<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K
-----------------
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997 Commission file number 1-5365
HANDY & HARMAN
(Exact name of registrant as specified in its charter)
NEW YORK 13-5129420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 Park Avenue
New York, NY 10177
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (212)661-2400
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Number Outstanding Name of each exchange
Title of each class as of March 26, 1998 on which Registered
------------------- -------------------- -------------------
<S> <C> <C>
Common Stock Par Value $1 Per Share...... 12,143,192 New York Stock Exchange
Common Stock Purchase Rights............. 12,143,192 New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Registration S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the Common Stock outstanding and held by
non-affiliates (as defined in Rule 405 under the Securities Act of 1933) of the
registrant, based upon the closing sale price of the Common Stock on the New
York Stock Exchange on March 26, 1998 was $416,098,328.
Incorporation of documents by reference: None.
================================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Handy & Harman (hereinafter "H&H" or the "Company") was incorporated in
the State of New York in 1905 as the successor to a partnership which commenced
business in 1867. Unless the context indicates otherwise, the terms "H&H" and
the "Company" refer to Handy & Harman and its consolidated subsidiaries.
Historically, until commencing a diversification program in 1966, the
Company was engaged primarily in the manufacture of silver and gold alloys in
mill forms and the refining of precious metals from jewelry and industrial
scrap. The Company's markets were largely among silversmiths and manufacturing
jewelers, users of silver brazing alloys, and manufacturers who required silver
and gold primarily for the properties of those metals. The Company publishes a
daily New York price for its purchases of silver and gold and also publishes a
daily price for its fabricated silver and gold. The silver price is recognized,
relied on and used by others throughout the world. The diversification program
has added lines of precious metals products and various specialty manufacturing
operations, including stainless steel and specialty metal alloy products, for
industrial users in a wide range of applications which include the electric,
electronic, automotive original equipment, office equipment, oil and other
energy related, refrigeration, utility, telecommunications and medical
industries. In September 1994, the Company acquired Sumco Inc., a precision
electroplating company, which does electroplating of electronic connector and
connector stock for the automotive, telecommunications, electronic and computer
industries and in June 1996, the Company acquired ele Corporation, which brings
a value-added reel-to-reel molding capability appropriate for the semiconductor
lead frame and sensors marketplace. On February 28, 1997, the Company completed
the acquisition of Olympic Manufacturing Group, Inc., the leading domestic
manufacturer and supplier of fasteners for the commercial roofing industry.
The Company's business segments are (a) manufacturing and selling of
non-precious metal wire, cable and tubing products primarily stainless steel and
specialty alloys; (b) manufacturing and selling of precious metals products and
precision electroplated materials and stamped parts; and (c) manufacturing and
selling of other specialty products supplied to roofing, construction, natural
gas, electric and water industries. Three-year financial data for the Company's
business segments appear under the caption "The Company's Business" on page 23
of this Annual Report on Form 10-K and are incorporated by reference herein.
Export sales and revenues are not significant in the total sales and
revenues of any of the Company's business segments.
MANUFACTURING OF SPECIALTY WIRE AND TUBING PRODUCTS
The Company, through several subsidiaries, manufactures a wide variety of
non-precious metal wire and tubing products. Small diameter precision drawn
tubing fabricated from stainless steel, nickel alloy and carbon and alloy steel
is produced in many sizes and shapes to critical specifications for use in the
semi-conductor, aircraft, petrochemical, automotive, appliance, refrigeration
and instrumentation industries. Additionally, tubular product is manufactured
for the medical industry for use as implants, surgical supplies and
instrumentation. Nickel alloy, galvanized, carbon steel and stainless steel wire
products redrawn from rods are produced for such diverse applications as
bearings, brushes, cable lashing, hose reinforcement, nails, knitted mesh, wire
rope and cloth, air bags and antennas in the aerospace, automotive, chemical,
communications, marine, medical, petrochemical, welding and other industries.
Raw Materials--The raw materials used in this segment include stainless,
galvanized and carbon steels, nickel alloys and a variety of high performance
alloys. The Company purchases all such raw materials at open market prices from
domestic and foreign suppliers. The Company has not experienced any problem in
obtaining the necessary quantities of raw materials. Prices and availability,
particularly of raw materials purchased from foreign suppliers, will be affected
by world market conditions and governmental policies.
Competition--There are many companies, domestic and foreign, which
manufacture wire and tubing products of the types manufactured by this segment.
Competition is based on quality, service, price and new product introduction,
each of which is of equal importance.
Distribution--Most of the products manufactured by this segment are sold
directly to customers through Company sales personnel and the remainder are sold
through manufacturer's representatives and distributors.
PRECIOUS METALS PRODUCTS
The operational structure of the parent company's precious metals
activities consists of the Products Operations. Within the precious metals
segment of the Company's business, two principal classes of products are
manufactured: wire products and rolled products. The Company's profits from the
products manufactured in this segment are derived from the "value added" of
processing and fabricating and not from the purchase and resale of precious
metals. In accordance with general practice in the industry, prices to customers
are a composite of two factors; namely, (1) the value of the precious metal
content of the product plus (2) an amount referred to as "fabrication values" to
cover the cost of base metals, labor, overhead, financing and profit.
1
<PAGE> 3
Wire Products--In the manufacture of the Company's wire products, precious
metal alloys are cast, extruded and then drawn into wire. The Company's precious
metal wire products consist of sterling and other alloys of silver, and other
precious metal alloys in drawn and coiled wire and rod forms of differing
diameters, ranging from seven thousandths of an inch to one fourth of an inch.
The Company also manufactures Easy-Flo(R), Sil-Fos(R) and other silver brazing
alloys in wire form for making permanent, strong, leak-tight joints of the
metals joined. Brazing alloy wire is also sold in preformed rings and special
shapes. The Company's precious metal alloy wire products are marketed for
electrical conductive and contact applications in a wide variety of industries,
including the aerospace, electronics and appliance industries. Manufacturing
jewelers use the Company's precious metal wire in a wide range of production
applications, including, for example, necklaces, bracelets, earring parts and
pins and clips.
Rolled Products--The Company's rolled products are manufactured from
precious metals in sheets, strips and bars of varying thicknesses, widths and
lengths. These precious metal rolled products range in standard thickness from
foils five ten thousandths of an inch thick to strips or bars three eighths of
an inch thick and in standard widths from strips one eighth of an inch wide to
fifteen inches wide. Rolled products are shipped in lengths up to many hundred
feet. The Company's rolled products include precious metals bonded with other
metals in bimetallic and trimetallic strips which provide more versatile
industrial applications at a lower cost than would be possible if a solid
precious metal or a precious metal alloy were used.
Because of the physical properties of precious metals and precious metal
alloys, the Company's rolled products have a wide variety of applications by the
Company's industrial customers. The Company's rolled products are sold to
silversmiths for use as anodes in plating operations and for flatware and
hollowware, to manufacturing jewelers for a variety of jewelry, to mints and
others for coins, commemorative medals and ingots, to manufacturers of
electrical and electronic devices for electrical contacts and circuitry, to the
nuclear power industry for control assemblies, to the defense industry as foil
for batteries, and to the aerospace industry for use in guidance systems.
Powder Products--The Company produces silver/tin alloy powders for use in
dental applications and silver/copper alloy powders, which are sold under the
names Easy-Flo(R) and Sil-Fos(R) for use in industrial brazing applications.
Precision Plating and Surface Finishing--The Company produces precision
electroplated materials and stamped parts (often using gold, silver, palladium
and various base metals on such materials and stamped parts) for use in the
semiconductor, telecommunications, automotive electronics and computer
industries. It also participates in the medical plastics field.
Other Precious Metals Products--The Company produces grain beads of
various precious metal alloys by melting the metal and then pouring it through
water. Grain beads are distinguished from the Company's precious metals powders,
which are not as coarse and are produced by atomization spraying.
The Company exited the karat gold fabricated product business in 1995.
Karat gold was used in the production of wire products, rolled products and
grain beads stated above. See Note 1 to the Consolidated Financial Statements
included in this Annual Report on Form 10-K.
Raw Materials--The raw materials for the Company's precious metals
products consist principally of silver, gold, copper, cadmium, zinc, nickel, tin
and the platinum group metals in various forms. Silver and gold constitute the
major portion of the value of the raw materials involved. The Company purchases
all of its precious metals at free market prices from either customers, primary
producers or bullion dealers. The prices of silver and gold are subject to
fluctuations and are expected to continue to be affected by world market
conditions. Nonetheless, the Company has not experienced any problem in
obtaining the necessary quantities of raw materials required for this segment
and, in the normal course of business, receives precious metals from suppliers
and customers. These metals are returnable in fabricated or commercial bar form
under agreed upon terms. Since precious metals are fungible, the Company does
not physically segregate supplier and customer metals from its own inventories.
Therefore, to the extent that supplier or customer metals are used by the
Company, the amount of inventory which the Company must own is reduced. All raw
materials used in this segment are readily available from several sources. For a
discussion of the Company's inventory purchasing and pricing and of the
Company's practices to eliminate the economic risk of precious metal price
fluctuations, see "The Company's Business" on page 23 of this Annual Report on
Form 10-K.
Working Capital Items--The Company maintains a level of inventory of fine
and fabricated precious metals in various stages of processing for customer
delivery requirements and for a continuous supply of raw materials. Such
inventories are carried under the Last-In, First-Out (LIFO) method of
accounting. The LIFO carrying values are substantially less than the market
values of the inventories. See Note 2 of the Notes to Consolidated Financial
Statements on page 35 of this Annual Report on Form 10-K for a comparison of the
cost and market values of the Company's precious metals inventories at December
31, 1997 and December 31, 1996.
Product Development, Patents and Trademarks--While the Company holds a
number of patents and trademarks related to its precious metals products and
processes, and is licensed under others, the precious metals business, as a
whole, is not dependent upon such patents. The Company's trademarks are
registered in the United States and in several foreign countries. The Company
maintains a technical laboratory and staff in connection with its precious
metals operations and a portion of the work of that staff is devoted to
metallurgical products and development.
Distribution Facilities--The Company distributes precious metals products
directly to customers from its plants and service branches, except that certain
products, primarily brazing alloys, are distributed through independent
distributors throughout the United States and Canada. The
2
<PAGE> 4
Company has a marketing organization trained to service its customers and
dealers, to solicit orders for its precious metal and related products. This
organization markets all of the Company's precious metals products and provides
special technical assistance with respect to precious metals through product
engineers and other technical personnel. The Company maintains customer service
and sales offices at its various manufacturing and processing plants. It also
has warehouse facilities to support sales and distribution at each of its
manufacturing and processing plants.
Competition--The Company is one of the leading fabricators of precious metals.
Although there are no companies in the precious metals field whose operations
exactly parallel those of H&H in every area, there are a number of competitors
in each of the classes of the Company's precious metals products. Many of these
competitors also carry on activities in other product lines in which the Company
is not involved. Competition is based on quality, service and price, each of
which is of equal importance.
MANUFACTURING OF OTHER SPECIALTY PRODUCTS
Subsidiaries of the Company manufacture fasteners, fastening systems,
plastic and steel fittings and connections and non-ferrous thermite welding
powders for the roofing, construction, natural gas, electric and water
distribution industries.
Distribution--Most of the Company's products comprising this segment are
sold directly to customers and distributors through Company sales personnel, and
the remaining sales are made by agents and manufacturers' representatives.
Raw Materials--The raw materials used in this segment include various
steel alloys and various plastic compositions. The Company purchases all such
raw materials at open market prices primarily from domestic suppliers. The
Company has not experienced any problem in obtaining the necessary quantities of
raw materials. Prices and availability, particularly as to raw materials
purchased from foreign suppliers, will continue to be affected by world market
conditions and governmental policies.
Competition--There are many companies, domestic and foreign, which
manufacture products of the type manufactured by this segment. Some are larger
than the Company and many are larger than the Company's operations with which
they compete. Competition is generally based on quality, service and price, each
of which is of equal importance.
RECENT DEVELOPMENTS
On March 1, 1998 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 commenced a tender offer on March 6, 1998 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
of the Purchaser with and into the Company and all shares of the Company's
common stock not purchased in the tender offer will be converted into the right
to receive $35.25 per share in cash.
On March 1, 1998 the Board amended the Rights Agreement dated as of
January 26, 1989, as amended on April 25, 1996 and October 22, 1996, between
the Company and ChaseMellon Shareholder Services L.L.C. (as so amended, the
"Rights Agreement") to prevent the Purchaser from becoming an "Acquiring
Person" and to prevent a "Triggering Event," "Stock Acquisition Date" or
"Distribution Date" (all as defined in the Rights Agreement) from occurring as
a result of the offer, the merger or other transactions contemplated by the
Merger Agreement. Consummation of the merger is expected to occur in the Spring
of 1998. The offer and the merger are subject to various conditions.
DISCONTINUED OPERATIONS
In August 1996 the Company sold its domestic refining business, which
recovered precious metals from waste and scrap generated by users of the
Company's precious metals products, by other industrial users of precious
metals, and by non-manufacturing refining customers, and from high grade mining
concentrates and bullion. During 1995 the Company sold, in two phases, its
automotive segment which manufactured a wide variety of parts, cables,
components and assemblies for North American automotive original equipment
manufacturers. The cable operations were sold on July 20, 1995 and the remaining
operations on December 29, 1995. See Note 1 of the Notes to the Consolidated
Financial Statements included in this Annual Report on Form 10-K.
GOVERNMENT REGULATION
During the last fiscal year, the Company spent or committed approximately
$1,800,000 in complying with federal, state and local occupational safety and
health, environmental control and equal employment opportunity laws and
regulations. These expenditures included monies spent by the Company in the
clean-up of hazardous wastes and toxic substances under federal, state and local
laws and regulations relating to protection of the environment. Typical of large
domestic manufacturing concerns, the Company's operations may affect the
environment. These operations may produce, process and dispose of materials and
waste products which, under certain conditions, are toxic or hazardous under
such environmental laws and regulations. The Company expects to make comparable
expenditures and commitments during the current fiscal year, provided that no
further changes are made in such laws and regulations or in their application.
Such expenditures are not material to the competitive position or financial
condition of the Company; however, such laws and regulations may require capital
expenditures not now contemplated and may result in increased operating costs.
See Item 3--Legal Proceedings.
3
<PAGE> 5
ENERGY
The Company requires significant amounts of electricity, natural gas, fuel
oil and propane to operate its facilities. The Company has few contracts
covering natural gas or electricity, but has some one-year contracts for the
delivery of fuel oil and propane at some facilities. These contracts are the
result of competitive bidding.
In an attempt to minimize the effects of any fuel shortages, the Company
has made a number of process and equipment changes to allow use of alternate
fuels in key processes, and the Company has equipped certain plants with
alternate fuel reserves intended to reduce any curtailment upon a local
shortage. A general and continuing shortage of such fuels or a government
allocation of supplies resulting in a general reduction in fuel supplies,
however, could cause some curtailment of production.
EMPLOYEES
The Company had 2,562 employees on December 31, 1997. Of these,
approximately 36 percent are covered by collective bargaining agreements, which
expire at various times during the next three years.
ITEM 2. PROPERTIES
The Company has 26 active operating plants in the United States, Canada,
England, Denmark and Singapore (50% owned) with a total area of approximately
1,860,000 square feet, including warehouse, office and laboratory space, but not
including the plants used by the Singapore operation. The Company also owns or
leases sales, service and warehouse facilities at two other locations in the
United States, which, with the Company's executive and general offices, have a
total area of approximately 63,000 square feet and owns eleven non-operating or
discontinued locations with a total area of approximately 634,000 square feet.
The Company considers its manufacturing plants and service facilities to be well
maintained and efficiently equipped, and therefore suitable for the work being
done. The productive capacity and extent of utilization of the Company's
facilities is dependent in some cases on general business conditions and in
other cases on the seasonality of the utilization of its products. Productivity
can be expanded readily to meet additional demands. A description of the
Company's principal plants by industry segment is as follows:
Wire and Tubing
The headquarters of the wire portion of this segment is in Cockeysville,
Maryland, and the headquarters of the tubing portion of this segment is in
Norristown, Pennsylvania. Manufacturing facilities are located in: Cockeysville,
Maryland; Norristown, Pennsylvania; Willingboro and Middlesex, New Jersey;
Oriskany, New York; Camden, Delaware; Evansville, Indiana; Fort Smith, Arkansas;
Retford, Notts. and Liversedge, Yorkshire, England; and Kolding, Denmark. All
these plants are owned in fee, except for the Retford, Middlesex and Fort Smith
plants, which are leased.
Precious Metals
The Company's principal precious metal products operation is conducted in
Fairfield, Connecticut. Other precious metal operations are conducted in: North
Attleboro, Massachusetts; East Providence, Rhode Island; Cudahy, Wisconsin;
Carmel, Indiana; Indianapolis, Indiana; Fontana, California; Toronto, Canada;
Hertfordshire, England; and Singapore (50 percent owned). The Company owns all
these operating plants in fee except for the Hertfordshire and Carmel plants,
which are leased.
Other Specialty Products
The principal facilities currently engaged in the Company's other
specialty products businesses are located in Tulsa and Broken Arrow, Oklahoma;
Agawam and Westfield, Massachusetts; and Canastota, New York. The Company owns
all these operating plants in fee, except for the Westfield and Canastota
plants, which are leased.
Company's Offices
The Company's executive offices are in New York, New York and occupy
17,000 square feet under a lease. The Company has its general offices in leased
premises containing approximately 30,000 square feet located in Rye, New York.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company or any of its
subsidiaries is a party or to which any of their property is the subject, other
than ordinary, routine litigation incidental to the business, none of which
individually or in the aggregate is material to the business or financial
condition of the Company, except as follows:
Montvale, New Jersey Facility
In connection with the Montvale, New Jersey facility (which was closed in
1984) formerly operated by Handy & Harman Electronic Materials Corporation
("HHEM"), a subsidiary of the Company, a civil action lawsuit was filed in April
1993 by the Borough of Park Ridge in the Superior
4
<PAGE> 6
Court of New Jersey, Law Division, Bergen County, against HHEM, the Company, the
prior owner of the facility and other defendants asserting that a chemical used
at the facility in Montvale, New Jersey, an adjoining municipality, had migrated
and entered a drinking water supply of Park Ridge. This action seeks recovery of
the alleged cost of treatment and remediation of water wells of the Borough of
Park Ridge as a result of alleged contamination by the defendants.
The Handy & Harman defendants denied responsibility for the alleged
contamination of the Park Ridge wells and asserted that if any such
contamination existed as a result of operation of the Montvale facility, damages
arising therefrom are the responsibility of the owner or operator thereof prior
to the purchase of the facility by HHEM from Plessey Incorporated (Plessey). The
Handy & Harman defendants asserted substantial cross-claims against Plessey,
GEC-Marconi Materials Corp. and a vendor of the chemical involved. Handy &
Harman also filed a separate action, since consolidated with the above Park
Ridge action, against Twin Cities Fire Insurance Company and other carriers,
claiming coverage under various liability insurance policies and seeking
indemnification and defense for all of Park Ridge's claims.
The Company has settled its claims against its co-defendant, Plessey,
Inc., and its claims against Twin City. As a result of those settlements, the
Company believes that the resolution of the Park Ridge lawsuit, either by
settlement or judgment, will not have a materially adverse effect on the
financial position of the Company.
Shareholder Lawsuits
Two purported class action lawsuits (each of which is described below)
were commenced in connection with the unsolicited tender offer commenced by WHX
in December 1997 to acquire all of Handy & Harman's shares for $30 per share in
cash (the "Initial WHX Offer"). Both of these purported class actions are in the
preliminary stages and no discovery has begun.
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 individual
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.
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.
Other Legal Proceedings
A grand jury subpoena was issued by the United States Attorney for the
District of New Jersey calling for the production of documents focusing
primarily on the business conducted in Argentina by Handy & Harman's former
refining division prior to the sale of that division in 1996. Counsel to the
Company has produced documents to the U.S. Attorney's Office and intends to
produce additional documents to the government in the future. The Company has
advised the U.S. Attorney that it intends to cooperate fully in this
investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the fourth quarter of the year ended December 31, 1997.
5
<PAGE> 7
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The information for this Item is incorporated by reference to the section
entitled "Stock Trading and Dividends" on page 24 of this Annual Report on Form
10-K and to Note 6 of the Notes to Consolidated Financial Statements included in
this Annual Report on Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA
The information for this Item is incorporated by reference to the section
entitled "Five Year Selected Financial Data" on page 25 of this Annual Report on
Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information for this Item is incorporated by reference to the section
entitled "Management's Discussion and Analysis" on pages 26 through 28 of this
Annual Report on Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information for this Item is incorporated by reference to the
Consolidated Financial Statements contained on pages 29 through 32 of this
Annual Report on Form 10-K and by reference to the Summary of Significant
Accounting Policies contained on pages 33 and 34 of this Annual Report on Form
10-K and the Notes to Consolidated Financial Statements commencing on page 34 of
this Annual Report on Form 10-K and by reference to the Independent Auditors'
Report set forth on page 41 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Certain information concerning the current directors and executive
officers of the Company as of March 26, 1998 is set forth below:
<TABLE>
<CAPTION>
Director or
Name of Director or Executive Officer Age Position with the Company Officer 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)............... 65 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.......................... 46 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.
6
<PAGE> 8
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.
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.
7
<PAGE> 9
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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the issued and outstanding shares of the Company's common stock (the "Shares"),
to file with the Securities and Exchange Commission (the "Commission") 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
regulations of the Commission 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.
ITEM 11. 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 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:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------- -----------------------------------------------
Restricted Options All Other
Name & Position Year Salary ($) Bonus ($) Stock Awards ($) Shares (#) Compensation (1) ($)
=====================================================================================================================
<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.
8
<PAGE> 10
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 & Harman 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 stand alone), shares of restricted or
phantom stock and stock bonuses, in such amounts and with such terms and
conditions as the Compensation Committee shall determine, subject to the
provisions of the 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
9
<PAGE> 11
prices. The remaining shares under option with terms of 7 years and 10
years become exercisable cumulatively at the 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 Under Option
Shares Available --------------------------- Weighted 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 Option 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>
Individual Grants
---------------------------------------------------------------------- Potential Realizable Value at
% of Total Assumed Annual Rates of Stock Price
# of Securities Options Granted Appreciation for Option Term (1) ($)
Underlying Option/ to Employees in Exercise or Expiration -------------------------------------
SARs Granted Fiscal Year Base Price ($) 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 Commission and, therefore, are not
intended to forecast possible future appreciation, if any, of the
Company's stock price. 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.
10
<PAGE> 12
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.
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.
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.
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.
11
<PAGE> 13
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 Retirement 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 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.
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.
12
<PAGE> 14
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.
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 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).
13
<PAGE> 15
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, 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.
14
<PAGE> 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 26, 1998 (except as noted
below), certain information as to those persons who were beneficial owners of
more than 5% of the 12,143,292 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
Name of Beneficial Owner Ownership (1),(6),(7) of Class
===========================================================================================================
<S> <C> <C>
Gabelli Funds, Inc. and affiliates (2)
One Corporate Center
Rye, New York 10580-1434....................................... 1,846,627 15.2%
Kennedy Capital Management, Inc. (3)
10829 Olive Blvd.
St. Louis, Missouri 63141...................................... 606,475 5.0
Neuberger & Berman, LLC and affiliates (4)
605 Third Avenue
New York, New York 10158-3698.................................. 617,908 5.1
WHX Corporation (5)
HN Acquisition Corp.
110 East 59th Street
New York, New York 10022....................................... 1,649,455 13.6
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 13D, dated
March 26, 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.
(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, and 40,000 Shares for Mr. Kuhns.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
15
<PAGE> 17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents Filed as a Part of This Report.
1. Financial Statements.
The Consolidated Financial Statements (pages 29 through 32 of this Annual
Report on Form 10-K), the Summary of Significant Accounting Policies and Notes
to Consolidated Financial Statements (pages 33 through 40 of this Annual Report
on Form 10-K), the Independent Auditors' Report (page 41 of this Annual Report
on Form 10-K) and the items of Supplementary Information incorporated by
reference in Part II, Item 8 of this Annual Report on Form 10-K are
incorporated by reference.
2. Financial Statement Schedule.
The following Financial Statement Schedule is filed as a part of this
Report, beginning herein at the respective pages indicated:
(i) Consent of Independent Auditors (page F-1).
(ii) Schedule II--Valuation and Qualifying Accounts and Reserves (page
S-1).
All other schedules are omitted because they are not applicable, are not
required or because the required information is included in the Consolidated
Financial Statements or Notes thereto.
3. Exhibits Required to Be Filed.
The following exhibits required to be filed as part of this Annual Report
on Form 10-K have been included:
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession
(a) Asset Purchase Agreement, dated as of July 8, 1996, by and between
Golden West Refining Corporation Limited and the Company (filed as Exhibit
3(1)(a) to the Company's 1996 Annual Report on Form 10-K and incorporated herein
by reference).
(b) Stock Purchase Agreement, dated as of February 19, 1997, among
Saugatuck Capital Company Limited Partnership III, the other sellers named
therein and the Company (filed as Exhibit 3(1)(b) to the Company's 1996 Annual
Report on Form 10-K and incorporated herein by reference).
(c) Agreement and Plan of Merger, dated as of March 1, 1998, by and among
WHX Corporation, HN Acquisition Corp. and the Company (filed as Exhibit 2 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(d) Amendment No. 1, dated as of March 26, 1998, to the Agreement and
Plan of Merger, dated as of March 1, 1998, by and among WHX Corporation, HN
Acquisition Corp. and the Company.
(3) Certificate of Incorporation and By-Laws
(a) Restated Certificate of Incorporation of the Company (filed as Exhibit
3(a) to the Company's 1989 Annual Report on Form 10-K and incorporated herein by
reference).
(b) By-Laws, as amended and restated as of December 23, 1997 (filed as
Exhibit 1 to the Company's Current Report on Form 8-K, dated December 23, 1997,
and incorporated herein by reference).
(4) Instruments Defining the Rights of Security Holders, Including
Indentures
(a) Rights Agreement, dated as of January 26, 1989, between the Company
and ChaseMellon Shareholder Services, L.L.C., (formerly known as Morgan
Shareholder Services Trust Company), as Rights Agent, including all exhibits
thereto (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A,
dated February 3, 1989, and incorporated herein by reference).
(b) Amendment, dated as of April 25, 1996, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A/A, dated May
21, 1996, and incorporated herein by reference).
16
<PAGE> 18
(c) Amendment, dated as of October 22, 1996, to the Rights Agreement
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A/A,
dated October 24, 1996, and incorporated herein by reference).
(d) Amendment, dated as of March 1, 1998, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 3 to the Company's Solicitation/Recommendation Statement on Schedule
14D-9, dated March 6, 1998, and incorporated herein by reference).
(e) Note Purchase Agreement, dated as of April 17, 1997, among the Company
and the Purchasers party thereto.
(10) Material Contracts.
(a) 1982 Stock Option Plan (filed as Exhibit 32 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(b) Amendment to 1982 Stock Option Plan approved in December 1988 (filed
as Exhibit 33 to the Company's Solicitation/Recommendation Statement on Schedule
14D-9, dated March 6, 1998, and incorporated herein by reference).
(c) Handy & Harman Management Incentive Plan-Corporate Group Participants,
as amended and restated on December 15, 1994 (filed as Exhibit 25 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(d) Subsidiary, Division, Group or Unit Management Incentive Plan, as
amended and restated on December 15, 1994 (filed as Exhibit 34 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(e) Handy & Harman Deferred Fee Plan For Directors, as amended and
restated on December 15, 1994, effective as of January 1, 1995 (filed as Exhibit
35 to the Company's Solicitation/Recommendation Statement on Schedule 14D-9,
dated March 6, 1998, and incorporated herein by reference).
(f) Form of Executive Agreement entered into with the Company's executive
officers in September 1986 (filed as Exhibit 10(d) to the Company's 1986 Annual
Report on Form 10-K and incorporated herein by reference).
(g) Amendment to Executive Agreement approved in December 1988 (filed as
Exhibit 20 to the Company's Solicitation/Recommendation Statement on Schedule
14D-9, dated March 6, 1998, and incorporated herein by reference).
(h) 1988 Long-Term Incentive Plan (filed as Exhibit 28 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(i) Amendment to 1988 Long-Term Incentive Plan approved in December 1988
(filed as Exhibit 29 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(j) Amendment to 1988 Long-Term Incentive Plan approved in June 1989
(filed as Exhibit 30 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(k) Agreement, dated as of May 1, 1989, between the Company and R. N.
Daniel (filed as Exhibit 4 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(l) Amendment to Agreement between the Company and R. N. Daniel approved
by the Company on May 11, 1993 (filed as Exhibit 5 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(m) Outside Directors' Stock Option Plan (filed as Exhibit 27 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(n) Amended and Restated Joint Venture Agreement, dated as of June 1,
1990, by and between Allen Heat Transfer Products Inc. and Handy & Harman
Radiator Corporation (filed as Exhibit 2 to the Company's Current Report on Form
8-K, dated June 5, 1990, and incorporated herein by reference).
(o) Handy & Harman Long-Term Incentive Stock Option Plan (filed as Exhibit
36 to the Company's Solicitation/Recommendation Statement on Schedule 14D-9,
dated March 6, 1998, and incorporated herein by reference).
(p) Handy & Harman Supplemental Executive Plan (filed as Exhibit 23 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
17
<PAGE> 19
(q) 1995 Omnibus Stock Incentive Plan (filed as Exhibit 37 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(r) Form of Change of Control Agreements, dated May 14, 1997, between the
Company's executive officers (filed as Exhibit (a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997 and incorporated herein
by reference).
(s) 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 (filed as Exhibit 6 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(t) Restated Amendment to Agreement with Richard N. Daniel, dated February
26, 1998 (filed as Exhibit 7 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(u) Executive Agreement, dated as of July 1, 1989, between the Company and
Frank E. Grzelecki (filed as Exhibit 8 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(v) Amendment, dated as of July 1, 1989, to Agreement, dated as of July 1,
1989, between the Company and Frank E. Grzelecki (filed as Exhibit 9 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(w) Amended and Restated Agreement, dated as of November 3, 1995, between
the Company and Mr. Grzelecki (filed as Exhibit 10 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(x) Restated Confirmation Agreement with Frank E. Grzelecki, dated
February 26, 1998 (filed as Exhibit 11 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(y) Employment Agreement, dated as of October 22, 1996, between the
Company and Robert D. LeBlanc (filed as Exhibit 12 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(z) Supplemental Agreement, dated as of May 14, 1997, between the Company
and Robert D. LeBlanc (filed as Exhibit 13 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(aa) Amendment, dated February 26, 1998, to Supplemental Agreement with
Robert D. LeBlanc (filed as Exhibit 14 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(bb) Amended and Restated Agreement with Paul E. Dixon, dated February 26,
1998 (filed as Exhibit 15 to the Company's Solicitation/Recommendation Statement
on Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(cc) Amended and Restated Agreement with Robert F. Burlinson, dated
February 27, 1998 (filed as Exhibit 16 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(dd) Amended and Restated Agreement with Dennis C. Kelly, dated February
26, 1998 (filed as Exhibit 17 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(ee) Amended and Restated Agreement with Dennis R. Kuhns, dated February
26, 1998 (filed as Exhibit 18 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(ff) Form of Executive Agreement, dated as of September 2, 1986, between
the Company and Robert M. Thompson (filed as Exhibit 19 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(gg) Amendment, dated February 26, 1998, to Executive Agreement with
Robert M. Thompson (filed as Exhibit 20 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(hh) Amended and Restated Supplemental Executive Retirement Plan as of
January 1, 1998, approved on February 26, 1998 (filed as Exhibit 22 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(ii) Handy & Harman Executive Post-Retirement Life Insurance Program
(filed as Exhibit 24 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(jj) Amendment to Management Incentive Plan, approved January 22, 1998
(filed as Exhibit 26 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
18
<PAGE> 20
(kk) Amendment to Long-Term Incentive Plan approved January 22, 1998
(filed as Exhibit 31 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(ll) Handy & Harman Pension Plan.
(mm) 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.
(11) Statement re computation of per share earnings. Incorporated by
reference to Item (H) of Summary of Significant Accounting Policies on page 33
of this Annual Report on Form 10-K.
(21) List of Subsidiaries of the Company.
(23) Consent of Independent Auditors. Included on page 21 of this Annual
Report on Form 10-K and incorporated herein by reference thereto.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
Current Report on Form 8-K, dated December 23, 1997, with respect to an
amendment of the Company's By-laws.
Current Report on Form 8-K, dated January 23, 1998, with respect to a
press release announcing the Board of Directors' determination to explore all
strategic alternatives to enhance shareholder value.
Current Report on Form 8-K, dated March 1, 1998, with respect to the
execution of (a) an Agreement and Plan of Merger, dated as of March 1, 1998, by
and among WHX Corporation, HN Acquisition Corp. and the Company; and (b) an
Amendment, dated as of March 1, 1998, to the Company's Rights Agreement, dated
as of January 26, 1989, as amended as of April 25, 1996 and October 22, 1996.
