Capital Appreciation Fund
_____% T. Rowe Price Spectrum Growth Fund
_____% T. Rowe Price Stable Value Fund
100% Total
Future deferrals will be allocated as shown above or a
different allocation of the Reserve Account may be selected by
notifying the committee in writing. No more than four changes
may be made in any calendar year.
Date: -----------------------
(Signature)
-----------------------
(Print Name)
17
<PAGE>
EXHIBIT C
SUBSIDIARY, DIVISION, GROUP OR UNIT
MANAGEMENT INCENTIVE PLAN
DESIGNATION OF BENEFICIARY(IES)
In accordance with the provisions of the Subsidiary, Division, Group or
Unit Management Incentive Plan, as amended and restated (the "Plan"), I hereby
designate the person (or persons) named below my beneficiary (or beneficiaries)
to receive any amounts in my deferred compensation account in the event of my
death, hereby revoking all prior designations of beneficiary(ies), if any, made
by me under the Plan.
--------------------------
Name
--------------------------
--------------------------
--------------------------
Address
Date: --------------------------
(Signature)
--------------------------
(Print Name)
18
<PAGE>
Handy & Harman
DEFERRED FEE PLAN FOR DIRECTORS
(As amended and restated as of January 1, 1995)
Section 1. Effective Date. The effective date of the Handy &
Harman Deferred Fee Plan for Directors (the "Plan") is December 1, 1980.
Effective as of January 1, 1995, the Plan is amended and restated with respect
to any and all fees earned beginning in the 1995 Fiscal Year as follows:
Section 2. Eligibility. Any member of the Board of Directors
(the "Board") of Handy & Harman (the "Company") who is not an officer or other
employee of the Company is eligible to participate in the Plan.
Section 3. Deferred Compensation Account. A deferred
compensation account (the "Account") shall be established for each director who
elects to participate in the Plan.
Section 4. Amount of Deferral. A participant may elect to
defer receipt of all or any part of the compensation payable to the participant
for serving on the Board or committees of the Board. An amount equal to the
compensation deferred shall be credited to the participant's Account on the date
such compensation would otherwise be payable.
Section 5. Time and Period of Election to Participate. An
election to participate in the Plan shall be effective when made as to
compensation not then earned and shall continue until the participant terminates
his participation in the Plan as provided in Section 7, except that compensation
earned before January 1, 1981 may not be deferred under the Plan.
Section 6. Manner of Election to Participate. A participant
shall elect to participate in the Plan by giving written notice to the Company
specifying: (1) the amount to be deferred; (2) an election of payment in either
a single lump sum or annual installments, as provided in Section 10 (each, a
"Payment Option"); and (3) a Retirement Date (as hereinafter defined), which, in
the case of a lump sum distribution, must be no earlier than the earlier of (a)
three years after the date of such election or (b) the participant's termination
of service as a director. A form of notice
<PAGE>
is attached as Exhibit A. Such election may be revoked by the participant, and a
new election of a Payment Option and/or a Retirement Date may be made, provided
that such new election shall be null and void and of no force and effect unless
(1) such new election is made at least one year prior to the participant's
termination from service as a director, (2) in the event the new election
involves a revocation of an annual installment Payment Option and the election
of a lump sum distribution Payment Option, the newly elected Retirement Date is
at least three years after the date of the new election, and (3) in the event
the new election involves a change in the Retirement Date applicable to a
previous lump sum distribution election, (a) the new election is made at least
one year prior to the Retirement Date previously in effect and (b) the new
Retirement Date is at least three years after the date of the new election.
Deferred amounts credited to a participant's Account shall commence to be paid
on such a date as the participant shall designate in his or her deferral
election hereunder or, in the case of installment payments under Section 10
hereof, the commencement date specified in such Section (the applicable
commencement date being referred to herein as the "Retirement Date"). A single
Payment Option and a single Retirement Date shall apply to all amounts deferred
by a participant hereunder. If more than one election notice has been filed,
the election in the most recent valid notice shall control. Notwithstanding such
elections, the Board, in its sole discretion, may determine to make
distributions in cases of hardship and may determine to cause distributions on
the Retirement Date to be made in a lump sum.
Section 7. Termination of Election. A participant may
terminate his participation in the Plan by written notice to the Company. If
participation in the Plan is terminated ("Termination"), an amount equal to the
compensation earned by the terminating participant before Termination which has
not been credited to the terminating participant's Account shall be credited to
such Account. A Termination shall not affect payment of amounts credited to any
Account; such amounts may be paid only as provided in Section 10.
Section 8. Value of Accounts. The value of each participant's
Account shall include amounts credited under Section 4 (deferred compensation)
adjusted for realized and unrealized income or loss resulting from investments
made under Section 9, and less the amount of any payments made under Section 10.
The corporation income tax on any income earned by funds so invested shall be
paid by the Company and shall not be a charge against the participant's Account.
Section 9. Management of Accounts. The Board shall appoint a
committee of three, which may include the participant, to administer the
participant's
2
<PAGE>
Account and any of the Company's funds invested in connection therewith. The
Company may create a grantor trust (with the meaning of section 671 of the
Internal Revenue Code of 1986, as amended (the "Code")) for this purpose to
which it shall from time to time contribute amounts equal to the amounts
deferred hereunder. Such trust shall conform to the terms of the model trust as
described in the Internal Revenue Service Revenue Procedure 92-64 (I.R.B.
1992-33). Payment of benefits from such trust shall, to that extent, discharge
the Company's obligation under this Plan. The participant shall elect that
amounts credited to his or her Account be invested in one or more investment
funds which shall be made available for such purposes under such trust or
otherwise. A form of such investment election is attached as Exhibit B. The
participant may amend his or her investment election no more than four times per
calendar year, subject to any restrictions which the committee may impose from
time to time. Notwithstanding the existence of any such trust or other funding
vehicle, it is expressly understood that neither the participant nor his or her
beneficiary shall have any present or future interest in the funds so invested,
which, together with the dividend and interest income thereon and any capital
gains realized with respect thereto, shall constitute assets of the Company. It
is further understood that this Plan creates no fund or trust for the benefit of
the participant or his or her beneficiary, that the Company's obligation
hereunder is limited to the contractual obligation to make payments to the
participant or to his or her beneficiary as provided herein, and that with
respect to such payments the rights of the participant or his beneficiary shall
be those of an unsecured creditor of the Company.
Section 10. Payment of Deferred Compensation. Except as
otherwise provided herein, payments shall be made from a participant's Account,
in accordance with one of the following Payment Options, as elected by the
participant:
(i) Lump Sum Distribution. The participant may elect to
receive the value of his or her Account in a lump sum
distribution.
(ii) Annual Installments. If annual installments are
elected, amounts credited to the participant's
Account shall be paid in annual installments over a
period of between three and twenty years, as elected
by the participant. The first payment shall be made
on January 15 of the first calendar year following
the participant's termination of service as a member
of the Board and shall be equal to the value of
participant's Account as
3
<PAGE>
of the date of such first payment divided by the
total number of payments to be made. Subsequent
installment payments shall be made on each January
15 thereafter; each such subsequent installment
payment shall be equal to the value of the
participant's Account as of the date of such
subsequent installment payment divided by the number
of installment payments (including such subsequent
installment payment) remaining to be made.
Except as provided in Section 12, all payments made from a
participant's Account shall be paid to the participant. Notwithstanding the
foregoing provisions of this Section 10, if amounts become payable to an estate
of a participant or of a beneficiary pursuant to Section 11 or 12, an amount
equal to the value of the participant's Account on the date of the death
occasioning payments to such estate shall be paid in one lump sum within 60 days
after the date of such death.
Section 11. Determination of Beneficiary. A participant shall
designate a beneficiary by giving written notice to the Company. If more than
one beneficiary designation notice has been filed, the beneficiary (or
beneficiaries) designated in the most recent notice shall control. A form of
designation of beneficiary is attached as Exhibit C.
If no beneficiary is designated, the beneficiary shall be the
participant's estate. If a designated beneficiary fails to survive the
participant, such beneficiary shall be replaced by the participant's estate as
beneficiary. If there is no sufficient evidence that the participant and such
designated beneficiary have died otherwise than simultaneously, for purposes of
the Plan the participant shall be deemed to have survived the designated
beneficiary.
If a designated beneficiary who has survived the participant
shall die, such beneficiary's estate shall replace the beneficiary as
beneficiary.
Section 12. Death of Participant. If a participant dies before
all payments under Section 10 to which he is or might become entitled under the
Plan have been made, all payments made under Section 10 after his death shall be
paid to the beneficiary (or beneficiaries) determined under Section 11.
4
<PAGE>
Section 13. Participant's Right Unsecured. The obligation of
the Company hereunder is supported only by the general assets of the Company; no
provisions of the Plan shall be construed to give any participant or beneficiary
at any time a security interest in any Account or any other asset in trust with
the Company for the benefit of any participant or beneficiary.
Section 14. Statement of Accounts. Statements will be sent to
participants during February, May, August and November of each year as to the
value of their Accounts as the last day of the preceding calendar quarter.
Section 15. Assignability. No right to receive payments
hereunder shall be transferable or assignable by a participant or a beneficiary,
except by will or by the laws of descent and distribution.
Section. 16. Participation in Other Plans. Nothing in this
Plan will affect any right which a participant may otherwise have to participate
in, or under, any other retirement plan or agreement which the Company may now
or hereafter have.
Section 17. Amendment. This Plan may at any time or from time
to time be amended, modified or terminated by the Board. No amendment,
modification or termination shall, without the consent of a participant,
adversely affect such participant's accruals in his Account.
5
<PAGE>
EXHIBIT A
HANDY & HARMAN
DEFERRED FEE PLAN FOR DIRECTORS
ELECTION NOTICE
As provided in the Handy & Harman Deferred Fee Plan for
Directors, as amended and restated as of January 1, 1995 (the "Plan"), I hereby
elect to participate in the Plan and to defer payment of compensation hereafter
earned by me for services on the Board of Directors of Handy & Harman and
committees thereto in the following manner:
Amount of Deferral (fill in one)
$_____________ per year
(amount)
or
______________% per year
(percentage)
Payment Option: The compensation deferred is to be paid to me in
(choose one):*
_____________ one lump sum.
_____________ annual installments {chose 3-20 years}.
Retirement Date: If the lump sum payment option is chosen, the
lump sum is to be paid on (choose one):*
- --------
* If you have previously elected a Payment Option and Retirement Date,
your prior election will apply and you need not complete these
Sections. If you wish to change either or both of your Payment Option
and Retirement Date, you may do so (subject to the term and conditions
of the Plan).
6
<PAGE>
________ the January 15 of the calendar year following
the termination of my services as a member of
the Board of Directors.
________ _________, 19___ (some other date, more than three years after
the date of this election).
Date:____________________ __________________________
(Signature)
--------------------------
(Print Name)
7
<PAGE>
EXHIBIT B
HANDY & HARMAN
DEFERRED FEE PLAN FOR DIRECTORS
INVESTMENT ELECTIONS
I hereby direct that amounts credited to my Account under the
Handy & Harman Deferred Fee Plan for Directors, as amended and restated as of
January 1, 1995, be invested as follows:
_____% Pooled Account - Company select investment manager
_____% T. Rowe Price International Stock Fund
_____% T. Rowe Price Prime Reserve Fund
_____% T. Rowe Price GNMA Fund
_____% T. Rowe Price Capital Appreciation Fund
_____% T. Rowe Price Spectrum Growth Fund
_____% T. Rowe Price Stable Value Fund
100% Total
Future deferrals will be allocated as shown above or a
different allocation of the Account may be selected by notifying the committee
in writing. No more than four changes may be made in any calendar year.
Date:____________________ __________________________
(Signature)
--------------------------
(Print Name)
8
<PAGE>
EXHIBIT C
HANDY & HARMAN
DEFERRED FEE PLAN FOR DIRECTORS
DESIGNATION OF BENEFICIARY (IES)
In accordance with the provisions of the Handy & Harman
Deferred Fee Plan For Directors, as amended and restated as of January 1, 1995
(the "Plan"), I hereby designate the person (or persons) named below my
beneficiary (or beneficiaries) to receive any amounts in my deferred
compensation account in the event of my death, hereby revoking all prior
designations of beneficiary (ies), if any, made by me under the Plan.