Current Report on Form 8-K, dated March 16, 1998, filing certain unaudited
consolidated financial information as of December 31, 1997 and 1996 and for each
of the years in the three year period ended December 31, 1997.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Handy & Harman has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HANDY & HARMAN
Dated: March 26, 1998
By /s/ R. N. DANIEL
--------------------------------
(R.N. Daniel)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company,
in the capacities and on the respective dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
============================================================================================================
<S> <C> <C>
/s/ R. N. DANIEL Chairman and Director March 26, 1998
- ------------------------------------------------ (Principal Executive Officer)
(R.N. Daniel)
/s/ F. E. GRZELECKI Vice Chairman and Director March 26, 1998
- ------------------------------------------------
(F.E. Grzelecki)
/S/ R.D. LeBlanc President and Director March 26, 1998
- ------------------------------------------------ (Chief Operating Officer)
(R.D. LeBlanc)
/s/ R. F. BURLINSON Vice President and Treasurer March 26, 1998
- ------------------------------------------------ (Principal Financial Officer)
(R.F. Burlinson)
/s/ D. C. KELLY Controller March 26, 1998
- ------------------------------------------------ (Principal Accounting Officer)
(D.C. Kelly)
/s/ C. A. ABRAMSON Director March 26, 1998
- ------------------------------------------------
(C.A. Abramson)
/s/ R. E. CORNELIA Director March 26, 1998
- ------------------------------------------------
(R.E. Cornelia)
/s/ G.G. GARBACZ Director March 26, 1998
- ------------------------------------------------
(G.G. Garbacz)
/s/ G. M. NICHOLS Director March 26, 1998
- ------------------------------------------------
(G.M. Nichols)
/s/ H. P. SOTOS Director March 26, 1998
- ------------------------------------------------
(H.P. Sotos)
/s/ E. J. SUSSMAN Director March 26, 1998
- ------------------------------------------------
(E.J. Sussman)
/s/ R. E. TETRAULT Director March 26, 1998
- ------------------------------------------------
(R.E. Tetrault)
</TABLE>
20
<PAGE> 22
F-1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Handy & Harman:
We consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration Nos. 2-78264, 33-37919, 33-43709 and
33-80803) of Handy & Harman of our report dated February 9, 1998, except as to
Note 11, which is as of March 1, 1998.
KPMG PEAT MARWICK LLP
New York, New York
March 26, 1998
21
<PAGE> 23
S-1
HANDY & HARMAN AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Balance, Balance,
Beginning Deductions Close
Description of Period Additions(a) From Reserve of Period
=======================================================================================================
<S> <C> <C> <C> <C>
Allowance for doubtful accounts receivable
(deducted from accounts receivable):
Year ended December 31, 1997 $1,686 $ 436(b) $ 488 $1,634
Year ended December 31, 1996 $3,021 $1,052 $2,387(c) $1,686
Year ended December 31, 1995 $3,597 $ 329 $ 905 $3,021
- -------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
1997 1996 1995
===========================
<S> <C> <C> <C>
(a) Provision for doubtful accounts--charged to costs and expenses......... $333 $1,052 $329
(b) Includes $103 acquired through business combination.
(c) Includes $694 of allowance for doubtful accounts
receivable related to discontinued operations reclassed accordingly.
</TABLE>
22
<PAGE> 24
handy & harman and subsidiaries
The Company's Business
The Company's industry segments are manufacturing of specialty wire and tubing,
manufacturing of precious metals products, and manufacturing of other
non-precious metal products. The table below presents information about the
segments with additional segment information for 1997, 1996 and 1995 found in
Note 7 of the Notes to Consolidated Financial Statements on page 38. A further
analysis of the industry segments can be found under "Management's Discussion
and Analysis" beginning on page 26.
The wire and tubing segment has two basic product types. Stainless steel
wire is drawn from rod to a wide range of smaller diameters. Applications are
widespread and include springs, telecommunication networks, mobile antennas,
brushes, laparoscopic instruments, petroleum well screens, and conveyor belts.
Tubing is manufactured from carbon steel, stainless steel, and a variety of
specialty alloys. Applications are similarly numerous including semiconductor
fabrication, electronics, oil field services, petrochemicals, refrigeration,
automotive, hydraulic, medical, and aerospace.
The precious metals segment is engaged in precision plating and surface
finishing for electronic and electrical components, the manufacturing of a
variety of products, generally in mill forms, containing silver, gold and other
precious metals in combination (alloys) with non-precious metals, and the sale
of such products to users in a wide range of industries, including silverware
and jewelry, electrical and electronic, automotive, telecommunication, heating
and refrigeration components, aerospace, and appliance.
It is the Company's operating policy to maintain constant precious metal
inventory levels under the last-in, first-out (LIFO) method of accounting.
Precious metals are purchased at the same prices and quantities as selling
commitments to customers. In the normal course of business, the Company accepts
precious metals from suppliers and customers, which quantities are returnable in
fabricated or commercial bar form under agreed upon terms. Since precious metals
are fungible, the Company does not physically segregate the supplier and
customer metals. Therefore, to the extent such metals are used by the Company to
meet its operating requirements, the amount of inventory which the Company must
own is reduced. The Company's inventory positions are sufficient to protect
against any losses in connection with these supplier and customer accounts. To
the extent that additional inventory is required to support operations, precious
metals are purchased and immediately sold for future delivery, eliminating the
economic risk of price fluctuations. Such purchases and sales are not included
in either sales or cost of sales. From time to time, management reviews the
appropriate inventory levels and may elect to make adjustments.
A high percentage of the selling price for precious metals products is the
cost of the precious metal content. Therefore, both sales and cost of sales are
influenced by fluctuations in the prices of precious metals. In addition,
certain customers choose to do business on a "toll" basis, that is, to furnish
bullion to Handy & Harman for fabrication. When the metals are returned to the
customer in fabricated form, the customer pays only a fabrication charge, and
the precious metal value of this consignment business is not included in sales
or cost of sales.
The business units in the other non-precious metal businesses segment
manufacture specialty roofing and construction fasteners and products for gas,
electricity and water distribution using steel and plastic which are sold
principally to roofing, construction, water and natural gas distribution
industries.
The following table provides details of sales from continuing operations,
as well as profit contribution by each reportable segment before general
corporate, non-operating and interest expenses. See "Management's Discussion
and Analysis" beginning on page 26.
<TABLE>
<CAPTION>
(Thousands of Dollars) 1997 1996 1995
======================================================================================
<S> <C> <C> <C>
Sales:
Wire/Tubing $ 173,763 $ 175,451 $ 175,092
Precious metals 220,879 215,246 236,196
Other non-precious metal businesses 56,468 16,410 15,900
- --------------------------------------------------------------------------------------
$ 451,110 $ 407,107 $ 427,188
- --------------------------------------------------------------------------------------
Profit contribution before unallocated expenses:
Wire/Tubing $ 16,839 $ 18,426 $ 17,870
Precious metals *25,631 *49,998 **8,588
Other non-precious metal businesses 7,333 2,031 2,226
- --------------------------------------------------------------------------------------
49,803 70,455 28,684
General corporate expenses (1,800) (1,800) (1,800)
Non-operating (net) *** 2,500 -- --
Interest expense (net) (14,452) (9,682) (12,598)
- --------------------------------------------------------------------------------------
Income from continuing operations
before income taxes and
extraordinary item $ 36,051 $ 58,973 $ 14,286
======================================================================================
</TABLE>
* Includes a $6,408,000 gain in 1997, and a $33,630,000 gain in 1996 as a result
of reduction in the quantities of precious metal inventories valued under the
LIFO method of accounting.
** Includes a $9,549,000 charge in 1995 related to restructuring and asset
writedowns for the Precious Metals Fabricated Products division.
*** Non-operating items are an insurance settlement gain of $3,000,000 and
certain takeover defense costs amounting to $500,000.
The following table segregates identifiable assets to the three reported
segments, corporate and discontinued operations.
<TABLE>
<CAPTION>
----------------------------------
Assets
(Thousands of Dollars) 1997 1996 1995
======================================================================================
<S> <C> <C> <C>
Wire/Tubing $108,155 $103,893 $103,939
Precious metals 122,296 122,397 130,356
Other non-precious metal businesses 67,324 9,802 10,568
Corporate 95,022 80,372 67,674
Discontinued operations -- -- 28,512
- --------------------------------------------------------------------------------------
$392,797 $316,464 $341,049
======================================================================================
</TABLE>
23
<PAGE> 25
handy & harman and subsidiaries
Stock Trading and Dividends
Handy & Harman Common Stock is traded on the New York Stock Exchange. The
following table sets forth, for the quarterly periods indicated, the reported
high and low sales prices for the Common Stock on the New York Stock Exchange
and the dividends paid on the Common Stock during such periods.
At February 13, 1998, there were 2,677 holders of record of Common Stock
of Handy & Harman.
<TABLE>
<CAPTION>
Common Stock Dividend Paid on
Sales Prices Common Stock
High Low Per Share
==============================================================================
<S> <C> <C> <C>
1997
January 1-March 31 $17 3/8 $15 3/8 6(cent)
April 1-June 30 17 3/4 13 5/8 6(cent)
July 1-September 30 23 16 15/16 6(cent)
October 1-December 31 35 21 7/8 6(cent)
- ------------------------------------------------------------------------------
1996
January 1-March 31 $17 5/8 $15 3/8 6(cent)
April 1-June 30 18 3/4 16 6(cent)
July 1-September 30 18 1/8 16 1/4 6(cent)
October 1-December 31 19 1/4 15 7/8 6(cent)
==============================================================================
</TABLE>
Selected Quarterly Data
Summarized financial data for interim periods of 1997 and 1996 (expressed in
thousands of dollars, except per share data) are shown below.
<TABLE>
<CAPTION>
1997 Quarter Ended
Mar. 31 June 30 Sept. 30 Dec. 31
================================================================================
<S> <C> <C> <C> <C>
Sales $104,932 $115,971 $115,115 $115,092
Gross profit 21,587 29,885 24,884 25,343
- --------------------------------------------------------------------------------
Net income $ 4,087 $ 7,009 $ 3,606 $ 6,208
- --------------------------------------------------------------------------------
Net income
per share - basic $ .34 $ .59 $ .30 $ .52
- --------------------------------------------------------------------------------
Net income
per share - diluted $ .34 $ .58 $ .30 $ .51
================================================================================
</TABLE>
<TABLE>
<CAPTION>
1996 Quarter Ended
Mar. 31 June 30 Sept. 30 Dec. 31
==========================================================================================
<S> <C> <C> <C> <C>
Sales $108,340 $105,806 $95,890 $97,071
Gross profit 21,349 21,429 23,572 47,185
Earnings (loss):
Continuing operations 4,363 4,454 5,684 19,272
Extraordinary item -- -- -- (2,889)
Discontinued operations (9,654) -- -- (4,861)
- ------------------------------------------------------------------------------------------
Net income (loss) ($5,291) $4,454 $5,684 $11,522
- ------------------------------------------------------------------------------------------
Earnings (loss) per share - basic
Continuing operations $.31 $.32 $.41 $1.44
Extraordinary item -- -- -- (.22)
Discontinued operations (.69) -- -- (.36)
- ------------------------------------------------------------------------------------------
Net income (loss) $(.38) $.32 $.41 $.86
- ------------------------------------------------------------------------------------------
Earnings (loss) per share - diluted
Continuing operations $.31 $.32 $.41 $1.44
Extraordinary item -- -- -- (.22)
Discontinued operations (.68) -- -- (.36)
- ------------------------------------------------------------------------------------------
Net income (loss) $(.37) $.32 $.41 $.86
==========================================================================================
</TABLE>
1997 includes after-tax LIFO gains of $2,706,000 or $.23 per share in the second
quarter and $1,011,000 or $.08 per share in the fourth quarter. Additionally,
1997 includes an after-tax insurance settlement gain of $1,740,000, or $.14 per
share and certain takeover defense costs after-tax of $290,000 or $.02 per share
both in the fourth quarter. Basic and diluted earnings per share are the same
for these items.
The 1996 continuing operations includes after-tax LIFO gains of $2,913,000 or
$.21 per share in the third quarter and $16,347,000 or $1.22 per share in the
fourth quarter. Basic and diluted earnings per share are the same for these
items.
The 1996 extraordinary item is attributable to the early retirement of debt.
The 1996 discontinued operations includes loss results and special charges for
the sale of the domestic refining business.
24
<PAGE> 26
handy & harman and subsidiaries
Five Year Selected Financial Data
<TABLE>
<CAPTION>
Dollars in thousands except per share figures 1997 1996 1995 1994 1993
====================================================================================================================
<S> <C> <C> <C> <C> <C>
Operations
Sales $451,110 $407,107 $427,188 $408,968 $372,571
Income from continuing operations
before extraordinary items and
excluding net LIFO gains (b) 17,193 14,513 7,509 6,743 1,928(a)
Net LIFO gains (b) 3,717 19,260 -- -- --
Loss from extraordinary item -- (2,889) -- -- --
Income (loss) from discontinued operations -- (14,515) 11,131 9,768 7,548
Net income 20,910 16,369 18,640 16,511 9,476(a)
Dividends 2,874 3,341 3,383 2,811 2,803
Per Share Data
Income from continuing operations before
extraordinary item and net LIFO gains (b) 1.44 1.05 .53 .48 .14(a)
Loss from extraordinary item -- (.21) -- -- --
Net LIFO gains (b) .31 1.40 -- -- --
Income (loss) from discontinued operations -- (1.05) .79 .70 .54
Net income 1.75 1.19 1.32 1.18 .68(a)
Dividends .24 .24 .24 .20 .20
Basic average shares outstanding (thousands) 11,981 13,796 14,092 14,050 14,021
- ----------------------------------------------------------------------------------------------------------------------
Financial Position (at December 31)
Current assets 158,248 138,674 163,101 187,336 226,441
Current liabilities 67,007 76,838 113,621 153,593 114,534
Working capital 91,241 61,836 49,480 33,743 111,907
Property, plant and equipment - net 94,988 83,205 91,406 117,200 106,220
Total assets 392,797 316,464 341,049 405,018 406,160
Long-term debt 190,880 127,500 93,500 131,750 188,750
Deferred income taxes 20,947 15,261 13,534 13,551 11,276
Shareholders' equity 112,408 95,606 120,394 106,124 91,600
LIFO reserve (c) 106,201 97,996 141,458 139,068 141,273
- ----------------------------------------------------------------------------------------------------------------------
Statistical Data
Property, plant and equipment
acquired through capital expenditures 18,460 14,694 23,143 18,567 15,147
Depreciation and amortization 14,194 12,000 16,668 15,683 15,816
Interest expense (net) - continuing operations 14,452 9,682 12,598 10,772 10,977
Number of shareholders 2,677 2,816 3,096 2,259 2,238
Number of employees at December 31 2,562 2,304 2,567 4,826 4,246
- ----------------------------------------------------------------------------------------------------------------------
Financial Ratios
Return on average shareholders' equity 20.1% 15.2% 16.5% 16.7% 10.7%
Current ratio 2.4 1.8 1.4 1.2 2.0
======================================================================================================================
</TABLE>
(a) Includes a benefit of $576,000 or $.04 per share, from cumulative effect
of accounting change.
(b) Net LIFO gains (after-tax) are due to change in levels of precious metal
inventories stated at LIFO cost.
(c) Excess of year-end market value of LIFO inventory over cost.
25
<PAGE> 27
handy & harman and subsidiaries
Management's Discussion and Analysis
Liquidity, Capital Resources and Other Financial Data
The Company's precious metal inventory, consisting principally of gold and
silver, is readily convertible to cash. Furthermore, these precious metal
inventories which are stated in the Balance Sheet at LIFO cost have a market
value of $106,201,000 in excess of such cost as of December 31, 1997.
It is the Company's policy to obtain funds necessary to finance working
capital requirements and acquisition activity from various banks under
commercial credit facilities. Fluctuations in the market prices of gold and
silver have a direct effect on the dollar volume of sales and the corresponding
amount of customer receivables resulting from sale of precious metal products.
In addition, receivables resulting from the sale of precious metal bullion for
future delivery are also financed by bank borrowings. The Company adjusts the
level of its credit facilities from time to time in accordance with its
borrowing needs for working capital requirements and acquisition activity and
maintains bank credit facilities well in excess of anticipated requirements.
Consistent with other precious metal fabricating companies, some of the
Company's gold and silver requirements are furnished by customers and suppliers
on a consignment basis. Title to the consigned gold and silver remains with the
Consignor. The value of consigned gold and silver held by the Company is not
included in the Company's Balance Sheet. The Company's gold and silver
requirements are provided from a combination of owned inventories, precious
metals which have been purchased and sold for future delivery, and gold and
silver received from suppliers and customers on a consignment basis.
The Company has a new unsecured Revolving Credit Facility, initiated on
September 29, 1997, which provides $200,000,000 for a five year period maturing
in 2002, subject to annual one year extensions. As of December 31, 1997 there
were borrowings of $25,000,000 under this facility. On August 29, 1997 the
Company returned precious metal and cancelled a three year fee consignment
facility which was initiated in the third quarter of 1994. In addition to the
Revolving Credit Facility the Company completed additional unsecured financing
on April 17, 1997 for $125,000,000 at a fixed rate of 7.31% due 2004.
On May 14, 1996, Handy & Harman announced that it had decided to exit the
refining business, exclusive of the Company's satellite refining operations
located in Singapore and Canada. The Company completed the sale of the Handy &
Harman Refining Division in the third quarter of 1996. Accordingly, operations
for this major division have been classified as discontinued operations. A
charge associated with exiting this business of $22,350,000 ($13,161,000
after-tax) was recorded in 1996. The sale of this division released a
significant portion of the Company's owned precious metal inventory position
making it, along with the Company's credit facilities, available for further
deployment to continuing operations, acquisition of new businesses and
repurchase of 1.8 million shares of the Company's common stock via a "Dutch
Auction", completed in December 1996.
On February 28, 1997, the Company acquired Olympic Manufacturing Group,
Inc. for approximately $53,000,000 which was funded by Revolving Credit
Facilities.
Over the past three years the Company's operating activities have provided
net cash of $94,181,000 and investing activities have used $12,968,000. The net
cash provided from operating and investing activities was primarily used in
financing activities amounting to $76,313,000.
Operating Activities
Net cash provided by operating activities amounted to $32,897,000 in 1997,
$41,198,000 in 1996 and $20,086,000 in 1995. Net cash flow from operating
activities decreased $8,301,000 from 1996 to 1997 primarily due to a decrease of
$10,132,000 in net income adjusted for non-cash and non-operating items. This
decrease is primarily due to greater reductions of LIFO inventories in 1996 as
compared to 1997 partially offset by expenditures associated with the disposal
of the refining business in 1996. Offsetting the above was a decrease in working
capital requirements of $1,831,000.
Net cash flow from operating activities increased $21,112,000 from 1995 to
1996 primarily due to an increase of $17,947,000 in net income adjusted for
non-cash and non-operating items. This increase was primarily due to proceeds
from the reductions of LIFO inventories in 1996, partially offset by
expenditures associated with the disposal of the refining business in 1996. The
balance of the cash flow increase from operating activities was due to a
decrease of $3,165,000 in working capital requirements.
Investing Activities
Net cash (used)/provided in investing activities amounted to ($71,149,000) in
1997, ($12,456,000) in 1996 and $70,637,000 in 1995. Net cash used in investing
activities increased $58,693,000 in 1997 over 1996 primarily due to the purchase
of Olympic Manufacturing Group, Inc. on February 28, 1997 for approximately
$53,000,000 as compared to the purchase of ele Corporation in 1996 for
$3,700,000. Also included in 1996 investing activities are net proceeds of
$5,074,000 for the sale of the refining division. Capital expenditures in 1997
amounted to $18,460,000 as compared to $14,694,000 in 1996. Included in capital
expenditures for 1997 is a major modernization program of our precious metal
product facility in Fairfield, Connecticut and the retrofitting of the former
karat gold facility in East Providence, Rhode Island by the Electronic Materials
Group.
Net cash provided by investing activities decreased $83,093,000 in 1996
over 1995 primarily due to net proceeds in 1995 of $68,032,000 from the sale of
the automotive (OEM) segment and $24,750,000 in net investing activities of
discontinued operations due to the realization of proceeds on the Company's
investment in and receivable from GO/DAN Industries, a joint venture, versus net
26
<PAGE> 28
handy & harman and subsidiaries
Management's Discussion and Analysis
proceeds in 1996 of $5,074,000 for the sale of the refining division and use
of cash for the purchase of ele Corporation amounting to $3,700,000 (net). Cash
outflows for capital expenditures decreased by $8,449,000 in 1996 versus 1995
due to plant expansion, primarily related to the wire/tubing segment in 1995.
Financing Activities
During this past three year period the Company's net financing activities were
an increase of $15,181,000 in debt, cash used by the net change in future
receivables and payables of $37,772,000, net purchases of Company stock of
$40,743,000, dividend payments of $9,598,000, penalties paid on the early
retirement of debt amounting to $4,640,000, and proceeds from a joint venture
partner of $1,259,000.
The net cash provided by financing activities was $35,913,000 in 1997 due
to an increase in debt of $48,380,000, primarily caused by the purchase of
Olympic Manufacturing group on February 28, 1997 for approximately $53,000,000.
The Company also completed long-term financing for $125,000,000 on April 17,
1997 at a fixed rate of 7.31% due 2004, the proceeds of which were used to
reduce both short-term borrowings and borrowings under the revolving credit
facility. Additional uses of cash were a decrease in futures payable of
$9,246,000, dividend payments of $2,874,000 and net treasury stock transactions
of $347,000.
The net cash used in financing activities was $25,668,000 in 1996 due to
the purchase of company stock for $40,036,000 via a "Dutch Auction" in December
1996 and the plan to buyback up to 1.5 million shares of the Company's common
stock announced on November 6, 1995, penalties paid on the early retirement of
debt of $4,640,000 and the payment of dividends of $3,341,000. This was
partially offset by an increase in debt of $3,301,000, a decrease in futures
receivables of $7,681,000, an increase in futures payable of $9,246,000, funding
proceeds received from a joint venture partner of $1,259,000, and other treasury
stock transaction proceeds of $862,000.
The net cash used in financing activities was $86,558,000 in 1995
primarily due to the decrease in futures payable of $37,772,000 and an increase
in futures receivable of $7,681,000, repayment of debt of $36,500,000, payment
of dividends of $3,383,000 and purchase of the Company's common stock amounting
to $1,505,000 (cash-settlement basis) which was part of the plan to buyback up
to 1.5 million shares of the Company's common stock announced on November 6,
1995.
The Company's program to expand productive capacity through acquisition of
new businesses and expenditures for new property, plant and equipment will
continue to be financed with internally generated funds and long-term debt, if
necessary.
The Company's foreign operations consist of four wholly owned
subsidiaries, (one in Canada, two in the United Kingdom, and one in Denmark),
and one equity investment in Asia. Substantially all unremitted earnings of such
entities are free from legal or contractual restrictions.
Statements contained in Management's Discussion and Analysis are
forward-looking statements and are made pursuant to the safe harbor provision of
the private securities litigation reform act of 1995. Forward-looking statements
involve a number of risks and uncertainties including, but not limited to,
product demand, pricing, market acceptance, precious metal and other raw
materials price fluctuations, intellectual property rights and litigation, risks
in product and technology development and other risk factors detailed in the
Company's Securities and Exchange Commissions filings.
As part of the Company's continuing process of upgrading its information
systems which it began in 1991, for both hardware and software, a majority of
the year 2000 internal concerns have been addressed or are in the process of
being rectified. The future costs associated with any remaining year 2000
upgrades to the Company's information systems are not significant. The Company
is also in the process of addressing year 2000 external concerns with its
vendors and customers which may affect the Company.
Comparison of 1997 versus 1996
Sales of the wire/tube segment decreased $1,688,000 (1%) and profit contribution
(pre-tax income before deducting interest and corporate expenses) decreased
$1,587,000 (9%) primarily due to decreased sales of stainless steel tubing
caused by the weakness in the semi-conductor fabrication industry, which began
in the third quarter of 1996. In addition, the effects of the strengthened
British pound against other European currencies has had a negative impact on the
Company's United Kingdom subsidiary's export sales. These decreases were
partially offset by the increased sales of the carbon steel tubing companies
servicing the refrigeration and automotive industries as well as diminishing
operating losses of the tubing facility in Denmark. This segment's overall
operating performance has started out strong in 1998 and its profit contribution
is expected to exceed the prior year's.
Sales for the precious metal segment increased $5,633,000 (3%) primarily
due to increased sales of ele Corporation which was acquired on June 27, 1996.
The average price of gold in 1997 was $331.55 per ounce and in 1996 was $387.70
per ounce. The average price of silver in 1997 was $4.88 per ounce and in 1996
was $5.18 per ounce. Profit contribution decreased $24,367,000 (49%) primarily
due to the reductions in the quantities of precious metal inventories valued at
LIFO cost which produced a gain of $6,408,000 in 1997 versus a gain of
$33,630,000 in 1996. Excluding LIFO gains, profit contribution increased
$2,855,000 (17%) primarily due to improved operating performance of the Precious
Metals Fabrication Group of companies. Several capital projects completed in
1997 and others scheduled for completion in 1998 should enhance the profit
potential for this segment in 1998.
Sales in the other non-precious metal segment increased $40,058,000 (244%)
and profit contribution increased $5,302,000 (261%) primarily due to the
addition of Olympic Manufacturing Group, Inc., purchased February 28, 1997. Due
to the nature of
27
<PAGE> 29
handy & harman and subsidiaries
Management's Discussion and Analysis
Olympic's business cycle, the levels of profit contribution experienced in the
second and third quarter are anticipated again in the second and third quarter
of 1998.
Interest expense increased $4,770,000 (49%) due to increased borrowings as
a result of the purchase of Olympic Manufacturing Group, Inc. on February 28,
1997, and the purchase of 1.8 million shares of the Company's common stock via a
"Dutch Auction" completed in December 1996. This increase was partially offset
by proceeds from the sale of precious metals in the fourth quarter of 1996 and
to a lesser extent sales of precious metals in 1997.
Included in other income/deductions for 1997 is an insurance settlement
gain of $3,000,000 and certain takeover defense costs amounting to $500,000.
The effective income tax rate for 1997 and 1996 was 42.0% and 42.7%,
respectively. The rate decrease was due to decreased foreign losses, for which a
valuation reserve has been provided, partially offset by increased
non-deductible goodwill associated with Olympic Manufacturing Group, Inc.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", which establishes new disclosures for reporting comprehensive income
and SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information", which established standards for the way that segment information
is to be disclosed in the financial statements along with additional information
on products and services, geographic areas and major customers. The Company's
1998 disclosures for these two statements will be determined by the timeliness
of the Company's merger with WHX Corporation, as further described in Note 11 to
the Consolidated Financial Statements.
Comparison of 1996 versus 1995
Sales for the wire/tubing segment increased $359,000 and profit contribution
(pre-tax income before deducting interest and corporate expenses) increased
$556,000 (3%) due to a strong increase in demand for stainless steel tubing
brought about by rapid growth in the semiconductor industry experienced during
the first half of 1996 partially offset by a decrease in sales destined for the
automotive market experienced by one of the segments wire units.
Sales for the precious metal segment decreased $20,950,000 (9%) due
primarily to the elimination for the karat gold fabricated line in 1995. The
average price of gold in 1996 was $387.70 per ounce and in 1995 was $384.19 per
ounce. The average price of silver in 1996 was $5.18 per ounce and in 1995 was
$5.19 per ounce. The profit contribution increased $41,410,000 (482%) primarily
due to the reductions in the quantities of precious metal inventories valued at
LIFO cost which produced a gain of $33,630,000. Also, in 1995 there was a
nonrecurring charge of $5,342,800 for severance costs and asset write-downs
related to the decision to exit the karat gold fabricated product line in East
Providence, Rhode Island and $4,207,000 of additional costs, primarily asset
write-downs, related to the Company's ongoing operation in Fairfield,
Connecticut recorded in the second quarter of 1995. Excluding the gain on LIFO
inventory and the nonrecurring charges in 1995 described above, the profit
contribution decreased $1,769,000 (10%) due to product mix changes experienced
in fabricated precious metals and a decrease in sales due to the higher demand
in the first half of 1995 from the electronic components sector of the
automotive industry experienced by the Company's precision surface finishing
business.
In the other non precious metal segment, sales increased $510,000 (3%) due
primarily to growth of the thermOweld(R) product line, particularly in foreign
markets, partially offset by decreased steel fitting sales. Profit contribution
decreased $195,000 (9%) due to lower production volume of steel fittings, and
the related expense of unabsorbed production costs partially offset by increased
thermOweld(R) sales discussed above.
Interest expense decreased $2,916,000 (23%) due to decreased levels of
borrowings as result of proceeds from the completion of the sale of the
Company's automotive segment and the sale of its investment in GO/DAN Industries
in the latter part of 1995.
The effective income tax rate for 1996 and 1995 was 42.7% and 47.4%,
respectively. The reason for the lower effective income tax rate for 1996
compared to 1995 is due to decreased foreign losses, for which a valuation
allowance has been provided, as a percentage of income before taxes.
28
<PAGE> 30
handy & harman and subsidiaries
Consolidated Statement of Income
<TABLE>
<CAPTION>
Year ended December 31 1997 1996 1995
=======================================================================================================
<S> <C> <C> <C>
Sales $451,110,000 $407,107,000 $427,188,000
Cost of sales 349,411,000 293,572,000 348,737,000
- -------------------------------------------------------------------------------------------------------
Gross profit 101,699,000 113,535,000 78,451,000
Selling, general, and administrative expenses 54,116,000 44,504,000 45,524,000
Restructuring charge -- -- 5,342,000
- -------------------------------------------------------------------------------------------------------
Income from operations 47,583,000 69,031,000 27,585,000
- -------------------------------------------------------------------------------------------------------
Other deductions (income):
Interest expense (net) 14,452,000 9,682,000 12,598,000
Other (net) (2,920,000) 376,000 701,000
- -------------------------------------------------------------------------------------------------------
11,532,000 10,058,000 13,299,000
- -------------------------------------------------------------------------------------------------------
Income from continuing operations before
income taxes and extraordinary item 36,051,000 58,973,000 14,286,000
Income tax provision 15,141,000 25,200,000 6,777,000
- -------------------------------------------------------------------------------------------------------
Income from continuing operations
before extraordinary item 20,910,000 33,773,000 7,509,000
Extraordinary loss on early retirement of
debt (net of $2,030,000 income tax benefit) -- (2,889,000) --
Discontinued operations:
Loss from operations, net of
income tax benefit $1,026,000, $252,000 -- (1,354,000) (365,000)
Gain/(loss) on disposal, net of
income taxes/(benefit) - ($9,190,000), $8,220,000 -- (13,161,000) 11,496,000
- -------------------------------------------------------------------------------------------------------
-- (14,515,000) 11,131,000
- -------------------------------------------------------------------------------------------------------
Net income $20,910,000 $16,369,000 $18,640,000
=======================================================================================================
Earnings per share - basic:
Income from continuing operations
before extraordinary item $1.75 $2.45 $.53
Extraordinary loss on early retirement of debt -- (.21) --
Discontinued operations -- (1.05) .79
- -------------------------------------------------------------------------------------------------------
Net income $1.75 $1.19 $1.32
=======================================================================================================
Basic average number of shares outstanding 11,981,000 13,796,000 14,092,000
=======================================================================================================
Earnings per share - diluted:
Income from continuing operations
before extraordinary item $1.74 $2.44 $.53
Extraordinary loss on early retirement of debt -- (.21) --
Discontinued operations -- (1.05) .79
- -------------------------------------------------------------------------------------------------------
Net income $1.74 $1.18 $1.32
=======================================================================================================
Diluted average number of shares outstanding 12,042,000 13,846,000 14,103,000
=======================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
29
<PAGE> 31
handy & harman and subsidiaries
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31 1997 1996
================================================================================================
<S> <C> <C>
Assets
Current assets:
Cash $ 7,259,000 $ 9,701,000
Accounts receivable, less allowance for doubtful accounts of
$1,634,000 in 1997 and $1,686,000 in 1996 59,084,000 51,572,000
Inventories 77,294,000 70,357,000
Prepaid expenses, deposits and other current assets 14,611,000 7,044,000
- ------------------------------------------------------------------------------------------------
Total current assets 158,248,000 138,674,000
- ------------------------------------------------------------------------------------------------
Investments in affiliates, at equity 3,870,000 3,122,000
Property, plant and equipment 218,052,000 195,623,000
Less accumulated depreciation and amortization 123,064,000 112,418,000
- ------------------------------------------------------------------------------------------------
94,988,000 83,205,000
Prepaid retirement costs (net) 60,659,000 54,566,000
Intangibles, net of amortization 65,058,000 24,818,000
Other assets 9,974,000 12,079,000
- ------------------------------------------------------------------------------------------------
$ 392,797,000 $ 316,464,000
================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings -- $ 15,000,000
Accounts payable $ 36,999,000 30,163,000
Futures payable -- 9,246,000
Other current liabilities 30,008,000 22,429,000
- ------------------------------------------------------------------------------------------------
Total current liabilities 67,007,000 76,838,000
- ------------------------------------------------------------------------------------------------
Long-term debt, less current maturities 190,880,000 127,500,000
Minority interest 1,555,000 1,259,000
Deferred income taxes 20,947,000 15,261,000
Commitments
- ------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock - par value $1; 60,000,000
shares authorized; 14,611,432 shares issued 14,611,000 14,611,000
Capital surplus 14,410,000 13,432,000
Retained earnings 130,435,000 112,399,000
Foreign currency translation adjustment (1,462,000) (61,000)
- ------------------------------------------------------------------------------------------------
157,994,000 140,381,000
Less: Treasury stock 1997 - 2,596,460 shares;
1996 - 2,618,421 shares - at cost 45,586,000 44,308,000
Unearned compensation -- 467,000
- ------------------------------------------------------------------------------------------------
Total shareholders' equity 112,408,000 95,606,000
- ------------------------------------------------------------------------------------------------
$ 392,797,000 $ 316,464,000
================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
30
<PAGE> 32
handy & harman and subsidiaries
Consolidated Statement of Shareholders' Equity
Three Years Ended December 31, 1997
<TABLE>
<CAPTION>
Foreign
Par Value $1 Currency Total
Common Capital Retained Translation Treasury Unearned Shareholders'
Stock Surplus Earnings Adjustment Stock Compensation Equity
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1995 $14,611,000 $11,830,000 $84,114,000 ($720,000) ($3,491,000) ($220,000) $106,124,000
Net income 18,640,000 18,640,000
Dividends - $.24 per share (3,383,000) (3,383,000)
Remeasurement and
amortization of
stock issued under 1988
long-term incentive plan 4,000 (6,000) 220,000 218,000
Stock awarded under
outside director stock
option plan (awarded
3,290 - issued 2,852 shares) 34,000 14,000 48,000
Stock issued under the
incentive stock option
plan (22,800 shares) 165,000 115,000 280,000
Shares purchased by Company
for treasury (95,500 shares) (1,505,000) (1,505,000)
Translation adjustment (28,000) (28,000)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1995 14,611,000 12,033,000 99,371,000 (748,000) (4,873,000) -- 120,394,000
Net income 16,369,000 16,369,000
Dividends - $.24 per share (3,341,000) (3,341,000)
Stock issued under
1988 long-term incentive
plan (62,750 shares) 735,000 315,000 (467,000) 583,000
Stock awarded under
outside director stock
option plan (awarded
4,194 - issued 8,640 shares) 54,000 43,000 97,000
Stock issued under the
incentive stock option
plan - net (69,889 shares) 610,000 243,000 853,000
Shares purchased by Company
for treasury (2,155,900 shares) (40,036,000) (40,036,000)
Translation adjustment 687,000 687,000
===================================================================================================================================
Balance,
December 31, 1996 14,611,000 13,432,000 112,399,000 (61,000) (44,308,000) (467,000) 95,606,000
Net income 20,910,000 20,910,000
Dividends - $.24 per share (2,874,000) (2,874,000)
Amortization of stock issued under
1988 long-term incentive plan
and forfeiture of 2,275 shares (27,000) (12,000) 467,000 428,000
Stock awarded under
outside director stock
option plan (awarded
4,781 - issued 1,366 shares) 53,000 7,000 60,000
Stock issued under the
incentive stock option
plan - net (112,750 shares) 952,000 567,000 1,519,000
Shares purchased by Company
for treasury (89,880 shares) (1,840,000) (1,840,000)
Translation adjustment (1,401,000) (1,401,000)
===================================================================================================================================
Balance,
December 31, 1997 $14,611,000 $14,410,000 $130,435,000 ($1,462,000) ($45,586,000) -- $112,408,000
===================================================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
31
<PAGE> 33
handy & harman and subsidiaries
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Increase (Decrease) in Cash
-----------------------------------------------
Year Ended December 31, 1997 1996 1995
==============================================================================================================
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 20,910,000 $ 16,369,000 $ 18,640,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Extraordinary loss on debt retirement -- 4,919,000 --
Depreciation and amortization 14,194,000 12,000,000 16,668,000
Provision for doubtful accounts 333,000 1,052,000 329,000
Gain on disposal of property, plant and equipment 8,000 68,000 91,000
(Gain)/loss on disposal of business units -- 8,704,000 (20,176,000)
Net prepaid retirement costs (6,093,000) (3,995,000) (2,339,000)
Equity in earnings of affiliates (942,000) (421,000) (451,000)
Minority interest 296,000 -- --
Earned compensation - 1988 long-term incentive
and outside director stock option plans 506,000 648,000 266,000
Restructuring and nonrecurring charges -- -- 8,369,000
Changes in assets and liabilities, net of effects
from acquisitions and divestitures:
Accounts receivable (3,198,000) 3,659,000 3,369,000
Inventories (2,670,000) 13,227,000 (7,877,000)
Prepaid expenses and other current assets (6,906,000) (3,767,000) 1,210,000
Deferred charges and other assets 1,086,000 (1,050,000) (2,951,000)
Accounts payable and other current liabilities 7,853,000 (4,662,000) (1,775,000)
Federal and foreign taxes on income (77,000) (5,279,000) 6,730,000
Deferred income taxes 7,597,000 (274,000) (17,000)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 32,897,000 41,198,000 20,086,000
- --------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 43,000 864,000 520,000
Capital expenditures (18,460,000) (14,694,000) (23,143,000)
Acquisition, net of cash and debt acquired (52,732,000) (3,700,000) --
Divestitures, net of cash sold -- 5,074,000 68,032,000
Investment in affiliates - net -- -- 478,000
Net investing activities of discontinued operations -- -- 24,750,000
- --------------------------------------------------------------------------------------------------------------
Net cash provided/(used) in investing activities (71,149,000) (12,456,000) 70,637,000
- --------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Short-term borrowings (15,000,000) (27,199,000) 5,250,000
Net decrease in revolving credit facility (120,000,000) -- --
Proceeds from long-term financing 183,380,000 -- --
Repayment of other long-term debt -- (64,500,000) (11,750,000)
Long-term revolving credit facilities -- 95,000,000 (30,000,000)
Net (increase)/decrease in futures receivable -- 7,681,000 (7,681,000)
Net increase/(decrease) in futures payable (9,246,000) 9,246,000 (37,772,000)
Dividends paid (2,874,000) (3,341,000) (3,383,000)
Purchase of treasury stock (net) (347,000) (39,174,000) (1,222,000)
Penalties paid on early retirement of debt -- (4,640,000) --
Funding proceeds from joint venture partner -- 1,259,000 --
- --------------------------------------------------------------------------------------------------------------
Net cash provided/(used) in financing activities 35,913,000 (25,668,000) (86,558,000)
- --------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on net cash (103,000) (10,000) (87,000)
- --------------------------------------------------------------------------------------------------------------
Net change in cash (2,442,000) 3,064,000 4,078,000
Cash at beginning of year 9,701,000 6,637,000 2,559,000
- --------------------------------------------------------------------------------------------------------------
Cash at end of year $ 7,259,000 $ 9,701,000 $ 6,637,000
==============================================================================================================
Cash paid during the year for:
Interest, net of contango on futures and forward contracts $ 12,745,000 $ 12,886,000 $ 20,979,000
Income taxes $ 3,084,000 $ 20,678,000 $ 6,365,000
==============================================================================================================
</TABLE>
The accompanying summary of significant accounting policies and notes are an
integral part of the financial statements.
32
<PAGE> 34
handy & harman and subsidiaries
Summary of Significant Accounting Policies
A: Principles of consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany items have been
eliminated. Investments in affiliates, which are 20%-50% owned companies, are
accounted for by the equity basis of accounting.
B: Inventories
Precious metals inventories are valued at cost as computed under the last-in,
first-out (LIFO) method, which is lower than market. Non-precious metals
inventories are stated at the lower of cost (principally average) or market. For
precious metals inventories no segregation among raw materials, work in process
and finished goods is practicable.
C: Property, plant and equipment, and depreciation
Property, plant and equipment are stated at cost. Depreciation and amortization
are provided principally on the straight-line method for financial reporting
purposes and on accelerated methods for tax purposes.
D: Intangibles and amortization
The excess of purchase price over net assets acquired in business combinations
is being amortized on the straight-line method over 40 years. The Company uses
undiscounted cash flows when evaluating annually the recoverability of the
unamortized balance for the excess of purchase price over net assets acquired in
a business combination. The assessment of the recoverability of goodwill will be
impacted if estimated future operating cash flows are not achieved. Purchased
patents are stated at cost, which is amortized over the respective remaining
lives of the patents.
E: Futures contracts
Consistent with the Company's policy of maintaining constant inventory levels
under the last-in, first-out (LIFO) method of accounting, precious metals are
purchased at the same prices and quantities as shipments to customers.
Additionally, to the extent that an increase in inventory is required to support
operations, precious metals are purchased and immediately sold for future
delivery, creating a futures receivable and eliminating the economic risk of
price fluctuations. Also to the extent there is a decrease in the inventory
required to support operations, precious metals are sold and immediately
purchased for future receipt, creating a futures payable and also eliminating
the economic risk of price fluctuations.
Future sales and purchases of precious metals are excluded from sales and
cost of sales in the accompanying income statement. The related margin deposits
are included with the futures receivable/payable. The income/expense from future
sales/purchases of precious metals is amortized over the contract period and is
included in interest expense.
F: Sales
A high percentage of the sales prices for the Company's precious metals products
is the value of the precious metals content. Changes in the unit sales price of
such precious metals result in corresponding changes in sales and cost of sales.
The Company includes in both sales and cost of sales the precious metal value of
sales of fabricated products if the customer purchased the precious metal from
the Company, whether or not the precious metal is sold at the same time as the
fabricated product. In addition, certain customers choose to do business on a
"toll" basis, that is, to furnish bullion to Handy & Harman for fabrication.
When the metals are returned to the customer in fabricated form, the customer
pays only a fabrication charge, and the precious metal value of this consignment
business is not included in sales or cost of sales.
G: Taxes on income
The Company accounts for certain income and expense items differently for
financial reporting and income tax purposes. In accordance with SFAS No. 109
"Accounting for Income Taxes" deferred tax assets and liabilities are determined
based on the difference between the financial statement and tax bases of assets
and liabilities applying enacted statutory tax rates in effect for the year in
which the differences are expected to reverse.
H: Earnings per share
In 1997, the Company adopted SFAS No. 128 "Earnings Per Share" which specifies
the computation, presentation, and disclosure requirements for "basic" and
"diluted" earnings per share. A weighted-average number of common shares
outstanding during the period is used in both the "basic" and "diluted"
computations. The difference between the Company's basic and diluted
computations is the diluted computation includes an increase in the number of
additional shares that would be outstanding relating to the potential exercise
of stock options. The weighted-average of these additional dilutive shares
amounted to 61,000, 50,000, and 11,000 shares for 1997, 1996 and 1995,
respectively which did not have a material impact on current and previously
reported earnings per share amounts.
I: Foreign currency translation
Assets and liabilities of foreign subsidiaries have been translated at current
exchange rates, and related revenues and expenses have been translated at
average rates of exchange in effect during the year. Resulting cumulative
translation adjustments have been recorded as a separate component of
shareholders' equity.
J: Fair value of financial instruments
The fair value amounts for cash, receivables (net), and short-term borrowings
approximate carrying amounts due to the short maturities of these instruments.
The fair value of long-term debt was estimated based on the current rates
offered to the Company for debt of the same remaining maturities. The difference
between the fair value and the carrying value is not material and the Company
has no plans to retire significant portions of its long-term debt prior to
scheduled maturity.
K: Long-lived assets
Long-lived assets and certain identifiable intangibles held, used or disposed of
are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company
determined that no impairment loss need be recognized for applicable assets of
continuing operations.
33
<PAGE> 35
handy & harman and subsidiaries
L: Stock-based compensation
In 1995 the Financial Accounting Standard Board issued SFAS No. 123 "Accounting
for Stock-Based Compensation". SFAS No. 123 encourages, but does not require
companies to record compensation cost for stock-based employee compensation
plans at fair value. The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations. Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of
Company's stock at the date of the grant over the amount an employee must pay to
acquire stock. Refer to Note 6.
M: New accounting standards
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income",
which establishes new disclosures for reporting comprehensive income and SFAS
No. 131, "Disclosure about Segments of an Enterprise and Related Information",
which established standards for the way that segment information is to be
disclosed in the financial statements along with additional information on
products and services, geographic areas and major customers. The Company's 1998
disclosures for these two statements will be determined by the timeliness of the
Company's merger with WHX Corporation, as further discribed in Note 11 to the
Consolidated Financial Statements.
N: Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and related
notes to financial statements. Changes in such estimates may affect amounts
reported in future periods.
O: Reclassifications
Certain reclassifications have been made to the 1996 and 1995 consolidated
financial statements to conform to the 1997 presentation.
================================================================================
Notes to Consolidated Financial Statements
Note 1: Acquisitions, Divestitures, Restructuring and
Other Income and Deductions
On February 28, 1997 the Company acquired 100% of the outstanding shares of
Olympic Manufacturing Group, Inc. for approximately $53,000,000. This
acquisition has been accounted for as a purchase; accordingly, the purchase
price has been allocated to the underlying assets and liabilities based on their
respective estimated fair values at the date of acquisition. The estimated fair
value of assets acquired was $17,500,000 and liabilities assumed was $6,500,000.
The excess of the purchase price over the fair value of the assets acquired and
liabilities assumed was approximately $42,000,000 and is being amortized over a
period of 40 years. The excess purchase price has a tax deductible basis of
approximately $10,000,000. This business is not material to the revenues of the
Company.
Included in other income/deductions for 1997 is an insurance settlement
gain of $3,000,000 and certain takeover defense costs amounting to $500,000.
On June 27, 1996 the Company acquired 100% of ele Corporation's
outstanding shares for $4,341,000. The acquisition has been accounted for as a
purchase; accordingly, the purchase price has been allocated to the underlying
assets and liabilities based on their respective estimated fair values at the
date of acquisition. The estimated fair value of assets acquired is $4,314,000
and liabilities assumed is $3,254,000 (inclusive of $2,199,000 of debt). The
excess of the purchase price over the fair value of the assets acquired and
liabilities assumed was $3,281,000 and is being amortized over a period of 40
years. This business is not material to the revenues of the Company.
The Company sold the Handy & Harman Refining Division in August 1996 for
which the Company received $5,074,000. Accordingly, operations for this major
division have been classified as discontinued operations. A charge associated
with exiting this business of $22,350,000 was recorded in 1996. Revenues from
this division for 1996 and 1995 were $98,934,000 and $168,309,000, respectively.
The Company sold its automotive (OEM) segment in two phases during 1995
and recorded a net gain on its sale amounting to $19,716,000. The first phase
was the sale of this segment's cable operations on July 20, 1995 for which the
Company received cash of $3,211,000. The cable operations' working capital
retained by the Company also generated approximately $3,000,000 in cash. The
second phase was the sale of this segment's remaining operations on December 29,
1995 for which the Company received $64,821,000 (net of cash sold) with an
additional amount due of $5,246,000. Accordingly, the results of this segment
for all years presented are reported in the accompanying consolidated statement
of income as discontinued operations. Revenue from this segment for 1995 was
$150,629,000.
With the sale of GO/DAN Industries, a joint venture, and the related
receipt of $24,750,000 in September 1995, the previously discontinued operations
net assets, primarily composed of the Company's investment in and receivable
from GO/DAN Industries, were realized.
During 1995 the Company exited the karat gold fabricated product line
located in its East Providence, Rhode Island facility. A restructuring charge to
exit the business amounting to $5,342,000 was recorded as follows: employee
separation (155 employees) -$733,000, asset write-downs -$3,819,000, and other
exit costs - $790,000. This action was substantially completed at December 31,
1995. In addition to this restructuring charge, a charge of $4,207,000,
primarily asset write-downs, was recorded relating to the Company's ongoing
operation in Fairfield, Connecticut.
Included in other deductions for 1995 is a gain on the sale of the
Company's joint venture in Brazil amounting to $460,000.
34
<PAGE> 36
handy & harman and subsidiaries
Note 2: Inventories and Fee Consignment Facilities
The components of inventories at December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
================================================================================
<S> <C> <C>
Precious metals:
Fine and fabricated metals in
various stages of completion $22,830,000 $26,569,000
Non-precious metals:
Base metals, factory supplies
and raw materials 25,878,000 20,993,000
Work in process 14,938,000 15,192,000
Finished goods 13,648,000 7,603,000
- --------------------------------------------------------------------------------
$77,294,000 $70,357,000
================================================================================
</TABLE>
Other inventory information at December 31:
<TABLE>
<CAPTION>
1997 1996
================================================================================
<S> <C> <C>
Precious metals stated at LIFO cost $ 20,960,000 $ 24,763,000
- --------------------------------------------------------------------------------
LIFO inventory - excess of year-end
market value over LIFO cost $106,201,000 $ 97,996,000
- --------------------------------------------------------------------------------
Market value per ounce:
Silver $ 5.95 $ 4.73
Gold $ 287.05 $ 369.00
================================================================================
</TABLE>
Included in continuing operations for 1997 and 1996 are profits before taxes of
$6,408,000 and $33,630,000 respectively, resulting from reduction in the
quantities of precious metal inventories valued under the LIFO method. The
after-tax effect on continuing operations for 1997 and 1996 amounted to
$3,717,000 ($.31 per basic share) and $19,260,000 ($1.40 per basic share),
respectively.
Consigned precious metal ounces due to/(from) customers and suppliers at
December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
================================================================================
<S> <C> <C>
Silver ounces
Net open account 2,146,000 500,000
Leased/Futures 2,495,000 9,419,000
- --------------------------------------------------------------------------------
Total 4,641,000 9,919,000
- --------------------------------------------------------------------------------
Gold ounces
Net open account 17,887 14,600
Leased/Futures (58,100) 5,700
- --------------------------------------------------------------------------------
Total (40,213) 20,300
================================================================================
</TABLE>
In 1994 the Company was provided a Gold and Silver Fee Consignment Facility
amounting to $250,750,000 of which $111,750,000 remained in 1996 after exiting
the karat gold business in 1995 and refining business in 1996. The Fee
Consignment Facility of $83,812,500 was for a three-year period and the
short-term Fee Consignment Facility of $27,937,500 was for 364 days. As of
December 31, 1996, 14,209,000 ounces of silver and 5,300 ounces of gold were
leased to the Company and are included in leased amounts above for 1996. On
August 29, 1997 the Company returned precious metal and canceled the Fee
Consignment facility.
Note 3: Debt and Credit Agreements
The Company's borrowing requirements are primarily related to the level of
working capital requirements and acquisition activity. At December 31, 1997, the
Company had outstanding short-term borrowings of $31,500,000 under short-term
uncommitted facilities. The Company's revolving credit facility and long-term
financing (see discussion below) gives the Company the ability to classify these
and other short term obligations aggregating $33,380,000 as long-term debt as of
December 31, 1997. At December 31, 1996, the Company had short-term credit
facilities of $50,000,000 and short-term borrowings of $15,000,000.
Long-term debt at December 31, 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
1997 1996
================================================================================
<S> <C> <C>
Credit facility $ 25,000,000 $120,000,000
Senior Notes (7.31%, due 2004) 125,000,000 --
Industrial revenue bonds,
floating rate, due 2004-2005 7,500,000 7,500,000
- --------------------------------------------------------------------------------
157,500,000 127,500,000
Less installments due within year -- --
- --------------------------------------------------------------------------------
157,500,000 127,500,000
Reclass of short-term obligations 33,380,000 --
- --------------------------------------------------------------------------------
Total long-term debt $190,880,000 $127,500,000
================================================================================
</TABLE>
On April 17, 1997 the Company completed unsecured long-term financing for
$125,000,000 at a fixed rate of 7.31% due 2004. On September 29, 1997 the
Company replaced its prior $200,000,000 revolving credit facility, which
provided $150,000,000 for a three year period and $50,000,000 for 364 days with
a new unsecured $200,000,000 revolving credit facility which provides
$200,000,000 for a five year period maturing in 2002, subject to annual one-year
extensions. At December 31, 1997 there was $25,000,000 borrowed under this
facility.
All the above loans have restrictive covenants. At December 31, 1997, the
Company was in compliance with all covenants.
35
<PAGE> 37
handy & harman and subsidiaries
Note 4: Income Taxes
The components of pre-tax income are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
===============================================================================
<S> <C> <C> <C>
Continuing operations - domestic $ 35,751 $ 59,090 $ 12,906
Continuing operations - foreign 300 (117) 1,380
Extraordinary item -- (4,919) --
- -------------------------------------------------------------------------------
36,051 54,054 14,286
Discontinued operations - domestic -- (24,731) 19,099
- -------------------------------------------------------------------------------
Total $ 36,051 $ 29,323 $ 33,385
===============================================================================
</TABLE>
The provision for taxes on income was comprised of the following (in thousands):
<TABLE>
<CAPTION>
1997
- --------------------------------------------------------------------------------
Current Deferred Total
================================================================================
<S> <C> <C> <C>
Continuing Operations
Federal $ 3,934 $ 7,209 $11,143
Foreign 182 72 254
State and local 3,429 315 3,744
- --------------------------------------------------------------------------------
Total $ 7,545 $ 7,596 $15,141
================================================================================
<CAPTION>
1996
- --------------------------------------------------------------------------------
Current Deferred Total
================================================================================
Continuing Operations
Federal $ 18,260 $ 764 $ 19,024
Foreign 676 -- 676
State and local 5,443 57 5,500
- --------------------------------------------------------------------------------
24,379 821 25,200
- --------------------------------------------------------------------------------
Extraordinary Item
Federal (1,557) -- (1,557)
State and local (473) -- (473)
- --------------------------------------------------------------------------------
(2,030) -- (2,030)
- --------------------------------------------------------------------------------
Discontinued Operations
Federal (8,709) 843 (7,866)
State and local (2,413) 63 (2,350)
- --------------------------------------------------------------------------------
(11,122) 906 (10,216)
- --------------------------------------------------------------------------------
Total $ 11,227 $ 1,727 $ 12,954
================================================================================
<CAPTION>
1995
- --------------------------------------------------------------------------------
Current Deferred Total
================================================================================
Continuing Operations
Federal $ 2,653 $ 1,913 $ 4,566
Foreign 1,594 (386) 1,208
State and local 223 780 1,003
- --------------------------------------------------------------------------------
4,470 2,307 6,777
- --------------------------------------------------------------------------------
Discontinued Operations
Federal 7,847 (1,776) 6,071
State and local 2,445 (548) 1,897
- --------------------------------------------------------------------------------
10,292 (2,324) 7,968
- --------------------------------------------------------------------------------
Total $ 14,762 ($ 17) $ 14,745
================================================================================
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1996 follow (in thousands):
<TABLE>
<CAPTION>
1997
- --------------------------------------------------------------------------------
Deferred Tax Deferred Tax Net Deferred
Assets Liabilities Liability
================================================================================
<S> <C> <C> <C>
Prepaid retirement costs -- $ 21,231 ($21,231)
Property, plant and equipment -- 5,100 (5,100)
Discontinued operations $ 1,277 -- 1,277
Acquired NOL-Olympic 1,613 -- 1,613
All other 5,842 3,348 2,494
Foreign losses 1,846 -- 1,846
Valuation allowance (1,846) -- (1,846)
- --------------------------------------------------------------------------------
Total $ 8,732 $ 29,679 ($20,947)
================================================================================
<CAPTION>
1996
- --------------------------------------------------------------------------------
Deferred Tax Deferred Tax Net Deferred
Assets Liabilities Liability
================================================================================
Prepaid retirement costs -- $ 19,098 ($19,098)
Property, plant and equipment -- 3,442 (3,442)
Discontinued operations $ 3,312 -- 3,312
All other 7,168 3,201 3,967
Foreign losses 1,625 -- 1,625
Valuation allowance (1,625) -- (1,625)
- --------------------------------------------------------------------------------
Total $ 10,480 $ 25,741 ($15,261)
================================================================================
</TABLE>
Due to the Company's current taxable income and expected future taxable income,
management believes it is more likely than not that the Company will realize the
benefit of the existing deferred tax assets other than the deferred tax asset on
foreign losses for which a valuation allowance has been provided.
Principal items making up the change in the net deferred tax liability
follow (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Prepaid retirement costs $ 2,133 $ 1,195 $ 1,293
Property, plant and equipment 1,658 (1,612) (4,175)
Restructuring and discontinued
operations 2,035 2,660 825
Foreign tax credit carryforwards -- -- 495
Acquired NOL-Olympic (1,613)
All other 1,473 (516) 1,545
- --------------------------------------------------------------------------------
$ 5,686 $ 1,727 ($ 17)
================================================================================
</TABLE>
Deferred income taxes have not been provided on the undistributed earnings of
foreign subsidiaries and other foreign investments carried at equity. These
earnings have been substantially reinvested and the Company does not plan to
initiate any action that would precipitate the payment of income taxes thereon.
36
<PAGE> 38
handy & harman and subsidiaries
The major elements contributing to the difference between the U.S. Federal
statutory tax rate and the consolidated effective tax rate for continuing
operations are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
U.S. Federal effective statutory tax rate 35.0% 35.0% 35.0%
State and local income taxes, net
of Federal income tax benefit 6.8 6.1 4.6
Valuation allowance 0.7 1.3 4.8
Net effect of foreign tax rates (0.2) (0.1) 0.1
Other (0.3) 0.4 2.9
- --------------------------------------------------------------------------------
42.0% 42.7% 47.4%
================================================================================
</TABLE>
Note 5: Commitments
Commitments at December 31, 1997 for the purchase of additional property, plant
and equipment approximated $744,000. Rent expense for 1997, 1996, and 1995 was
$2,620,000, $2,885,000, and $3,591,000, respectively. Operating lease and rental
commitments for future years are as follows:
<TABLE>
================================================================================
<S> <C>
1998 $ 1,913,000
1999 2,026,000
2000 1,889,000
2001 1,751,000
2002 1,570,000
2003 and beyond 5,530,000
- --------------------------------------------------------------------------------
Total lease and rental commitments $14,679,000
================================================================================
</TABLE>
Note 6: Incentive Plans
Handy & Harman 1995 Omnibus Stock Incentive Plan
(successor to the Handy & Harman Long-Term Incentive
Stock Option Plan Adopted in 1991)
After incorporating 1994's remaining "shares available for option"
of the predecessor plan the combined number of shares subject to award under
this succeeding plan adopted in 1995 shall not exceed 1,000,000 shares of Common
Stock. The compensation committee of the Board of Directors may grant options,
stock appreciation rights (tandem or stand alone), shares of restricted or
phantom stock, and stock bonuses, in such amounts and with such terms and
conditions as the compensation committee shall determine, subject to the
provisions of the plan. Through 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 specified
trading prices. The remaining shares under option with terms of 7 years and 10
years become exercisable cumulatively at the rate of 50% and 25% per year (20%
for predecessor plan awarded options), respectively.
Successor and predecessor plans' transactions are as follows:
<TABLE>
<CAPTION>
Shares under option Weighted
Shares ----------------------- Average
Available Range of Exercise
for Option Shares Price Price
================================================================================
<S> <C> <C> <C> <C>
Balance,
January 1, 1995 253,200 716,000 $ 9.62-16.62 $13.74
Increase in shares
subject to award 746,800
Options granted (162,000) 162,000 15.12-15.43 15.13
Options exercised -- (22,800) 9.62-12.93 12.25
Options expired 28,200 (28,200) 11.31-16.62 13.67
- --------------------------------------------------------------------------------
Balance,
December 31, 1995 866,200 827,000 9.62-16.62 14.06
Options granted (260,000) 260,000 17.75-18.62 17.92
Options exercised -- (78,500) 9.62-16.62 12.80
Options expired 48,800 (48,800) 12.62-16.62 13.20
- --------------------------------------------------------------------------------
Balance,
December 31, 1996 655,000 959,700 9.62-18.62 15.25
Options granted (581,200) 581,200 6.56-22.71 21.77
Options exercised -- (112,750) 9.62-17.75 13.24
Options expired 45,050 (45,050) 12.06-17.75 15.16
- --------------------------------------------------------------------------------
Balance,
December 31, 1997 118,850 1,383,100 $12.56-22.71 $18.157
================================================================================
</TABLE>
Additional information on options outstanding and options exercisable at
December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Excercisable
----------------------- -----------------------
Weighted
Range Average Weighted Weighted
of Number Remaining Average Number Average
Excercise Outstanding Contractual Excercise Excercisable Excercise
Prices at 12/31/97 Life Price at 12/31/97 Price
================================================================================
<S> <C> <C> <C> <C> <C>
$12.625 to $14.125 253,500 3 years $13.81 253,500 $13.81
$12.5625 2,000 5 years 12.56 2,000 12.56
$12.9370 72,400 6 years 12.94 50,600 12.94
$13.75 to $16.625 95,000 7 years 16.41 57,000 16.41
$15.125 to $15.438 127,250 8 years 15.14 59,250 15.14
$17.75 to $18.625 253,750 9 years 17.92 62,500 17.93
$16.565 to $22.719 579,200 6 years 21.77 50,000 22.72
- --------------------------------------------------------------------------------
1,383,100 534,850
================================================================================
</TABLE>
The disclosure-only method described in SFAS No.123 "Accounting for Stock-Based
Compensation" is being used by the Company, therefore the proforma effect of
recognizing compensation cost for the above plan on net income and earnings per
share is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Net income - as reported $20,910,000 $16,369,000 $18,640,000
Net income - proforma 19,984,000 15,980,000 18,277,000
Net income per share -
as reported - basic $1.75 $1.19 $1.32
Net income per share -
as reported - diluted $1.74 $1.18 $1.32
Net income per share -
proforma $1.62 $1.14 $1.29
================================================================================
</TABLE>
37
<PAGE> 39
handy & harman and subsidiaries
The fair value of each option grant is estimated using the Black-Scholes
option-pricing model with the following assumptions used for the options
granted:
<TABLE>
<CAPTION>
1997 1996 1995
===============================================================================
<S> <C> <C> <C>
Expected dividend yield 1.10% 1.34% 1.58%
Expected stock price volatility 47.20% 27.05% 25.94%
Risk-free interest rate 5.7% 6.42% 6.41%
Expected life of options 6 6 6
===============================================================================
</TABLE>
Additionally, 100 % of the stock options granted in 1995 were assumed vested as
a baseline for the proforma calculations.
The effects of applying SFAS No.123 in this proforma disclosure are not
indicative of future proforma amounts. SFAS No. 123 does not apply to awards
prior to 1995 and additional awards in future years were assumed. Assumptions
used for Company options and stock were made "as if" the purchase of the
Company, as further described in Note 11 to these consolidated financial
statements, did not occur.
Outside Director Stock Option Plan
Under the Outside Director Stock Option Plan each outside director
is awarded fully and immediately exercisable options, on an annual basis, to
purchase Common Stock at an option price of $1. The market value of the
Company's shares at date of grant less the option price is amortized to
compensation expense during the year. Transactions under this Plan are
summarized below:
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Options outstanding January 1 5,531 9,977 9,539
Options awarded 4,781 4,194 3,290
Options expired -- -- --
Options exercised (1,366) (8,640) (2,852)
- --------------------------------------------------------------------------------
Options outstanding December 31 8,946 5,531 9,977
- --------------------------------------------------------------------------------
Shares subject to award
December 31 62,960 67,741 71,935
================================================================================
</TABLE>
All options outstanding under this plan are exercisable at December 31, 1997.
1988 Long-Term Incentive Plan
Shares issued under the 1988 Long-Term Incentive Plan are in the name of the
employee, who has all the rights of a shareholder, subject to certain
restrictions or forfeitures. Of the 400,000 shares which may be awarded under
this Plan cumulative shares amounting to 142,050 were issued, of which 6,275
shares were forfeited as of December 31, 1997. The market value of shares issued
under the Plan is recorded as unearned compensation and shown as a separate
component of shareholders' equity. This compensation is amortized to expense
over the period the employees become vested.
Compensation expense for both the Outside Director Stock Option Plan and
the 1988 Long-Term Incentive Plan amounted to $506,000, $648,000 and $266,000,
in 1997, 1996 and 1995, respectively.
Note 7: Segment Information
Information regarding the Company's industry segments and discontinued
operations is contained on page 23 under the heading "The Company's Business"
and is incorporated herein by reference.
Additional information concerning industry segments, corporate and
discontinued operations is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Depreciation and
amortization expense:
Wire/Tubing $5,678,000 $5,461,000 $5,029,000
Precious metals 5,289,000 4,560,000 4,545,000
Other non-precious
metal businesses 2,125,000 442,000 543,000
Corporate* 1,102,000 1,136,000 1,053,000
Discontinued operations -- 401,000 5,498,000
- --------------------------------------------------------------------------------
$14,194,000 $12,000,000 $16,668,000
================================================================================
</TABLE>
*Includes amortization of deferred financing fees of $685,000, $552,000, and
$820,000 in 1997, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Property, plant and equipment additions:
<S> <C> <C> <C>
Wire/Tubing $5,653,000 $3,881,000 $11,378,000
Precious metals 10,712,000 9,315,000 7,738,000
Other non-precious
metal businesses 2,070,000 419,000 929,000
Corporate 25,000 31,000 47,000
- --------------------------------------------------------------------------------
18,460,000 13,646,000 20,092,000
Discontinued operations: -- 1,048,000 3,051,000
- --------------------------------------------------------------------------------
$18,460,000 $14,694,000 $23,143,000
================================================================================
</TABLE>
Note 8: Supplemental Information
<TABLE>
<CAPTION>
Life/Years 1997 1996
================================================================================
<S> <C> <C> <C>
a-Property, plant and equipment:
Land $ 3,566,000 $ 3,355,000
Buildings and improvements 10-50 45,473,000 43,642,000
Machinery and equipment 3-20 146,074,000 130,573,000
Furniture and fixtures 2-20 12,586,000 11,932,000
Automotive 4-8 630,000 566,000
Leasehold improvements Lease Life 1,769,000 1,684,000
Construction in progress -- 7,954,000 3,871,000
- --------------------------------------------------------------------------------
$218,052,000 $195,623,000
================================================================================
</TABLE>
Depreciation and amortization of property, plant and equipment charged to
operations for 1997, 1996 and 1995 was $11,933,000, $10,816,000 and $15,066,000,
respectively.
<TABLE>
<CAPTION>
1997 1996
================================================================================
<S> <C> <C>
b-Intangibles (net of amortization):
Patents and other $ 818,000 $ 515,000
Excess of purchase price over
net assets acquired in business
combinations 64,240,000 24,303,000
- --------------------------------------------------------------------------------
$65,058,000 $24,818,000
================================================================================
</TABLE>
38
<PAGE> 40
handy & harman and subsidiaries
Note 9: Retirement Plans and Other Benefits
Retirement Plans
The Company and substantially all of its subsidiaries have noncontributory
defined benefit plans covering most of their employees. The benefits are based
on years of service and the employee's compensation at the time of retirement.
Contributions are made by the Company as necessary to provide assets sufficient
to meet the benefits payable to plan participants, and are determined in
accordance with applicable minimum funding standard requirements as promulgated
by the Internal Revenue Service. Such contributions are based on actuarial
computations of the amount sufficient to fund normal (current service) cost plus
an amortization of the unfunded actuarial accrued liability over periods of up
to 30 years.