NAME ADDRESS
Dated:____________________ __________________________
(Signature)
--------------------------
(Print Name)
9
<PAGE>
HANDY & HARMAN
LONG-TERM INCENTIVE
STOCK OPTION PLAN
1. Purpose. The purpose of the Handy & Harman Long-Term Incentive Stock
Option Plan (the "Plan") is to benefit Handy & Harman and its subsidiaries (the
"Company') by providing for the acquisition of a greater personal and financial
interest in the Company by key employees upon whom the Company is dependent for
success.
2. Administration of the Plan. The Plan shall be administered by a
Committee (the "Committee") appointed by and responsible to the Board of
Directors of the Company (the "Board"). The Committee shall consist of not less
than three directors who are "disinterested persons" within the meaning of Rule
16b-3 promulgated under the Securities and Exchange Act of 1934, as amended, or
any successor provision ("Rule 16b-3").
The Committee has and may exercise such powers and authority of the
Board as may be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. The Committee has authority in its
discretion to determine the key employees to whom and the time or times at which
options or stock appreciation rights (together, "Awards") may be granted and the
number of shares of Common Stock applicable to each such Award. Each Award will
be evidenced by a written instrument and may include any terms and conditions
consistent with the Plan, as the Committee may determine. The Committee also has
authority to interpret the Plan, to determine the terms and provisions of the
respective agreements and to make all other determinations necessary or
advisable for Plan administration. The Committee shall interpret the Plan and
Awards hereunder in accordance and consistent with the principles set forth in
Rule 16b-3. The Committee has authority to prescribe, amend, and rescind rules
and regulations relating to the Plan. All interpretations, determinations and
actions by the Committee will be final, conclusive and binding upon parties. Any
action of the Committee with respect to the administration of the Plan shall be
taken pursuant to a majority vote or by the unanimous written consent of its
members.
<PAGE>
No member of the Board or the Committee will be liable for any action
or determination made in good faith by the Board or the Committee with respect
to the Plan or any Award under it.
3. Participants. Options shall be granted under the Plan to those key
employees of the Company who are approved by the Committee, including directors
of the Company who are also salaried officers, who perform services of special
importance to the management, operation and development of the Company.
4. Effective Date and Termination of the Plan. The effective date of
the Plan shall be February 28, 1991, and the Plan shall terminate on February
27, 2001, or at such earlier time as the Board of Directors may determine. Any
option or stock appreciation right outstanding under the Plan at the time of its
termination shall remain in effect until it shall have been exercised or shall
have expired or otherwise terminated pursuant to the provisions of the Plan.
5. Stock Subject to Options. The number of shares to be subject to
Awards hereunder shall not exceed 1,000,000 shares of the Common Stock, $1.00
par value, of the Company ("Common Stock"), subject to adjustment as provided in
Section 10 hereof. Any shares subject to an Award under the Plan, which Award
expires or is terminated unexercised as to such shares, may again be subjected
to an Award under the Plan. The Committee may require the surrender of
outstanding Awards as a condition precedent to the grant of new Awards under the
Plan.
6. Payment of Purchase Price. The purchase price of each share acquired
pursuant to the exercise of any option shall be paid in full at the time of such
purchase, and a certificate representing shares so purchased shall be delivered
to the persons entitled thereto. The Committee shall have the sole discretion to
determine at the time of grant of the option the form (cash, shares of Common
Stock, or a combination thereof) in which payment of the purchase price may be
made.
7. Types of Options. It is intended that no options granted under the
Plan shall qualify as an incentive stock option as defined in Section 422 of the
Internal Revenue Code.
8. Terms and Conditions of Options. Each option granted under the Plan
shall contain such terms and conditions, not inconsistent with the Plan, as are
determined by the Committee, subject to the following provisions:
2
<PAGE>
(a) Such option by its terms shall not be exercisable after
the expiration of ten years from the date such option is granted.
(b) Each option shall become exercisable (commencing one year
after the date of grant) cumulatively at the rate of 20% per year.
(c) The option price shall not be less than 100 percent of the
fair market value of the Common Stock at the time such option is
granted. The term "fair market value" shall mean the average of the
highest price and the lowest price at which the Common Stock shall have
been sold on the New York Stock Exchange on the date of the grant of
such option. In the event that any such option shall be granted on a
date on which there were no such sales on such Exchange, the fair
market value on such date shall be deemed to be the average of such
highest price on the immediately preceding day on which there were such
sales.
(d) Such option by its terms shall not be transferable by the
optionee otherwise than by will or the laws of descent and distribution
and shall be exercisable, during his lifetime, only by him.
(e) No option shall be granted after ten years from the
effective date of the Plan, as set forth in Section 4.
9. Stock Appreciation Rights. Stock appreciation rights may be granted
by the Committee in connection with any option at the time of grant of such
option. Stock appreciation rights shall be subject to the following terms and
conditions and to such other terms and conditions, not inconsistent with the
Plan, as the Committee shall determine:
(a) The number of stock appreciation rights granted to a
participant may not exceed 100% of the number of shares that such
participant is entitled to purchase pursuant to the related option.
(b) Stock appreciation rights shall be exercisable, in whole
or in part, at such time or times and to the extent that the option to
which they relate shall be exercisable, and shall expire simultaneously
with the option to which they relate.
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(c) Upon exercise of a stock appreciation right, the related
option or portion thereof shall be surrendered to the Company in
exchange for payment by the Company of shares of Common Stock (valued
at their fair market value on the date of exercise of the stock
appreciation right) or cash or a combination thereof in an amount equal
to the excess of the aggregate fair market value of the shares subject
to the option or portion thereof being surrendered (valued on the date
of exercise of the stock appreciation right) over the aggregate option
price thereof; provided, however, that fractional shares shall not be
issued. Any option, to the extent surrendered, shall thereupon cease to
be exercisable.
(d) The Committee shall have the sole discretion to determine
the form in which payment (i.e., cash, shares of Common Stock, or any
combination thereof) will be made.
(e) Stock appreciation rights shall be transferable only when
the options to which they relate are transferable, and under the same
conditions.
(f) A stock appreciation right may be exercised only when the
market price of Common Stock exceeds the option price of the option to
which the stock appreciation right relates.
10. Adjustment in the Event of Recapitalization of the Company. Subject
to Section 11, if the outstanding shares of Common Stock of the Company are
increased, decreased or exchanged for a differing number or kind of shares or
other securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all the
property of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other distribution with
respect to such shares of Common Stock, or other securities, an appropriate and
proportionate adjustment may be in (i) the maximum number and kind of shares
provided in Section 5, (ii) the number and kind of shares or other securities
subject to the then-outstanding Awards, and (iii) the price for each share or
other unit of any other securities subject to then-outstanding Awards without
change in the aggregate purchase price or value as to which such options remain
exercisable or subject to restrictions.
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11. Change in Control. (a) Notwithstanding anything in the Plan to the
contrary, upon a Change in Control of the Company, all outstanding options
granted under the Plan shall become immediately exercisable.
(b) For purposes of this Section, a Change in control of the Company
shall be deemed to have occurred if:
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (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 the
Company in substantially the same proportions as their ownership of
stock of the Company), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities;
(ii) during any period of two 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 the Company to effect a transaction described in
clause (i), (iii) or (iv) of this Section) whose election by the Board
of Directors or nomination for election by the Company'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;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation; other than (A)
a merger or consolidation which would result in the voting securities
of the Company 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 the Company or such
surviving entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires
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more than 50% of the combined voting power of the company's then
outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
12. General Provisions. (a) Nothing in the Plan or in any instrument
executed pursuant to the Plan will confer upon any participant any right to
continue in the employ of the Company or affect the right of the company to
terminate the employment of any participant at any time with or without cause.
(b) No shares of Common Stock will be issued or transferred pursuant to
the exercise of an option or stock appreciation right unless and until all
then-applicable requirements imposed by federal and state securities and other
laws, rules and regulations and by any regulatory agencies having jurisdiction,
and by any stock exchanges upon which the Common Stock may be listed, have been
fully met. As a condition precedent to the issuance of shares pursuant to the
grant or exercise of an option or stock appreciation right, the Company may
require the participant to take any reasonable action to meet such requirements.
(c) No participant and no beneficiary or other person claiming under or
through such participant will have any right, title or interest in or to any
shares of Common Stock allocated or reserved under the Plan or subject to any
option or stock appreciation right except as to such shares of Common Stock, if
any, that have been issued or transferred to such participant.
(d) The Company may make such provisions as it deems appropriate to
withhold any taxes the Company determines it is required to withhold in
connection with the exercise of any option or stock appreciation right. The
Company may require the participant to satisfy any relevant tax requirements
before authorizing any issuance of Common Stock to the participant.
13. Amendment and Termination of Plan; Amendment of Incentive Awards.
The Board or the Committee will have the power, in its discretion, to amend,
suspend or terminate the Plan at any time. Except as provided in Section 10 of
the Plan, no such amendment will, without approval of the shareholders of the
Company (i) change the class of persons eligible to receive options or stock
appreciation rights under the Plan, (ii) materially increase the benefits
accruing to participants under the
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Plan, (iii) increase the number of shares of common stock subject to the Plan,
or (iv) transfer the administration of the Plan to any person who is not a
"disinterested person" under Rule 16b-3.
No amendment, suspension or termination of the Plan shall, without the
consent of the participant, impair or adversely affect any right or obligation
under any Award previously granted under the Plan.
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HANDY & HARMAN
1995 OMNIBUS STOCK INCENTIVE PLAN
1. Establishment and Purpose.
There is hereby adopted the Handy & Harman 1995 Omnibus Stock Incentive
Plan (the "Plan"). The Plan shall be the successor to the Handy & Harman
Long-Term Incentive Stock Option Plan (the "Predecessor Plan"). Upon adoption of
the Plan by the Board of Directors and approval of the Plan by stockholders of
Handy & Harman, no further awards shall be made under the Predecessor Plan. If
the Plan is not approved by the stockholders of Handy & Harman, the Predecessor
Plan shall remain in full force and effect. This Plan is intended to promote the
interests of the Company and the stockholders of Handy & Harman by providing
officers and other employees of the Company (including directors who are also
employees of the Company) with appropriate incentives and rewards to encourage
them to enter into and continue in the employ of the Company and to acquire a
proprietary interest in the long-term success of the Company.
2. Definitions.
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Agreement" shall mean the written agreement between Handy &
Harman and a Participant evidencing an Incentive Award.
(b) "Board of Directors" shall mean the Board of Directors of Handy &
Harman.
(c) "Cause," when used in connection with the termination of a
Participant's employment by the Company, shall mean (i) the
willful and continued failure by the Participant substantially to
perform his duties and obligations to the Company (other than any
such failure resulting from his incapacity due to physical or
mental illness) or (ii) the willful engaging by the Participant in
misconduct which is materially injurious to the Company. For
purposes of this Section 2(c), no act, or failure to act, on a
<PAGE>
Participant's part shall be considered "willful" unless done, or
omitted to be done, by the Participant in bad faith and without
reasonable belief that his action or omission was in the best
interest of the Company. The Committee shall determine whether a
termination of employment is for Cause.
(d) "Change in Control" shall mean any of the following occurrences:
(i) 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 Handy & Harman in substantially the same
proportions as their ownership of stock of Handy & Harman), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Handy &
Harman representing 25% or more of the combined voting power of
Handy & Harman's then outstanding securities;
(ii) during any period of not more than two 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
Handy & Harman to effect a transaction described in clause (i),
(iii) or (iv) of this Section) whose election by the Board of
Directors or nomination for election by Handy & Harman'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;
(iii) the stockholders of Handy & Harman approve a merger or
consolidation of Handy &
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Harman with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of
Handy & Harman 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
Handy & Harman or such surviving entity outstanding immediately
after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of Handy &
Harman (or similar transaction) in which no "person" (as
hereinabove defined) acquires more than 50% of the combined voting
power of Handy & Harman's then outstanding securities; or
(iv) the stockholders of Handy & Harman approve a plan of
complete liquidation of Handy & Harman or an agreement for the
sale or disposition by Handy & Harman of all or substantial ly
all of Handy & Harman's assets.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Committee" shall mean the Compensation Committee of the Board of
Directors. The Committee shall consist of two or more persons each
of whom is an "outside director" within the meaning of Section
162(m) of the Code and a "disinterested person" within the
meaning of Rule 16b-3 under the Exchange Act.
(g) "Company" shall mean, collectively, Handy & Harman and each of its
subsidiaries now held or hereinafter acquired.
(h) "Company Stock" shall mean the common stock of Handy & Harman, par
value $1.00 per share.