The components of net periodic pension cost (credit) for 1997, 1996 and
1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Service cost-benefits earned
during the period $ 2,491,000 $ 2,678,000 $ 3,582,000
Interest cost on the projected
benefits obligation 8,029,000 7,784,000 7,974,000
Return on plan assets (60,494,000) (26,000,000) (37,283,000)
Net amortization
and deferral 43,887,000 11,202,000 21,399,000
- --------------------------------------------------------------------------------
Net periodic pension
cost (credit) ($ 6,087,000) ($ 4,336,000) ($ 4,328,000)
================================================================================
</TABLE>
Assumptions used in the accounting at December 31 are:
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Discount rate:
Beginning of year 6.5% 6.5% 7.0%
End of year 6.5% 6.5% 6.5%
Compensation increase 5.0% 5.0% 5.0%
Expected asset return 8.5% 8.0% 8.0%
================================================================================
</TABLE>
The plans' funded status as of December 31 and the amounts recognized in the
accompanying financial statements are as follows:
<TABLE>
<CAPTION>
1997 1996
================================================================================
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 110,730,000 $ 107,909,000
- --------------------------------------------------------------------------------
Accumulated benefit obligation $ 115,334,000 $ 113,260,000
- --------------------------------------------------------------------------------
Projected benefit obligation $ 124,529,000 $ 119,544,000
Plan assets at fair value 249,240,000 196,253,000
- --------------------------------------------------------------------------------
Plan assets in excess of projected
benefit obligation 124,711,000 76,709,000
Unrecognized net (gain)/loss (56,562,000) (10,974,000)
Unrecognized prior service cost 1,235,000 (925,000)
Unrecognized net asset (2,889,000) (4,553,000)
- --------------------------------------------------------------------------------
Prepaid pension cost $ 66,495,000 $ 60,257,000
================================================================================
</TABLE>
The plans' assets are invested primarily in stocks and insurance contracts.
The Company recorded pension curtailment gains from discontinued
operations amounting to $287,000 in 1996 and $1,354,000 in 1995.
Postretirement Benefits Other Than Pensions
Certain operations of the Company provide postretirement medical benefits to
current and retired employees. Certain employees of these operations become
eligible for postretirement medical benefits after fulfilling minimum age and
service requirements.
Postretirement benefit costs were determined assuming discount rates of
6.5%, 6.5% and 7% for the years ended 1997, 1996 and 1995, respectively. The
components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
================================================================================
<S> <C> <C> <C>
Service cost $ 71,000 $ 134,000 $ 174,000
Interest cost 537,000 539,000 596,000
Amortization of transition
obligation 223,000 311,000 371,000
- --------------------------------------------------------------------------------
$ 831,000 $ 984,000 $1,141,000
================================================================================
</TABLE>
In addition, a curtailment loss of $868,000 incurred on the 1996 sale of the
refining business is included in discontinued operations.
The Company's funding policy with respect to these benefits is to pay the
amounts required to provide the benefits during each year. The following table
presents the Company's postretirement medical benefits funded status as of
December 31, 1997 and 1996.
Accumulated Postretirement Benefit Obligation:
<TABLE>
<CAPTION>
1997 1996
=========== ===========
<S> <C> <C>
Retirees $ 5,288,000 $ 4,414,000
Future retirees 3,216,000 4,041,000
- --------------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 8,504,000 8,455,000
Unrecognized transition obligation (3,489,000) (3,762,000)
Unrecognized actuarial gain (loss) 821,000 998,000
- --------------------------------------------------------------------------------
Net postretirement benefit liability -
classified with prepaid retirement costs $ 5,836,000 $ 5,691,000
================================================================================
</TABLE>
The assumed discount rate used to measure the accumulated postretirement benefit
obligation was 6.5% for 1997 and 1996. The unrecognized transition obligation
amortization period is 20 years beginning on January 1, 1991, the implementation
date.
For measurement purposes, a 15% annual rate of increase in the health care
cost trend rate was assumed for 1992 through 1994; the rate was assumed to
decrease gradually to 6% by the year 2003 and remain at that level thereafter. A
1% increase in the assumed health care trend rate would not have a significant
impact on the accumulated postretirement benefit obligation as of December 31,
1997 and 1996.
39
<PAGE> 41
handy & harman and subsidiaries
Savings Plan
The Company has a savings plan which qualifies under Section 401(k) of the
Internal Revenue Code. This savings plan allows eligible employees to contribute
from 1% to 15% of their income on a pretax basis to this savings plan. The
Company matches 50% of the first 3% of the employee's contribution. Such
matching Company contributions are invested in shares of the Company's common
stock and become immediately vested. The charge to operations for the Company's
matching contribution amounted to $ 548,000, $570,000, and $932,000 for 1997,
1996 and 1995, respectively.
Note 10: Common Stock Purchase Rights
In 1989, the Board of Directors declared a dividend of one Common Stock Purchase
Right on each outstanding share of Handy & Harman Common Stock to holders of
record on February 6, 1989.
If the rights become exercisable, the rights will separate from the common
stock and each right will entitle the holder to purchase from the Company a
share of common stock at a predefined price. The rights are not exercisable
until either ten days after certain changes in ownership of the Company occurs
or ten days following the commencement of a tender offer for at least 20% of the
Company's common stock.
The rights are redeemable by the Company at a fixed price after certain
defined events or at any time prior to the expiration of the rights on January
26, 1999, if such events do not occur.
Through December 31, 1997, the Company had reserved common shares as
issuable pursuant to these rights. At the present time, the rights have no
dilutive effects on the earnings per share calculation. See Note 11 : Subsequent
Event
Note 11: Subsequent Event
On March 1, 1998 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 commenced a tender offer on March 6, 1998 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
of the Purchaser with and into the Company and all shares of the Company's
common stock not purchased in the tender offer will be converted into the right
to receive $35.25 per share in cash.
On March 1, 1998 the Board amended the Rights Agreement dated as of
January 26, 1989, as amended on April 25, 1996 and October 22, 1996, between
the Company and ChaseMellon Shareholder Services L.L.C. (as so amended, the
"Rights Agreement") (see Note 10 above) to prevent the Purchaser from becoming
an "Acquiring Person" and to prevent a "Triggering Event", "Stock Acquisition
Date" or "Distribution Date" (all as defined in the Rights Agreement) from
occurring as a result of the offer, the merger or other transactions
contemplated by the Merger Agreement. Consummation of the merger is expected to
occur in the Spring of 1998. The offer and merger are subject to various
conditions.
40
<PAGE> 42
handy & harman and subsidiaries
Independent Auditors' Report
To the Board of Directors and Shareholders Handy & Harman:
We have audited the consolidated balance sheets of Handy & Harman and
Subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1997. In connection with our audits
of the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule on page S-1. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Handy &
Harman and Subsidiaries as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997 in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set forth
therein.
As discussed in Note 11 to the consolidated financial statements, Handy &
Harman announced on March 1, 1998 that they have entered into a definitive
merger agreement providing for the acquisition by WHX Corporation of all of the
outstanding common shares of Handy & Harman. The transaction has been
unanimously approved by the Boards of Directors of both companies.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
February 9, 1998, except as to Note 11,
which is as of March 1, 1998
Responsibility for Financial Statements
The financial statements presented in this Annual Report were prepared by Handy
& Harman which is responsible for their fairness. Such statements include, in
some instances, judgments as to those amounts which are estimates and
approximations and such amounts could differ from actual results. The Company
believes that the consolidated financial statements are in conformity with
generally accepted accounting principles.
The Company depends upon an accounting system, including internal
accounting controls, administered by a staff of corporate accountants. The
controls are designed to provide reasonable assurance that the Company's
financial records are reliable, that the corporate assets are safeguarded and
that transactions are executed in accordance with the appropriate corporate
authorizations and recorded properly to permit the preparation of financial
statements in accordance with generally accepted accounting principles. It must
be recognized, however, that errors and irregularities may nevertheless occur,
so the effectiveness of such a financial system depends to a great extent upon
the careful selection of financial and other responsible managers. Also,
estimates and judgments are required to assess and balance the relative cost and
expected benefits of the Company's controls. The Company believes that its
accounting controls provide reasonable assurance that errors or irregularities
which could be material to the financial statements are prevented or would be
detected within a timely period by employees in the normal course of performing
their assigned functions. KPMG Peat Marwick LLP, independent certified public
accountants, has been engaged by the Company to conduct quarterly reviews and an
audit of the Company's financial statements in accordance with generally
accepted auditing standards.
Such standards provide for numerous procedures, including obtaining an
understanding of the Company's accounting systems and performing reviews of
internal accounting control systems and tests of transactions deemed appropriate
by the auditors. KPMG Peat Marwick LLP is a member of the SEC Practice Section
of the AICPA Division of CPA firms.
For many years the Company has had an Audit Committee of the Board of
Directors consisting exclusively of outside Directors of the Company. The
Committee meets periodically with the independent auditors, internal auditors,
management and corporate staff accountants to review and evaluate their
accounting, auditing and financial reporting activities and responsibilities.
The independent auditors as well as the internal auditors and the Corporate
Controller have full and free access to the Audit Committee. The independent
auditors meet with the Audit Committee, with and without Company employees
present, to discuss their audit plan and at a later date the results of their
audits.
41
<PAGE> 43
handy & harman and subsidiaries
Directors and Officers
Listed at right are the members of the Board of Directors of the Company and
its officers, together with their principal business occupations or employment
and the principal business of the organizations by which they are employed. In
the case of each of the officers, the principal occupation is employment with
the Company.
Board of Directors
Clarence A. Abramson**
Former Vice President and Secretary
Merck &Co., Inc.
(a pharmaceutical company)
Active consultant to the health
care industry.
Robert E. Cornelia**
Management Consultant
Richard N. Daniel*
Chairman of the Board of the Company
Gerald G. Garbacz+
Chairman, President and Chief Executive
Officer, Nashua Corporation (an international
provider of coated products, office
supplies and photofinishing services)
Frank E. Grzelecki*
Vice Chairman of the Company
Robert D. LeBlanc
President of the Company
Gouverneur M. Nichols*+
Business Consultant
Hercules P. Sotos***
Retired 1995 as Vice Chairman and
a Director of Playtex Products, Inc.
(a manufacturer of health and beauty
aid products)
Dr. Elliot J. Sussman+
President and Chief Executive Officer
of Lehigh Valley Health Network, Inc.
and Lehigh Valley Hospital, Inc.
Roger E. Tetrault**
Vice Chairman of the Board
and Chief Executive Officer
McDermott International, Inc.
(a manufacturer and supplier of power
generation systems and equipment and
also marine construction services)
*Member of Executive Committee
+Member of Audit Committee
**Member of Compensation Committee
Officers
Richard N. Daniel
Chairman of the Board and
Chief Executive Officer
Frank E. Grzelecki
Vice Chairman
Robert D. LeBlanc
President and Chief
Operating Officer
Robert F. Burlinson
Vice President and Treasurer
Paul E. Dixon
Senior Vice President,
General Counsel and Secretary
Dennis C. Kelly
Controller
Dennis R. Kuhns
Vice President
President, Specialty Wire & Tubing
Robert M. Thompson
Vice President
International
<PAGE> 44
handy & harman and subsidiaries
Corporate Organization
Handy & Harman Executive
and General Offices
New York, NY
R.N. Daniel, Chairman
and Chief Executive Officer
Frank E. Grzelecki
Vice Chairman
R.D. LeBlanc, President
and Chief Operating Officer
Domestic Divisions and
Subsidiaries
Specialty Tubing
Handy & Harman
Tube Company, Inc.
Norristown, PA
Charles L. Spangler,
Executive Vice President
and General Manager
Indiana Tube Corporation
Evansville, IN
Jerry D. Stohler, Vice President
and General Manager
Camdel Metals Corporation
Camden, DE
Millard V. Vaughn,
Division Manager
Micro-Tube Fabricators, Inc.
Middlesex, NJ
Anthony J. VanderPutten,
Vice President and
General Manager
Specialty Wire
Maryland Specialty Wire, Inc.
Cockeysville, MD
David E. Koontz,
Vice President
Willing B Wire Corporation
Willingboro, NJ
Robert V. Biscotti,
Vice President
Strandflex Division
Oriskany, NY
David M. Waddell,
Plant Manager
Precious Metals Fabrication
Lucas-Milhaupt, Inc.
Cudahy,WI
Richard A. Kettler, President
Alloy Ring Service, Inc.
Carmel, IN
Charles E. Fuerstenau,
General Manager
Handy & Harman Precious Metals
Products Division
Fairfield, CT
Michael J. Merolla, Vice
President and General Manager
Electronic Metals
Handy & Harman Electronic
Materials Corporation
North Attleboro, MA
Allen E. Molvar, President
ele Corporation
Fontana, CA
Gerald C. Avery, Vice
President and General Manager
Sumco Inc.
Indianapolis, IN
Thomas R. Brouillard, President
Engineered Materials
Olympic Manufacturing
Group, Inc.
Agawam, MA
Daniel P. Murphy, President
Continental Industries, Inc.
Tulsa, OK
Richard E. Cota, President
International Operations
In Canada
Handy & Harman of Canada, Ltd.
Rexdale, Ontario
Keith F. Perrin,
General Manager
In Europe
Handy & Harman (Europe) Ltd.
Harrogate, North Yorkshire,
England
Peter J. Rigby,
Managing Director
Indiana Tube Danmark A/S
Kolding, Denmark
Kaj A. Deleuran,
Managing Director
Rigby-Maryland (Stainless) Ltd.
Liversedge, West Yorkshire,
England
Christopher J. Moore,
Managing Director
Lucas-Milhaupt Europe
Stevenage, Hertfordshire,
England
Keith F. Perrin,
Managing Director
In Asia
Handy & Harman (Asia) S.A.
Singapore
(owned jointly with King Fook
Investments, S.A.)
Thomas A. Longo,
Managing Director
Handy & Harman Manufacturing
(Singapore)Pte., Ltd. Singapore
(owned jointly with King Fook
Investments, S.A.)
Thomas A. Longo,
Managing Director
Mizuno Handy Harman, Ltd.
Taitoh-Ku, Tokyo, Japan
(owned jointly with Mizuno
Precious Metals, Ltd. and
Itochu Corporation)
Hiroshi Mizuno,
President
Corporate Services
Auditors
KPMG Peat Marwick LLP
Transfer Agent & Registrar
Chase Mellon
Shareholders Services
New York, NY
Stock Listing
New York Stock Exchange
Ticker Symbol:HNH
Employment Policy
It is the policy of Handy & Harman and its subsidiaries to comply with all
applicable Federal, state and local laws and regulations with respect to
employment practices and procedures, and to ensure equal employment opportunity
and non-discriminatory treatment in matters of race, sex, religion, color,
national origin, age or condition of handicap.
Design: Zahor &Bender Incorporated
<PAGE> 45
EXHIBIT INDEX
The following exhibits required to be filed as part of this Annual Report
on Form 10-K have been included:
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or
Succession
(a) Asset Purchase Agreement, dated as of July 8, 1996, by and between
Golden West Refining Corporation Limited and the Company (filed as Exhibit
3(1)(a) to the Company's 1996 Annual Report on Form 10-K and incorporated herein
by reference).
(b) Stock Purchase Agreement, dated as of February 19, 1997, among
Saugatuck Capital Company Limited Partnership III, the other sellers named
therein and the Company (filed as Exhibit 3(1)(b) to the Company's 1996 Annual
Report on Form 10-K and incorporated herein by reference).
(c) Agreement and Plan of Merger, dated as of March 1, 1998, by and among
WHX Corporation, HN Acquisition Corp. and the Company (filed as Exhibit 2 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(d) Amendment No. 1, dated as of March 26, 1998, to the Agreement and
Plan of Merger, dated as of March 1, 1998, by and among WHX Corporation, HN
Acquisition Corp. and the Company.
(3) Certificate of Incorporation and By-Laws
(a) Restated Certificate of Incorporation of the Company (filed as Exhibit
3(a) to the Company's 1989 Annual Report on Form 10-K and incorporated herein by
reference).
(b) By-Laws, as amended and restated as of December 23, 1997 (filed as
Exhibit 1 to the Company's Current Report on Form 8-K, dated December 23, 1997,
and incorporated herein by reference).
(4) Instruments Defining the Rights of Security Holders, Including
Indentures
(a) Rights Agreement, dated as of January 26, 1989, between the Company
and ChaseMellon Shareholder Services, L.L.C., (formerly known as Morgan
Shareholder Services Trust Company), as Rights Agent, including all exhibits
thereto (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A,
dated February 3, 1989, and incorporated herein by reference).
(b) Amendment, dated as of April 25, 1996, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 1 to the Company's Registration Statement on Form 8-A/A, dated May
21, 1996, and incorporated herein by reference).
<PAGE> 46
(c) Amendment, dated as of October 22, 1996, to the Rights Agreement
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (filed as Exhibit 1 to the Company's Registration Statement on Form 8-A/A,
dated October 24, 1996, and incorporated herein by reference).
(d) Amendment, dated as of March 1, 1998, to the Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 3 to the Company's Solicitation/Recommendation Statement on Schedule
14D-9, dated March 6, 1998, and incorporated herein by reference).
(e) Note Purchase Agreement, dated as of April 17, 1997, among the Company
and the Purchasers party thereto.
(10) Material Contracts.
(a) 1982 Stock Option Plan (filed as Exhibit 32 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(b) Amendment to 1982 Stock Option Plan approved in December 1988 (filed
as Exhibit 33 to the Company's Solicitation/Recommendation Statement on Schedule
14D-9, dated March 6, 1998, and incorporated herein by reference).
(c) Handy & Harman Management Incentive Plan-Corporate Group Participants,
as amended and restated on December 15, 1994 (filed as Exhibit 25 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(d) Subsidiary, Division, Group or Unit Management Incentive Plan, as
amended and restated on December 15, 1994 (filed as Exhibit 34 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(e) Handy & Harman Deferred Fee Plan For Directors, as amended and
restated on December 15, 1994, effective as of January 1, 1995 (filed as Exhibit
35 to the Company's Solicitation/Recommendation Statement on Schedule 14D-9,
dated March 6, 1998, and incorporated herein by reference).
(f) Form of Executive Agreement entered into with the Company's executive
officers in September 1986 (filed as Exhibit 10(d) to the Company's 1986 Annual
Report on Form 10-K and incorporated herein by reference).
(g) Amendment to Executive Agreement approved in December 1988 (filed as
Exhibit 20 to the Company's Solicitation/Recommendation Statement on Schedule
14D-9, dated March 6, 1998, and incorporated herein by reference).
(h) 1988 Long-Term Incentive Plan (filed as Exhibit 28 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(i) Amendment to 1988 Long-Term Incentive Plan approved in December 1988
(filed as Exhibit 29 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(j) Amendment to 1988 Long-Term Incentive Plan approved in June 1989
(filed as Exhibit 30 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(k) Agreement, dated as of May 1, 1989, between the Company and R. N.
Daniel (filed as Exhibit 4 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(l) Amendment to Agreement between the Company and R. N. Daniel approved
by the Company on May 11, 1993 (filed as Exhibit 5 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(m) Outside Directors' Stock Option Plan (filed as Exhibit 27 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(n) Amended and Restated Joint Venture Agreement, dated as of June 1,
1990, by and between Allen Heat Transfer Products Inc. and Handy & Harman
Radiator Corporation (filed as Exhibit 2 to the Company's Current Report on Form
8-K, dated June 5, 1990, and incorporated herein by reference).
(o) Handy & Harman Long-Term Incentive Stock Option Plan (filed as Exhibit
36 to the Company's Solicitation/Recommendation Statement on Schedule 14D-9,
dated March 6, 1998, and incorporated herein by reference).
(p) Handy & Harman Supplemental Executive Plan (filed as Exhibit 23 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
<PAGE> 47
(q) 1995 Omnibus Stock Incentive Plan (filed as Exhibit 37 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(r) Form of Change of Control Agreements, dated May 14, 1997, between the
Company's executive officers (filed as Exhibit (a) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997 and incorporated herein
by reference).
(s) 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 (filed as Exhibit 6 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(t) Restated Amendment to Agreement with Richard N. Daniel, dated February
26, 1998 (filed as Exhibit 7 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(u) Executive Agreement, dated as of July 1, 1989, between the Company and
Frank E. Grzelecki (filed as Exhibit 8 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(v) Amendment, dated as of July 1, 1989, to Agreement, dated as of July 1,
1989, between the Company and Frank E. Grzelecki (filed as Exhibit 9 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(w) Amended and Restated Agreement, dated as of November 3, 1995, between
the Company and Mr. Grzelecki (filed as Exhibit 10 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(x) Restated Confirmation Agreement with Frank E. Grzelecki, dated
February 26, 1998 (filed as Exhibit 11 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(y) Employment Agreement, dated as of October 22, 1996, between the
Company and Robert D. LeBlanc (filed as Exhibit 12 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(z) Supplemental Agreement, dated as of May 14, 1997, between the Company
and Robert D. LeBlanc (filed as Exhibit 13 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(aa) Amendment, dated February 26, 1998, to Supplemental Agreement with
Robert D. LeBlanc (filed as Exhibit 14 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(bb) Amended and Restated Agreement with Paul E. Dixon, dated February 26,
1998 (filed as Exhibit 15 to the Company's Solicitation/Recommendation Statement
on Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(cc) Amended and Restated Agreement with Robert F. Burlinson, dated
February 27, 1998 (filed as Exhibit 16 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(dd) Amended and Restated Agreement with Dennis C. Kelly, dated February
26, 1998 (filed as Exhibit 17 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(ee) Amended and Restated Agreement with Dennis R. Kuhns, dated February
26, 1998 (filed as Exhibit 18 to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9, dated March 6, 1998, and incorporated herein by
reference).
(ff) Form of Executive Agreement, dated as of September 2, 1986, between
the Company and Robert M. Thompson (filed as Exhibit 19 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(gg) Amendment, dated February 26, 1998, to Executive Agreement with
Robert M. Thompson (filed as Exhibit 20 to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, dated March 6, 1998,
and incorporated herein by reference).
(hh) Amended and Restated Supplemental Executive Retirement Plan as of
January 1, 1998, approved on February 26, 1998 (filed as Exhibit 22 to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated March
6, 1998, and incorporated herein by reference).
(ii) Handy & Harman Executive Post-Retirement Life Insurance Program
(filed as Exhibit 24 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(jj) Amendment to Management Incentive Plan, approved January 22, 1998
(filed as Exhibit 26 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
<PAGE> 48
(kk) Amendment to Long-Term Incentive Plan approved January 22, 1998
(filed as Exhibit 31 to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9, dated March 6, 1998, and incorporated herein by reference).
(ll) Handy & Harman Pension Plan.
(mm) 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.
(11) Statement re computation of per share earnings. Incorporated by
reference to Item (H) of Summary of Significant Accounting Policies on page 33
of this Annual Report on Form 10-K.
(21) List of Subsidiaries of the Company.
(23) Consent of Independent Auditors. Included on page 21 of this Annual
Report on Form 10-K and incorporated herein by reference thereto.
(27) Financial Data Schedule.
<PAGE> 1
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1 (the "Amendment"), dated as of March 26, 1998, to the
Agreement and Plan of Merger, dated as of March 1, 1998 (the "Merger
Agreement"), by and among WHX Corporation, a Delaware corporation ("Parent"), HN
Acquisition Corp., a New York corporation and a wholly owned subsidiary of
Parent (the "Purchaser"), and Handy & Harman, a New York corporation (the
"Company").
WHEREAS, the parties hereto desire to amend the Merger Agreement to
provide that payments required to be made to holders of Options (as defined in
the Merger Agreement) in consideration of the cancellation of such Options
pursuant to the Merger Agreement shall be made immediately prior to the
acceptance of Shares for payment pursuant to the Offer, rather than at the
Effective Time (as defined in the Merger Agreement).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein shall have the meaning assigned to such
term in the Merger Agreement. Each reference to "hereof," "herein," "hereunder,"
"hereby" and "this Agreement" shall from and after the date hereof refer to the
Merger Agreement as amended by this Amendment.
SECTION 2. Treatment of Options. The first paragraph of Section 2.5 of
the Merger Agreement is hereby amended and restated in its entirety to read as
follows:
Section 2.5 Company Option Plans. Parent and the Company shall
take all actions necessary to provide that, effective immediately prior
to the acceptance of Shares for payment pursuant to the Offer, (i) each
outstanding 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 pur-
<PAGE> 2
chase 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).
SECTION 3. No Further Amendment. Except as otherwise provided herein,
the Merger Agreement shall remain unchanged and in full force and effect.
SECTION 4. Effect of Amendment. From and after the execution of this
Amendment by the parties hereto, any reference to the Merger Agreement shall be
deemed a reference to the Merger Agreement as amended hereby.
SECTION 5. Governing Law. This Amendment shall be governed by, enforced
under and construed in accordance with the laws of the State of New York,
without giving effect to the principles of conflict of laws thereof.
SECTION 6. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 7. Captions. The captions of the various sections of this
Amendment have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any provision of this Amendment
or the Merger Agreement or affect the construction thereof.
2
<PAGE> 3
IN WITNESS WHEREOF, each of Parent, the Purchaser and the
Company has caused this Amendment to be executed as of the date first above
written.
WHX CORPORATION
By: /s/ Ronald LaBow
--------------------------
Name: Ronald LaBow
Title: Chairman
HN ACQUISITION CORP.
By: /s/ Stuart Tabin
--------------------------
Name: Stuart Tabin
Title: Vice President
HANDY & HARMAN
By: /s/ Paul E. Dixon
--------------------------
Name: Paul E. Dixon
Title: Senior Vice President
General Counsel &
Secretary
3
<PAGE> 1
HANDY & HARMAN
---------------------------------------------------
NOTE PURCHASE AGREEMENT
---------------------------------------------------
Dated as of April 17, 1997
$125,000,000
7.31% Senior Notes due April 30, 2004
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. AUTHORIZATION OF NOTES................................................................................. 1
2. SALE AND PURCHASE OF NOTES............................................................................. 1
3. CLOSING................................................................................................ 2
4. CONDITIONS TO CLOSING.................................................................................. 2
4.1 Representations and Warranties................................................................ 2
4.2 Performance; No Default....................................................................... 2
4.3 Compliance Certificates....................................................................... 2
4.4 Opinions of Counsel........................................................................... 3
4.5 Purchase Permitted By Applicable Law, etc..................................................... 3
4.6 Sale of Other Notes........................................................................... 3
4.7 Payment of Special Counsel Fees............................................................... 3
4.8 Private Placement Number...................................................................... 4
4.9 Changes in Corporate Structure................................................................ 4
4.10 Proceedings and Documents..................................................................... 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................... 4
5.1 Organization; Power and Authority............................................................. 4
5.2 Authorization, etc............................................................................ 4
5.3 Disclosure.................................................................................... 5
5.4 Organization and Ownership of Shares of Subsidiaries; Affiliates.............................. 5
5.5 Financial Statements.......................................................................... 6
5.6 Compliance with Laws, Other Instruments, etc.................................................. 6
5.7 Governmental Authorizations, etc.............................................................. 7
5.8 Litigation; Observance of Agreements, Statutes and Orders..................................... 7
5.9 Taxes......................................................................................... 7
5.10 Title to Property; Leases..................................................................... 8
5.11 Licenses, Permits, etc........................................................................ 8
5.12 Compliance with Pension Plan Laws............................................................. 8
5.13 Private Offering by the Company............................................................... 10
5.14 Use of Proceeds; Margin Regulations........................................................... 10
5.15 Existing Debt, Future Payables Transactions and Consignments; Future Liens.................... 10
5.16 Foreign Assets Control Regulations, etc....................................................... 11
5.17 Status under Certain Statutes................................................................. 11
5.18 Environmental Matters......................................................................... 11
6. REPRESENTATIONS OF THE PURCHASER....................................................................... 12
6.1 Purchase for Investment....................................................................... 12
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (cont.)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.2 Source of Funds............................................................................... 12
6.3 Investor Representations...................................................................... 14
7. INFORMATION AS TO COMPANY.............................................................................. 14
7.1 Financial and Business Information............................................................ 14
7.2 Officer's Certificate......................................................................... 17
7.3 Inspection.................................................................................... 18
8. PAYMENT OF THE NOTES................................................................................... 19
8.1 Payment at Maturity........................................................................... 19
8.2 Optional Prepayments with Make-Whole Amount................................................... 19
8.3 Allocation of Partial Prepayments............................................................. 19
8.4 Maturity; Surrender, etc...................................................................... 19
8.5 No Other Optional Prepayments or Purchase of Notes............................................ 20
8.6 Make-Whole Amount............................................................................. 20
9. AFFIRMATIVE COVENANTS.................................................................................. 21
9.1 Compliance with Law........................................................................... 21
9.2 Insurance..................................................................................... 21
9.3 Maintenance of Properties..................................................................... 22
9.4 Payment of Taxes and Claims................................................................... 22
9.5 Corporate Existence, etc...................................................................... 22
10. NEGATIVE COVENANTS..................................................................................... 23
10.1 Transactions with Affiliates.................................................................. 23
10.2 Merger, Consolidation, etc.................................................................... 23
10.3 Sale of Assets, Etc........................................................................... 24
10.4 Fixed Charges Coverage Ratio.................................................................. 26
10.5 Company Debt Incurrence....................................................................... 26
10.6 Restricted Subsidiary Debt Incurrence......................................................... 26
10.7 Liens......................................................................................... 27
10.8 Consolidated Net Worth........................................................................ 30
10.9 Line of Business.............................................................................. 30
10.10 Sale-and-Leasebacks........................................................................... 30
10.11 Designation of Subsidiaries................................................................... 31
10.12 Precious Metals Transactions.................................................................. 32
11. EVENTS OF DEFAULT...................................................................................... 33
12. REMEDIES ON DEFAULT, ETC............................................................................... 36
12.1 Acceleration.................................................................................. 36
12.2 Other Remedies................................................................................ 37
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS (cont.)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
12.3 Rescission.................................................................................... 37
12.4 No Waivers or Election of Remedies, Expenses, etc............................................. 37
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................................................... 37
13.1 Registration of Notes......................................................................... 37
13.2 Transfer and Exchange of Notes................................................................ 38
13.3 Replacement of Notes.......................................................................... 38
14. PAYMENTS ON NOTES...................................................................................... 39
14.1 Place of Payment.............................................................................. 39
14.2 Home Office Payment........................................................................... 39
15. EXPENSES, ETC.......................................................................................... 39
15.1 Transaction Expenses.......................................................................... 39
15.2 Survival...................................................................................... 40
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.............................................................................................. 40
17. AMENDMENT AND WAIVER................................................................................... 40
17.1 Requirements.................................................................................. 40
17.2 Solicitation of Holders of Notes.............................................................. 41
17.3 Binding Effect, etc........................................................................... 41
17.4 Notes held by Company, etc.................................................................... 41
18. NOTICES................................................................................................ 42
19. REPRODUCTION OF DOCUMENTS.............................................................................. 42
20. CONFIDENTIAL INFORMATION............................................................................... 42
21. SUBSTITUTION OF PURCHASER.............................................................................. 44
22. MISCELLANEOUS.......................................................................................... 44
22.1 Successors and Assigns........................................................................ 44
22.2 Payments Due on Non-Business Days............................................................. 44
22.3 Generally Accepted Accounting Principles...................................................... 45
22.4 Severability.................................................................................. 45
22.5 Construction.................................................................................. 45
22.6 Counterparts.................................................................................. 45
22.7 Governing Law................................................................................. 46
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE 4.2 -- Pre-Closing Transactions
SCHEDULE 4.9 -- Changes in Corporate Structure
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Patents, etc.
SCHEDULE 5.12 -- ERISA Affiliates
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15(a) -- Existing Debt and Future Payables Transactions
SCHEDULE 5.15(b) -- Existing Consignment Arrangements
SCHEDULE 5.15(c) -- Liens
SCHEDULE 5.18 -- Environmental Matters
EXHIBIT 1 -- Form of 7.31% Senior Note due April 30, 2004
EXHIBIT 4.4(a)(i) -- Form of Opinion of Special Counsel for the Company
EXHIBIT 4.4(a)(ii) -- Form of Opinion of General Counsel of the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel for the Purchasers
</TABLE>
iv
<PAGE> 6
HANDY & HARMAN
555 Theodore Fremd Avenue
Rye, New York 10580
NOTE PURCHASE AGREEMENT
$125,000,000
7.31% Senior Notes Due April 30, 2004
Dated as of April 17, 1997
[Separately addressed to each of the Purchasers
listed in the attached Schedule A]
Ladies and Gentlemen:
HANDY & HARMAN, a New York corporation (together with its successors
and assigns, the "Company"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $125,000,000 aggregate
principal amount of its 7.31% Senior Notes due April 30, 2004 (the "Notes", such
term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement or the Other Agreements (as hereinafter defined)).
The Notes shall be substantially in the form set out in Exhibit 1, with such
changes therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified below your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "Other Agreements")
identical with this
<PAGE> 7
Agreement with each of the other purchasers named in Schedule A (the "Other
Purchasers"), providing for the sale at such Closing to each of the Other
Purchasers of Notes in the principal amount specified below its name in Schedule
A. Your obligation hereunder and the obligations of the Other Purchasers under
the Other Agreements are several and not joint obligations and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or non-performance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of the Company, 555 Theodore Fremd Avenue,
Rye, New York 10580 at 10:00 a.m., local time, at a closing (the "Closing") on
April 17, 1997 or on such other Business Day thereafter on or prior to April 24,
1997 as may be agreed upon by the Company and you and the Other Purchasers. At
the Closing, the Company will deliver to you the Notes to be purchased by you in
the form of a single Note (or such greater number of Notes in denominations of
at least $500,000 as you may request), dated the date of the Closing and
registered in your name (or in the name of your nominee), against delivery by
you to the Company or its order of immediately available funds in the amount of
the purchase price therefor by wire transfer of immediately available funds for
the account of the Company to account number 823-0037036 at The Bank of New
York, 1 Wall Street, New York, New York 10286, ABA # 021000018, Reference: Handy
& Harman. If at the Closing the Company shall fail to tender such Notes to you
as provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
2
<PAGE> 8
4.1 Representations and Warranties.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2 Performance; No Default.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing, and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing. Except as set forth on Schedule 4.2, neither the Company nor any
Subsidiary shall have entered into any transaction since the date of the
Memorandum that would have been prohibited by any of Sections 10.1, 10.2, 10.3,
10.5, 10.6, 10.7 or 10.10 had such Sections applied since such date.
4.3 Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been
fulfilled.
(b) Secretary's Certificate. The Company shall have delivered
to you a certificate of its Secretary or one of its Assistant
Secretaries, dated the date of the Closing, certifying as to the
resolutions attached thereto and other corporate proceedings relating
to the authorization, execution and delivery of the Notes, this
Agreement and the Other Agreements.
4.4 Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing,
(a) from (i) Skadden, Arps, Slate, Meagher & Flom LLP, special
counsel for the Company, and (ii) Paul E. Dixon, Vice President and
General Counsel of the Company, substantially in the forms set out in
Exhibit 4.4(a)(i) and Exhibit 4.4(a)(ii), respectively, and covering
such other matters incident to the transactions contemplated hereby as
you or your special counsel may
3
<PAGE> 9
reasonably request (and the Company hereby instructs such counsel to
deliver such opinion to you), and
(b) from Hebb & Gitlin, your special counsel in connection
with such transactions, substantially in the form set out in Exhibit
4.4(b) and covering such other matters incident to such transactions as
you may reasonably request.
4.5 Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall (a) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (b) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (c) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date of your execution and delivery of this Agreement. If requested by you,
you shall have received an Officer's Certificate certifying as to such matters
of fact as you may reasonably specify to enable you to determine whether such
purchase is so permitted.
4.6 Sale of Other Notes.
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase from the Company the Notes to
be purchased by them at the Closing as specified in Schedule A.
4.7 Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the reasonable fees, charges and disbursements of
your special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least three Business Days
prior to the date of the Closing.
4
<PAGE> 10
4.8 Private Placement Number.
A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.9 Changes in Corporate Structure.
Except as specified in Schedule 4.9, the Company shall not have changed
its jurisdiction of incorporation or been a party to any merger or consolidation
and shall not have succeeded to all or any substantial part of the liabilities
of any other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
4.10 Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you, as of the date of the
Closing, that:
5.1 Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the Properties it purports to own or hold under lease, to transact
the business it currently transacts, to execute and deliver this Agreement and
the Other Agreements and the Notes and to perform the provisions hereof and
thereof, except to the extent that the failure to have such power or authority
5
<PAGE> 11
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.2 Authorization, etc.
This Agreement, the Other Agreements and the Notes have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3 Disclosure.
The Company, through its agent, Goldman, Sachs & Co., has delivered to
you and each Other Purchaser a copy of a Confidential Private Placement
Memorandum, dated February, 1997 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal Properties
of the Company and its Subsidiaries as of the date thereof. Except as disclosed
in Schedule 5.3, this Agreement, the Memorandum, the Company's Annual Report on
Form 10-K for its fiscal year ended December 31, 1996, the financial statements
listed in Schedule 5.5 and the other documents, certificates or other writings
delivered to you by or on behalf of the Company pursuant to this Agreement,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31, 1996, there has
been no change in the financial condition, operations, business or Properties of
the Company or any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that could reasonably be expected to have
a Material Adverse Effect that would be materially disproportionate in its
effect on the Company, compared with
6
<PAGE> 12
the Company's competitors, and which has not been set forth herein or in the
Memorandum, in the Company's Annual Report on Form 10-K for its fiscal year
ended December 31, 1996 or in the other documents, certificates and other
writings delivered to you by or on behalf of the Company specifically for use in
connection with the transactions contemplated hereby. Without limiting any of
the Company's representations and warranties in this Section 5.3, it is
understood that neither you nor the Company has intended that the scope of
disclosure made to you in the materials referred to in this Section 5.3 would be
the same as that in, or would address all the matters customarily addressed in,
a registration statement filed in connection with a public offering under the
Securities Act.
5.4 Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete
and correct lists of (i) the Company's Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of its
organization, the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and
each other Subsidiary and whether, as of the date of the Closing, such
Subsidiary is to be designated as a "Restricted Subsidiary" or an
"Unrestricted Subsidiary" and (ii) the Company's Affiliates, other than
Subsidiaries.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being
owned by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable (except to the extent that the failure of
any such shares or other equity interests to be so issued, paid or
nonassessable could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect) and are owned by
the Company or another Subsidiary free and clear of any Lien (except
for Liens permitted by Section 10.7).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization,
and is duly qualified as a foreign corporation or other legal entity
and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to
which
7
<PAGE> 13
the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or
other power and authority to own or hold under lease the Properties it
purports to own or hold under lease and to transact the business it
currently transacts, except to the extent that the failure to have any
such power or authority could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed in Schedule 5.4, agreements requiring that
distributions to holders of equity interests be ratable in proportion
to such interests, and customary limitations imposed by corporate or
similar law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns outstanding
shares of capital stock or similar equity interests of such Subsidiary.
5.5 Financial Statements.
The Company has delivered to you and each Other Purchaser copies of the
consolidated financial statements of the Company and its Subsidiaries listed in
Schedule 5.5. All of said financial statements (including in each case the
related schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such financial statements and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any
Property of the Company or any
8
<PAGE> 14
Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or
any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective Properties may be bound or affected,
(b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of
any court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary, or
(c) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or
any Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the Notes
except such consents, approvals, authorizations, registrations, filings, and
declarations as are required because of the nature of your business or
regulatory status or that of any Other Purchaser.
5.8 Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the actual knowledge of any
Responsible Officer, threatened against or affecting the Company or any
Subsidiary or any Property of the Company or any Subsidiary in any
court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) To the actual knowledge of any Responsible Officer,
neither the Company nor any Subsidiary is in default under any term of
any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including, without
limitation, Environmental Laws) of any Governmental
9
<PAGE> 15
Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
5.9 Taxes.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their Properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments and tax returns in respect
thereof, (a) the amount of which is not individually or in the aggregate
Material, (b) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which the
Company or a Subsidiary, as the case may be, has established adequate reserves
in accordance with GAAP or (c) to the extent the failure to pay or file, as
applicable, could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company knows of no basis for any other
tax or assessment that could reasonably be expected to have a Material Adverse
Effect. The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods
are adequate except to the extent that the failure of such charges, accruals and
reserves to be adequate, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. As of April 11, 1997, the Federal
income tax liabilities of the Company and its Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended December 31, 1992.
5.10 Title to Property; Leases.
The Company and its Subsidiaries have good and marketable title to, or
valid leasehold interests in, their respective Properties, including all such
Properties reflected in the most recent audited balance sheet referred to in
Section 5.5 or acquired by the Company or any Subsidiary after said date (except
as sold or otherwise disposed of in the ordinary course of business and except
for the sale of Precious Metals, whether or not in the ordinary course of
business), in each case free and clear of Liens prohibited by this Agreement,
except to the extent that the failure to have any such title or
10
<PAGE> 16
leasehold interest could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11 or except to the extent that the
failure of any of the following to be true could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, necessary
for their respective businesses, without known conflict with the rights
of others;
(b) to the actual knowledge of any Responsible Officer, no
product or practice of the Company or any Subsidiary infringes on any
license, permit, franchise, authorization, patent, copyright, service
mark, trademark, trade name or other right owned by any other Person;
and
(c) to the actual knowledge of any Responsible Officer, there
is no violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or licensed to the Company
or any of its Subsidiaries.
5.12 Compliance with Pension Plan Laws.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except
for such instances of noncompliance as have not resulted in and could
not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined
in section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate,
or in the imposition of any Lien on any of the rights, Properties or
assets of the Company or any ERISA Affiliate, in either case pursuant
to Title I or IV of ERISA or to such penalty or excise tax
11
<PAGE> 17
provisions or to section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(b) The sum of the present values of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer Plans)
that is underfunded, determined as of the end of such Plan's most
recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the sum of the aggregate current
values of the assets of each such Plan allocable to such benefit
liabilities by more than $10,000,000. The term "benefit liabilities"
has the meaning specified in section 4001 of ERISA and the terms
"current value" and "present value" have the meaning specified in
section 3 of ERISA.
(c) The Company and the ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(d) Except as set forth in the financial statements referred
to in Section 5.5, the expected postretirement benefit obligation
(determined as of the last day of the Company's most recently ended
fiscal year in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the
Company and its Subsidiaries could not reasonably be expected to have a
Material Adverse Effect.
(e) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA
or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation by the Company in the
first sentence of this Section 5.12(e) is made in reliance upon and
subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be
purchased by you.
12
<PAGE> 18
(f) Schedule 5.12 sets forth a list of all "employee benefit
plans" maintained by the Company (or any ERISA Affiliate) or in respect
of which the Notes could constitute an "employer security" ("employee
benefit plan" has the meaning specified in section 3 of ERISA and
"employer security" has the meaning specified in section 407(d) of
ERISA).
(g) All Non-US Pension Plans have been established, operated,
administered and maintained in compliance with all laws, regulations
and orders applicable thereto except for such failures to comply, in
the aggregate for all such failures, that could not reasonably be
expected to have a Material Adverse Effect. All premiums, contributions
and any other amounts required by applicable Non-US Pension Plan
documents or applicable laws have been paid or accrued as required,
except for premiums, contributions and amounts that, in the aggregate
for all such obligations, could not reasonably be expected to have a
Material Adverse Effect.
5.13 Private Offering by the Company.
Neither the Company nor anyone authorized to act on its behalf has
offered the Notes or any similar Securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any Person other than you, the Other Purchasers and not more than
70 other Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor anyone authorized to act on
its behalf has taken, or will take, any action that would subject the issuance
or sale of the Notes to the registration requirements of section 5 of the
Securities Act.
5.14 Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any Securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute
13
<PAGE> 19
more than 25% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute more than 25% of the value of such assets.
5.15 Existing Debt, Future Payables Transactions and Consignments;
Future Liens.
(a) Schedule 5.15(a) sets forth a complete and correct list of
all outstanding Debt and all Future Payables Transactions of the
Company and its Subsidiaries as of March 31, 1997 with a principal
amount or a payment obligation in excess of $5,000,000 (and specifying,
as to each such issue of Debt and Future Payables Transaction, the
collateral, if any, securing such Debt or Future Payables Transaction,
as the case may be), since which date there has been no Material change
in the amounts, interest rates, sinking funds, instalment payments or
maturities of the Debt or Future Payables Transactions of the Company
or its Subsidiaries. The aggregate outstanding principal amount of all
Debt, and the aggregate payment obligations in respect of all Future
Payables Transactions, of the Company and its Subsidiaries as of March
31, 1997 that are not listed on Schedule 5.15(a) do not exceed
$5,000,000. Neither the Company nor any Subsidiary is in default in the
payment of any principal or interest on, or any other amount payable in
respect of, any such Debt or Future Payables Transaction, no waiver of
default with respect to any such Debt or Future Payables Transaction is
currently in effect which has an expiration date prior to the maturity
of the relevant obligation, and to the actual knowledge of any Senior
Financial Officer no event or condition exists with respect to any such
Debt or Future Payables Transaction that would permit (or that with
notice or the lapse of time, or both, would permit) one or more Persons
to cause such Debt to become due and payable before its stated maturity
or before its regularly scheduled dates of payment or to cause such
Future Payables Transaction to be terminated prior to the scheduled
settlement or expiration thereof.
(b) Schedule 5.15(b) sets forth a complete and correct list of
all Consignment Arrangements of the Company and its Subsidiaries under
which there are any outstanding consignments of Precious Metals as of
March 31, 1997 (and specifying, as to each such Consignment
Arrangement, the amount and type of Precious Metals
14
<PAGE> 20
leased or consigned to the Company or any of its Subsidiaries). There
has been no Material change in such list since such date. Neither the
Company nor any Subsidiary is in default in the payment of any amount
payable in respect of any such Consignment Arrangement, no waiver of
default with respect to any such Consignment Arrangement is currently
in effect which has an expiration date prior to expiration of such
Consignment Arrangement, and to the actual knowledge of any Senior
Financial Officer no event or condition exists with respect to any such
Consignment Arrangement that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Consignment Arrangement to be terminated prior to the scheduled
settlement or expiration thereof.
(c) Except as disclosed in Schedule 5.15(c), neither the
Company nor any Subsidiary has agreed or consented to cause or permit
in the future (upon the happening of a contingency or otherwise, except
any such contingency or other arrangement that is within its control)
any of its Property, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by Section 10.7.
5.16 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17 Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation as an
"investment company" under the Investment Company Act of 1940, as amended, as a
"holding company" under the Public Utility Holding Company Act of 1935, as
amended, or as a "regulated utility" under the Federal Power Act, as amended or
is subject to regulation under the Transportation Acts (49 U.S.C.), as amended.
5.18 Environmental Matters.
Neither the Company nor any Subsidiary has actual knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim
15
<PAGE> 21
against the Company or any of its Subsidiaries or any of their respective real
Properties now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, as set forth on Schedule 5.18 or such as could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. Except as otherwise disclosed to you in writing,
(a) no Responsible Officer has actual knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real Properties now or formerly
owned, leased or operated by any of them or to other assets or their
use, except, in each case, such as could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect;
(b) no Responsible Officer has actual knowledge that the
Company or any of its Subsidiaries has stored any Hazardous Materials
on real properties now or formerly owned, leased or operated by any of
them or disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws in each case in any manner that could, individually
or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; and
(c) no Responsible Officer has actual knowledge that any
building on any real properties now owned, leased or operated by the
Company or any of its Subsidiaries is not in compliance with applicable
Environmental Laws, except where failure to comply could not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
All such violations of Environmental Laws, damage to the environment or
storage or disposal of Hazardous Materials would not, collectively, reasonably
be expected to result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained
16
<PAGE> 22
by you or for the account of one or more pension or trust funds and not with a
view to the distribution thereof, provided that the disposition of your or their
Property shall at all times be within your or their control. You understand that
the Notes have not been registered under the Securities Act and may not be
resold except in compliance with applicable federal and state securities laws
and that the Company is not obligated to register the Notes.
6.2 Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" as
defined in Department of Labor Prohibited Transaction Exemption 95-60
(60 3FR 35925, July 12, 1995) and in respect thereof you represent that
there is no "employee benefit plan" (as defined in section 3(3) of
ERISA and section 4975(e)(1) of the Code, treating as a single plan all
plans maintained by the same employer or employee organization or
affiliate thereof) with respect to which the amount of the general
account reserves and liabilities of all contracts held by or on behalf
of such plan exceed ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement
filed with your state of domicile; or
(b) if you are an insurance company, the Source does not
include assets allocated to any separate account maintained by you in
which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely in
connection with your fixed contractual obligations under which the
amounts payable, or credited, to such plan and to any participant or
beneficiary of such plan (including any annuitant) are not affected in
any manner by the investment performance of the separate account; or
(c) the Source is either (i) an insurance company pooled
separate account, within the meaning of Prohibited Transaction
Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant
17
<PAGE> 23
to this paragraph (c), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially
owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
(d) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets that
are included in such investment fund, when combined with the assets of
all other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and
(i) the identity of such QPAM and
(ii) the names of all employee benefit plans whose
assets are included in such investment fund
have been disclosed to the Company in writing pursuant to this
paragraph (d); or
(e) the Source is a governmental plan; or
(f) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (f); or
(g) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
18
<PAGE> 24
6.3 Investor Representations.
You represent and warrant to the Company that:
(a) you are a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) and have such knowledge and
experience in financial and business matters that you are capable of
evaluating the merits and risks of investing in the Notes;
(b) you are aware that the Notes have not been registered
under the Securities Act or the securities laws of any state, and that
the sale of each Note is predicated upon such sale being exempt from
registration as an exempt transaction under applicable federal and
state securities laws, and that no state or federal Governmental
Authorities have made any finding or determination relating to the
Notes, and that no state or federal Governmental Authority has or will
recommend or endorse the Notes; and
(c) you recognize that (i) there has been no public market for
the Notes, (ii) no public market for the Notes is anticipated or
likely, and (iii) transferability of the Notes is restricted in
accordance with the Securities Act and state securities laws.
7. INFORMATION AS TO COMPANY.
7.1 Financial and Business Information.
So long as any of the Notes are outstanding, the Company shall deliver
to each then holder of Notes that is an Institutional Investor:
(a) Quarterly Statements -- within 45 days after the end of
each quarterly fiscal period in each fiscal year of the Company (other
than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,
(i) (A) a consolidated balance sheet of the Company
and the Restricted Subsidiaries as at the end of such quarter
and (B) a consolidated balance sheet of the Company and its
consolidated subsidiaries as at the end of such quarter, and
(ii) (A) consolidated statements of income, changes
in shareholders' equity and cash flows of
19
<PAGE> 25
the Company and the Restricted Subsidiaries for such quarter
and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter and (B)
consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its consolidated
Subsidiaries for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the
consolidated financial position of the companies being reported on and
their consolidated results of operations and cash flows, subject to
changes resulting from year-end adjustments, provided that delivery
within the time period specified above of copies of the Company's
Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of Section
7.1(a)(i)(B) and Section 7.1(a)(ii)(B);
(b) Annual Statements -- within 90 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) (A) a consolidated balance sheet of the Company
and the Restricted Subsidiaries as at the end of such year and
(B) a consolidated balance sheet of the Company and its
consolidated subsidiaries as at the end of such year, and
(ii) (A) consolidated statements of income, changes
in shareholders' equity and cash flows of the Company and the
Restricted Subsidiaries for such year and (B) consolidated
statements of income, changes in shareholders' equity and cash
flows of the Company and its consolidated subsidiaries for
such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by
20
<PAGE> 26
(A) an opinion thereon of independent
certified public accountants of recognized national
standing, which opinion shall state that such
financial statements present fairly, in all material
respects, the consolidated financial position of the
companies being reported upon and their consolidated
results of operations and cash flows and have been
prepared in conformity with GAAP, and that the
examination of such accountants in connection with
such financial statements has been made in accordance
with generally accepted auditing standards, and that
such audit provides a reasonable basis for such
opinion in the circumstances, and
(B) a certificate of such accountants
expressing their opinion as to whether the
computations by the Company show compliance with
Sections 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8 and
10.10, and stating that, in connection with their
audit of the financial statements of the Company for
such fiscal year, nothing came to their attention of
a financial or accounting nature that caused them to
believe that the Company was not in compliance with
such terms, covenants, provisions or conditions (it
being understood that generally accepted auditing
standards require such accountants to report any
Default or Event of Default of which they obtain
knowledge, regardless of whether it arises as a
result of a breach of any such section),
provided that the delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year prepared
in accordance with the requirements therefor and filed with the
Securities and Exchange Commission, together with the accountant's
certificate described in clause (B) above, shall be deemed to satisfy
the requirements of Section 7.1(b)(i)(B) and Section 7.1(b)(ii)(B);
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report (including,
without limitation, the Company's annual report to shareholders, if
any, prepared pursuant to Rule 14a-3 under the Exchange
21
<PAGE> 27
Act), notice or proxy statement sent by the Company or any Subsidiary
to public Securities holders generally, and (ii) each regular or
periodic report, each registration statement (without exhibits except
as expressly requested by such holder), each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and each press release made
available generally by the Company or any Subsidiary to the public
concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer obtains actual
knowledge of the existence of any Default or Event of Default or that
any Person has given any notice or taken any action with respect to a
claimed default hereunder or that any Person has given any notice or
taken any action with respect to a claimed default of the type referred
to in Section 11(f), a written notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes
to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five
Business Days after a Responsible Officer has actual knowledge of any
of the following, a written notice setting forth the nature thereof and
the action, if any, that the Company or an ERISA Affiliate proposes to
take with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived
pursuant to such regulations as in effect on the date of the
Closing except for any such reportable event or reportable
events which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; or
(ii) the taking by the PBGC of steps to institute, or
the threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan except for any
such proceedings which, individually
22
<PAGE> 28
or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or
any ERISA Affiliate pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to
employee benefit plans, or in the imposition of any Lien on
any of the rights, Properties or assets of the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material
Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect;
(g) Actions, Proceedings -- promptly after a Responsible
Officer has actual knowledge of the commencement thereof, notice of any
action or proceeding relating to the Company or any Subsidiary in any
court or before any Governmental Authority or arbitration board or
tribunal as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect; and
(h) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition or Properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes, including, without
limitation, such information regarding the Company required to satisfy
the requirements of 17 C.F.R. Section 230.144A, as amended from time to
time, in connection with any contemplated permitted transfer of the
Notes.
23
<PAGE> 29
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- (i) the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Sections 10.2, 10.3,
10.4, 10.5, 10.6, 10.7, 10.8, and 10.10, during the quarterly or annual
period covered by the statements then being furnished (including with
respect to each such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of
the amount, ratio or percentage then in existence), (ii) the aggregate
Fair Market Value of each type of Precious Metal held on consignment at
the Company's Fairfield, Connecticut facility (and any other facilities
where Precious Metals are so held) by the Company and the Restricted
Subsidiaries pursuant to Consignment Arrangements, (iii) the aggregate
number of ounces of each type of Precious Metal held on consignment at
such Fairfield, Connecticut facility (and any other facilities where
Precious Metals are so held) by the Company and the Restricted
Subsidiaries pursuant to Consignment Arrangements, (iv) the aggregate
Fair Market Value of each type of Owned Precious Metal Inventory of the
Company and the Restricted Subsidiaries and (v) the aggregate
outstanding obligations of the Company and Restricted Subsidiaries with
respect to Future Payables Transactions; and
(b) Event of Default -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review has not
disclosed the existence at the end of such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed with respect to any of the covenants listed
in Section 7.2(a) during such period or exists at the end of such
period (including, without limitation, any such event
24
<PAGE> 30
or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature
and period of existence thereof and what action the Company shall have
taken or proposes to take with respect thereto.
7.3 Inspection.
So long as any Notes are outstanding, the Company shall permit the
representatives of each then holder of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such holder and upon reasonable prior notice
to the Company,
(i) to visit the principal executive office of the
Company, and to discuss the affairs, finances and accounts of
the Company and its Subsidiaries with the Company's officers,
and
(ii) with the consent of the Company (which consent
will not be unreasonably withheld) and in the presence of
Senior Financial Officers (if such presence is requested by
the Company), to discuss the affairs, finances and accounts of
the Company and its Subsidiaries with its independent public
accountants and to visit the other offices and Properties of
the Company and each Subsidiary,
all at such reasonable times during normal business hours and as often
as may be reasonably requested in writing and in a manner so as not to
interfere, to the extent reasonably possible, with the conduct of the
business of the Company and its Subsidiaries; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Company, to visit and inspect any of the offices
or Properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and, in the
presence of Senior Financial Officers (if such presence is requested by
the Company), its independent public accountants (and by this provision
the Company authorizes said accountants to discuss the affairs,
finances and accounts of the
25
<PAGE> 31
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PAYMENT OF THE NOTES.
8.1 Payment at Maturity.
The Company will pay all of the principal amount of the Notes remaining
outstanding, if any, on April 30, 2004.
8.2 Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes (but if in part, in
an amount not less than $5,000,000 or such lesser amount as shall then be
outstanding), at 100% of the principal amount so prepaid, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 20 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall specify
such prepayment date, the aggregate principal amount of the Notes to be prepaid
on such date, the principal amount of each Note held by such holder to be
prepaid (determined in accordance with Section 8.3), and the interest to be paid
on the prepayment date with respect to such principal amount being prepaid, and
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
8.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes pursuant to Section
8.2, the principal amount of the Notes to be prepaid shall be allocated among
all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.
26
<PAGE> 32
8.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall cease to be considered
to be outstanding, shall be surrendered to the Company and cancelled and shall
not be reissued, and no Note shall be issued in lieu of any prepaid principal
amount of any Note.
8.5 No Other Optional Prepayments or Purchase of Notes.
The Company will not, and will not permit any Affiliate which it
controls to, prepay (whether directly or indirectly by purchase, redemption or
other acquisition) any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with the terms of this Section 8 or upon
the Notes becoming due pursuant to Section 12, or (b) pursuant to an offer to
purchase, at par or otherwise, made by the Company or any such Affiliate pro
rata to the holders of all Notes at the time outstanding upon the same terms and
conditions. Any such offer shall provide each holder with sufficient information
to enable it to make an informed decision with respect to such offer, and shall
remain open for at least 10 Business Days. The Company will promptly cancel all
Notes acquired by it or any Affiliate pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.
8.6 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
27
<PAGE> 33
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (a)
the yields reported, as of 10:00 A.M. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as Page "UST" on the
Bloomberg Financial Market Service (or such other display as may
replace Page UST on the Bloomberg Financial Market Service) for
actively traded U.S. Treasury Securities having a remaining time to
maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date, or (b) if such yields are not reported as
of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with respect to
such Called Principal, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded
U.S. Treasury Securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date. Such implied yield will be determined, if necessary, by (i)
converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (ii) interpolating
linearly between (1) the actively traded U.S. Treasury Security with
the remaining time to maturity closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury
Security with the remaining time to
28
<PAGE> 34
maturity closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (a) such Called Principal into (b) the sum
of the products obtained by multiplying (i) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (ii) the number of years (calculated to the nearest one-twelfth
year) that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled maturity date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled maturity date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1 Compliance with Law.
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of
29
<PAGE> 35
their respective Properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.2 Insurance.
The Company will and will cause each of the Restricted Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective Properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
9.3 Maintenance of Properties.
The Company will and will cause each of the Restricted Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
Properties in good repair, working order and condition (other than ordinary wear
and tear) except where the Company has concluded that the failure to so maintain
or keep any such Property could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.4 Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
Properties, assets, income or franchises, to the extent such taxes, assessments,
charges or levies have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable and before
they have become delinquent that have or might become a Lien on Properties or
assets of the Company or any Subsidiary, provided that neither the Company nor
any Subsidiary need file any such return or pay any such tax, assessment,
governmental charge, levy or claim if (a) the amount,
30
<PAGE> 36
applicability or validity thereof is contested by the Company or such Subsidiary
on a timely basis in good faith and in appropriate proceedings, and the Company
or such Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of the Company or such Subsidiary or (b) the failure to file
any such return or the nonpayment of all such taxes, assessments, charges,
levies and claims in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
9.5 Corporate Existence, etc.
Except in connection with a transaction permitted by Section 10.2(a),
the Company will at all times preserve and keep in full force and effect its
corporate existence. Except in connection with a transaction permitted by
Sections 10.2 and 10.3, the Company will at all times preserve and keep in full
force and effect the corporate existence of each of its Subsidiaries and all
rights and franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
10.1 Transactions with Affiliates.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into directly or indirectly any transaction or Material group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of Properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Restricted Subsidiary), except
pursuant to the reasonable requirements of the Company's or such Restricted
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company and the Restricted Subsidiaries, taken as a whole, than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate; provided, that this Section 10.1 shall not apply to the pension
plan-related services provided to the Company and the Restricted Subsidiaries by
the Affiliates identified in Schedule 5.4 hereto so long as there is no
significant change subsequent to the date of Closing, which is
31
<PAGE> 37
adverse to the Company or any Restricted Subsidiary, in the terms and conditions
pursuant to which such services are provided.
10.2 Merger, Consolidation, etc.
(a) The Company. The Company will not consolidate with or
merge with any other corporation or, except as permitted by Section
10.3, convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person; provided
that the foregoing restriction does not apply to the consolidation or
merger of the Company with, or the conveyance, transfer or lease of
substantially all of the assets of the Company in a single transaction
or series of transactions to, any Person so long as:
(i) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by
conveyance, transfer or lease substantially all of the assets
of the Company as an entirety, as the case may be (the
"Successor Corporation"), shall be a solvent corporation
organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;
(ii) if the Company is not the Successor Corporation,
such corporation shall have executed and delivered to each
holder of Notes its assumption, satisfactory in form and
substance to the Required Holders, of the due and punctual
performance and observance of each covenant and condition of
this Agreement and the Notes, and the Company or the Successor
Corporation shall have caused to be delivered to each holder
of Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory
to the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in
accordance with their respective terms and comply with the
terms hereof (it being understood that such opinion may
contain customary exceptions, qualifications and assumptions,
and that the General Counsel of the Company may give the
necessary opinions with respect to the matters addressed by
the opinion delivered on the date of
32
<PAGE> 38
Closing in the form attached hereto as Exhibit 4.4(a)(ii));
and
(iii) immediately after giving effect to such
transaction:
(A) no Default or Event of Default exists or
would exist, and
(B) the Successor Corporation would be
permitted by the provisions of Section 10.5 to incur
at least $1.00 of additional Debt owing to a Person
other than a Restricted Subsidiary.
Any such conveyance or transfer, but not any such lease, of
substantially all of the assets of the Company shall have the effect of
releasing the Company from its liability under this Agreement or the
Notes, except to the extent set forth therein.
(b) Restricted Subsidiaries. The Company will not permit any
Restricted Subsidiary to consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any Person
except that a Restricted Subsidiary may:
(i) consolidate with or merge with, or convey,
transfer or lease substantially all of its assets in a single
transaction or series of transactions to, a Restricted
Subsidiary or the Company,
(ii) consolidate with or merge with any Person if,
immediately after giving effect to such transaction, (A) the
Person surviving such consolidation or merger is a Restricted
Subsidiary, (B) no Default or Event of Default exists or would
exist, (C) the Company would be permitted by the provisions of
Section 10.5 to incur at least $1.00 of additional Debt owing
to a Person other than a Restricted Subsidiary and (D) such
Restricted Subsidiary would be permitted by the provisions of
Section 10.6 to incur at least $1.00 of additional Debt owing
to a Person other than the Company or another Restricted
Subsidiary, and
33
<PAGE> 39
(iii) consolidate with or merge with, or convey,
transfer or lease its assets in a single transaction or a
series of transactions to, any Person, in each case in
compliance with the provisions of Section 10.3.
10.3 Sale of Assets, Etc.
Except as permitted under Section 10.2, the Company will not, and will
not permit any of the Restricted Subsidiaries to, make any Asset Disposition
unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value
at least equal to that of the Property exchanged, as determined by the
Company in good faith;
(b) immediately after giving effect to the Asset Disposition,
(i) no Default or Event of Default would exist, and
(ii) the Company would be permitted by the provisions
of Section 10.5 to incur at least $1.00 of additional Debt
owing to a Person other than a Restricted Subsidiary; and
(c) immediately after giving effect to the Asset Disposition,
the aggregate Disposition Value of the Property subject to such Asset
Disposition, and all other Property that was the subject of any Asset
Disposition occurring in the period of 365 days ending on and including
the date of such Asset Disposition, would not exceed 50% of
Consolidated Adjusted Cash Flow for the Applicable Four Quarter Period;
provided, however, that
(i) if the Company gives prompt written notice (a
"Reinvestment Notice") to all holders of Notes that, within
180 days before or after any Transfer, an amount equal to all
or any portion of the Net Proceeds Amount arising therefrom
was, or is intended to be, applied by the Company or such
Restricted Subsidiary to a Debt Prepayment Application or a
Property Reinvestment Application, then such Transfer (to the
extent of the amounts actually so applied within such period)
shall be
34
<PAGE> 40
deemed not to be an Asset Disposition as of any date for
purposes of determining compliance by the Company and the
Restricted Subsidiaries with this paragraph (c),
(ii) the time period set forth in the preceding
clause (i) may be computed, at the Company's option, with
respect to the date that the Company or any Restricted
Subsidiary receives cash (instead of the date of such
Transfer) in respect of (A) up to $5,000,000 in the aggregate
for all Net Proceeds Amounts arising from the Transfer of
excess buildings and land from sold operations and (B) up to
10% of any Net Proceeds Amount to the extent such amount is
required to be held in escrow pursuant to customary
"hold-back" provisions set forth in any document relating to
the Transfer giving rise to such Net Proceeds Amount, and
(iii) immediately after giving effect to such Asset
Disposition, the Unapplied Portions of the Net Proceeds
Amounts for all Asset Dispositions shall not exceed 30% of the
Company's consolidated assets.
The "Unapplied Portion of the Net Proceeds Amount," with respect to any
Asset Disposition as to which the Company has given a Reinvestment Notice,
means, at any time, the Disposition Value of the Property subject to such Asset
Disposition multiplied by a fraction of which the numerator is the portion of
the Net Proceeds Amount subject to such Reinvestment Notice which has not been
applied to a Property Reinvestment Application or a Debt Prepayment Application
at such time and the denominator of which is the entire amount of the portion of
the Net Proceeds Amount subject to such Reinvestment Notice.
If the Company shall fail to apply an amount equal to the entire amount
of the Net Proceeds Amount subject to the Reinvestment Notice in respect of such
Transfer, within such 360-day period, to a Property Reinvestment Application or
a Debt Prepayment Application, the Company shall be deemed to have consummated
an Asset Disposition to which clause (i) of Section 10.3(c) does not apply in an
amount equal to the Unapplied Portion of the Net Proceeds Amount in respect of
such Asset Disposition. Such deemed Asset Disposition shall be deemed to have
occurred on the date of the original Asset Disposition and the Company's
compliance with this Section 10.3 shall be determined, as of such date, as if
such
35
<PAGE> 41
Unapplied Portion of the Net Proceeds Amount had not been included in the
Reinvestment Notice.
If any Restricted Subsidiary shall cease to be a Restricted Subsidiary
as a result of any Asset Disposition consisting of Subsidiary Stock, all Debt
owing by the Company or any other Restricted Subsidiary to such Restricted
Subsidiary after giving effect to such Asset Disposition and to the transactions
entered into in connection therewith (and any Liens securing such Debt) shall be
deemed for all purposes of this Agreement to have been incurred by the Company
or such other Restricted Subsidiary immediately after giving effect to such
Asset Disposition.
10.4 Fixed Charges Coverage Ratio.
The Company will not, for any period of four complete consecutive
fiscal quarters of the Company, permit the ratio of
(a) Consolidated Adjusted Cash Flow plus Consolidated Rentals
to
(b) Consolidated Interest Expense plus Consolidated Rentals,
in each case for such period, to be less than 2.0 to 1.0.