(i) "Disability" shall mean: (1) any physical or mental condition that
would qualify a Participant for a disability benefit under the
long-term disability plan maintained by the Company and
applicable to him; or (2) when used in con-
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<PAGE>
nection with the exercise of an Incentive Stock Option following
termination of employment, disability within the meaning of
Section 22(e)(3) of the Code.
(j) "Effective Date" shall mean the date upon which this Plan is
adopted by the Board of Directors.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(l) "Executive Officer" shall have the meaning set forth in Rule 3b-7
promulgated under the Exchange Act.
(m) The "Fair Market Value" of a share of Company Stock, as of a date
of determination, shall mean (i) the closing sales price per share
of Company Stock on the national securities exchange on which
such stock is principally traded for the last preceding date on
which there was a sale of such stock on such exchange, or (ii) if
the shares of Company Stock are not listed or admitted to trading
on any such exchange, the closing price as reported by the Nasdaq
Stock Market for the last preceding date on which there was a sale
of such stock on such exchange, or (iii) if the shares of Company
Stock are not then listed on the Nasdaq Stock Market, the average
of the highest reported bid and lowest reported asked prices for
the shares of Company Stock as reported by the National
Association of Securities Dealers, Inc. Automated Quotations
System for the last preceding date on which there was a sale of
such stock in such market, or (iv) if the shares of Company Stock
are not then listed on a national securities exchange or traded
in an over-the-counter market or the value of such shares not
otherwise determinable, such value as determined by the Committee
in good faith.
(n) "Handy & Harman" shall mean Handy & Harman, a New York
corporation.
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(o) "Incentive Award" shall mean an Option, Tandem SAR, Stand-Alone
SAR, Restricted Stock grant, Phantom Stock grant or Stock Bonus
granted pursuant to the terms of the Plan.
(p) "Incentive Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of Section 422 of the
Code.
(q) "Issue Date" shall mean the date established by Handy & Harman on
which certificates representing shares of Restricted Stock shall
be issued by Handy & Harman pursuant to the terms of Section
10(e).
(r) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(s) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 7.
(t) "Participant" shall mean an employee of the Company to whom an
Incentive Award is granted pursuant to the Plan, and, upon his
death, his successors, heirs, executors and administrators, as
the case may be.
(u) "Phantom Stock" shall mean the right, granted pursuant to Section
11, to receive in cash the Fair Market Value of a share of Company
Stock.
(v) "Plan" shall mean this Handy & Harman 1995 Omnibus Stock Incentive
Plan, as amended from time to time.
(w) "Predecessor Plan" shall mean the Handy & Harman Long-Term
Incentive Stock Option Plan.
(x) "Restricted Stock" shall mean a share of Company Stock which is
granted pursuant to the terms of Section 10 hereof and which is
subject to the restrictions set forth in Section 10(c).
(y) "Rule 16b-3" shall mean the Rule 16b-3 promulgated under the
Exchange Act.
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(z) "Section 162(m)" shall mean Section 162(m) of the Code and the
regulations promulgated thereunder.
(aa) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
(ab) "Stand-Alone SAR" shall mean a stock appreciation right granted
pursuant to Section 9 which is not related to any Option.
(ac) "Stock Bonus" shall mean a bonus payable in shares of Company
Stock granted pursuant to Section 12.
(ad) "Subsidiary" shall mean a "subsidiary corporation" within the
meaning of Section 424(f) of the Code.
(ae) "Tandem SAR" shall mean a stock appreciation right granted
pursuant to Section 8 which is related to an Option.
(af) "Vesting Date" shall mean the date established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.
3. Stock subject to the Plan
(a) Shares Available for Awards
The maximum number of shares of Company Stock reserved for
issuance under the Plan shall be 1,000,000 shares (subject to
adjustment as provided herein). Such shares may be authorized but
unissued Company Stock or authorized and issued Company Stock held
in the Handy & Harman's treasury or acquired by Handy & Harman
for the purposes of the Plan. The Committee may direct that any
stock certificate evidencing shares issued pursuant to the Plan
shall bear a legend setting forth such restrictions on
transferability as may apply to such shares pursuant to the Plan.
The grant of a Tandem SAR shall not reduce the number of shares of
Company Stock with respect
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<PAGE>
to which Incentive Awards may be granted pursuant to the Plan.
Upon the exercise of any Incentive Award granted in tandem with
any other Incentive Awards, such related Awards shall be cancelled
to the extent of the number of shares of Company Stock as to which
the Incentive Award is exercised and, notwithstanding the
foregoing, such number of shares shall no longer be available for
Incentive Awards under the Plan.
(b) Individual Limitation
The total number of shares of Company Stock subject to Incentive
Awards (including Incen tive Awards payable in cash but
denominated as shares of Company Stock, i.e., Stand-Alone SARs and
Phantom Stock), awarded to any employee during any tax year of the
Company, shall not exceed 300,000 shares. Determinations under the
preceding sentence shall be made in a manner that is consistent
with Section 162(m).
(c) Adjustment for Change in Capitalization.
In the event that the Committee shall determine that any dividend
or other distribution (whether in the form of cash, Company
Stock, or other property), recapitalization, Company Stock split,
reverse Company Stock split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share
exchange, or other similar corporate transaction or event, affects
the Company Stock such that an adjustment is appropriate in order
to prevent dilution or enlargement of the rights of Participants
under the Plan, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any
or all of (i) the number and kind of shares of Company Stock which
may thereafter be issued in connection with Incentive Awards, (ii)
the number and kind of shares of Company Stock issued or issuable
in respect of outstanding Incentive Awards, and (iii) the exercise
price, grant price, or purchase price relating to any Incentive
Award; provided that, with respect to Incentive Stock
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<PAGE>
Options, such adjustment shall be made in accordance with Section
424 of the Code.
(d) Re-use of Shares.
The following shares of Company Stock shall again become available
for Incentive Awards; any shares subject to an Incentive Award
that remain unissued upon the cancellation, surrender, exchange
or termination of such award for any reason whatsoever; any shares
of Restricted Stock forfeited; and any shares in respect of which
a stock appreciation right is settled for cash.
4. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee shall have
the authority in its sole discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Incentive Awards; to determine the persons to
whom and the time or times at which Incentive Awards shall be granted; to
determine the type and number of Incentive Awards to be granted, the number of
shares of Stock to which an Award may relate and the terms, conditions,
restrictions and performance criteria relating to any Incentive Award; to
determine whether, to what extent, and under what circumstances an Incentive
Award may be settled, cancelled, forfeited, exchanged, or surrendered (provided
that in no event shall the foregoing be construed to permit the repricing of an
Option (whether by amendment, cancellation and regrant or otherwise) to a lower
exercise price); to make adjustments in the performance goals in recognition of
unusual or non-recurring events affecting the Company or the financial
statements of the Company (to the extent in accordance with Section 162(m), if
applicable), or in response to changes in applicable laws, regulations, or
accounting principles; to construe and interpret the Plan and any Incentive
Award; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of Agreements; and to make all
8
<PAGE>
other determinations deemed necessary or advisable for the administration of the
Plan.
The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or Stand-Alone SAR granted
under the Plan becomes exercisable, waive or amend the operation of Plan
provisions respecting exercise after termination of employment or otherwise
adjust any of the terms of such Option or Stand-Alone SAR, and (ii) accelerate
the Vesting Date or Issue Date, or waive any condition imposed hereunder, with
respect to any share of Restricted Stock or Phantom Stock or otherwise adjust
any of the terms applicable to such share.
No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of
the Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action,
omission determination was taken or made by such member, director or employee in
bad faith and without reasonable belief that it was in the best interests of the
Company.
5. Eligibility.
The persons who shall be eligible to receive Incentive Awards pursuant
to the Plan shall be such employees of the Company (including officers of the
Company, whether or not they are directors of Handy & Harman) as the Committee
shall select from time to time. Directors who are not employees or officers of
the Company shall not be eligible to receive Incentive Awards under the Plan.
6. Awards Under the Plan; Agreement.
The Committee may grant Options, Tandem SARs, Stand-Alone SARs, shares
of Restricted Stock, shares of Phantom Stock and Stock Bonuses, in such amounts
and with such
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<PAGE>
terms and conditions as the Committee shall determine, subject to the provisions
of the Plan.
Each Incentive Award granted under the Plan (except an unconditional
Stock Bonus) shall be evidenced by an Agreement which shall contain such
provisions as the Committee may in its sole discretion deem necessary or
desirable. By accepting an Incentive Award, a Participant thereby agrees that
the award shall be subject to all of the terms and provisions of the Plan and
the applicable Agreement.
7. Options.
(a) Identification of Options.
Each Option shall be clearly identified in the applicable
Agreement as either an Incentive Stock Option or a Non-Qualified
Stock Option.
(b) Exercise Price.
Each Agreement with respect to an Option shall set forth the
amount (the "option exercise price") payable by the grantee to the
Company upon exercise of the Option. The option exercise price
per share shall be determined by the Committee but shall in no
event be less than the Fair Market Value of a share of Company
Stock on the date the Option is granted.
(c) Term and Exercise of Options.
(1) Unless the applicable Agreement provides otherwise, an
Option shall become cumulatively exercisable as to 25
percent of the shares covered thereby on each of the first,
second, third and fourth anniversaries of the date of
grant. The Committee shall determine the expiration date of
each Option; provided, however, that no Incentive Stock
Option shall be exercisable more than 10 years after the
date of grant. Unless the applicable Agreement provides
otherwise, no Option shall be
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<PAGE>
exercisable prior to the first anniversary of the date of
grant.
(2) An Option may be exercised for all or any portion of the
shares as to which it is exercisable, provided, that no
partial exercise of an Option shall be for an aggregate
exercise price of less than $1,000. The partial exercise of
an Option shall not cause the expiration, termination or
cancellation of the remaining portion thereof.
(3) An Option shall be exercised by delivering notice to Handy
& Harman's principal office, to the attention of its
Secretary, no less than one business day in advance of the
effective date of the proposed exercise. Such notice shall
be accompanied by the applicable Agreement, shall specify
the number of shares of Company Stock with respect to which
the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Participant or
other person then having the right to exercise the Option.
Such notice may be withdrawn at any time prior to the close
of business on the business day immediately preceding the
effective date of the proposed exercise. Payment for shares
of Company Stock purchased upon the exercise of an Option
shall be made on the effective date of such exercise by one
or a combination of the following means: (i) in cash, by
certified check, bank cashier's check or wire transfer;
(ii) subject to the approval of the Committee, in shares of
Company Stock owned by the Participant for at least six
months prior to the date of exercise and valued at their
Fair Market Value on the effective date of such exercise;
or (iii) subject to the approval of the Committee, by such
other provision as the Committee may from time to time
authorize. Any payment in shares of Company Stock shall be
effected by the delivery of such shares
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<PAGE>
to the Secretary of Handy & Harman, duly endorsed in blank
or accompanied by stock powers duly executed in blank,
together with any other documents and evidences as the
Secretary of Handy & Harman shall require.
(4) Certificates for shares of Company Stock purchased upon the
exercise of an Option shall be issued in the name of the
Participant or other person entitled to receive such
shares, and delivered to the Participant or such other
person as soon as practicable following the effective date
on which the Option is exercised.
(d) Limitations on Incentive Stock Options.
(1) To the extent that the aggregate Fair Market Value of
shares of Company Stock with respect to which Incentive
Stock Options are exercisable for the first time by a
Participant during any calendar year under the Plan and any
other stock option plan of the Company (or any Subsidiary)
shall exceed $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options shall
be treated as Non-Qualified Stock Options. Such Fair Market
Value shall be determined as of the date on which each such
Incentive Stock Option is granted.
(2) No Incentive Stock Option may be granted to an individual
if, at the time of the proposed grant, such individual owns
stock possessing more than ten percent of the total
combined voting power of all classes of stock of the
Company or any Subsidiary unless (i) the exercise price of
such Incentive Stock Option is at least 110 percent of the
Fair Market Value of a share of Company Stock at the time
such Incentive Stock Option is granted and (ii) such
Incentive Stock Option is not exercisable after the
expiration of five years
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from the date such Incentive Stock Option is granted.
(e) Effect of Termination of Employment.
(1) Unless the applicable Agreement provides otherwise, in the
event that the employment of a Participant with the
Company shall terminate for any reason other than Cause,
Disability or death (i) Options granted to such
Participant, to the extent that they are exercisable at the
time of such termination, shall remain exercisable until
the date that is three months after such termination, on
which date they shall expire, and (ii) Options granted to
such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire
at the close of business on the date of such termination.