10.5 Company Debt Incurrence.
The Company will not at any time, directly or indirectly, create,
incur, assume, guarantee, or otherwise become directly or indirectly liable with
respect to, any Debt (except for inter-company payables arising from operation
of the Company's cash management system in the ordinary course of its business),
unless on the date the Company becomes liable with respect to any such Debt and
immediately after giving effect thereto, the application of the proceeds thereof
and the concurrent retirement of any other Debt,
(a) no payment Default, no Default with respect to the
covenant set forth in Section 10.8, and no Event of Default exists, and
(b) Consolidated Adjusted Debt on such date does not exceed
350% of Consolidated Adjusted Cash Flow for the Applicable Four Quarter
Period.
36
<PAGE> 42
For the purposes of this Section 10.5, any Person extending, renewing or
refunding any Debt shall be deemed to have incurred such Debt at the time of
such extension, renewal or refunding.
10.6 Restricted Subsidiary Debt Incurrence.
The Company will not permit any Restricted Subsidiary to, at any time,
directly or indirectly, create, incur, assume, guarantee, or otherwise become
directly or indirectly liable with respect to, any Debt, except Debt owing to
the Company or another Restricted Subsidiary, unless on the date such Restricted
Subsidiary becomes liable with respect to any such Debt and immediately after
giving effect thereto, the application of the proceeds thereof and the
concurrent retirement of any other Debt,
(a) no payment Default, no Default with respect to the
covenant set forth in Section 10.8, and no Event of Default exists,
(b) Consolidated Adjusted Debt on such date does not exceed
350% of Consolidated Adjusted Cash Flow for the Applicable Four Quarter
Period, and
(c) Priority Debt does not exceed the lesser of (i) 20% of
Consolidated Net Worth determined as of the end of the Applicable Four
Quarter Period, or (ii) 50% of Consolidated Adjusted Cash Flow for the
Applicable Four Quarter Period.
10.7 Liens.
(a) Negative Pledge. The Company will not, and will not permit
any of the Restricted Subsidiaries to, directly or indirectly create,
incur, assume or permit to exist (upon the happening of a contingency
or otherwise) any Lien on or with respect to any Property or asset
(including, without limitation, any document or instrument in respect
of goods or accounts receivable) of the Company or any such Restricted
Subsidiary, whether now owned or held or hereafter acquired, or any
income or profits therefrom, except:
(i) Liens for taxes, assessments, governmental
charges, levies or claims the payment of which is not at the
time required by Section 9.4;
37
<PAGE> 43
(ii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other
similar Liens, in each case, incurred in the ordinary course
of business for sums not yet due or the payment of which is
not at the time required by Section 9.4;
(iii) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business
(A) (I) in connection with workers'
compensation, unemployment insurance and other types
of social security or retirement benefits or (II) to
secure (or to obtain letters of credit that secure)
the performance of tenders, statutory obligations,
surety bonds, appeal bonds, bids, leases (other than
Capital Leases), performance bonds, purchase,
construction or sales contracts and other similar
obligations, in each case not incurred or made in
connection with the borrowing of money, the obtaining
of advances or credit or the payment of the deferred
purchase price of Property, or
(B) in connection with margin calls made in
respect of Future Payables Transactions;
(iv) any attachment or judgment Lien, unless the
judgment it secures (A) shall not, within 30 days after the
entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay or (B)
exceeds $5,000,000 (less the amount represented by such
attachment or judgment which is covered by insurance so long
as the relevant insurer has not rejected coverage with respect
thereto in writing);
(v) consignments to or from the Company or any
Restricted Subsidiary (including, without limitation, Liens on
Property subject to such consignments and the proceeds
thereof), leases or subleases and licenses and sublicenses
granted to others, easements, rights-of-way, restrictions and
other similar charges or encumbrances, in each case incidental
to, and not interfering with, the
38
<PAGE> 44
ordinary conduct of the business of the Company or any of the
Restricted Subsidiaries;
(vi) Liens on Property or assets of the Company or
any of the Restricted Subsidiaries securing Debt owing to the
Company or to any of the Restricted Subsidiaries;
(vii) Liens existing on the date of this Agreement
and securing the Debt of the Company and the Restricted
Subsidiaries, provided that any such Debt which is in excess
of $5,000,000 is referred to in Schedule 5.15 and the
aggregate amount of Debt so secured and not listed on such
Schedule does not exceed $5,000,000;
(viii) any Lien (including, without limitation, any
Capital Lease) created to secure all or any part of the
purchase price, or to secure Debt incurred or assumed to pay
all or any part of the purchase price or cost of construction,
of Property (or any improvement thereon) acquired or
constructed by the Company or a Restricted Subsidiary after
the date of the Closing, provided that
(A) any such Lien shall extend solely to the
item or items of such Property (or improvement
thereon) so acquired or constructed and other
Property (or improvement thereon) which is an
improvement to or is acquired for specific use in
connection with such acquired or constructed Property
(or improvement thereon) or which is real property
being improved by such acquired or constructed
Property (or improvement thereon) and proceeds of any
of the foregoing,
(B) unless such Debt is non-recourse, the
principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to 100% of
the lesser of (I) the cost to the Company or such
Restricted Subsidiary of the Property (or improvement
thereon) so acquired or constructed and (II) the Fair
Market Value (as determined in good faith by the
Company) of such Property (or improvement thereon) at
the time of such acquisition or construction, and
39
<PAGE> 45
(C) any such Lien shall be created
contemporaneously with, or within 180 days after, the
acquisition or construction of such Property (it
being understood that, with respect to the
improvement of previously acquired Property, such
period shall be determined with reference to the
completion of such improvement and not the date of
acquisition of such Property);
(ix) any Lien existing on Property of a Person
immediately prior to its being consolidated with or merged
into the Company or a Restricted Subsidiary or its becoming a
Restricted Subsidiary, or any Lien existing on any Property
acquired by the Company or any Restricted Subsidiary at the
time such Property is so acquired (whether or not the Debt
secured thereby shall have been assumed), provided that (A) no
such Lien shall have been created or assumed by such Person in
contemplation of such consolidation or merger or such Person's
becoming a Restricted Subsidiary or such acquisition of
Property, and (B) each such Lien shall extend solely to the
item or items of Property so acquired and, if required by the
terms of the instrument originally creating such Lien, other
Property which is an improvement to or is acquired for
specific use in connection with such acquired Property;
(x) any Lien renewing, extending or refunding any
Lien permitted by paragraphs (vii) through (ix), inclusive, of
this Section 10.7(a), provided that (A) the principal amount
of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased (except to
the extent that any increase in principal amount represents
capitalization of the transaction costs incurred in connection
with such renewal, extension or refunding, so long as the
aggregate amount of all such costs so capitalized (and not
amortized) in connection with all such renewals, extensions
and refundings does not exceed $2,500,000 immediately after
giving effect to the renewal, extension or refunding of such
secured Debt), (B) such Lien is not extended to any other
Property, and (C) immediately after such extension, renewal or
refunding no payment Default, no Default with respect to the
40
<PAGE> 46
covenant set forth in Section 10.8 and no Event of Default
would exist; or
(xi) other Liens not otherwise permitted by
paragraphs (i) through (x), inclusive, of this Section
10.7(a), granted contemporaneously with the incurrence of Debt
by the Company or any Restricted Subsidiary, provided that
immediately after giving effect to the creation of any such
Lien, Priority Debt does not exceed the lesser of (A) 20% of
Consolidated Net Worth determined as of the end of the
Applicable Four Quarter Period, or (B) 50% of Consolidated
Adjusted Cash Flow for the Applicable Four Quarter Period.
(b) Equitable and Ratable Lien. In case any Property shall be
subjected to a Lien not permitted by Section 10.7(a), the Company will
forthwith make or cause to be made, to the fullest extent permitted by
applicable law, provision whereby its obligations under the Notes, this
Agreement and the Other Agreements will be secured equally and ratably
with all other obligations secured by such Lien pursuant to such
agreements and instruments as shall be approved by the Required Holders
in their reasonable discretion, and the Company will cause to be
delivered to each holder of Notes an opinion of independent counsel
(selected by the Company and reasonably satisfactory to the Required
Holders) to the effect that such agreements and instruments are
enforceable in accordance with their terms (subject to customary
exceptions, assumptions and qualifications). Regardless of whether the
Company complies with the provisions of the immediately preceding
sentence, in case any Property shall be subjected to a Lien not
permitted by Section 10.7(a), the obligations under the Notes, this
Agreement and the Other Agreements shall have the benefit, to the
fullest extent that, and with such priority as, the holders of Notes
may be entitled under applicable law, of an equitable Lien on such
Property securing such obligations. A violation of Section 10.7(a) will
constitute an Event of Default, whether or not provision is made for an
equal and ratable Lien pursuant to this Section 10.7(b).
10.8 Consolidated Net Worth.
The Company will not, at any time, permit Consolidated Net Worth to be
less than the sum of
41
<PAGE> 47
(a) $80,000,000, plus
(b) the sum of the Fiscal Quarter Net Worth Increase Amounts
for all fiscal quarters of the Company ended after December 31, 1996.
"Fiscal Quarter Net Worth Increase Amount" means, for any fiscal quarter of the
Company ended after December 31, 1996, the greater of (a) 50% of Consolidated
Net Income for such fiscal quarter and (b) $0.
10.9 Line of Business.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, engage in any business other than any business conducted on the
date hereof, the products manufacturing business and any business closely
related to either of the foregoing if, as a result, the general nature of the
business in which the Company and the Restricted Subsidiaries, taken as a whole,
would then be engaged would be substantially changed from the business conducted
by them on the date hereof, the products manufacturing business and any business
closely related to either of the foregoing.
10.10 Sale-and-Leasebacks.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale-and-Leaseback Transaction unless,
(a) immediately after giving effect to such Sale-and-Leaseback
Transaction and the application of the proceeds thereof, Priority Debt
does not exceed the lesser of (i) 20% of Consolidated Net Worth
determined as of the end of the Applicable Four Quarter Period, or (ii)
50% of Consolidated Adjusted Cash Flow for the Applicable Four Quarter
Period, or
(b) the Company, in accordance with and pursuant to Section
10.3(c), promptly gives a Reinvestment Notice to all holders of Notes
that, within 180 days before or after the Transfer of Property in such
Sale-and-Leaseback Transaction, the Company applied, or will apply, an
amount equal to the Net Proceeds Amount arising therefrom to a Debt
Prepayment Application or a Property Reinvestment Application.
42
<PAGE> 48
The Company's failure to apply the Net Proceeds Amount in respect of such
Sale-and-Leaseback Transaction in accordance with the Reinvestment Notice and
within such 360-day period shall have the effect set forth in the penultimate
paragraph of Section 10.3.
10.11 Designation of Subsidiaries.
(a) Right of Designation. Subject to satisfaction of the
requirements of Section 10.11(c), the Company shall have the right to
designate each Subsidiary acquired after the date of the Closing as a
Restricted Subsidiary or an Unrestricted Subsidiary by delivering to
each holder of Notes a writing, signed by a Senior Financial Officer,
so designating such Subsidiary within 30 days of the acquisition
thereof by the Company or any Restricted Subsidiary. Any such
Subsidiary not so designated within such 30-day period shall be deemed,
on and after such date and without any further action by the Company or
any holder of Notes (but subject to Section 10.11(b)), to have been
designated by the Company as a Restricted Subsidiary. Each Subsidiary
designated as a Restricted Subsidiary in Schedule 5.4 shall be a
Restricted Subsidiary for all purposes herein until such time as such
Restricted Subsidiary is redesignated pursuant to Section 10.11(b) and
all other Subsidiaries, if any, listed in such Schedule shall, subject
to Section 10.11(b), be Unrestricted Subsidiaries on and after the
Closing.
(b) Right of Redesignation. Subject to the satisfaction of the
requirements of Section 10.11(c), the Company may at any time designate
(i) any Unrestricted Subsidiary as a Restricted
Subsidiary, or
(ii) any Restricted Subsidiary as an Unrestricted
Subsidiary,
by delivering a written notice to such effect, signed by a Senior
Financial Officer, to each holder of Notes.
(c) Designation Criteria.
(i) No Subsidiary shall at any time after the Closing
be designated as a Restricted Subsidiary unless:
43
<PAGE> 49
(A) immediately after giving effect to such
designation, and assuming that all obligations and
liabilities of such Subsidiary being so designated
were incurred contemporaneously with such
designation,
(1) no Default or Event of Default
exists or would exist,
(2) the Company would be permitted
by the provisions of Section 10.5 to incur
at least $1.00 of additional Debt owing to a
Person other than a Restricted Subsidiary,
and
(3) no Unrestricted Subsidiary,
directly or indirectly, owns or holds any
Debt or Capital Stock of such Subsidiary;
and
(B) such Subsidiary shall not previously
have been designated (including, without limitation,
deemed designation pursuant to Section 10.11(a))
pursuant to this Section 10.11 more than twice.
Any Person designated a Restricted Subsidiary hereunder shall
be deemed to have incurred all of its then outstanding Debt at
the time of such designation.
(ii) No Subsidiary shall at any time after the
Closing Date be designated as an Unrestricted Subsidiary
unless:
(A) immediately after giving effect to such
designation,
(1) no Default or Event of Default
exists or would exist, and
(2) such Subsidiary does not,
directly or indirectly, own or hold any Debt
or Capital Stock of the Company or any
Restricted Subsidiary; and
(B) such Subsidiary shall not previously
have been designated (including, without
44
<PAGE> 50
limitation, deemed designation pursuant to Section
10.11(a)) pursuant to this Section 10.11 more than
twice.
(iii) Notwithstanding anything in this paragraph (c)
to the contrary, any Person which shall become a Subsidiary at
any time when a Default or an Event of Default shall exist
shall be an Unrestricted Subsidiary.
(d) Effectiveness. Other than as set forth in the last two
sentences of Section 10.11(a), any designation under this Section 10.11
that satisfies all of the conditions set forth in this Section 10.11
shall become effective on the day that notice thereof shall have been
sent by the Company to each holder of Notes or as of such subsequent
date as may be set forth in such notice.
10.12 Precious Metals Transactions.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any transaction with respect to Precious Metals for speculative or
other purposes not directly related to the acquisition of Precious Metals for
incorporation in the products of the Company or any Restricted Subsidiary, the
reduction of its inventory of Precious Metals, hedging in connection with any
such acquisition or reduction, Future Payables Transactions and any transactions
incidental to, and in furtherance of, the foregoing activities.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in
45
<PAGE> 51
(i) Section 10 (other than Section 10.8) or Section
7.1(d), or
(ii) Section 10.8 and such default is not remedied
within 3 Business Days after the earlier of (A) a Responsible
Officer obtaining actual knowledge of such default and (B) the
Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as
a "notice of default" and to refer specifically to this
paragraph (c)(ii) of Section 11);
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11), and such default is
not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (d) of Section 11); or
(e) the representation and warranty set forth in Section 5.3
proves to have been false or incorrect, or any representation or
warranty made in writing by the Company or by any officer of the
Company in this Agreement or in any writing furnished by the Company
pursuant hereto proves to have been false or incorrect in any material
respect on the date as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default
(as principal or as guarantor or other surety) in the payment
of any principal of or premium or make-whole amount or
interest on any Debt (other than Debt under this Agreement and
the Notes) beyond any period of grace provided with respect
thereto, that individually or together with such other Debt as
to which any such failure exists has an aggregate outstanding
principal amount of at least $5,000,000, or
(ii) the Company or any Restricted Subsidiary is in
default in the performance of or compliance with any term of
any evidence of any Debt (other than Debt under this Agreement
and the Notes), that individually or together with such other
Debt as to which any such failure exists has an aggregate
46
<PAGE> 52
outstanding principal amount of at least $5,000,000, or of any
mortgage, indenture or other agreement relating thereto or any
other condition exists, and as a consequence of such default
or condition such Debt has become, or has been declared, due
and payable before its stated maturity or before its regularly
scheduled dates of payment, or
(iii) as a consequence of the occurrence or
continuation of any event or condition, the Company or any
Restricted Subsidiary has become obligated to purchase or
repay Debt (other than Debt under this Agreement and the
Notes) before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding
principal amount of at least $5,000,000, provided, however, no
Event of Default shall exist under this clause (iii) if such
event or condition is
(A) the right of the holder of Debt to
convert such Debt into equity interests,
(B) Debt secured by Property becoming due
upon the transfer of such Property by operation of a
due-on-sale or similar clause, or if, simultaneously
with the purchase or repayment of any such Debt, the
Company offers to purchase Notes from each holder of
Notes (in compliance with Section 8.5), or prepays
pursuant to Section 8.2, a principal amount of the
Notes which bears the same relation to the principal
amount of Notes outstanding immediately prior to the
purchase or prepayment thereof as the principal
amount of such Debt so purchased or prepaid bears to
the principal amount of such Debt outstanding
immediately prior to the purchase or prepayment
thereof, or
(C) the Company is required to repay any
over-advance on any revolving credit facility so long
as no other payment default or event of default
exists at such time under the agreement governing
such revolving credit facility, or
(g) the Company or any Material Restricted Subsidiary (i) is
generally not paying, or admits in writing its inability to pay, its
debts as they become due, (ii) files,
47
<PAGE> 53
or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law
of any jurisdiction, (iii) makes an assignment for the benefit of its
creditors generally, (iv) consents to the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to
it or with respect to all or substantially all of its Property, (v) is
adjudicated as insolvent or, except as permitted by Section 10.2, to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company
or any Material Restricted Subsidiary, a custodian, receiver, trustee
or other officer with similar powers with respect to the Company or any
Material Restricted Subsidiary or with respect to all or substantially
all of its Property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any Material Restricted
Subsidiary, or any such petition shall be filed against the Company or
any Material Restricted Subsidiary and, in any such case, such petition
or order shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 (less the portion of such judgments
which is covered by insurance so long as the relevant insurer has not
rejected coverage with respect thereto in writing) are rendered against
one or more of the Company and the Restricted Subsidiaries and which
judgments are not, within 60 days after entry thereof, bonded,
discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part
thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of
the Code,
48
<PAGE> 54
(ii) a notice of intent to terminate any Plan shall
have been filed with the PBGC or the PBGC shall have
instituted proceedings under ERISA section 4042 to terminate
or appoint a trustee to administer any Plan or the PBGC shall
have notified the Company or any ERISA Affiliate that a Plan
will become a subject of any such proceedings,
(iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV
of ERISA, shall exceed $5,000,000,
(iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans,
(v) the Company or any ERISA Affiliate withdraws from
any Multiemployer Plan, or
(vi) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary
thereunder;
and any such event or events described in clauses (i) through (vi)
above, either individually or together with any other such event or
events, could reasonably be expected to have a Material Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default described in paragraph (g) or
paragraph (h) of Section 11 (other than an Event of Default described
in clause (i) of paragraph (g) or described in clause (vi) of paragraph
(g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then
49
<PAGE> 55
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing (except an Event of Default described in paragraph (a) or
paragraph (b) of Section 11), any holder or holders of more than 50% in
principal amount of the Notes at the time outstanding may at any time
at its or their option, by notice or notices to the Company, declare
all the Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b)
of Section 11 has occurred and is continuing,
(i) any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time,
at its or their option, by notice or notices to the Company,
declare all the Notes held by it or them to be immediately due
and payable, and
(ii) any holder or holders of more than 25% in
principal amount of the Notes at the time outstanding may at
any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be
immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount in respect of such
principal amount (to the full extent permitted by applicable law, determined as
of the date the Notes have become so due and payable), shall all be immediately
due and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived. The Company acknowledges, and
the parties hereto agree, that each holder of a Note has the right to maintain
its investment in the Notes free from repayment by the Company (except as herein
specifically provided for), and that the provision for payment of a Make-Whole
Amount by the Company in the event that the Notes are prepaid or are accelerated
as a result of an Event of Default is intended to provide compensation for the
deprivation of such right under such circumstances.
50
<PAGE> 56
12.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable pursuant
to paragraph (b) of Section 12.1, the holders of not less than a majority in
principal amount of the Notes then outstanding, and at any time after any Notes
have been declared due and payable pursuant to paragraph (c)(ii) of Section
12.1, the holders of more than 75% in principal amount of the Notes then
outstanding, by written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, due and
payable on any Notes other than by reason of such declaration, and all interest
on such overdue principal and Make-Whole Amount, if any, and (to the extent
permitted by applicable law) any overdue interest in respect of the Notes, at
the Default Rate, (b) all Events of Default and Defaults, other than non-payment
of amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes as a result of such declaration. No rescission and annulment under this
Section 12.3 will extend to or affect any subsequent Event of Default or Default
or impair any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any
51
<PAGE> 57
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all reasonable costs and expenses of such holder
incurred in any enforcement or collection under this Section 12, including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
The Company shall keep or cause to be kept a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give or cause to be given
to any holder of a Note that is an Institutional Investor, promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of (or
other place designated by) the Company for registration of transfer or exchange
(and in the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or his attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense (except as provided
below), one or more new Notes (as requested by the holder thereof) in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount
of the surrendered Note. Each such new Note shall be payable to such Person as
such holder may request and shall be substantially in the form of Exhibit 1.
Each such new Note shall be dated and bear interest from the date to which
52
<PAGE> 58
interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations set forth in Section 6 and that
the transfer to it of such Notes does not violate any applicable federal or
state securities laws. Notwithstanding anything to the contrary contained herein
or in any Note, a Note may only be transferred to an Institutional Investor.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Company (provided that if the holder of
such Note is, or is a nominee for, an original purchaser or an
Institutional Investor, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
53
<PAGE> 59
14. PAYMENTS ON NOTES.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York at the principal office of the Company in such jurisdiction. The
Company may at any time, by notice to each holder of a Note, change the place of
payment of the Notes so long as such place of payment shall be either the
principal office of the Company in such jurisdiction or the principal office of
a bank or trust company in such jurisdiction.
14.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.
54
<PAGE> 60
15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all reasonable out-of-pocket costs and expenses (including
reasonable attorneys' fees of a special counsel for all holders of the Notes
and, if reasonably required, local or other counsel of all such holders)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the reasonable costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the reasonable costs and
expenses incurred in connection with the insolvency or bankruptcy of the Company
or any Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other
than those retained by you).
15.2 Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein, and may be relied
upon by any subsequent holder of a Note, regardless of any investigation made at
any time by or on behalf of you or any other holder of a Note; it being
understood that such representations and warranties are only made as of the date
of the Closing. All statements contained in any certificate or other instrument
55
<PAGE> 61
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties, as of the date thereof, of the Company
under this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between you and the Company
and supersede all prior agreements and understandings relating to the subject
matter hereof.
17. AMENDMENT AND WAIVER.
17.1 Requirements.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of any of Sections 1, 2, 3, 4, 5, 6 and 21, or any defined term (as
it is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, reduce the
amount or extend the time of any prepayment or payment of principal of, or
reduce the rate or extend the time of payment or adversely change (from the
perspective of the holders of the Notes) the method of computation of interest
or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the
principal amount of the Notes the holders of which are required to consent to
any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b),
11(g), 11(h), 12, 17 and 20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a
decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of each
amendment, waiver or consent effected pursuant to the provisions of
this Section 17 to each holder of outstanding Notes promptly following
the date on which it is executed and
56
<PAGE> 62
delivered by, or receives the consent or approval of, the requisite
holders of Notes.
(b) Payment. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any
of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same
terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement (including the
exhibits and schedules hereto) as it may from time to time be amended or
supplemented.
17.4 Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
57
<PAGE> 63
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), (b) by a recognized overnight delivery service (with charges
prepaid) or (c) by hand delivery. Any such notice must be sent or delivered:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company
in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of its Treasurer,
telecopier: (914) 925-4498, with a copy to the Company's General
Counsel, telecopier: (914) 925-4498, or at such other address or
telecopier as the Company shall have specified to the holder of each
Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the
58
<PAGE> 64
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that
(a) was publicly known or otherwise became known to you from a
Person other than the Company, any Subsidiary, or another holder of
Notes prior to the time of such disclosure,
(b) subsequently becomes publicly known through no act or
omission by you or any Person acting on your behalf,
(c) otherwise becomes known to you other than through
disclosure by the Company, any Subsidiary or another holder of Notes,
or
(d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to:
(i) your directors, officers, trustees, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your
Notes),
(ii) your financial advisors and other professional advisors,
(iii) any other holder of any Note,
59
<PAGE> 65
(iv) any Institutional Investor to which you sell or offer to
sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing for the benefit of the Company prior
to its receipt of such Confidential Information to be bound by the
provisions of this Section 20),
(v) any Person from which you offer to purchase any Security
of the Company (if such Person has agreed in writing for the benefit of
the Company prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having
jurisdiction over you, to the extent required by any such authority,
(vii) the National Association of Insurance Commissioners or
any similar organization, or any nationally recognized rating agency
that requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure
may be necessary or appropriate
(A) to effect compliance with any law, rule,
regulation or order applicable to you,
(B) in response to any subpoena or other legal
process,
(C) in connection with any litigation to which you
are a party, or
(D) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies
under your Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder
60
<PAGE> 66
that is a party to this Agreement or its nominee), such holder will enter into
an agreement with the Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and permitted assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
22.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
61
<PAGE> 67
22.3 Generally Accepted Accounting Principles.
You acknowledge that the covenants of the Company set forth in Section
10, and the definitions of terms used in such Section and set forth in Schedule
B hereto, have been negotiated and agreed upon on the basis of the application
to the financial statements of the Company and the Subsidiaries of GAAP as in
effect on the date of this Agreement. Accordingly, you agree that, in the event
of a change in GAAP that would affect in any material respect the ability of the
Company to comply with any of such covenants, you will negotiate in good faith
with the Company for a period of ninety (90) days, ending not later than the
ninetieth (90th) day after the effectiveness of any such change in GAAP, with a
view to agreement upon appropriate revisions to any such covenant to take into
account such change. During such ninety (90) day period, any Event of Default
which would result solely from such change in GAAP shall be deemed waived. Upon
the expiration of such ninety (90) day period, if no agreement between you and
the Company has been reached, such deemed waiver shall terminate and the
Company's compliance with the covenants in Section 10 shall be determined in
accordance with GAAP as in effect from time to time. You acknowledge that it is
not your present intention to charge a fee in connection with any such revisions
and the Company acknowledges that this statement of intention does not prohibit
you from charging a fee for any such revisions if you subsequently determine
that a fee would be appropriate.
22.4 Severability.
Any provision of this Agreement that 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, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.5 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to
62
<PAGE> 68
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
22.6 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.7 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
[Remainder of page intentionally blank. Next page is signature page.]
63
<PAGE> 69
If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.
Very truly yours,
HANDY & HARMAN
By /s/ Robert F. Burlinson
__________________________
Name: Robert F. Burlinson
Title: Vice President
and Treasurer
The foregoing is hereby
agreed to as of the
date thereof.
[Separately executed by each
of the following Purchasers]
NEW YORK LIFE INSURANCE COMPANY
By /s/ Lydia S. Sangree
_______________________________
Name: Lydia Sangree
Title: Director
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By: New York Life Insurance Company
By /s/ Lydia S. Sangree
_______________________________
Name: Lydia Sangree
Title: Director
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
on behalf of one or more separate accounts
By CIGNA Investments, Inc.
By /s/ Daniel E. Feder
_______________________________
Name: Daniel E. Feder
Title: Vice President
PACIFIC EMPLOYERS INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ Daniel E. Feder
_______________________________
Name: Daniel E. Feder
Title: Vice President
INA LIFE INSURANCE COMPANY OF NEW YORK
By CIGNA Investments, Inc.
By /s/ Daniel E. Feder
_______________________________
Name: Daniel E. Feder
Title: Vice President
LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By /s/ Daniel E. Feder
_______________________________
Name: Daniel E. Feder
Title: Vice President
ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
By /s/ Robert E. Whalen, II
_______________________________
Name: Robert E. Whalen, II
Title: Second Vice President
JEFFERSON-PILOT LIFE INSURANCE COMPANY
By /s/ Robert E. Whalen, II
_______________________________
Name: Robert E. Whalen, II
Title: Second Vice President
GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
By /s/ Thomas M. Donohue
_______________________________
Name: Thomas M. Donohue
Title: Vice President
FORT DEARBORN LIFE INSURANCE COMPANY
By GUARDIAN ASSET MANAGEMENT CORP.
By /s/ Thomas G. Sorell
_______________________________
Name: Thomas Sorell
Title: Managing Director
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ John G. Powles
_______________________________
Name: John G. Powles
Title: Vice President
Subsidiary & Affiliate Investments
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By /s/ John G. Powles
_______________________________
Name: John G. Powles
Title: Vice President
Subsidiary & Affiliate Investments
PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
By /s/ Michael S. Smith
_______________________________
Name: Michael S. Smith
Title: Second Vice President - Investments
AMERICAN BANKERS INSURANCE COMPANY
By /s/ Robert L. Kisiel
_______________________________
Name: Robert L. Kisiel
Title: Director of Investments
AMERICAN BANKERS LIFE ASSURANCE COMPANY
By /s/ Robert L. Kisiel
_______________________________
Name: Robert L. Kisiel
Title: Director of Investments
RGA REINSURANCE COMPANY
By: Conning Asset Management Company
By /s/ D. Koester
_______________________________
Name: Douglas R. Koester
Title: Senior Vice President
THE OHIO NATIONAL LIFE INSURANCE COMPANY
By /s/ B. Douglas Hundley
_______________________________
Name: B. Douglas Hundley
Title: Investment Officer
SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY
By /s/ Carol Robertson
_______________________________
Name: Carol Robertson, CFA
Title: Portfolio Manager, Fixed Income
PROVIDENT MUTUAL LIFE INSURANCE COMPANY
By /s/ James D. Kestner
_______________________________
Name: James D. Kestner
Title: Vice President
PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
By /s/ James D. Kestner
_______________________________
Name: James D. Kestner
Title: Vice President
MID-WESTERN NATIONAL LIFE INSURANCE COMPANY
By /s/ Patrick McLaughlin
_______________________________
Patrick J. McLaughlin, Managing Director
Emerald Capital Group, Ltd.
Investment Advisor to
Mid-Western National Life Insurance Company
MERRILL LYNCH LIFE INSURANCE COMPANY
By /s/ David M. Dunford
_______________________________
Name: David M. Dunford
Title: Senior Vice President
MODERN WOODMEN OF AMERICA
By /s/ G. E. Stoefen
_______________________________
Name: G. E. Stoefen
Title: Director, Treasurer & Investment Manager
NATIONAL GUARDIAN LIFE INSURANCE COMPANY
By /s/ R. A. Mucci
_______________________________
Name: R. A. Mucci
Title: AVP Investments
PAN-AMERICAN LIFE INSURANCE COMPANY
By /s/ F. A. Stone
_______________________________
Name: F. Anderson Stone
Title: Vice President
Corporate Securities
<PAGE> 70
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NEW YORK LIFE INSURANCE COMPANY
- -------------- -------------------------------
<S> <C>
Name in Which Note is Registered New York Life Insurance Company
Note Registration Number; Principal R-1; $15,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Morgan Guaranty Trust Company of New York
Account Information New York, New York 10015
ABA No.: 021-000-238
For the Account of: New York Life Insurance Company
Account No.: 810-00-000
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to New York Life Insurance Company
Payments 51 Madison Avenue
New York, New York 10010-1603
Attention: Treasury Department
Securities Income Section
Room 209
Fax #: (212) 447-4160
Address for all other Notices New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Investment Department
Private Finance Group
Room 206
Fax #: (212) 447-4122
with a copy of any notice regarding
defaults or Events of Default under the
operative documents to:
Office of General Counsel
Investment Section, Room 1104
Fax #: (212) 576-8340
</TABLE>
Schedule A-1
<PAGE> 71
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NEW YORK LIFE INSURANCE COMPANY
- -------------- -------------------------------
<S> <C>
Other Instructions NEW YORK LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 13-5582869
</TABLE>
Schedule A-2
<PAGE> 72
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
- -------------- -----------------------------------------------
<S> <C>
Name in Which Note is Registered New York Life Insurance and Annuity Corporation
Note Registration Number; Principal R-2; $10,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Chase Manhattan Bank
Account Information New York, New York
ABA No.: 021-000-021
For the Account of: New York Life Insurance and Annuity Corporation
Account No.: 008-0-57001
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to New York Life Insurance and Annuity Corporation
Payments c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Treasury Department
Securities Income Section
Room 209
Fax #: (212) 447-4160
</TABLE>
Schedule A-3
<PAGE> 73
SCHEDULE A
INFORMATION RELATING TO PURCHASES
<TABLE>
<CAPTION>
Purchaser Name NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
- -------------- -----------------------------------------------
<S> <C>
Address for all other Notices New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Investment Department
Private Finance Group
Room 206
Fax #: (212) 447-4122
with a copy of any notice regarding
defaults or Events of Default under the
operative documents to:
Office of General Counsel
Investment Section, Room 1104
Fax #: (212) 576-8340
Other Instructions NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By: New York Life Insurance Company
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 13-3044743
</TABLE>
Schedule A-4
<PAGE> 74
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
on behalf of one or more separate accounts
- -------------- -------------------------------------------
<S> <C>
Name in Which Notes are CIG & Co.
Registered
Note Registration Numbers; R-3; $3,500,000
Principal Amounts R-4; $3,000,000
Payment on Account of Notes
Federal Funds Wire Transfer
Method
Chase NYC/CTR/
Account Information BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
OBI=[name of company; description of
security; interest rate, maturity date;
PPN; due date and application (as among
principal, premium and interest of the
payment being made; contact name and
phone.]
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
</TABLE>
Schedule A-5
<PAGE> 75
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
on behalf of one or more separate accounts
- -------------- -------------------------------------------
<S> <C>
Address for Notices Related to CIG & Co.