The three-month period described in this Section 7(e)(1)
shall be extended to one year in the event of the
Participant's death during such three-month period.
Notwithstanding the foregoing, no Option shall be
exercisable after the expiration of its term.
(2) Unless the applicable Agreement provides otherwise, in the
event that the employment of a Participant with the
Company shall terminate on account of the Disability or
death of the Participant (i) Options granted to such
Participant, to the extent that they were exercisable at
the time of such termination, shall remain exercisable
until the first anniversary of such termination, on which
date they shall expire, and (ii) Options granted to such
Participant, to the extent that they were not exercisable
at the time of such termination, shall expire at the close
of business on the date of such termination; provided,
however, that no Option shall be exercisable after the
expiration of its term.
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(3) In the event of the termination of a Participant's
employment for Cause, all out standing Options granted to
such Participant shall expire at the commencement of
business on the date of such termination.
(f) Acceleration of Exercise Date Upon Change in Control.
Upon the occurrence of a Change in Control, each Option granted
under the Plan and outstanding at such time shall become fully
and immediately exercisable and shall remain exercisable until
its expiration, termination or cancellation pursuant to the terms
of the Plan.
8. Tandem SARs.
The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARs relating to a number of shares of Company Stock less
than or equal to the number of shares of Company Stock subject to the related
Option. A Tandem SAR may be granted at the same time as, or, in the case of a
Non-Qualified Stock Option, subsequent to the time that, its related Option is
granted.
(a) Benefit Upon Exercise.
The exercise of a Tandem SAR with respect to any number of shares
of Company Stock shall entitle the Participant to a cash payment,
for each such share, equal to the excess of (i) the Fair Market
Value of a share of Company Stock on the exercise date over (ii)
the option exercise price of the related Option. Such payment
shall be made as soon as practicable after the effective date of
such exercise.
(b) Term and Exercise of Tandem SAR.
(1) A Tandem SAR shall be exercisable only if and to the extent
that its related Option is exercisable.
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(2) The exercise of a Tandem SAR with respect to a number of
shares of Company Stock shall cause the immediate and
automatic cancellation of its related Option with respect
to an equal number of shares. The exercise of an Option, or
the cancellation, termination or expiration of an Option
(other than pursuant to this Section 8(b)(2)), with
respect to a number of shares of Company Stock shall cause
the automatic and immediate cancellation of any related
Tandem SARs to the extent that the number of shares of
Company Stock remaining subject to such Option is less than
the number of shares subject to such Tandem SARs.
Such Tandem SARs shall be cancelled in the order in which
they become exercisable.
(3) A Tandem SAR may be exercised for all or any portion of the
shares as to which it is exercisable; provided, that no
partial exercise of a Tandem SAR shall be for an aggregate
exercise price of less than $1,000. The partial exercise of
a Tandem SAR shall not cause the expiration, termination
or cancellation of the remaining portion thereof.
(4) No Tandem SAR shall be assignable or transferable otherwise
than together with its related Option.
(5) A Tandem SAR shall be exercised by delivering notice to
Handy & Harman's principal office, to the attention of its
Secretary, no less than one business day in advance of the
effective date of the proposed exercise. Such notice shall
be accompanied by the applicable Agreement, shall specify
the number of shares of Company Stock with respect to which
the Tandem SAR is being exercised and the effective date of
the proposed exercise and shall be signed by the
Participant or other person then having the right to
exercise the
15
<PAGE>
Option to which the Tandem SAR is related. Such notice may
be withdrawn at any time prior to the close of business on
the business day immediately preceding the effective date
of the proposed exercise.
9. Stand-Alone SARs.
(a) Exercise Price.
The exercise price per share of a Stand-Alone SAR shall be
determined by the Committee at the time of grant, but shall in no
event be less than the Fair Market Value of a share of Company
Stock on the date of grant.
(b) Benefit Upon Exercise.
The exercise of a Stand-Alone SAR with respect to any number of
shares of Company Stock shall entitle the Participant to a cash
payment, for each such share, equal to the excess of (i) the Fair
Market Value of a share of Company Stock on the exercise date over
(ii) the exercise price of the Stand-Alone SAR. Such payments
shall be made as soon as practicable.
(c) Term and Exercise of Stand-Alone SARs.
(1) Unless the applicable Agreement provides otherwise, a
Stand-Alone SAR shall become cumulatively exercisable as to
25 percent of the shares covered thereby on each of the
first, second, third and fourth anniversaries of the date
of grant. The Committee shall determine the expiration
date of each Stand-Alone SAR. Unless the applicable
Agreement provides otherwise, no Stand-Alone SAR shall be
exercisable prior to the first anniversary of the date of
grant.
(2) A Stand-Alone SAR may be exercised for all or any portion
of the shares as to which it is exercisable; provided, that
no partial exercise of a Stand-Alone SAR shall
16
<PAGE>
be for an aggregate exercise price of less than $1,000. The
partial exercise of a Stand-Alone SAR shall not cause the
expiration, termination or cancellation of the remaining
portion thereof.
(3) A Stand-Alone SAR shall be exercised by delivering notice
to Handy & Harman's principal office, to the attention of
its Secretary, no less than one business day in advance of
the effective date of the proposed exercise. Such notice
shall be accompanied by the applicable Agreement, shall
specify the number of shares of Company Stock with respect
to which the Stand-Alone SAR is being exercised, and the
effective date of the proposed exercise, and shall be
signed by the Participant. The Participant may withdraw
such notice at anytime prior to the close of business on
the business day immediately preceding the effective date
of the proposed exercise.
(d) Effect of Termination of Employment.
The provisions set forth in Section 7(e) with respect to the
exercise of Options following termination of employment shall
apply as well to such exercise of Stand-Alone SARs.
(e) Acceleration of Exercise Date Upon Change in Control.
Upon the occurrence of a Change in Control, any Stand-Alone SAR
granted under the Plan and outstanding at such time shall become
fully and immediately exercisable and shall remain exercisable
until its expiration, termination or cancellation pursuant to the
terms of the Plan.
10. Restricted Stock.
(a) Issue Date and Vesting Date.
17
<PAGE>
At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a
Vesting Date or Vesting Dates with respect to such shares. The
Committee may divide such shares into classes and assign a
different Issue Date and/or Vesting Date for each class. If the
grantee is employed by the Company on an Issue Date (which may be
the date of grant), the specified number of shares of Restricted
Stock shall be issued in accordance with the provisions of Section
10(e). Provided that all conditions to the vesting of a share of
Restricted Stock imposed pursuant to Section 10(b) are satisfied,
and except as provided in Section 10(g), upon the occurrence of
the Vesting Date with respect to a share of Restricted Stock, such
share shall vest and the restrictions of Section 10(c) shall
lapse.
(b) Conditions to Vesting.
At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions to the
vesting of such shares as it, in its absolute discretion, deems
appropriate.
(c) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of a share of Restricted Stock, no transfer
of a Participant's rights with respect to such share, whether
voluntary or involuntary, by operation of law or otherwise, shall
be permitted. Immediately upon any attempt to transfer such
rights, such share, and all of the rights related thereto, shall
be forfeited by the Participant.
(d) Dividends on Restricted Stock.
The Committee in its discretion may require that any dividends
paid on shares of Restricted Stock shall be held in escrow until
all restrictions on such shares have lapsed.
18
<PAGE>
(e) Issuance of Certificates.
(1) Reasonably promptly after the Issue Date with respect to
shares of Restricted Stock, Handy & Harman shall cause to
be issued a stock certificate, registered in the name of
the Participant to whom such shares were granted,
evidencing such shares; provided, that Handy & Harman shall
not cause such a stock certificate to be issued unless it
has received a stock power duly endorsed in blank with
respect to such shares. Each such stock certificate shall
bear the following legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions,
terms and conditions (including forfeiture provisions and
restrictions against transfer) contained in the Handy &
Harman Omnibus Stock Incentive Plan and an Agreement
entered into between the registered owner of such shares
and Handy & Harman. A copy of the Plan and Agreement is on
file in the office of the Secretary of Handy & Harman, 250
Park Avenue, New York, New York 10177.
Such legend shall not be removed until such shares vest pursuant
to the terms hereof.
(2) Each certificate issued pursuant to this Section 10(e),
together with the stock powers relating to the shares of
Restricted Stock evidenced by such certificate, shall be
held by Handy & Harman unless the Committee determines
otherwise.
(f) Consequences of Vesting.
19
<PAGE>
Upon the vesting of a share of Restricted Stock pursuant to the
terms hereof, the restrictions of Section 10(c) shall lapse.
Reasonably promptly after a share of Restricted Stock vests, Handy
& Harman shall cause to be delivered to the Participant to whom
such shares were granted, a certificate evidencing such share,
free of the legend set forth in Section 10(e).
(g) Effect of Termination of Employment.
(1) Subject to such other provision as the Committee may set
forth in the applicable Agreement, and to the Committee's
amendment authority pursuant to Section 4, upon the
termination of a Participant's employment for any reason
other than Cause, any and all shares to which restrictions
on transferability apply shall be immediately forfeited by
the Participant and transferred to, and reaquired by,
Handy & Harman; provided that if the Committee, in its
sole discretion, shall within thirty (30) days after such
termination of employment notify the Participant in
writing of its decision not to terminate the Participant's
rights in such shares, then the Participant shall continue
to be the owner of such shares subject to such continuing
restrictions as the Committee may prescribe in such
notice. In the event of a forfeiture of shares pursuant to
this section, Handy & Harman shall repay to the Participant
(or the Participant's estate) any amount paid by the
Participant for such shares. In the event that Handy &
Harman requires a return of shares, it shall also have the
right to require the return of all dividends paid on such
shares, whether by termination of any escrow arrangement
under which such dividends are held or otherwise.
(2) In the event of the termination of a Participant's
employment for Cause, all shares of Restricted Stock
granted to such
20
<PAGE>
Participant which have not vested as of the date of such
termination shall immediately be returned to Handy &
Harman, to gether with any dividends paid on such shares,
in return for which Handy & Harman shall repay to the
Participant any amount paid by the Participant for such
shares.
(h) Effect of Change in Control.
Upon the occurrence of a Change in Control, all outstanding shares
of Restricted Stock which have not theretofore vested shall
immediately vest and all restrictions on such shares shall
immediately lapse.
(i) Special Provisions Regarding Awards.
Notwithstanding anything to the contrary contained herein,
Restricted Stock granted pursuant to this Section 10 to Executive
Officers shall be based on the attainment by Handy & Harman or the
Company (or a Subsidiary or division of Handy & Harman if
applicable) of performance goals pre-established by the Committee,
based on one or more of the following criteria: (i) the
attainment of a specified percentage return on total stockholder
equity of the Company; (ii) the attainment of a specified
percentage increase in earnings per share of Company Stock; (iii)
the attainment of a specified percentage increase in net income of
the Company; and (iv) the attainment of a specified percentage
increase in profit before taxation of Handy & Harman or the
Company (or a Subsidiary or division of Handy & Harman if
applicable). Each such performance criteria shall be evaluated in
accordance with generally accepted accounting principles. Such
shares of Restricted Stock shall be released from restrictions
only after the attainment of such performance measures have been
certified by the Committee.
11. Phantom Stock.
21
<PAGE>
(a) Vesting Date.
At the time of the grant of shares of Phantom Stock, the Committee
shall establish a Vesting Date or Vesting Dates with respect to
such shares. The Committee may divide such shares into classes and
assign a different Vesting Date for each class. Provided that all
conditions to the vesting of a share of Phantom Stock imposed
pursuant to Section 11(c) are satisfied, and except as provided in
Section 11(d), upon the occurrence of the Vesting Date with
respect to a share of Phantom Stock, such share shall vest.
(b) Benefit Upon Vesting.
Upon the vesting of a share of Phantom Stock, the Participant
shall be entitled to receive in cash, within 30 days of the
date on which such share vests, an amount equal to the sum of
(i) the Fair Market Value of a share of Company Stock on the
date on which such share of Phantom Stock vests and (ii) the
aggregate amount of cash dividends paid with respect to a
share of Company Stock during the period commencing on the
date on which the share of Phantom Stock was granted and
terminating on the date on which such share vests.
(c) Conditions to Vesting.
At the time of the grant of shares of Phantom Stock, the
Committee may impose such restrictions or conditions to the
vesting of such shares as it, in its absolute discretion,
deems appropriate.
(d) Effect of Termination of Employment.