Payments c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S307
Operations Group
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: 860-726-7203
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
Address for all other Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S307
Daniel E. Feder, Vice President
900 Cottage Grove Road
Hartford, CT 06152-2307
FAX: 860-726-7203
Other Instructions CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on
behalf of one or more separate accounts
By CIGNA Investments, Inc.
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 13-3574027
</TABLE>
Schedule A-6
<PAGE> 76
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PACIFIC EMPLOYERS INSURANCE COMPANY
- -------------- -----------------------------------
<S> <C>
Name in Which Note is Registered CIG & Co.
Note Registration Number; Principal R-5; $3,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Chase NYC/CTR/
Account Information BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
OBI=[name of company; description of
security; interest rate, maturity date;
PPN; due date and application (as among
principal, premium and interest of the
payment being made; contact name and
phone.]
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to CIG & Co.
Payments c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S307
Operations Group
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: 860-726-7203
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
</TABLE>
Schedule A-7
<PAGE> 77
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PACIFIC EMPLOYERS INSURANCE COMPANY
- -------------- -----------------------------------
<S> <C>
Address for all other Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
Daniel E. Feder, Vice President
900 Cottage Grove Road
Hartford, CT 06152-2307
FAX: 860-726-7203
Other Instructions PACIFIC EMPLOYERS INSURANCE
COMPANY By CIGNA Investments, Inc.
By_______________________
Name:
Title:
Instructions re Delivery of Notes Law Department of Purchaser
Tax Identification Number 13-3574027
</TABLE>
Schedule A-8
<PAGE> 78
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name INA LIFE INSURANCE COMPANY OF NEW YORK
- -------------- --------------------------------------
<S> <C>
Name in Which Note is Registered CIG & Co.
Note Registration Number; Principal R-6; $3,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Chase NYC/CTR/
Account Information BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
OBI=[name of company; description of
security; interest rate, maturity date;
PPN; due date and application (as among
principal, premium and interest of the
payment being made; contact name and
phone.]
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to CIG & Co.
Payments c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S307
Operations Group
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: 860-726-7203
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
</TABLE>
Schedule A-9
<PAGE> 79
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name INA LIFE INSURANCE COMPANY OF NEW YORK
- -------------- --------------------------------------
<S> <C>
Address for all other
Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
Daniel E. Feder, Vice President
900 Cottage Grove Road
Hartford, CT 06152-2307
FAX: 860-726-7203
Other Instructions INA LIFE INSURANCE COMPANY
OF NEW YORK By CIGNA Investments, Inc.
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 13-3574027
</TABLE>
Schedule A-10
<PAGE> 80
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name LIFE INSURANCE COMPANY OF NORTH AMERICA
- -------------- ---------------------------------------
<S> <C>
Name in Which Note is
Registered CIG & Co.
Note Registration Number; Principal R-7; $3,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Chase NYC/CTR/
Account Information BNF=CIGNA Private Placements/AC=9009001802
ABA# 021000021
OBI=[name of company; description of
security; interest rate, maturity date;
PPN; due date and application (as among
principal, premium and interest of the
payment being made; contact name and
phone.]
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
</TABLE>
Schedule A-11
<PAGE> 81
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name LIFE INSURANCE COMPANY OF NORTH AMERICA
- -------------- ---------------------------------------
<S> <C>
Address for Notices Related to CIG & Co.
Payments c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, CT 06152-2309
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities - S307
Operations Group
900 Cottage Grove Road
Hartford, CT 06152-2307
Fax: 860-726-7203
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P.O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
FAX: 212-552-3107/1005
Address for all other
Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
Daniel E. Feder, Vice President
900 Cottage Grove Road
Hartford, CT 06152-2307
FAX: 860-726-7203
Other Instructions LIFE INSURANCE COMPANY OF NORTH AMERICA
By CIGNA Investments, Inc.
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 13-3574027
</TABLE>
Schedule A-12
<PAGE> 82
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
- -------------- ----------------------------------------------------
<S> <C>
Name in Which Note is Registered Alexander Hamilton Life Insurance Company of America
Note Registration Number; Principal R-8; $6,500,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Alexander Hamilton Life Insurance Company of America
Account Information c/o The Bank of New York
ABA #021 000 018
BNF: IOC566
Attention: P&I Department
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Alexander Hamilton Life Insurance Company of America
Payments c/o The Bank of New York
Attention: P&I Department
P.O. Box 19266
Newark, New Jersey 07195
Address for all other Notices Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, NC 27420
Attention: Securities Administration - 3630
Fax: 910/691-3025
For overnight delivery:
100 North Greene Street
Greensboro, NC 27401
Other Instructions ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF
AMERICA
By_______________________
Name:
Title:
</TABLE>
Schedule A-13
<PAGE> 83
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
- -------------- ----------------------------------------------------
<S> <C>
Instructions re Bank of New York
Delivery of Notes One Wall Street
3rd Floor, Window A
For Alexander Hamilton Life Acct. 186101
New York, NY 10286
with a copy to:
Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, NC 27420
Attention: Securities Administration - 3630
Tax Identification Number 56-1311063
</TABLE>
Schedule A-14
<PAGE> 84
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name JEFFERSON-PILOT LIFE INSURANCE COMPANY
- -------------- --------------------------------------
<S> <C>
Name in Which Note is Registered Jefferson-Pilot Life Insurance Company
Note Registration Number; Principal R-9; $6,500,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Jefferson-Pilot Life Insurance Company
Account Information c/o The Bank of New York
ABA #021 000 018
BNF: IOC566
Attention: P&I Department
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Jefferson-Pilot Life Insurance Company
Payments c/o The Bank of New York
Attention: P&I Department
P.O. Box 19266
Newark, New Jersey 07195
Address for all other Notices Jefferson-Pilot Life Insurance Company
P.O. Box 21008
Greensboro, NC 27420
Attention: Securities Administration - 3630
Fax: 910/691-3025
For overnight delivery:
100 North Greene Street
Greensboro, NC 27401
Other Instructions JEFFERSON-PILOT LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
</TABLE>
Schedule A-15
<PAGE> 85
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name JEFFERSON-PILOT LIFE INSURANCE COMPANY
- -------------- --------------------------------------
<S> <C>
Instructions re Bank of New York
Delivery of Notes One Wall Street
3rd Floor, Window A
For Jefferson-Pilot Life Acct. 186100
New York, NY 10286
with a copy to:
Jefferson-Pilot Life Insurance Company
P.O. Box 21008
Greensboro, NC 27420
Attention: Securities Administration - 3630
Tax Identification Number 56-0359860
</TABLE>
Schedule A-16
<PAGE> 86
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
- -------------- ----------------------------------------------
<S> <C>
Name in Which Note
is Registered CUDD & CO.
Note Registration Number; Principal R-10; $8,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
The Chase Manhattan Bank
Account Information FED ABA #021000021
CHASE/NYC/CTR/BNF
A/C 900-9-000200
Reference The Guardian A/C #G05978
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to The Guardian Life Insurance Company of America
Payments Attn: Investment Account M-IA
201 Park Avenue South
New York, NY 10003
Fax (212) 677-9023
Address for all other Notices The Guardian Life Insurance Company of America
201 Park Avenue South
New York, NY 10003
Attn: Thomas Donohue
Investment Department 7B
FAX # (212) 777-6715
Other Instructions GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
By_______________________
Name:
Title:
</TABLE>
Schedule A-17
<PAGE> 87
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
- -------------- ----------------------------------------------
<S> <C>
Instructions re Chase Manhattan Bank
Delivery of Notes 4 New York Plaza
Ground Floor/Receive Window
New York, NY 10081
Reference The Guardian Account #G05978
Tax Identification Number 13-6022143
</TABLE>
Schedule A-18
<PAGE> 88
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name FORT DEARBORN LIFE INSURANCE COMPANY
- -------------- ------------------------------------
<S> <C>
Name in Which Note is Registered Var & Co.
Note Registration Number; Principal R-11; $2,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
First Bank Minneapolis
Account Information ABA #091000022
For further credit to First Trust Illinois
Account 1-801-21167365
Wire Clearing Account 47300098
Att: A/C #78693302 Fort Dearborn Life
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Fort Dearborn Life Insurance Company
Payments c/o Guardian Asset Management Corp.
Fixed Income Securities
201 Park Avenue South - 8B
New York, NY 10003
Address for all other Notices Fort Dearborn Life Insurance Company
c/o Guardian Asset Management Corp.
Fixed Income Securities
201 Park Avenue South - 8B
New York, NY 10003
Other Instructions FORT DEARBORN LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re First Trust N.A.
Delivery of Notes Attn: Physical Unit
Asset Settlement Services
Fourth Floor
180 East 5th Street
St. Paul, MN 55101
Tax Identification Number 41-6026203
</TABLE>
Schedule A-19
<PAGE> 89
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Schedule A-20
<PAGE> 90
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NATIONWIDE LIFE INSURANCE COMPANY
- -------------- ---------------------------------
<S> <C>
Name in Which Note is Registered Nationwide Life Insurance Company
Note Registration Number; Principal R-12; $7,500,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
The Bank of New York
Account Information ABA No.: 021-000-018
BNF: IOC566
For the Account of: Nationwide Life Insurance Company
Attn: P&I Department
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Nationwide Life Insurance Company
Payments c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
With a copy to:
Nationwide Life Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Address for all other Notices Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
Other Instructions NATIONWIDE LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
</TABLE>
Schedule A-21
<PAGE> 91
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NATIONWIDE LIFE INSURANCE COMPANY
- -------------- ---------------------------------
<S> <C>
Instructions re The Bank of New York
Delivery of Notes One Wall Street
3rd Floor - Window A
New York, New York 10286
F/A/O Nationwide Life Insurance Company Account No.: 267829
Tax Identification Number 31-4156830
</TABLE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
- -------------- ---------------------------------------------
<S> <C>
Name in Which Note is Registered Nationwide Life and Annuity Insurance Company
Note Registration Number; Principal R-13; $2,500,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
The Bank of New York
Account Information ABA No.: 021-000-018
BNF: IOC566
For the Account of: Nationwide Life and Annuity Insurance Company
Attn: P&I Department
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Nationwide Life and Annuity Insurance Company
Payments c/o The Bank of New York
P.O. Box 19266
Attn: P&I Department
Newark, NJ 07195
With a copy to:
Nationwide Life Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
</TABLE>
Schedule A-22
<PAGE> 92
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
- -------------- ---------------------------------------------
<S> <C>
Address for all other Notices Nationwide Life and Annuity Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities
Other Instructions NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re The Bank of New York
Delivery of Notes One Wall Street
3rd Floor - Window A
New York, New York 10286
F/A/O Nationwide Life and Annuity Insurance
Company Account No.: 267961
Tax Identification Number 31-1000740
</TABLE>
Schedule A-23
<PAGE> 93
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
- -------------- -------------------------------------------
<S> <C>
Name in Which Note is Registered Kinsat
Note Registration Number; Principal R-14; $10,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Bankers -NYC
Account Information ABA No.: 021-001-033
Account No.: 99-911-145
For Further Credit to: Providian Life and Health Insurance Company
Account No. 099159
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Attn: Securities Processing - 11th Floor
Payments Providian Life and Health Insurance Company
c/o Providian Capital Management
400 West Market Street
Louisville, KY 40202
Address for all other Notices Attn: Securities Department - 10th Floor
Providian Life and Health Insurance Company
c/o Providian Capital Management
400 West Market Street
Louisville, KY 40202
Fax: (502) 560-2030
Other Instructions PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
By_______________________
Name:
Title:
</TABLE>
Schedule A-24
<PAGE> 94
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY
- -------------- -------------------------------------------
<S> <C>
Instructions re Bankers Trust Company
Delivery of Notes 16 Wall Street, 4th Floor
New York, NY 10005
Attn: Richard McCormick
for the account of
Providian Life and Health Insurance Company,
Account No. 099159
Tax Identification Number 13-2839318 (Kinsat)
</TABLE>
Schedule A-25
<PAGE> 95
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name AMERICAN BANKERS INSURANCE COMPANY
- -------------- ----------------------------------
<S> <C>
Name in Which Note is Registered American Bankers Insurance Company
Note Registration Number; Principal R-15; $1,500,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
CHASE NY/GEOCUST
Account Information ABA #021-000-021
Account #N 5472904
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to American Bankers Insurance Company
Payments Attn: Investments Dept.
P.O. Box 979004
Miami, FL 33197-9004
Address for all other Notices American Bankers Insurance Company
Attn: Investments Dept.
P.O. Box 979004
Miami, FL 33197-9004
Other Instructions AMERICAN BANKERS INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Chase Manhattan Bank
Delivery of Notes 4 New York Plaza
New York, NY 10004
(Ground Floor/Receive Window)
Euroclear Number: 94684
Tax Identification Number 59-0593886
</TABLE>
Schedule A-26
<PAGE> 96
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name AMERICAN BANKERS LIFE ASSURANCE COMPANY
- -------------- ---------------------------------------
<S> <C>
Name in Which Note is Registered American Bankers Life Assurance Company
Note Registration Number; Principal R-16; $5,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
CHASE NY/GEOCUST
Account Information ABA #021-000-021
Account #N 5472808
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to American Bankers Life Assurance Company
Payments Attn: Investments Dept.
P.O. Box 979004
Miami, FL 33197-9004
Address for all other Notices American Bankers Insurance Company
Attn: Investments Dept.
P.O. Box 979004
Miami, FL 33197-9004
Other Instructions AMERICAN BANKERS LIFE ASSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Chase Manhattan Bank
Delivery of Notes 4 New York Plaza
New York, NY 10004
(Ground Floor/Receive Window)
Account #N 5472808
Euroclear Number 94684
Tax Identification Number 59-0676017
</TABLE>
Schedule A-27
<PAGE> 97
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name RGA REINSURANCE COMPANY
- -------------- -----------------------
<S> <C>
Name in Which Note is Registered RGA Reinsurance Company
Note Registration Number; Principal R-17; $6,500,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
General American Life Insurance Company
Account Information c/o The Bank of New York
ABA #021000018 BNF: IOC566
Attn: P&I Department
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Conning Asset Management
Payments Attn: Investment Accounting
P.O. Box 418
St. Louis, MO 63166
and
General American Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Newark, NJ 07195
Address for all other Notices Conning Asset Management
Attn: Securities Division
P.O. Box 396
St. Louis, MO 63166
and
General American Life Insurance Company
c/o The Bank of New York
P.O. Box 19266
Newark, NJ 07195
Other Instructions RGA Reinsurance Company
By: Conning Asset Management Company
By: __________________________________
Name:
Title:
</TABLE>
Schedule A-28
<PAGE> 98
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name RGA REINSURANCE COMPANY
- -------------- -----------------------
<S> <C>
Instructions re The Bank of New York
Delivery of Notes Attn: Free Receive
One Wall Street, 5th Floor
New York, NY 10004
For the account of
RGA Reinsurance Company
Account #127709
If problem, call
Lucille Del Terzo at The Bank of New York
(212) 495-2404
Tax Identification Number 43-1235868
</TABLE>
Schedule A-29
<PAGE> 99
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name THE OHIO NATIONAL LIFE INSURANCE COMPANY
- -------------- ----------------------------------------
<S> <C>
Name in Which Note is Registered The Ohio National Life Insurance Company
Note Registration Number; Principal R-18; $6,500,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Star Bank, NA
Account Information ABA #042-000013
425 Walnut Street
Cincinnati, Ohio 45202
For credit to The Ohio National Life Insurance Company
Account #910-275-7
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Ohio National Financial Services
Payments One Financial Way
Cincinnati, Ohio 45242
Address for all other Notices Ohio National Financial Services
One Financial Way
Cincinnati, Ohio 45242
Other Instructions THE OHIO NATIONAL LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 31-0397080
</TABLE>
Schedule A-30
<PAGE> 100
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY
- -------------- -------------------------------------------
<S> <C>
Name in Which Note is Registered Southern Farm Bureau Life Insurance Company
Note Registration Number; Principal R-19; $5,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Wachovia Bank of North Carolina
Account Information 301 North Main Street
Winston-Salem, NC 27150-1013
ABA #053100494
For further credit to: Account #8730-007153
Southern Farm Bureau Life Insurance Company
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Southern Farm Bureau Life Insurance Company
Payments 1401 Livingston Lane
Jackson, MS 39213
Attn: Carol Robertson, CFA
Tel: 601-981-7422 ext. 506
Fax: 601-981-3605
Address for all other Notices Southern Farm Bureau Life Insurance Company
P.O. Box 78
Jackson, MS 39205
Attn: Investment Department
or by overnight delivery to:
1401 Livingston Lane
Jackson, MS 39213
Other Instructions SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
</TABLE>
Schedule A-31
<PAGE> 101
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY
- -------------- -------------------------------------------
<S> <C>
Tax Identification Number 64-0283583
</TABLE>
Schedule A-32
<PAGE> 102
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PROVIDENT MUTUAL LIFE INSURANCE COMPANY
- -------------- ---------------------------------------
<S> <C>
Name in Which Note is Registered Provident Mutual Life Insurance Company
Note Registration Number; Principal R-20; $2,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
PNC Bank
Account Information Broad and Chestnut Streets
Philadelphia, PA 19101
ABA No.: 031-000-053
For the Account of: Provident Mutual Life Insurance Company
Account No.: 85-4084-2176
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to 1205 Westlakes Drive
Payments Berwyn, PA 19312-2405
Attn: Treasurer
Address for all other Notices Provident Mutual Life Insurance Company
P.O. Box 1717
Valley Forge, PA 19482-1717
Attention: Securities Investment Department
Fax No.: (610) 407-1322
or if by overnight courier to:
1205 Westlakes Drive
Berwyn, PA 19312-2405
Attn: Treasurer
Other Instructions PROVIDENT MUTUAL LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Law Department of Purchaser
Delivery of Notes
</TABLE>
Schedule A-33
<PAGE> 103
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PROVIDENT MUTUAL LIFE INSURANCE COMPANY
- -------------- ---------------------------------------
<S> <C>
Tax Identification Number 23-099-045-0
</TABLE>
Schedule A-34
<PAGE> 104
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
- -------------- ---------------------------------------------------
<S> <C>
Name in Which Note is Registered Providentmutual Life and Annuity Company of America
Note Registration Number; Principal R-21; $2,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
PNC Bank
Account Information Broad and Chestnut Streets
Philadelphia, PA 19101
ABA No.: 031-000-053
For the Account of: Providentmutual Life and Annuity
Company of America
Account No.: 85-5075-4911
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to 1205 Westlakes Drive
Payments Berwyn, PA 19312-2405
Attn: Treasurer
Address for all other Notices Providentmutual Life and Annuity Company of America
P.O. Box 1717
Valley Forge, PA 19482-1717
Attention: Securities Investment Department
Fax No.: (610) 407-1322
or if by overnight courier to:
1205 Westlakes Drive
Berwyn, PA 19312-2405
Attn: Treasurer
Other Instructions PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
By_______________________
Name:
Title:
</TABLE>
Schedule A-35
<PAGE> 105
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
- -------------- ---------------------------------------------------
<S> <C>
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 23-161-908-2
</TABLE>
Schedule A-36
<PAGE> 106
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name MID-WESTERN NATIONAL LIFE INSURANCE COMPANY
- -------------- -------------------------------------------
<S> <C>
Name in Which Note is Registered MAC & Co
Note Registration Number; Principal R-22; $3,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Federal Reserve Bank of Boston
Account Information ABA # -- 011001234/BOS SAFE DEP
DDA # -- 048771-CC1167
For account of: Mid-Western National Life Insurance Company
Account # -- 312V012
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Mid-Western National Life Insurance Company
Payments c/o Emerald Capital Group, Ltd.
100 Chetwynd Drive, Suite 202
Rosemont, PA 19010
(610) 527-0350
(610) 527-0352 -- fax
Address for all other Notices Mid-Western National Life Insurance Company
c/o Emerald Capital Group, Ltd.
100 Chetwynd Drive, Suite 202
Rosemont, PA 19010
(610) 527-0350
(610) 527-0352 -- fax
Other Instructions MID-WESTERN NATIONAL LIFE INSURANCE COMPANY
By_________________________________________
Patrick J. McLaughlin, Managing Director
Emerald Capital Group, Ltd.
Investment Advisor to
Mid-Western National Life Insurance Company
</TABLE>
Schedule A-37
<PAGE> 107
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name MID-WESTERN NATIONAL LIFE INSURANCE COMPANY
- -------------- -------------------------------------------
<S> <C>
Instructions re Mellon Securities Trust Company
Delivery of Notes 120 Broadway, 13th Floor
New York, New York 10271
For account of: Mid-Western National Life Insurance Company
Account # -- 312V02
Tax Identification Number 62-0724538
</TABLE>
Schedule A-38
<PAGE> 108
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name MERRILL LYNCH LIFE INSURANCE COMPANY
- -------------- ------------------------------------
<S> <C>
Name in Which Note is Registered Salkeld & Co.
Note Registration Number; Principal R-23; $3,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Private Placements
Account Information Bankers Trust Company
ABA #02101033
Account #99-011-145
FFC: MLLIFE, a/c #91469
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Merrill Lynch Life Insurance Company
Payments P.O. Box 9011
Princeton, NJ 08543
Attention: Linda Thatch 2-I
Supervisor
Tel: (609) 282-3625 Fax: (609) 282-3703
Address for all other Notices Merrill Lynch Asset Management
P.O. Box 9011
Princeton, NJ 08543-9011
Attention: Anna Chin
Vice President
Tel: (609) 282-1297 Fax: (609) 282-2586
or if by overnight courier to:
Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, NJ 08536
Attention: Anna Chin
Vice President
Other Instructions MERRILL LYNCH LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
</TABLE>
Schedule A-39
<PAGE> 109
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name MERRILL LYNCH LIFE INSURANCE COMPANY
- -------------- ------------------------------------
<S> <C>
Instructions re Law Department of Purchaser
Delivery of Notes
Tax Identification Number 91-132-5756
</TABLE>
<TABLE>
<CAPTION>
Purchaser Name MODERN WOODMEN OF AMERICA
- -------------- -------------------------
<S> <C>
Name in Which Note is Registered Modern Woodmen of America
Note Registration Number; Principal R-24; $3,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Harris Trust & Savings Bank
Account Information 111 West Monroe Street
Chicago, IL 60690
ABA No.: 071-000-288
For the Account of: Modern Woodmen of America
Account No.: 347-904-5
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Modern Woodmen of America
Payments 1701 1st Avenue
Rock Island, IL 61201
Attention: Investment Department
Address for all other Notices Modern Woodmen of America
1701 1st Avenue
Rock, Island IL 61201
Attention: Investment Department
Other Instructions MODERN WOODMEN OF AMERICA
By_______________________
Name:
Title:
Instructions re Modern Woodmen of America
Delivery of Notes Attn: Investment Department
</TABLE>
Schedule A-40
<PAGE> 110
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name MODERN WOODMEN OF AMERICA
- -------------- -------------------------
<S> <C>
Tax Identification Number 36-1493430
</TABLE>
Schedule A-41
<PAGE> 111
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NATIONAL GUARDIAN LIFE INSURANCE COMPANY
- -------------- ----------------------------------------
<S> <C>
Name in Which Note is Registered National Guardian Life Insurance Company
Note Registration Number; Principal R-25; $2,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
Firstar Bank Madison
Account Information PO Box 7900
Madison, WI 53707
ABA No.: 075900465
For the Account of: National Guardian Life Insurance Company
Account No.: 311-700-397
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Attention: Investment Department
Payments National Guardian Life Insurance Company
2 East Gilman Street PO Box 1191
Madison, WI 53701-1191
Address for all other Notices Attention: Investment Department
National Guardian Life Insurance Company
2 East Gilman Street PO Box 1191
Madison, WI 53701-1191
Other Instructions NATIONAL GUARDIAN LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re National Guardian Life Insurance
Delivery of Notes 2 East Gilman Street
Madison, WI 53703-1191
Attention: Robert Mucci
</TABLE>
Schedule A-42
<PAGE> 112
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name NATIONAL GUARDIAN LIFE INSURANCE COMPANY
- -------------- ----------------------------------------
<S> <C>
Tax Identification Number 39-049-3780
</TABLE>
Schedule A-43
<PAGE> 113
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PAN-AMERICAN LIFE INSURANCE COMPANY
- -------------- -----------------------------------
<S> <C>
Name in Which Note is Registered PAN-AMERICAN LIFE INSURANCE COMPANY
Note Registration Number; Principal R-26; $2,000,000
Amount
Payment on Account of Note
Federal Funds Wire Transfer
Method
First National Bank of Commerce
Account Information 210 Baronne Street
New Orleans, LA 70112
ABA No.: 065000029
For the Account of: Pan-American Life Insurance Company
Account No.: 1100-29496
Accompanying Information Name of Company: HANDY & HARMAN
Description of
Security: 7.31% Senior Notes due April 30, 2004
PPN: 410306 D* 2
Due Date and Application (as among
principal, Make-Whole Amount and
interest) of the payment being made:
Address for Notices Related to Pan-American Life Insurance Company
Payments Attn: Bond & Stock Accounting
28th Floor
601 Poydras Street
New Orleans, LA 70130
Fax (504) 566-3459
Address for all other Notices Pan-American Life Insurance Company
Attn: Investment Department
28th Floor
601 Poydras Street
New Orleans, LA 70130
Other Instructions PAN-AMERICAN LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Pan-American Life Insurance Company
Delivery of Notes Attn: Marylyn Andree
28th Floor
601 Poydras Street
New Orleans, LA 70130
</TABLE>
Schedule A-44
<PAGE> 114
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
<TABLE>
<CAPTION>
Purchaser Name PAN-AMERICAN LIFE INSURANCE COMPANY
- -------------- -----------------------------------
<S> <C>
Tax Identification Number 72-0281240
</TABLE>
Schedule A-45
<PAGE> 115
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Adjusted Debt" means, at any time, and with respect to any Person, the
sum (without duplication) of
(a) all Debt of such Person plus
(b) the aggregate notional amount at such time of all Future
Payables Transactions of such Person net of the amount of any cash
pledged to secure the payment obligations in respect of Future Payables
Transactions, minus
(c) an amount equal to 70% of the Fair Market Value of Owned
Precious Metal Inventory of such Person at such time, so long as none
of such Owned Precious Metal Inventory is subject to any Lien in favor
of any Person other than the Company or a Restricted Subsidiary.
"Affiliate" means, at any time, and with respect to any Person,
(a) any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by, or is
under common Control with, such first Person, and
(b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of
the Company or any Restricted Subsidiary or any corporation of which
the Company and the Restricted Subsidiaries beneficially own or hold,
in the aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting Securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the Company.
Schedule B-1
<PAGE> 116
"Agreement, this" is defined in Section 17.3.
"Applicable Four Quarter Period" means, as of any time, the period of
four complete consecutive fiscal quarters of the Company then most recently
ended as to which either or both of the following conditions have been met: (i)
45 days have elapsed since the end of such period and (ii) the holders of the
Notes have received the financial statements required to be delivered to them by
Section 7.1(a) or Section 7.1(b), as the case may be, with respect to the last
fiscal quarter of such period.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the
Company or another Restricted Subsidiary; and
(ii) Transfer from the Company to a Restricted
Subsidiary;
so long as immediately before and immediately after the consummation of
any such Transfer and after giving effect thereto, no Default or Event
of Default exists;
(b) any Transfer (including, without limitation, the Transfer
of Precious Metals) made in the ordinary course of business;
(c) any Transfer of Owned Precious Metal Inventory by the
Company or any Restricted Subsidiary in exchange for consideration
having a Fair Market Value at least equal to that of the Owned Precious
Metal Inventory being Transferred;
(d) any Transfer of Precious Metals by the Company or any
Restricted Subsidiary in connection with a Future Payables Transaction
involving the same quantity of Precious Metals so Transferred;
(e) any Transfer of Property if, as part of the same
transaction or series of transactions, the Company or any Restricted
Subsidiary shall enter into a Capital Lease (as lessee) with respect to
such Property or Property it intends to use for the same purposes;
Schedule B-2
<PAGE> 117
(f) the Singapore Joint Venture Asset Disposition; and
(g) the Transfer of Subsidiary Stock of any Unrestricted
Subsidiary.
"Singapore Joint Venture Asset Disposition" means the Transfer, or
series of related Transfers, of all or substantially all of the Company's equity
interest in Handy & Harman Manufacturing (Singapore) Pte. Ltd., or all or
substantially all of the assets thereof, but only in respect of the Company's
direct or indirect portion of the Net Proceeds Amount attributable thereto that
does not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000) and the
entire amount of such portion of such Net Proceeds Amount is applied to a
Property Reinvestment Application (whether or not within 180 days before or
after such Transfer).
"Business Day" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City are required or authorized to be
closed.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a
Capital Lease, the principal portion of the obligation of such Person as the
lessee under such Capital Lease which would, in accordance with GAAP, appear as
a liability on a balance sheet of such Person.
"Capital Stock" means any class of capital stock, share capital or
similar equity interest of a Person.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" is defined in the introductory sentence of this Agreement.
"Confidential Information" is defined in Section 20.
Schedule B-3
<PAGE> 118
"Consignment Arrangement" means any financing arrangement by the
Company or any Restricted Subsidiary whereby the Company or such Restricted
Subsidiary acquires possession of Precious Metals from any other Person (other
than the Company or a Restricted Subsidiary), for use in its manufacturing
process, by way of consignment or lease (it being understood that, for purposes
of this Agreement, neither the Company nor any Restricted Subsidiary acquires
any ownership interest in such Precious Metals until such time as it purchases
such Precious Metals in accordance with the terms of such financing
arrangement). In no event shall Consignment Arrangements include any Precious
Metals of any customer of the Company or any Restricted Subsidiary.
"Consolidated Adjusted Cash Flow" means, for any period of four
complete consecutive fiscal quarters of the Company, the sum of
(a) Consolidated Net Income for such period, plus
(b) the amount of all (i) interest expense, (ii) depreciation,
amortization and other non-cash charges, (iii) income taxes, and (iv)
non-recurring charges, but only to the extent deducted in the
determination of Consolidated Net Income for such period, minus
(c) Non-Cash Income (except for Non-Cash Income arising from
the over-funding of pension plans as provided in Statement of Financial
Accounting Standards No. 87) but only to the extent included in the
determination of Consolidated Net Income for such period minus
(d) gains on sales of Owned Precious Metal Inventory (except
for any such gains on sales attributable to Owned Precious Metal
Inventory incorporated in products manufactured by the Company or any
Restricted Subsidiary).
Subject to the next succeeding sentence, Consolidated Adjusted Cash Flow, in
respect of any period of four complete consecutive fiscal quarters of the
Company, shall be determined on the basis that all acquisitions or dispositions
of Subsidiary Stock or other Property acquired or disposed of during such period
occurred on the first day of such period. In addition, as used in Sections 10.3,
10.5, 10.6, 10.7 and 10.10, Consolidated Adjusted Cash Flow with respect to the
Applicable Four Quarter Period referred to in each of such sections shall be
determined on the basis that all acquisitions
Schedule B-4
<PAGE> 119
or dispositions of Subsidiary Stock or other Property acquired or disposed of at
any time subsequent to the commencement of such period, and at or prior to the
time of determination referred to in each of such sections, occurred on the
first day of such period.
"Non-Cash Income," in respect of any period, means
(i) the income (or loss) of any Person (other than a
Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest, except to the extent
that any such income has been actually received by the Company
or such Restricted Subsidiary in the form of cash dividends or
similar cash distributions,
(ii) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve
was made out of income accrued during such period,
(iii) any gains resulting from any write-up of any
assets (but not any loss resulting from any write-down of any
assets),
(iv) any gain arising from the acquisition of any
Debt Security, or the extinguishment, under GAAP, of any Debt,
of the Company or any Restricted Subsidiary,
(v) any net income, net loss or gain or loss during
such period from (x) any change in accounting principles in
accordance with GAAP or (y) any prior period adjustments
resulting from any change in accounting principles in
accordance with GAAP, and
(vi) any deferred credit representing the excess of
equity in any Restricted Subsidiary at the date of acquisition
over the cost of investment in such Restricted Subsidiary.
It is understood that Non-Cash Income may be negative.
Schedule B-5
<PAGE> 120
"Consolidated Adjusted Debt" means, at any time, Adjusted Debt at such
time as determined for the Company and the Restricted Subsidiaries on a
consolidated basis, after eliminating all offsetting debits and credits between
the Company and the Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Company and the Restricted Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period, the
sum (without duplication) of (in each case, eliminating all offsetting debits
and credits between the Company and the Restricted Subsidiaries and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and the Restricted Subsidiaries in
accordance with GAAP),
(a) all interest (other than amortization of Debt expense) in
respect of Debt of the Company and the Restricted Subsidiaries
(including imputed interest on Capital Lease Obligations deducted in
determining Consolidated Net Income for such period) for such period as
determined in accordance with GAAP, together with all interest (other
than amortization of Debt expense) capitalized or deferred during such
period and not deducted in determining Consolidated Net Income for such
period; provided that interest on any Debt of the Company or the
Restricted Subsidiaries that accrues at a variable rate based on LIBOR
shall be determined on the basis that LIBOR does not exceed 6.5% per
annum, plus
(b) all debt discount amortized or required to be amortized in
the determination of Consolidated Net Income for such period, plus
(c) in a Future Payables Transaction, the amount by which the
purchase price of Precious Metal to be acquired on a future date
exceeds the price of the Owned Precious Metal Inventory sold in such
transaction, to the extent such excess is attributable to such period
(it being understood that such excess shall be attributed ratably to
each day in the period from the date of such Future Payables
Transaction to and including such future date).
"Consolidated Net Income" means, with reference to any period, the net
income (or loss) of the Company and the Restricted Subsidiaries for such period
(taken as a cumulative
Schedule B-6
<PAGE> 121
whole), as determined in accordance with GAAP, after eliminating all offsetting
debits and credits between the Company and the Restricted Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and the Restricted Subsidiaries
in accordance with GAAP; provided, however, that, as used in Section 10.8,
Consolidated Net Income shall be determined without taking into account 50% of
the gains or losses of the Company and the Restricted Subsidiaries arising from
any disposition of Precious Metals outside the ordinary course of their
business.