(1) Subject to such other provision as the Committee may set
forth in the applicable Agreement, and to the Committee's
amendment authority pursuant to Section 4, shares of
Phantom Stock that have not vested, together with any
dividends cred-
22
<PAGE>
ited on such shares, shall be forfeited upon the
Participant's termination of employment for any reason
other than Cause.
(2) In the event of the termination of a Participant's
employment for Cause, all shares of Phantom Stock granted
to such Participant which have not vested as of the date of
such termination shall immediately be forfeited, together
with any dividends credited on such shares.
(e) Effect of Change in Control.
Upon the occurrence of a Change in Control, all outstanding shares
of Phantom Stock which have not theretofore vested shall
immediately vest.
(f) Special Provisions Regarding Awards.
Notwithstanding anything to the contrary contained herein,
Phantom Stock granted pursuant to this Section 11 to Executive
Officers shall be based on the attainment by Handy & Harman or the
Company (or a Subsidiary or division of Handy & Harman if
applicable) of performance goals pre-established by the Committee,
based on one or more of the following criteria: (i) the attainment
of a specified percentage return on total stockholder equity of
the Company; (ii) the attainment of a specified percentage
increase in earnings per share of Company Stock from continuing
operations; (iii) the attainment of a specified percentage
increase in net income of the Company; and (iv) the attainment of
a specified percentage increase in profit before taxation of Handy
& Harman or the Company (or a Subsidiary or division of Handy &
Harman if applicable). Each such performance criteria shall be
evaluated in accordance with generally accepted accounting
principles. No cash payment in respect of any Phantom Stock award
will be paid to an Executive Officer until the attainment of the
respective performance measures have been certified by the
Committee.
23
<PAGE>
12. Stock Bonuses.
In the event that the Committee grants a Stock Bonus, a certificate for
the shares of Company Stock comprising such Stock Bonus shall be issued in the
name of the Participant to whom such grant was made and delivered to such
Participant as soon as practicable after the date on which such Stock Bonus is
payable. Executive Officers shall be eligible to receive Stock Bonus grants
hereunder only after a determination of eligibility is made by the Committee, in
its sole discretion.
13. Rights as a Stockholder.
No person shall have any rights as a stockholder with respect to any
shares of Company Stock covered by or relating to any Incentive Award until the
date of issuance of a stock certificate with respect to such shares. Except as
otherwise expressly provided in Section 3(c), no adjustment to any Incentive
Award shall be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.
14. No Special Employment Rights; No Right to Incentive Award.
Nothing contained in the Plan or any Agreement shall confer upon any
Participant any right with respect to the continuation of employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a participant at
any time shall neither require the Committee to grant any other Incentive Award
to such Participant or other person at any time or preclude the Committee from
making subsequent grants to such Participant or any other person.
15. Securities Matters.
(a) Handy & Harman shall be under no obligation to effect the
registration pursuant to the Securi-
24
<PAGE>
ties Act of any interests in the Plan or any shares of Company
Stock to be issued hereunder or to effect similar compliance under
any state laws. Notwithstanding anything herein to the contrary,
Handy & Harman shall not be obligated to cause to be issued or
delivered any certificates evidencing shares of Company Stock
pursuant to the Plan unless and until Handy & Harman is advised
by its counsel that the issuance and delivery of such certificates
is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities
exchange on which shares of Company Stock are traded. The
Committee may require, as a condition of the issuance and delivery
of certificates evidencing shares of Company Stock pursuant to the
terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that such
certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
(b) The transfer of any shares of Company Stock hereunder shall be
effective only at such time as counsel to Handy & Harman shall
have determined that the issuance and delivery of such shares is
in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities
exchange on which shares of Company Stock are traded. The
Committee may, in its sole discretion, defer the effectiveness of
any transfer of shares of Company Stock hereunder in order to
allow the issuance of such shares to be made pursuant to
registration or an exemption from registration or other methods
for compliance available under federal or state securities laws.
The Committee shall inform the Participant in writing of its
decision to defer the effectiveness of a transfer. During the
period of such deferral in connection with the exercise of an
Option, the Participant may, by written notice, withdraw such
exercise and obtain the refund of any amount paid with respect
thereto.
25
<PAGE>
16. Withholding Taxes.
Whenever cash is to be paid pursuant to an Incentive Award, the Company
shall have the right to deduct therefrom an amount sufficient to satisfy any
federal, state and local withholding tax requirements related thereto.
Whenever shares of Company Stock are to be delivered pursuant to an
Incentive Award, the Company shall have the right to require the Participant to
remit to the Company in cash an amount sufficient to satisfy any federal, state
and local withholding tax requirements related thereto. With the approval of the
Committee, a Participant may satisfy the foregoing requirement by electing to
have the Company withhold from delivery shares of Company Stock having a value
equal to the amount of tax to be withheld. Such shares shall be valued at their
Fair Market Value on the date of which the amount of tax to be withheld is
determined (the "Tax Date"). Fractional share amounts shall be settled in cash.
Such a withholding election may be made with respect to all or any portion of
the shares to be delivered pursuant to an Incentive Award.
17. Notification of Election Under Section 83(b) of the Code.
If any Participant shall, in connection with the acquisition of shares of
Company Stock under the Plan, make the election permitted under Section 83(b) of
the Code (i.e., an election to include in gross income in the year of transfer
the amounts specified in Section 83(b)), such Participant shall notify the
Company of such election within 10 days of filing notice of the election with
the Internal Revenue Service, in addition to any filing and a notification
required pursuant to regulation issued under the authority of Code Section
83(b).
18. Notification Upon Disqualifying Disposition Under Section 421(b) of the
Code.
Each Agreement with respect to an Incentive Stock Option shall require
the Participant to notify the Company of any disposition of shares of Company
Stock issued pursuant to the exercise of such Option under the circumstances
described in Section 421(b) of the Code (relating
26
<PAGE>
to certain disqualifying dispositions), within 10 days of such disposition.
19. Amendment or Termination of the Plan.
The Board of Directors may, at any time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever; provided, however, that
stockholder approval shall be required if and to the extent required by Rule
16b-3 or by any comparable or successor exemption under which the Board of
Directors believes it is appropriate for the Plan to qualify, or if and to the
extent the Board of Directors determines that such approval is appropriate for
purposes of satisfying Section 162(m) or 422 of the Code. Incentive Awards may
be granted under the Plan prior to the receipt of such stockholder approval but
each such grant shall be subject in its entirety to such approval and no award
may be exercised, vested or otherwise satisfied prior to the receipt of such
approval. Nothing herein shall restrict the Committee's ability to exercise
its discretionary authority pursuant to Section 4, which discretion may be
exercised without amendment to the Plan. No action hereunder may, without the
consent of a Participant, reduce the Participant's rights under any outstanding
Incentive Award.
20. Transfers Upon Death; Nonassignability.
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executor or administrator of the
Participant's estate or by a person who shall have acquired the right to such
exercise by will or by the laws of descent and distribution. No transfer of an
Incentive Award by will or the laws of descent and distribution shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such evidence
as the Committee may deem necessary to establish the validity of the transfer
and (b) an agreement by the transferee to comply with all the terms and
conditions of the Incentive Award that are or would have been applicable to the
Participant and to be bound by the acknowledgements made by the Participant in
connection with the grant of the Incentive Award.
27
<PAGE>
During a Participant's lifetime, the Committee may permit the transfer,
assignment or other encumbrance of an outstanding Option or outstanding shares
of Restricted Stock unless (y) such Option is an Incentive Stock Option and the
Committee and the Participant intend that it shall retain such status, or (z)
the award is meant to qualify for the exemptions available under Rule 16b-3,
nontransferability is necessary under Rule 16b-3 in order for the award to so
qualify and the Committee and the Participant intend that it shall continue to
so qualify. Notwithstanding the foregoing, subject to any conditions as the
Committee may prescribe, a Participant may, upon providing written notice to the
Secretary of Handy & Harman, elect to transfer any or all Options granted to
such Participant pursuant to the Plan to members of his or her immediate family,
including, but not limited to, children, grandchildren and spouse or to trusts
for the benefit of such immediate family members or to partnerships in which
such family members are the only partners; provided, however, that no such
transfer by any Participant may be made in exchange for consideration.
21. Expenses and Receipts.
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
22. Failure to Comply.
In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the applicable Agreement, unless such failure is
remedied by such Participant (or beneficiary) within ten days after notice of
such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part, as the Committee, in
its absolute discretion, may determine.
23. Effective Date and Term of Plan.
The Plan became effective on the Effective Date, but the Plan (and any
grants of Incentive Awards made prior to stockholder approval of the Plan) shall
be subject to the requisite approval of the stockholders of Handy &
28
<PAGE>
Harman. In the absence of such approval, such Incentive Awards shall be null and
void. Unless earlier terminated by the Board of Directors, the right to grant
Incentive Awards under the Plan will terminate on the tenth anniversary of the
Effective Date. Incentive Awards outstanding at Plan termination will remain in
effect according to their terms and the provisions of the Plan.
24. Applicable Law.
Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
New York, without reference to the principles of conflicts of law.
25. Participant Rights.
No Participant shall have any claim to be granted any award under the
Plan, and there is no obligation for uniformity of treatment for Participants.
Except as provided specifically herein, a Participant or a transferee of an
Incentive Award shall have no rights as a stockholder with respect to any shares
covered by any award until the date of the issuance of a Company Stock
certificate to him for such shares.
26. Unfunded Status of Awards.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Incentive Award, nothing contained in the Plan or any
Agreement shall give any such Participant any rights that are greater than those
of a general creditor of the Company.
27. No Fractional Shares.
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan. The Committee shall determine whether cash, other
Incentive Awards, or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.
29
<PAGE>
28. Beneficiary.
A Participant may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, the executor or administrator of the Participant's
estate shall be deemed to be the grantee's beneficiary.
29. Interpretation.
The Plan is designed and intended to comply with Rule 16b-3 promulgated
under the Exchange Act and, with Section 162(m) of the Code, and all provisions
hereof shall be construed in a manner to so comply.
0190500.01-New YorkS5A
30
<PAGE>
[HANDY & HARMAN LETTERHEAD]
March 6, 1998
Dear Shareholder:
I am pleased to inform you that on March 1, 1998, Handy & Harman (the
'Company') entered into an Agreement and Plan of Merger (the 'Merger Agreement')
with WHX Corporation ('WHX') and HN Acquisition Corp., a wholly owned subsidiary
of WHX (the 'Purchaser'). Pursuant to the Merger Agreement, the Purchaser today
commenced a tender offer (the 'Offer') to purchase all outstanding shares of the
Company's common stock for $35.25 per share in cash. Under the Merger Agreement,
the tender offer will be followed by a merger (the 'Merger') of the Purchaser
with and into the Company and all shares of the Company's common stock not
purchased in the tender offer (other than shares held by WHX, the Purchaser or
the Company or shares held by dissenting shareholders) will be converted into
the right to receive $35.25 per share in cash.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY (WITH ONE DIRECTOR ABSENT) APPROVED
THE MERGER AGREEMENT, THE OFFER AND THE MERGER AND DETERMINED THAT THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS. ACCORDINGLY, THE BOARD RECOMMENDS THAT SHAREHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES IN THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors, including, among other things, the opinion
of Goldman, Sachs & Co., the Company's financial advisor, that as of March 1,
1998, the $35.25 per share in cash to be received by the Company's shareholders
(excluding WHX and its subsidiaries) pursuant to the Offer and the Merger was
fair from a financial point of view to such shareholders.
Attached is a copy of the Schedule 14D-9 filed by the Company with the
Securities and Exchange Commission. The Schedule 14D-9 describes the reasons for
your Board of Directors' recommendation, includes as an exhibit the full text of
the March 1, 1998 opinion of Goldman, Sachs & Co. and contains other important
information relating to the Offer. Also enclosed is the Offer to Purchase, dated
March 6, 1998, of the Purchaser, together with related materials, including a
Letter of Transmittal to be used for tendering your shares. These documents set
forth the terms and conditions of the Offer and provide instructions on how to
tender your shares. We urge you to read the Schedule 14D-9 and the enclosed
materials carefully.
Sincerely,
/s/ R. N. Daniel
-----------------------
R. N. Daniel
Chairman and
Chief Executive Officer
<PAGE>
Contact: Adam Weiner or Thomas M. Daly Joele Frank/Patricia Sturms
Kekst and Company Abernathy MacGregor Frank
(212) 521-4800 (212) 371-5999
FOR IMMEDIATE RELEASE
WHX CORPORATION AND HANDY & HARMAN AGREE TO MERGE
NEW YORK, NY, MARCH 2, 1998-WHX Corporation (NYSE:WHX) and Handy & Harman
(NYSE:HNH) jointly announced today that they have entered into a definitive
merger agreement providing for the acquisition by WHX of all of the
outstanding common shares of Handy & Harman at $35.25 per share in cash. The
transaction has been unanimously approved by the Boards of Directors of both
companies.
The merger agreement provides for a subsidiary of WHX to promptly commence a
cash tender offer to acquire all of Handy & Harman's outstanding shares at
$35.25 per share. The tender offer is conditioned on, among other things,
the valid tender of such number of shares which, when added to the 13.6% of
the outstanding shares already owned by WHX, would represent at least a
majority of Handy & Harman's outstanding shares. The tender offer is not
subject to financing or Hart-Scott Rodino approval, and is expected to
commence later this week. Donaldson, Lufkin & Jenrette Securities Corp. will
be the dealer-manager for the tender offer, and Innisfree M&A Incorporated
will be the information agent.
Following completion of the tender offer, WHX Corporation will be entitled
to designate a majority of the Board of Directors of Handy & Harman. The
parties will complete a second-step cash merger at $35.25 per share as
promptly as practicable following completion of the tender offer.
The transaction has a total value of approximately $645 million, including
the assumption of approximately $190 million in debt and the cash-out of
stock options.
-more-
<PAGE>
Commenting on the execution of the merger agreement, Richard N. Daniel,
Chairman and Chief Executive Officer of Handy & Harman, and Ronald LaBow,
Chairman of WHX Corporation, stated: "We are pleased that these two fine
companies have been able to reach an amicable agreement which is beneficial
to the stockholders of both companies. We look forward to working together
in the coming years in continuing the excellent growth and profitability of
Handy & Harman's businesses."
Mr. Daniel further stated: "Handy & Harman has engaged in an extensive
process, with the assistance of Goldman, Sachs & Co., the Company's
financial advisor, in soliciting and evaluating third party interest in a
transaction with Handy & Harman and evaluating other strategic alternatives
not involving the sale of Handy & Harman to a third party. We are convinced
that the current $35.25 per share offer by WHX is in the best interests of
our shareholders."
A detailed discussion of the rationale for the Handy & Harman Board of
Directors' recommendation will be contained in a Solicitation/Recommendation
Statement on Schedule 14D-9, which is expected to be filed with the
Securities and Exchange Commission later this week and will be mailed to
shareholders shortly thereafter.
WHX Corporation is a holding company and through its Wheeling-Pittsburgh
Steel Corporation is the ninth largest integrated steel manufacturer in the
United States.
Handy & Harman is a diversified industrial manufacturing company with
operations in materials engineering and specialty manufacturing. Handy &
Harman's products include electronic components, specialty fasteners,
engineered materials, specialty wire and tubing and fabricated precious
metals. Handy & Harman was founded in 1867 and is headquartered in New York.
# # #
2
<PAGE>
PERSONAL AND CONFIDENTIAL
- -------------------------
March 1, 1998
Board of Directors
Handy & Harman
250 Park Avenue
New York, NY 10177
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders (excluding WHX Corporation ("WHX") and its subsidiaries) of the
outstanding shares of Common Stock, par value $1.00 per share (the "Shares"), of
Handy & Harman (the "Company") of the $35.25 per Share in cash proposed to be
paid by WHX in the Tender Offer and the Merger (as defined below) pursuant to
the Agreement and Plan of Merger, dated as of March 1, 1998, among WHX, HN
Acquisition Corp., a direct wholly-owned subsidiary of WHX, and the Company (the
"Agreement"). The Agreement provides for a tender offer for all of the Shares
(the "Tender Offer") pursuant to which HN Acquisition Corp. will pay $35.25 per
Share in cash for each Share accepted. The Agreement further provides that
following completion of the Tender Offer, HN Acquisition Corp. will be merged
with and into the Company (the "Merger") and each outstanding Share (other than
Shares already owned by WHX and its subsidiaries and Shares as to which holders
exercise appraisal rights) will be converted into the right to receive $35.25 in
cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having provided certain investment banking services to the Company
from time to time, including having acted as placement agent for a private
offering of $125,000,000 principal amount of 7.31% Senior Notes due April 30,
2004 of the Company in 1997 and having acted as its financial advisor in
connection with, and having participated in certain negotiations leading to, the
Agreement. Goldman, Sachs & Co. provides a full range of financial advisory and
securities services, and in the course of its normal trading activities, may
from time to time effect transactions and hold securities, including derivative
securities, of the Company or WHX for its own account and for the account of
customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Shareholders and Annual Reports on Form 10-K of the
Company for the five years ended
<PAGE>
Handy & Harman
March 1, 1998
Page Two
December 31, 1996; the Company's audited financial results for the year ended
December 31, 1997; certain interim reports to shareholders and Quarterly Reports
on Form 10-Q of the Company; certain other communications from the Company to
its shareholders; and certain internal financial analyses and forecasts for the
Company prepared by its management. We also have held discussions with members
of the senior management of the Company regarding its past and current business
operations, financial condition and future prospects. In addition, we have
reviewed the reported price and trading activity for the Shares, compared
certain financial and stock market information for the Company with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations and
performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and we have not been furnished with any such
evaluation or appraisal. Our advisory services and the opinion expressed herein
are provided for the information and assistance of the Board of Directors of the
Company in connection with its consideration of the transaction contemplated by
the Agreement and such opinion does not constitute a recommendation as to
whether or not any holder of Shares should tender such Shares in connection with
such transaction or how any holder of Shares should vote with respect to such
transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $35.25 per
Share in cash to be received by the holders of Shares (excluding WHX and its
subsidiaries) in the Tender Offer and the Merger is fair from a financial point
of view to such holders.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
<PAGE>
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- - - - - - - - - - - - - - - - - - - - - - x
WILLIAM STEINER, individually and on behalf
of all others similarly situated, Index No. 97124099
Plaintiff, FILING DATE:
v. Plaintiff designates
CLARENCE A. ABRAMSON, ROBERT E. NEW YORK COUNTY
CORNELIA, RICHARD N. DANIEL, GERALD G. as the Place of Trial
GARBACZ, FRANK E. GRZELECKI,
GOUVERNEUR M. NICHOLS, HERCULES P. The basis of the venue is the
SOTOS, ELLIOT J. SUSSMAN, ROGER E. defendants' place business
TETRAULT and HANDY & HARMAN
SUMMONS
Defendants,
Plaintiffs reside in New York
- - - - - - - - - - - - - - - - - - - - - - x
TO THE ABOVE NAMED DEFENDANTS:
YOU ARE HEREBY SUMMONED to answer the complaint in this action and to
serve a copy of your answer, or, if the complaint is not served with this
summons, to serve a notice of appearance, on the Plaintiff's Attorneys within 20
days after the service of this summons, exclusive of the day of service (or
within 30 days after the service is complete if this summons is not personally
delivered to you within the State of New York); and in case of your failure to
appear or answer, judgment will be taken against you by default for the relief
demanded in the complaint.
Dated: New York, New York
December 26, 1997
GOODKIND LABATON RUDOFF & SUCHAROW LLP
100 Park Avenue, 12th floor
New York, New York 10017
Telephone: (212) 907-0700
<PAGE>
Defendant's Address:
CLARENCE A. ABRAMSON
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
ROBERT E. CORNELIA
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
RICHARD N. DANIEL
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
GERALD G. GARBACZ
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
FRANK E. GRZELECKI
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
GOUVERNEUR M. NICHOLS
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
HERCULES P. SOTOS
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
ELLIOT J. SUSSMAN
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
2
<PAGE>
ROGER E. TETRAULT
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
HANDY & HARMAN
250 Park Avenue
New York, New York 10177
3
<PAGE>
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- - - - - - - - - - - - - - - - - - - - -
WILLIAM STEINER, individually and on behalf )
of all others similarly situated, ) Index No. 97124099
)
)
Plaintiff, )
)
v. )
)
CLARENCE A. ABRAMSON, ROBERT E. )
CORNELIA, RICHARD N. DANIEL, GERALD )
G. GARBACZ, FRANK E. GRZELECKI, )
GOUVERNEUR M. NICHOLS, HERCULES P. )
SOTOS, ELLIOT J. SUSSMAN, ROGER E. )
TETRAULT and HANDY & HARMAN, )
)
Defendants, )
- - - - - - - - - - - - - - - - - - - - - - - -
CLASS ACTION COMPLAINT
Plaintiff alleges on information and belief, except as to
paragraph 2 which is alleged on knowledge, as follows:
1. Plaintiff brings this action as a class action on behalf of
himself and all other stockholders of Handy & Harman ("Handy" or the "Company")
who are similarly situated, against the Company and the individual defendants,
who are directors of the Company, in connection with the offer by WHX
Corporation ("WHX"), a shareholder of the Company, to acquire the remaining
outstanding shares of Handy stock it does not already own.
4
<PAGE>
THE PARTIES
2. Plaintiff is the owner of shares of Handy common stock and
has owned such stock at all times material hereto.
3. (a) Defendant Handy is a corporation organized and existing
under the laws of the State of New York with principal executive offices at 250
Park Avenue, New York, New York. The Company is a diversified manufacturer
providing engineered products, system components and precious metal fabrication
for industries worldwide. Handy has approximately 12 million shares of common
stock outstanding, of which approximately 4.9% are held by WHX.
(b) Defendant Richard N. Daniel ("Daniel") is the Chairman
of the Board and Chief Executive Officer of Handy. In 1996, Mason's compensation
from Handy was at least $640,000, comprised of a salary of $470,000 and a bonus
of $170,000.
(c) Defendant Frank E. Grzelecki is Vice Chairman of the
Company, President and Chief Operating Officer. In 1996, Grzelecki's
compensation from Handy was at least $560,000 comprised of a salary of $410,000
and a bonus of $150,000.
(d) Defendants Clarence A. Abramson, Robert E. Cornelia,
Gerald G. Garbacz, Gouverneur M. Nichols, Hercules P. Sotos, Elliot J. Sussman
and Roger E. Tetrault are directors of the Company.
4. The foregoing individual defendants referred to as P. P.
3(b)-(d) (collectively referred to herein as the "Individual Defendants"), as
directors of the Company, are in a fiduciary relationship with plaintiff and the
public stockholders of Handy and owe plaintiff and the other Handy public
stockholders the highest obligations of good faith, fair dealing, due care,
loyalty and full and candid disclosure.
5
<PAGE>
CLASS ACTION ALLEGATIONS
5. Plaintiff brings this action for declaratory, injunctive
and other relief on his own behalf and as a class action, pursuant to Article 9
of the Civil Practice Laws and Rules and on behalf of all common stockholders of
Handy (except defendants herein and any person, firm, trust, corporation or
other entity related to or affiliated with any of the defendants) or their
successors in interests, who are being deprived of the opportunity to maximize
the value of their Handy shares by the wrongful acts of the defendants as
described herein (the "Class").
6. This action is properly maintainable as a class action
for the following reasons:
(a) The class of stockholders for whose benefit this action
is brought is so numerous that joinder of all Class members is impracticable.
There are approximately 2,816 Handy stockholders of record and approximately 12
million shares of Handy common stock.
Members of the Class are scattered throughout the United States.
(b) There are questions of law and fact which are common to
members of the Class and which predominate over all questions affecting only
individual members, including whether the defendants have breached the fiduciary
duties owed by them to plaintiff and members of the Class by reason of the acts
described herein.
(c) The claims of plaintiff are typical of the claims of
the other members of the Class and plaintiff has no interests that are adverse
or antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of
this action and has retained competent counsel experienced in litigation of this
nature. Accordingly,
6
<PAGE>
plaintiff is an adequate representative of the Class and will fairly and
adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual
members of the Class would create a risk of inconsistent or varying
adjudications with respect to individual members of the Class and establish
incompatible standards of conduct for the party opposing the Class.
(f) Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
relief with respect to the Class as a whole.
FACTUAL BACKGROUND
7. WHX is a Delaware corporation with its principal executive
offices at 110 East 59th Street, New York, New York. WHX, through its
subsidiaries, is a vertically integrated manufacturer of predominantly
value-added flat rolled steel products. Its Wheeling-Pittsburgh Steel unit is
the fourth-largest United States steelmaker. WHX holds approximately 4.9% of
Handy's issued and outstanding common stock.
8. On or about December 15, 1997, Ronald LaBow, Chairman of
WHX sent a proposal letter to defendant Daniel advising him of WHX's interest in
buying Handy for $30.00 per share in cash (the "December 15 Letter"). His letter
noted that the offering price represented a significant premium to the
then-current and historic market price. LaBow further advised that the Offer is
conditioned on upon, among other things, approval by Handy's Board of Directors
under the Shareholder Rights Plan (the "Poison Pill") and the Business
Combination Statute
7
<PAGE>
(Section 912) of the New York law. He also informed Daniel that the Offer will
not be subject to financing. LaBow expressed to Daniel his hope that WHX could
have "an amicable and productive dialogue on the merits of [the Offer] and the
benefits which a combination of our companies would bring to your senior
management team, employees at large and the company's shareholders."
9. On that same day, WHX issued a press release announcing an
all cash tender offer for Handy at $30.00 per share for a total of approximately
$360 million in cash and $182 million in assumed debt, for a total value of $533
million (the "Offer"). The announced price represented a 34.8% premium over the
closing price on the preceding trading day.
10. On or about December 16, 1997, WHX filed with the United
States Securities Exchange Commission ("SEC") a Schedule 14D-1 setting forth the
details of its tender offer, which is set to expire on January 16, 1998. The WHX
tender offer is conditioned on, among other things:
(1) the rights under Handy's Rights Agreement (the "Poison Pill")
having been redeemed by Handy's Board of Directors or the rights being
invalid or otherwise inappli cable to the Offer;
(2) Handy not having entered into any agreement or transaction with any
person or entity having the effect of impairing WHX's ability to
acquire Handy or otherwise diminishing the expected economic value to
WHX of the purchase of Handy; and
(3) the provisions of Section 912 of the New York Business Corporation
Law have been complied with or are invalid or otherwise inapplicable to
the Offer.
11. On December 18, 1997, at a meeting among the Board of
Directors of Handy (participated in by all Individual Defendants), Handy
management, Goldman Sachs (Handy's financial advisor) and legal the Offer was
discussed.
8
<PAGE>
12. On December 23, 1997, the Individual Defendants met again
with management and Handy's legal counsel and reviewed the Offer.
13. On December 23, 1997, Handy filed a Form 8-K with the SEC
announcing that, on December 23, 1997, Handy's Board approved an amendment to
Handy's By-laws. Article I, Section 1 of Handy's By-laws was amended such that
the first paragraph provides in its entirety as follows:
The annual meeting of the shareholders of the corporation shall be held
annually, at such place and hour and on such date as the board of
directors may fix, for the election of directors and for the
transaction of such other business as may properly come before the
meeting.
Prior to that amendment, the first sentence of Article I, Section 1 of
Handy's By-laws provided: The annual meeting of shareholders of the
corporation shall be held annually in the City of New York, at such
place and at such hour as the board of directors may fix, on the second
Tuesday in May if not a legal holiday and, if a legal holiday, then on
the next secular day following, for the election of director and for
the transaction of such other business as may properly come before the
meeting.
The foregoing amendment was clearly made by Handy as an "eleventh hour" and
highly improper defensive measure in response to the Offer, and it has a
material and deleterious affect on class members' voting rights. The amendment's
intended effect is to further concentrate the Individual Defendants' control
over the timing and course of events affecting Handy and to preserve their
lucrative positions as directors, particularly at this critical juncture when
the Offer, which clearly will significantly enhance shareholder value, remains
outstanding. The amend ment gives Handy's Board greater opportunity to forestall
Handy's shareholders' exercise of their voting power with respect to material
matters that the Individual Defendants perceive as a threat to their position
and standing vis a vis the Company, including the Offer. By enacting the
9
<PAGE>
amendment to the By-laws in response to the Offer, the Individual Defendants are
seeking to entrench themselves in control and are otherwise advancing their own
interests to the detriment of plaintiff and the Class. The decision to make the
By-law amendment exemplifies the Individual Defendants' agenda, to wit, to stave
off a change of control of Handy that will result in their loss of continued
enjoyment of the significant benefits that inure to them by virtue of their
director and/or executive positions with Handy.
14. On December 24, 1997, Handy issued a press release and
filed with the SEC a Form 14D-9 setting forth its response to the Offer, and
stating Defendants determination that the $30 per share all cash offer for all
shares reflected in the Offer is inadequate and not in the best interests of
Handy's and its shareholders. Despite the fact that the Individual Defendants
Daniel and Grzelecki have a substantial financial interest in successfully
resisting the Offer, they apparently participated in all discussions relating to
the Offer; no special committee of independ ent directors was established to
separately review the WHX Offer.
15. The actions taken by the defendants are in gross disregard
of the duties each of them owes to plaintiff and the other members of the Class.
16. Defendants' fiduciary obligations require them to:
(a) undertake an appropriate evaluation of any bona fide
offers, and take appropriate steps to solicit all potential bids for the Company
or its assets or consider strategic alternatives;
(b) undertake an appropriate and independent evaluation of
the proposed Handy-WHX merger, including appointing a disinterested committee
so that the interests of Handy's public stockholders would be protected; and
10
<PAGE>
(c) adequately ensure that no conflicts of interest exist
between defendants' own interests and their fiduciary obligations to the public
stockholders of Handy.
17. In response to the Offer, Defendants failed to appoint an
independent committee to fairly and objectively evaluate the Offer and to
explore business opportunities with WHX.
18. Indeed, Defendants have apparently refused to either
negotiate with WHX, or even to explore with it the parameters of the Offer to
seek to maximize shareholder value, or attempt to pursue alternative
transactions. In fact, Defendants have deliberately acted to thwart WHX from
acquiring the Company.
19. Particularly, in an unreasonable response to the WHX
Offer, Defendants amended Handy's By-laws in a transparent attempt to
disenfranchise Handy shareholders with respect to their exercise of voting
power, and to entrench the Individual Defendants in control.
20. Plaintiff and other Class members are immediately
threatened by the acts and transactions complained of herein which have caused
and will cause irreparable injury to them.
21. The proposal reflected in WHX's Offer represents an
opportunity to effect a change of control of Handy, its business and affairs. In
a change of control transaction, the Individual Defendants necessarily and
inherently suffer from a conflict of interest between their own personal desires
to retain their offices in Handy, with the emoluments and prestige which
accompany those offices, and their fiduciary obligation to maximize shareholder
value in a change of control transaction. Because of such conflict of interest,
it is unlikely that defendants will be able to represent the interests of
Handy's public stockholders with the impartiality that
11
<PAGE>
their fiduciary duties require, nor will they be able to ensure that their
conflicts of interest will be resolved in the best interests of Handy's public
stockholders.
22. By virtue of the acts and conduct alleged herein, the
Individual Defen dants, who direct the actions of the Company, are carrying out
a preconceived plan and scheme to entrench themselves in office and to protect
and advance their own personal parochial interests at the expense of Handy's
public shareholders.
23. As a result of the foregoing, the Individual Defendants
have breached their fiduciary duties owed to Handy and its stockholders.
24. Unless enjoined by this Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the other members of the
Class to the irreparable harm of the Class, as aforesaid.
25. Plaintiff and the other members of the Class have no
adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out
their fiduciary duties to plaintiff and the other members of the Class by
announcing their intention to:
(i) undertake an appropriate and independent
evaluation of alternatives designed to maximize value for Handy's public
stockholders; and
(ii) adequately ensure that no conflicts of
interests exist between defendants' own interests and their fiduciary
obligations to Handy's public stockholders
12
<PAGE>
or, if such conflicts exist, ensure that all the conflicts would be resolved in
the best interests of Handy's public stockholders;
(c) ordering Defendants to utilize the Poison Pill in a
manner designed to maximize shareholder value;
(d) declaring the December 23, 1997 amendment to the
By-laws to be null and void;
(e) ordering defendants, jointly and severally, to
account to plaintiff and the other members of the Class for all damages suffered
and to be suffered by them as a result of the wrongs complained of herein;
(f) awarding plaintiff the costs and disbursements of
this action, including a reasonable allowance for plaintiff's attorney's fees
and experts' fees; and
(g) granting such other and further relief as this
Court may deem to be just and proper.
Dated: December 26, 1997
GOODKIND LABATON RUDOFF &
SUCHAROW, LLP
100 Park Avenue
New York, New York 10017-5563
(212) 907-0700
Attorneys for Plaintiff
13
<PAGE>
<PAGE>
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- ---------------------------------------------------x Index No. 98-600059
HARBOR FINANCE PARTNERS, on behalf :
of' itself and all others similarly : Purchased and filed on:
situated, : January 7, 1998
:
Plaintiff, : Plaintiff designates
: New York County as the
v. : place for trial
:
CLARENCE A. ABRAMSON, ROBERT E. : The basis of venue is
CORNELIA, RICHARD N. DANIEL, : place of business of
GERALD G. GARBACZ, FRANK E. : defendants
GRZELECKI, GOUVERNEUR M. NICHOLAS, :
HERCULES P. SOTOS, ELLIOT J. : Plaintiff resides in
SUSSMAN, ROGER E. TETRAULT, : Dade County, Florida
and HANDY & HARMAN, :
Defendants. : S U M M O N S
- ---------------------------------------------------x
To the above named defendants:
YOU ARE HEREBY SUMMONED to answer the complaint in this action
and to serve a copy of your answer, or, if the complaint is not served with this
summons, to serve a notice of appearance, on the Plaintiffs' Attorneys within 20
days after service of this summons, exclusive of the day of service (or within
30 days after the service is complete if this summons is not personally
delivered to you within the State of New York); and in case of your failure to
appear or answer, judgment will be taken against you by default for the relief
demanded in the complaint.
Defendants' address:
c/o Handy & Harman
250 Park Avenue
New York, New York 10177
Dated: January 7, 1998
WECHSLER HARWOOD HALEBIAN
& FEFFER LLP
By: /s/ Robert I. Harwood
---------------------
Robert I. Harwood
488 Madison Avenue
New York, New York 10022
(212) 935-7400
Attorneys for Plaintiff
<PAGE>
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- ----------------------------------------------------x Index No. 1998/600059
HARBOR FINANCE PARTNERS, on behalf :
of' itself and all others similarly :
situated, :
:
Plaintiff, :
: CLASS ACTION COMPLAINT
v. :
:
CLARENCE A. ABRAMSON, ROBERT E. :
CORNELIA, RICHARD N. DANIEL, : JURY TRIAL DEMANDED
GERALD G. GARBACZ, FRANK E. :
GRZELECKI, GOUVERNEUR M. NICHOLAS, :
HERCULES P. SOTOS, ELLIOT J. :
SUSSMAN, ROGER E. TETRAULT, :
and HANDY & HARMAN, :
:
Defendants. :
- ----------------------------------------------------x
Plaintiff, by its attorneys, alleges upon personal knowledge
as to its own acts and upon information and belief as to all other matters, as
follows:
NATURE OF THE ACTION
1. This is a shareholders' class action lawsuit brought on
behalf of the public shareholders of Handy & Harman ("Handy & Harman" or the
"Company") who have been, and continue to be, deprived of the opportunity to
realize fully the benefits of their investment in the Company. The individual
defendants have wrongfully refused to properly consider a bona fide offer for
the Company from WHX Corporation ("WHX"), announced on December 15, 1997. Their
actions constitute a breach of fiduciary duty to maximize shareholder value. The
individual defendants are using their fiduciary positions of control over Handy
& Harman to thwart others in their legitimate attempts to acquire the Company,
and the individual defendants are trying to entrench themselves in their
positions with Handy & Harman.
<PAGE>
Parties
2. Plaintiff is and, at all relevant times, has been the owner
of shares of Handy & Harman common stock.
3. Handy & Harman is a corporation duly organized and existing
under the laws of the State of New York. The Company is a diversified
manufacturing company with operations in materials engineering and specialty
manufacturing. Handy & Harman products include electronic components, specialty
fasteners, engineered materials, specialty wire, and tubing and fabricated
precious metals. Handy & Harman maintains its principal executive offices at 250
Park Avenue, New York, New York 10177. Handy & Harman has approxi mately 12.0
million shares of common stock outstanding and approximately 2800 stockholders
of record. Handy & Harman stock trades on the NYSE.
4. Defendant Richard N. Daniel ("Daniel") has been the Chief
Executive Officer and Chairman of the Board of the Company since 1992, and prior
thereto Chairman of the Board, President and Chief Executive Officer. Daniel has
served on the Board of Directors since 1974.
5. Defendant Frank E. Grzelecki ("Grzelecki") has been, at all
times material hereto, the President and Chief Operating Officer of Handy &
Harman, and has served as a director of the Company since 1988.
6. Defendants Clarence A. Abramson, Robert E. Cornelia, Gerald
G. Garbacz, Governeur M. Nichols, Hercules P. Sotos, Elliot J. Sussman and
Robert E. Tetrault have been, at all times material hereto, directors of Handy &
Harman.
7. The individuals identified in Paragraphs 4 through 6 are
collectively referred to throughout this complaint as the "Individual
Defendants."
8. All directors and executive officers as a group own
approximately 5% of Handy & Harman.
2
<PAGE>
9. The Individual Defendants, by reason of their corporate
directorship and/or executive positions, stand in a fiduciary position relative
to the Company's shareholders, which fiduciary relationship, at all times
relevant herein, required the defendants to exercise their best judgment, and to
act in a prudent manner and in the best interests of the Company's shareholders.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this case in its own behalf and as a
class action, pursuant to Section 901 et seq. of the CPLR, on behalf of all
shareholders of the Company, except defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of the
defendants, who will be threatened with injury arising from defendants' actions
as is described more fully below (the "Class").
11. This action is properly maintainable as a class action.
12. The Class is so numerous that joinder of all members is
impracticable.
The Company has approximately 2,800 shareholders, who are located throughout
this State and the United States.
13. There are questions of law and fact common to the Class,
which predominate over individual ones, including, inter alia, whether:
a. defendants have breached their fiduciary
duties owed by them to plaintiff and other
members of the Class by failing and refusing
to attempt in good faith to maximize
shareholder value in the sale of Handy & Harman;
b. defendants have breached or aided and
abetted the breach of the fiduciary duties
owed by them to plaintiff and other members
of the Class; and
3
<PAGE>
c. plaintiff and the other members of the Class
are being, and will continue to be, injured
by the wrongful conduct alleged herein and,
if so, what is the proper remedy and/or
measure of damages.
14. Plaintiff is committed to prosecuting the action and has
retained competent counsel experienced in litigation of this nature. Plaintiff's
claims are typical of the claims of the other members of the Class and plaintiff
has the same interests as the other members of the Class. Plaintiff is an
adequate representative of the Class.
15. The prosecution of separate actions by individual members
of the Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to individual
members of the Class which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudication or substantially
impair or impede their ability to protect their interests.
16. The defendants have acted, or refused to act, on grounds
generally applicable to, and causing injury to, the Class and, therefore,
preliminary and final injunctive relief on behalf of the Class as a whole is
appropriate.
SUBSTANTIVE ALLEGATIONS
17. On December 15, 1997, WHX announced that it had sent a
1etter to the Chairman of the Board of Handy & Harman to have Handy & Harman's
Board of Directors (the "Board") consider a stock acquisition by WHX valued at
$360 million. Under the terms of the proposal, Handy & Harman shareholders would
receive $30.00 per share in cash representing a 34.8% premium over the trading
price of the Company's stock on the day prior to the announcement. According to
the letter, Ronald LaBow ("LaBow"), the Chairman of the Board of WHX, sought to
have "an amicable and productive dialogue on the merits of this offer
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and the benefits which a combination of [the] companies would bring to [the]
senior management team, employees at large, and the [C]ompany's shareholders."
LaBow also outlined his plan to commence a cash tender offer on December 16,
1997 for any and all shares of Handy & Harman common stock at $30.00 per share.
18. Handy & Harman responded to WHX's offer only to say that
the Board will consider WHX's offer.
19. According to the Dow Jones Wire on December 23, 1997,
LaBow had tried to negotiate with the defendants, but was rebuffed in his
efforts.
20. On December 24, 1997, defendants announced over the PR
Newswire that they had unanimously voted to recommend that shareholders reject
WHX's tender offer, and not tender any of their shares pursuant to the offer. In
recommending that shareholders reject the offer, as reported by Reuters, the
Board took a "just say no" defense, citing a number of reasons that ignore the
strength of a combined WHX/Handy & Harman company, including the Company's
recent strategic repositioning and business and financial prospects, and the
Board's familiarity with the financial condition, business opportunities and
current business plans of Handy & Harman.
21. Analysts have commented on the positive financial
condition of WHX, and LaBow's stewardship of that company. Barry Vogel, an
industry analyst with Vogel & Associates, described LaBow's running of WHX as
"extremely conservative," and cited the executive's rescue of
Wheeling-Pittsburgh Steel from bankruptcy over the past decade, turning WHX into
the nation's fourth-largest steelmaker and more recently refinancing $266
million worth of long-term debt. Vogel concluded by saying, "I think (LaBow's)
just trying to improve the value of the steel company."
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22. In addition to taking a "just say no defense," defendants
have other defensive measures at their disposal to thwart WHX or any other third
party interested in an acquisition of or merger with the Company.
23. For example, the Company has in place a Common Stock
Purchase Rights plan (commonly known as a "Poison Pill"), which entitles each
holder of common stock to one purchase right ("Rights") for each common share
held. Under the plan, the Rights are exercisable ten days after a person or
group acquires 20% or announces or makes a tender offer for 20% or more of the
Company's common shares. Each right would entitle the holder to buy one common
share of Company stock for $58.00.
24. The purpose, intent, and effect of the Poison Pill is to
thwart, impede, and delay any acquisition of Handy & Harman so that the
Individual Defendants can remain in control of the Company.
25. The rights plan has the force and effect of entrenching
the Individual Defendants in their corporate offices against any real or
perceived threat to their control, and dramatically impairs the rights of Class
members to exercise freedom of choice in a proxy contest or to avail themselves
of a bona fide offer to purchase their shares by an acquiror, such as WHX,
unfavored by incumbent management. This fundamental shift of control of the
Company's destiny from the hands of its shareholders to the hands of the
Individual Defendants results in a heightened fiduciary duty of the Individual
Defendants to consider, in good faith, a third party bid, such as WHX, and
further requires the Individual Defendants to pursue a third party's interest in
acquiring the Company and to negotiate in good faith with a bidder on behalf of
the Company's shareholders.
26. Further, on December 23, 1997, defendants approved an
amendment to Handy & Harman's by-laws to allow the Board the right to schedule
the time and date of the annual shareholders' meeting and, therefore, the
election of directors, instead of its previous
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fixed date. In amending the by-laws, defendants have manipulated the corporate
machinery to make it virtually impossible for third parties interested in an
acquisition of or merger with the Company to wage a proxy contest or elect or
remove incumbent directors.
27. Defendants' recalcitrance to consider and promptly act
upon WHX's offer has no valid business purpose, and simply evidences their
disregard for the benefits of a combined WHX/Handy & Harman company. By refusing
to consider WHX's offer, defendants are depriving plaintiff and the Class of the
right to share in the assets and businesses of Handy & Harman and receive the
maximum value for their shares.
28. Handy & Harman represents a highly attractive acquisition
candidate. Defendants' conduct would ensure their continued positions within the
Company but deprive the Company's public shareholders of a premium that WHX, or
any other bidder, is prepared to pay, or of the enhanced premium that further
negotiation or exposure of Handy & Harman to the market could provide.
29. Defendants owe fundamental fiduciary obligations to Handy
& Harman's shareholders to take all necessary and appropriate steps to maximize
the value of their shares. In addition, the Individual Defendants have the
responsibility to act independently so that the interests of the Company's
public shareholders will be protected, to seriously consider all bona fide
offers for the Company, and to conduct fair and active bidding procedures or
other mechanisms for checking the market to assure that the highest possible
price is achieved. Further, the directors of Handy & Harman must adequately
ensure that no conflict of interest exists between the Individual Defendants'
own interests and their fiduciary obligations to maximize shareholder value or,
if such conflicts exist, to insure that all such conflicts will be resolved in
the best interests of the Company's stockholders.
30. Because defendants dominate and control the business and
corporate affairs of Handy & Harman, and because they are in possession of
private corporate
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information concerning Handy & Harman's assets, businesses, and future
prospects, there exists an imbalance and disparity of knowledge of economic
power between defendants and Handy & Harman's public shareholders. This
discrepancy makes it grossly and inherently unfair for defendants to entrench
themselves at the expense of its public stockholders.
31. The Individual Defendants have breached their fiduciary
and other common law duties owed to plaintiff and other members of the Class in
that they have not and are not exercising independent business judgment and have
acted and are acting to the detriment of the Class.
32. In connection with the conduct described therein, the
Individual Defendants breached their fiduciary duties by, among other things:
a. failing to properly consider the WHX
proposal without fully informing themselves
about or intentionally ignoring the future
prospects of a combined Handy & Harman/WHX
company, or the intrinsic worth of WHX;
b. failing and refusing to negotiate with
representatives of WHX; and
c. impairing the franchise rights of Handy &
Harman's shareholders.
33. Defendants have refused to take those steps necessary to
ensure that Handy & Harman's shareholders will receive maximum value for their
shares of Handy & Harman stock. Defendants have thus refused to seriously
consider the pending offer, and have failed to announce any active auction or
open bidding procedures best calculated to maximize shareholder value in selling
the Company.
34. By the acts, transactions and courses of conduct alleged
herein, the Individual Defendants, individually and as part of a common plan and
scheme in breach of
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their fiduciary duties and obligations, are attempting unfairly to deprive
plaintiff and other members of the Class of the premium they could realize in an
acquisition transaction and to ensure continuance of their positions as
directors and officers, all to the detriment of Handy & Harman's public
shareholders. The Individual Defendants have been engaged in a wrongful effort
to entrench themselves in their offices and positions of control and prevent the
acquisition of Handy & Harman, except on terms that would further their own
personal interests.
35. As a result of the actions of the Individual Defendants,
plaintiff and the other members of the Class have been and will be damaged in
that they have not and will not receive their fair proportion of the value of
Handy & Harman's assets and businesses and/or have been and will be prevented
from obtaining a fair and adequate price for their shares of Handy & Harman's
common stock, and have been and will be prevented from fully and freely
exercising their franchise rights.
36. Plaintiff seeks preliminary and permanent injunctive
relief and declaratory relief preventing defendants from inequitably and
unlawfully depriving plaintiff and the Class of their right to realize a full
and fair value for their stock at a premium over the market price, by unlawfully
entrenching themselves in their positions of control, and to compel defendants
to carry out their fiduciary duties to maximize shareholder value.
37. Only through the exercise of this Court's equitable powers
can plaintiff be fully protected from the immediate and irreparable injury which
defendants' actions threaten to inflict. Defendants are precluding the
shareholders' enjoyment of their franchising rights and the full economic value
of their investment by failing to proceed expeditiously and in good faith to
evaluate and pursue a premium acquisition proposal that would provide
consideration for all shares at an attractive price.
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38. Unless enjoined by the Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the members of the Class,
and/or aid and abet and participate in such breaches of duty, and will prevent
the sale of Handy & Harman, all to the irreparable harm of plaintiff and other
members of the Class.
39. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring this to be a proper class action and
certifying p1aintiff as a class representative;
(b) Ordering the Individual Defendants to carry out
their fiduciary duties to plaintiff and the other members of the Class by
announcing their intention to:
(i) cooperate fully with any entity or person,
including WHX, having a bona fide interest in proposing any transaction that
would maximize shareholder value, including but not limited to, a merger or
acquisition of Handy & Harman;
(ii) immediately undertake an appropriate
evaluation of Handy & Harman's worth as a merger/acquisition candidate;
(iii) take all appropriate steps to enhance
Handy & Harman's value and attractiveness as a merger/acquisition candidate;
(iv) take all appropriate steps to effectively
expose Handy & Harman to the marketplace in an effort to create an active
auction of the Company;
(v) act independently so that the interests of
the Company's public shareholders will be protected; and
(vi) adequately ensure that no conflicts of
interest exist between the Individual Defendants' own interest and their
fiduciary obligation to maximize shareholder value or, in the event such
conflicts exist, to ensure that all conflicts of interest are resolved in the
best interests of the public stockholders of Handy & Harman;
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(c) Ordering the Individual Defendants, jointly and
severally to account to plaintiff and the Class for all damages suffered and to
be suffered by them as a result of the acts and transactions alleged herein;
(d) Awarding plaintiff the costs and disbursements
of this action, including a reasonable allowance for plaintiff's attorneys' and
expert's fees; and (e) Granting such other and further relief as may be just and
proper.
Dated: New York, New York
January 7, 1998
WECHSLER KARWOOD HALEBIAN
& FEFFER LLP
By: /s/ Robert I. Harwood
---------------------
Robert I. Harwood
488 Madison Avenue
New York, New York 10022
(212) 935-7400
Attorneys for Plaintiff
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