"Consolidated Net Worth" means, at any time,
(a) the total assets of the Company and the Restricted
Subsidiaries which would be shown as assets on a consolidated balance
sheet of the Company and the Restricted Subsidiaries as of such time
prepared in accordance with GAAP, after eliminating all amounts
properly attributable to minority interests, if any, in the stock and
surplus of Restricted Subsidiaries, minus
(b) the total liabilities of the Company and the Restricted
Subsidiaries which would be shown as liabilities on a consolidated
balance sheet of the Company and its Restricted Subsidiaries as of such
time prepared in accordance with GAAP;
provided, however, that the amount to be included in Consolidated Net Worth in
respect of the Capital Stock of Unrestricted Subsidiaries shall be calculated on
the equity method, and Consolidated Net Worth shall not be increased or
decreased by an amount in excess of $5,000,000 for the sum of the aggregate
amount of such Capital Stock and the aggregate principal amount of all Debt
owing to the Company and the Restricted Subsidiaries by all Unrestricted
Subsidiaries.
"Consolidated Rentals" means, with respect to any period, the aggregate
amount of rental and all other obligations required to be paid during such
period by the Company or any Restricted Subsidiary (a) as lessee under all
leases (other than Capital Leases) of Property or (b) as consignee or lessee
under any Consignment Arrangement (to the extent the rent or other obligations
thereunder are not included in Consolidated Interest Expense) (in each case,
eliminating all offsetting debits and credits between the Company and the
Restricted Subsidiaries and all other items required to be eliminated in
Schedule B-7
<PAGE> 122
the course of the preparation of consolidated financial statements of the
Company and the Restricted Subsidiaries in accordance with GAAP), excluding any
amount required to be paid by the lessee (whether or not therein designated as
rental or additional rental) on account of maintenance and repairs, insurance,
taxes, assessments, water rates, reimbursement of expenses, indemnities and
similar charges, provided that if, at the date of determination, any such rental
or other obligations (or portion thereof) are contingent or not otherwise
definitely determinable by the terms of the related lease or Consignment
Arrangement, the amount of such obligations (or such portion thereof) (i) shall
be assumed to be equal to the amount of such obligations for the period of 12
consecutive calendar months immediately preceding the date of determination or
(b) if the related lease or Consignment Arrangement was not in effect during
such preceding 12-month period, shall be the amount estimated by a Senior
Financial Officer of the Company on a reasonable basis and in good faith.
"Debt" means, with respect to any Person, without duplication,
(a) the principal amount of borrowed money that (subject to
the last sentence of this definition) appears on the balance sheet of
such Person as a liability in accordance with GAAP;
(b) the deferred purchase price of Property acquired by such
Person (including, without limitation, all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such Property) that (subject to the last sentence
of this definition) appears on the balance sheet of such Person as a
liability in accordance with GAAP;
(c) its Capital Lease Obligations;
(d) all liabilities for the principal amount of borrowed money
of any other Person that is secured by any Lien with respect to any
Property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of
a type described in any of paragraphs (a) through (d) hereof.
Schedule B-8
<PAGE> 123
In no event shall "Debt" include Consignment Arrangements, Future Payables
Transactions or accounts payable arising in the ordinary course of business of
the Company and the Restricted Subsidiaries.
Debt of any Person shall include all obligations of such Person of the character
described in paragraphs (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Debt Prepayment Application" means, with respect to any Transfer of
Property, the application by the Company or the Restricted Subsidiaries of cash
in an amount equal to all or any portion of the Net Proceeds Amount with respect
to such Transfer to pay Senior Debt or the obligations under any Future Payables
Transaction (other than Senior Debt owing to the Company, any of the Restricted
Subsidiaries or any Affiliate and Debt in respect of any revolving credit or
similar credit facility providing the Company or any of the Restricted
Subsidiaries with the right to obtain loans or other extensions of credit from
time to time, except to the extent that in connection with such payment of Debt
the availability of credit under such credit facility is permanently reduced by
an amount not less than the amount of such proceeds applied to the payment of
such Debt). In the course of making such application to the payment of Senior
Debt (but not any such application to the obligations under any Future Payables
Transaction) the Company shall offer to repurchase, at par, from each holder of
Notes the lesser of (x) the entire outstanding principal amount of such holder's
Notes or (y) a portion of such holder's Notes equal to the Noteholders' Share of
the Net Proceeds Amount multiplied by a fraction of which the numerator is the
outstanding principal amount of such holder's Notes and the denominator is the
aggregate outstanding principal amount of all Notes. Any such offer which is not
accepted within 30 days shall be deemed to have lapsed and the Company shall
forthwith apply any portion of the Net Proceeds Amount not applied to the
acquisition of Notes to the prepayment of other Senior Debt. "Noteholders' Share
of the Net Proceeds Amount" means, in respect of any Net Proceeds Amount to be
applied towards the repayment of Senior Debt, an amount equal to the result of
(I) such Net Proceeds Amount multiplied by (II) a fraction, of which the
numerator is the aggregate outstanding principal amount of all Notes and the
denominator is the aggregate outstanding principal amount of all Senior Debt
(including, without
Schedule B-9
<PAGE> 124
limitation, the Notes), in each case immediately prior to such prepayment.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is 1% per annum above
the rate of interest stated in clause (a) of the first paragraph of the Notes.
"Disposition Value" means, at any time, with respect to any Property
(a) in the case of Property that does not constitute
Subsidiary Stock, the net book value thereof, valued at the time of
such disposition in good faith by the Company, and
(b) in the case of Property that constitutes Subsidiary Stock,
an amount equal to that percentage of the net book value of the net
assets of the Restricted Subsidiary that issued such stock as is equal
to the percentage that the net book value of such Subsidiary Stock
represents of the net book value of all of the outstanding capital
stock of such Restricted Subsidiary (assuming, in making such
calculations, that all Securities convertible into such capital stock
are so converted and giving full effect to all transactions that would
occur or be required in connection with such conversion) determined at
the time of the disposition thereof, in good faith by the Company.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
Schedule B-10
<PAGE> 125
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" means, at any time and with respect to any
Property, the sale value of such Property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
For purposes of determining the Fair Market Value of any Precious Metals as of
any date of determination, the Company may base such value on the average of the
prices of such metal, as published by the Company (or, if not so published, by
the London P.M. Fix) on each day during the three month period ending on such
date of determination.
"Future Payables Transaction" means, as of any date, a financing
arrangement of the Company or any Restricted Subsidiary involving the sale of
Precious Metals actually owned by the Company as of such date and the
contemporaneous purchase, on a future payment and delivery basis, by the Company
or such Restricted Subsidiary of a substantially equivalent quantity of Precious
Metals of the same type.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any state or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or that
asserts jurisdiction over any Properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
Schedule B-11
<PAGE> 126
"Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt of any other Person in any manner, whether directly or indirectly,
including, without limitation, obligations incurred through an agreement,
contingent or otherwise, by such Person:
(a) to purchase such Debt or any Property constituting
security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such Debt, or (ii) to maintain any working capital or other balance
sheet condition or any income statement condition of any other Person
or otherwise to advance or make available funds for the purchase or
payment of such Debt;
(c) to lease Properties or to purchase Properties or services
primarily for the purpose of assuring the owner of such Debt of the
ability of any other Person to make
payment of the Debt; or
(d) otherwise to assure the owner of such Debt against loss in
respect thereof.
In any computation of the Debt of the obligor under any Guaranty, the Debt that
is the subject of such Guaranty shall be assumed to be direct obligations of
such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
Schedule B-12
<PAGE> 127
"Institutional Investor" means (a) any original purchaser of a Note or
any of its Affiliates and (b) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"LIBOR" means any interest rate based on the per annum London interbank
offered rate for deposits of United States dollars.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any Property or asset of such Person.
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, or Properties of the Company and its Subsidiaries
taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition or Properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company to
perform its obligations under this Agreement and the Notes, or (c) the validity
or enforceability of this Agreement or the Notes.
"Material Restricted Subsidiary" means a Restricted Subsidiary owning
Property having a net book value equal to or greater than five percent (5%) of
Consolidated Net Worth or having revenues equal to or greater than five percent
(5%) of the consolidated revenues of the Company and the Restricted
Subsidiaries, after eliminating all offsetting debits and credits between the
Company and the Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Company and the Restricted Subsidiaries in accordance with GAAP.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
Schedule B-13
<PAGE> 128
"Net Proceeds Amount" means, with respect to any Transfer of any
Property by any Person, an amount equal to:
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation
of such Transfer) received by such Person in respect of such Transfer,
minus
(b) all reasonable out-of-pocket costs, fees, commissions
and other expenses incurred by such Person in connection with such
Transfer and income taxes paid or reasonably estimated to be payable in
connection therewith; minus
(c) all obligations required to be paid by the Company or a
Restricted Subsidiary as a result of such Transfer.
"Non-US Pension Plan" means any plan, fund or other similar program
(a) established or maintained outside of the United States of
America by any one or more of the Company or the Subsidiaries primarily
for the benefit of employees (substantially all of whom are not
citizens of, and do not reside within, the United States of America) of
the Company or such Subsidiaries which plan, fund or other similar
program provides for retirement income for such employees or results in
a deferral of income for such employees in contemplation of retirement,
and
(b) not subject to ERISA.
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"Owned Precious Metal Inventory" means all Precious Metals acquired by
the Company or a Restricted Subsidiary in a Future Payables Transaction and all
Precious Metals owned by the Company or any Restricted Subsidiary up to an
Schedule B-14
<PAGE> 129
aggregate amount of ounces for each type of Precious Metal as set forth below:
Gold - 116,076
Silver - 14,749,005
Platinum - 943
Palladium - 80,755
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"Precious Metals" means any precious metals, including, without
limitation, gold, silver, palladium and platinum.
"Priority Debt" means, without duplication, at any time, the sum of
(a) all Debt of the Company and the Restricted Subsidiaries
secured by any Lien with respect to any Property owned by the Company
or any of the Restricted Subsidiaries permitted by paragraph (xi) of
Section 10.7(a) (other than Debt owing to the Company or a Restricted
Subsidiary), plus
(b) all Adjusted Debt of the Restricted Subsidiaries (other
than Debt in respect of Capital Lease Obligations, pollution control
bonds or industrial revenue bonds) outstanding at such time (other than
Debt owing to the Company or another Restricted Subsidiary), plus
Schedule B-15
<PAGE> 130
(c) all Attributable Debt of the Company and the Restricted
Subsidiaries (other than Attributable Debt owing to the Company or a
Restricted Subsidiary).
"Attributable Debt" means, at any time, as to any particular
lease relating to a Sale-and-Leaseback Transaction (other than a
Sale-and-Leaseback Transaction the Net Proceeds Amount in respect of
which is to be applied as described in Section 10.10(b)), the present
value of all base rentals required to be paid by the Company or any
Restricted Subsidiary under such lease during the remaining term
thereof (determined in accordance with GAAP using a discount factor
equal to the interest rate implicit in such lease if known or, if not
known, 8% per annum), provided, however, that if such lease is a
non-recourse lease, Attributable Debt shall mean the lesser of (x) such
present value or (y) the Fair Market Value of the Property subject to
such transaction as determined at such time by the Company in good
faith. As used in this definition, "base rentals" means all rentals
payable by a lessee under a lease less all amounts required to be paid
by the lessee in respect of maintenance and repairs, insurance, taxes,
assessments, water rates, reimbursement of expenses, indemnities and
similar charges.
"Property or Properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"Property Reinvestment Application" means, with respect to any Transfer
of Property, the application of, or the entering into of an agreement to apply,
an amount equal to all or any portion of the Net Proceeds Amount with respect to
such Transfer to the acquisition or construction by the Company or any
Restricted Subsidiary of assets of the Company or any Restricted Subsidiary to
be used in the business of such Person, to the acquisition of a business or of
all or substantially all of the assets of another Person, or to the acquisition
of equity interests in a Person that becomes a Restricted Subsidiary as a result
thereof; provided, however, that, with respect to any such agreement to apply,
immediately after such agreement shall be entered into, the Unapplied Portions
of the Net Proceeds Amounts for all Asset Dispositions shall not exceed 30% of
the Company's consolidated assets. Any Transfer which is, in whole or in part, a
barter Transfer of Property for the assets, business or equity interests
referred to above shall be automatically
Schedule B-16
<PAGE> 131
deemed to be a Property Reinvestment Application to the extent of the assets,
business or equity interests received.
"PTE" is defined in Section 6.2.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Reinvestment Notice" is defined in Section 10.3.
"Required Holders" means, at any time, the holder or holders of at
least 662/3% in principal amount of the Notes at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Subsidiary" means, at any time, each Subsidiary then
designated (or deemed designated) a Restricted Subsidiary pursuant to Section
10.11.
"Sale-and-Leaseback Transaction" means any transaction or series of
transactions commencing on or after the date of Closing pursuant to which the
Company or any Restricted Subsidiary shall, more than 180 days after the later
of the acquisition or occupancy of any Property, sell or transfer to any Person
(other than the Company or a Restricted Subsidiary) such Property (other than
any Precious Metals), whether now owned or hereafter acquired with an intent of
leasing it back, and, as part of the same transaction or series of transactions,
the Company or any Restricted Subsidiary shall rent or lease as lessee (other
than pursuant to a Capital Lease), or similarly acquire the right to possession
or use of, such Property or one or more other Properties which it intends to use
for the same purpose or purposes as such Property for a period of 36 months or
longer.
"Security" means "security" as defined by section 2(1) of the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Senior Debt" means (a) any Debt of the Company (other than any Debt
that is in any manner subordinated in right of
Schedule B-17
<PAGE> 132
payment or security in any respect to the Debt evidenced by the Notes) and (b)
any Debt of a Restricted Subsidiary.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
"Source" is defined in Section 6.2.
"Subsidiary" means, as to any Person, any corporation, partnership,
joint venture, association or other business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its Subsidiaries
owns sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership or
joint venture can and does ordinarily take major business actions without the
prior approval of such Person or one or more of its Subsidiaries). Unless the
context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of the Company.
"Subsidiary Stock" means, with respect to any Person, the Capital Stock
(or any options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of any Restricted Subsidiary of such Person.
"Successor Corporation" is defined in Section 10.2.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers, or leases (as lessor) pursuant to a
Capital Lease, ownership of any of its Property (including, without limitation,
Subsidiary Stock and Property sold in a Sale-and-Leaseback Transaction) and
includes any consolidation or merger of a Restricted Subsidiary with any other
Person if the Person surviving such consolidation or merger is not a Restricted
Subsidiary.
Unapplied Portion of the Net Proceeds Amount is defined in Section
10.3.
"Unrestricted Subsidiary" means a Subsidiary that is not a Restricted
Subsidiary.
Schedule B-18
<PAGE> 133
EXHIBIT 1
FORM OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OF THE UNITED STATES OF AMERICA AND MAY NOT BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT, EXCEPT UNDER CIRCUMSTANCES WHERE
NEITHER SUCH REGISTRATION NOR SUCH AN EXEMPTION IS REQUIRED BY LAW.
HANDY & HARMAN
7.31% SENIOR NOTE DUE APRIL 30, 2004
No. R-___ [Date]
$_______ PPN 410306 D* 2
FOR VALUE RECEIVED, the undersigned, HANDY & HARMAN (herein called the
"Company"), a corporation organized and existing under the laws of the State of
New York, hereby promises to pay to ________________, or registered assigns, the
principal sum of _________________________ DOLLARS ($_________) on April 30,
2004, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 7.31% per annum from
the date hereof, payable semiannually on the 30th day of April and October in
each year, commencing with the later of October 30, 1997 or the payment date
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to 8.31%.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the address shown in the register maintained by the Company for such
purpose or at such other place as the Company shall have designated by written
notice to the holder of this Note as provided in the Note Purchase Agreements
referred to below.
Exhibit 1-1
<PAGE> 134
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of April
17, 1997 (as from time to time amended, the "Note Purchase Agreements"), between
the Company and the respective purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, to have made the representations set forth in Section 6 of the Note
Purchase Agreements and to be bound by the terms thereof (including, without
limitation, the confidentiality provisions in Section 20 thereof).
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
The entire principal amount of this Note is due on the maturity date
hereof. This Note is also subject to optional prepayment, in whole or from time
to time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.
THIS NOTE AND THE NOTE PURCHASE AGREEMENTS ARE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
HANDY & HARMAN
Exhibit 1-2
<PAGE> 135
By _____________________________
Name:
Title:
Exhibit 1-3
<PAGE> 136
EXHIBIT 4.4(a)
FORM OF OPINION OF COUNSEL TO THE COMPANY
Exhibit 4.4(a)-1
<PAGE> 137
EXHIBIT 4.4(b)
FORM OF OPINION OF SPECIAL COUNSEL TO THE PURCHASERS
Exhibit 4.4(b)-1
<PAGE> 1
HANDY & HARMAN PENSION PLAN
As Amended And Restated Effective December 1, 1989
This is the Handy & Harman Pension Plan as amended and restated
effective December 1, 1989 which unless otherwise expressly provided
herein covers eligible employees of Handy & Harman and those of its
Affiliated Corporations which have adopted the Plan for their eligible
employees. The rights to benefits, if any, of employees who terminated
employment prior to December 1, 1989 shall unless otherwise expressly
provided herein be determined under the Plan, if any, as in effect for
the employee at the date of his termination of employment. This amended
and restated plan includes amendments to the plan as amended and
restated effective December 1, 1984 through the twentieth amendment
effective January 1, 1993. This plan includes amendments through the
1994 Plan Year to comply with the provisions of the Tax Reform Act of
1986 as amended and corresponding regulations.
<PAGE> 2
HANDY & HARMAN PENSION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Article 1 General Definitions
Article 2 Provisions Relating To Participation
Article 3 Definitions For Computation Of Accrued Benefit
Article 4 Benefits For Participants, Their Surviving Spouses And
Beneficiaries
Article 5 Contributions
Article 6 Pension Trust
Article 7 Administration Of The Pension Plan
Article 8 Amendments To The Pension Plan
Article 9 Termination Of The Pension Plan
Article 10 Temporary Limitation On Benefits For Highly-Paid Employees
Article 11 Limitations On Benefits
Article 12 Top-Heavy Provisions
Article 13 Merger, Consolidation, Or Asset Or Liability Transfer
Article 14 Miscellaneous Provisions
</TABLE>
This plan covers several Participating Companies of Handy & Harman. A list of
Participating Companies is included at the end of Article 1. This plan document
includes a separate Article 2, 3 and 4 for each Participating Company, with each
set noted by the letter designation included on the list of Participating
Companies. There is also an additional Article 3 and Article 4 which contains
provisions generally applicable to all Participating Companies.
<PAGE> 3
HANDY & HARMAN PENSION PLAN
Article 1
GENERAL DEFINITIONS
Wherever used in this document, the words and phrases defined in this
Article 1 shall have the meanings stated in this Article 1 unless the
context clearly indicates otherwise.
1.1 "Actuarial Equivalent" shall mean when applicable to a benefit hereunder
that the benefit has, at the date of determination, the same value as the
applicable other benefit hereunder when computed with interest at 8% per
year, compounded annually, and with mortality in accordance with the Unisex
Pension 1984 Mortality Table without set back in the case of the
Participant and set back three years in the case of a co-pensioner. In any
case where the Actuarial Equivalent of the monthly benefit payable to any
Participant or surviving spouse must be determined as a single sum amount,
such Actuarial Equivalent shall be determined on the basis of the above 8%
interest rate unless the level interest rate that is equivalent to the
interest rates used by the PBGC to value deferred annuities (or in the case
of a Participant or surviving spouse who is entitled to an immediate
pension, to value immediate annuities) for pension plans terminating as of
the first day of the Plan Year
1-1
<PAGE> 4
in which the determination date falls is lower than such 8% interest rate
in which event such PBGC interest rates, or rate as applicable, shall be
used to determine the Actuarial Equivalent. In determining such single sum
amount the determination shall be made assuming the Participant is not
married and elects no optional form of pension. In the case of determining
the single sum amount for a Participant who is not entitled to an immediate
pension, such single sum amount shall be determined reflecting the amount
of pension commencing at the Participant's Normal Retirement Date.
1.2 "Affiliated Corporation" shall mean Handy & Harman, each corporation as to
which Handy & Harman is the successor, and any other corporation 50% or
more of whose outstanding voting stock is owned, directly or indirectly, by
Handy & Harman.
1.3 "Annuity Starting Date" shall mean:
(a) the first day of the first period for which an amount is payable as
an annuity, or
(b) in the case of a benefit not payable in the form of an annuity, the
first day on which all events have occurred which entitle the participant
to such benefit.
1.4 "Birthday" shall mean the anniversary of the date of birth of an
individual.
1-2
<PAGE> 5
1.5 "Board of Directors" shall mean the board of directors of Handy & Harman.
1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended, or as it
may be amended from time to time.
1.7 "Committee" shall mean the administrative committee of the Pension Plan
provided for in Section 7.
1.8 "Company" shall mean Handy & Harman, a New York corporation.
"Participating Company" shall mean any Affiliated Corporation, or a
division (or location or other separately identifiable entity) that is a
part of any Affiliated Corporation, which is designated a Participating
Company by the Board of Directors, and which by action of its board of
directors adopts this Plan.
1.9 "Continuous Service" shall mean on any given date, except as otherwise pro-
vided in Section 2.1, the period of time commencing on the first day of the
month in which an employee's Employment Commencement Date or Reemployment
Commencement Date, whichever is applicable, occurs and ending on the first
day of the month coinciding with (next following, if none coincides with)
his Severance From Service Date. In the case of any individual who is an
employee
1-3
<PAGE> 6
of any company (or a division, location or other part of any company) that
is acquired by any Affiliated Corporation after December 31, 1982 and who
is employed by the company on such acquisition date, Continuous Service
shall not include any period prior to the date of acquisition unless
otherwise specifically provided for by the Board of Directors. Continuous
Service shall be stated in years and twelfth's of years.
An individual shall cease to accrue Continuous Service on his Severance
From Service Date provided, however, that an individual's Continuous
Service shall include the following periods:
(a) a period of authorized leave of absence granted by an Affiliated
Corporation,
(b) a period of up to twelve months during which an individual is on layoff,
(c) a period of up to twelve months during which an individual is absent from
active work on account of a compensable disability incurred during the
course of employment with an Affiliated Corporation, except that if the
individual returns to work with an Affiliated Corporation within 30 days
after final payment of statutory compensation for such disability or after
the end of the period used in calculating a lump sum payment, the full
1-4
<PAGE> 7
period during which the individual is absent,
(d) a period of up to twelve months after an individual shall have ceased to be
in the employment of an Affiliated Corporation if the individual returns to
employment with an Affiliated Corporation during such period, or
(e) a period of up to twenty-four months after an individual shall have ceased
to be in the employment of an Affiliated Corporation for a Maternity or
Paternity Leave if the individual returns to employment with an Affiliated
Corporation during such period. A Maternity or Paternity Leave shall be an
absence which commenced on or after December 1, 1985 by reason of (i) the
pregnancy of a Participant, (ii) the birth of a child or the adoption of a
child by the Participant or the Participant's spouse, or (iii) the care of
a Participant's child immediately after its birth or adoption.
An individual who has ceased to accrue Continuous Service because he has
ceased to be in the employment of an Affiliated Corporation shall
nevertheless retain the Continuous Service he had accrued at the time he
ceased to be in such employment:
(a) until the date of his death if he was a Vested Participant;
otherwise
1-5
<PAGE> 8
(b) until the end of a period of time equal to his period of Continuous
Service, or effective December 1, 1985 five One Year Periods Of Severance
if greater, but such Continuous Service shall be canceled as of the end of
such period of time if he has not prior thereto returned to employment with
an Affiliated Corporation and continued in such employment for the one year
period starting on his reemployment date.
1.10 "Employee" shall mean each individual who is in the employment of an
Affiliated Corporation on or after December 1, 1989 or such later date that
the employment unit which employs him became a Participating Company.
1.11 "Employment Commencement Date" shall mean the date on which an Employee
first performs an Hour of Service.
1.12 "ERISA" the Employee Retirement Income Security Act of 1974.
1.13 "Hour of Service" means an hour for which the Employee is paid, or entitled
to payment, by an Affiliated Corporation either for the performance of
duties for an Affiliated Corporation or for a period of time during which
no duties are performed due to vacations, holidays, illness, incapacity
(including disability), layoff, jury duty, military duty, or leave of
absence. In addition, Hour of Service shall include each hour for which
back pay, irrespective of mitigation of damages is either awarded
1-6
<PAGE> 9
or agreed to by an Affiliated Corporation, if such hour has not been
credited under the preceding sentence.
1.14 "Leased Employee" means any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient
(or for the recipient and related persons determined in accordance with
Code Section 414(n)(6) on a substantially full time basis for a period of
at least one year, and such services are of a type historically performed
by employees in the business field of the recipient employer. Contributions
or benefits provided a Leased Employee by the leasing organization which
are attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer. A Leased Employee shall not
be considered an employee of the recipient if:
(a) such employee is covered by a money purchase pension plan
providing:
(i) a non-integrated employer contribution rate of at least
10% of compensation, as defined in Code Section 415(c)(3), but
including amounts contributed pursuant to a salary reduction
agreement which are excludable from the employee's gross
income under Code Sections 125, 402(a)(8), 402(h) or 403(b);
(ii) immediate participation; and
(iii) full and immediate vesting.
(b) Leased Employees do not constitute more than 20% of the recipient's
non-highly compensated work force.
1-7
<PAGE> 10
Leased Employees are not eligible to participate in this Plan.
1.15 "Limitation Year" is the same as the calendar year.
1.16 "One Year Period Of Severance" shall mean an 12-consecutive month period
beginning on the Severance From Service Date or any anniversary thereof and
ending on the next succeeding anniversary of such date; provided, however,
that the employee during such 12-consecutive-month period does not complete
any hours of service within the meaning of 29 CFR Part 2530.200 b-2 (a) for
the employer or employers maintaining the plan.
1.17 "PBGC" shall mean Pension Benefit Guarantee Corporation.
1.18 "Pension Plan" shall mean the plan of pension benefits set forth herein
which shall be known as the Handy & Harman Pension Plan.
1.19 "Pension Trust" shall mean the trust established to implement the Pension
Plan.
1.20 "Pension Trustee" shall mean the person or persons or party or parties
acting as the trustee or trustees of and under the Pension Trust.
1.21 "Period Of Severance" shall mean the period of time commencing on the
Severance From Service Date and ending on the date when the employee again
performs an Hour of Service.
1.22 "Plan Year" on and after January 1, 1993 shall mean a year beginning on
January 1st and
1-8
<PAGE> 11
ending on the next December 31st, the same as the calendar year. "Plan
Year" on or prior to November 30, 1992 shall mean a year beginning on
December 1st and ending on the following November 30th. The period from
December 1, 1992 through December 31, 1992 shall be a "Plan Year".
1.23 "Qualified Domestic Relation Order", as referred to in Section 14.6, shall
mean a domestic relations order that satisfies the conditions of a
Qualified Domestic Relations Order as defined in the Retirement Equity Act
of 1984 as determined by the Committee. If the Plan is required to make
payments to an alternate payee under a Qualified Domestic Relations Order
then the benefits otherwise payable to a Participant and his spouse or
other beneficiaries, shall be adjusted so that the sum total of benefits
payable to the Participant, his spouse or other beneficiaries payees are
the Actuarial Equivalent of the benefits that would have been paid absent
the Qualified Domestic Relations Order.
1.24 "Reemployment Commencement Date" shall mean the first date following a
Period Of Severance from service which is not required to be taken into
account under the Plan on which the Employee first performs an Hour of
Service.
1.25 "Severance From Service Date" shall be the earlier to occur of the
following dates:
(a) the date on which the employee quits, retires, is discharged, or
1-9
<PAGE> 12
dies; or
(b) the first anniversary of the first date of a period in which the
employee remains absent from service (with or without pay) with an
Affiliated Corporation for any reason other than quit, retirement,
discharge or death, such as vacation, holiday, sickness, disability, leave
of absence or layoff.
1-10
<PAGE> 13
HANDY & HARMAN PENSION PLAN
Article 2A
PROVISIONS RELATING TO PARTICIPATION
Plan As In Effect At Handy & Harman
(For Plan purposes also referred to as "Handy & Harman")
2.1 "Continuous Service" shall be as defined in Section 1.9.
2.2 A. "Member Of The Eligible Class" for the period through December 31, 1992
shall mean each Employee of Handy & Harman excluding however each
Employee who is compensated on an hourly rate basis who is employed at
the East Providence, Rhode Island plant, and excluding any Employee who
is subject to a collective bargaining agreement which does not
incorporate the Plan, and excluding any Employee covered by another
retirement plan qualified under Code Section 401(a) sponsored by Handy &
Harman.
B. "Member Of The Eligible Class" for the period starting January 1, 1993
shall mean each Employee of Handy & Harman excluding however each
Employee who is compensated on an hourly rate basis who is employed at
either the East Providence, Rhode Island plant or the South Windsor
Metallurgical plant, and excluding any Employee who is subject to a
collective bargaining agreement which does not incorporate the Plan, and
excluding any Employee covered by another retirement plan qualified
under Code Section 401(a) sponsored by Handy & Harman.
2.3 "Participant" means, unless specifically stated, an Active
2A-1
<PAGE> 14
Participant, Vested Participant, Disabled Participant or Inactive
Participant as the context indicates.
2.4 Active Participant. Each Member Of The Eligible Class shall become an
Active Participant on the earliest date as of which he has both
completed one year of Continuous Service and attained his 21st Birthday.
An Active Participant shall cease to be an Active Participant on the
date on which he ceases to be a Member Of The Eligible Class.
2.5 Vested Participant. An Active Participant shall become a Vested
Participant on the earlier to occur of the following two dates:
(a) the date the Active Participant completes 5 years of
Continuous Service.
(b) the Active Participant's 65th Birthday.
2.6 Disabled Participant. An Active Participant who ceases to be an Active
Participant on account of a disability, the onset of which occurs when
he is an Active Participant with two or more years of Continuous Service
but prior to his Earliest Benefit Commencement Date, pursuant to which
he becomes entitled to receive disability benefits under the Federal
Social Security Act within one year of the date of the onset of his
disability, shall become a Disabled Participant on the first day of the
month following the sixth monthly anniver-
2A-2
<PAGE> 15
sary of the onset of his disability. A Disabled Participant shall cease
to be a Disabled Participant on the date as of which he ceases to be
entitled to receive disability benefits under the Federal Social Security
Act if such date is prior to his Normal Retirement Date, otherwise on the
date of his death. A person who ceases to be a Disabled Participant prior
to his Normal Retirement Date other than by death shall be deemed to have
been on an authorized leave of absence granted by an Affiliated
Corporation (hereinafter a "Disability Leave") for the period beginning
on the date of the onset of his disability and ending on the earlier to
occur of the first day of the month coincident with (next following, if
none coincides with) the first anniversary of the onset of his disability
and the date he ceased to be a Disabled Participant. If a person who
ceases to be a Disabled Participant prior to his Normal Retirement Date
again becomes a Member Of The Eligible Class within the twelve-month
period following the month in which he ceased to be a Disabled
Participant, he shall thereupon become an Active Participant and he shall
retain the Continuous Service he has at that time. Otherwise, it shall be
deemed that he ceased to be an Active Participant at the expiration of
his Disability Leave.
2.7 Inactive Participant. An Active Participant who is not a Vested
Participant
2A-3
<PAGE> 16
who ceases to be an Active Participant other than by death shall become
an Inactive Participant. An Inactive Participant shall cease to be an
Inactive Participant on the earliest to occur of the following four
dates:
(a) the date of his death.
(b) the date the Inactive Participant again becomes an Active
Participant.
(c) the date he completes 5 years of Continuous Service, in which event
he shall thereupon become a Vested Participant.
(d) the date his Continuous Service is disregarded pursuant to Section
1.9.
2.8 "Normal Retirement Age" shall mean the individual's 65th Birthday.
2.9 "Normal Retirement Date" shall mean the first day of the month following
the month which includes the individual's Normal Retirement Age.
2.10 "Earliest Benefit Commencement Date" shall mean the earlier of:
(a) the Active Participant's Normal Retirement Date, and
(b) the first day of the month following the month in which the Active
Participant has both attained his 60th Birthday and completed 10 years of
Continuous Service (5 years if the individual was employed by an
Affiliated Corporation on December 1, 1989).
2A-4
<PAGE> 17
HANDY & HARMAN PENSION PLAN
Article 3A
DEFINITIONS FOR COMPUTATION OF ACCRUED BENEFIT
Plan As In Effect At Handy & Harman
(For Plan purposes also referred to as "Handy & Harman")
3.1 "Benefit Service" shall be equal to Continuous Service except that
Benefit Service shall not include any period prior to September 9, 1983
with the Improved Laminated Metals Division of Krementz & Co.
3.2 "Expected Monthly Normal Retirement Pension" shall mean for an Active
Participant on any given date the larger of (a) and (b), where:
(a) equals the sum of
(i) 38.75% of such Active Participant's Average Monthly Basic
Pay, and
(ii) 11.25% of such Average Monthly Basic Pay in excess of
$833.33, if any, with such sum multiplied in the case of an Active
Participant whose Expected Period Of Benefit Service At Normal
Retirement Date is less than 25 years by a percentage equal to 4%
multiplied by his Expected Period Of Benefit Service At Normal
Retirement Date, and
(b) equals $12.50 multiplied by such Active Participant's Expected
Period Of Benefit Service At Normal Retirement Date, plus $1.50
multiplied by such Expected Period of Benefit Service At Normal
Retirement Date in excess of 15 years, if any, plus $1.50 multiplied by
such Expected Period Of Benefit
3A-1
<PAGE> 18
Service At Normal Retirement Date in excess of 30 years, if any.
3.3 "Accrued Monthly Pension" shall mean for an Active Participant on any
given date the product of (a) and (b) where:
(a) equals such Active Participant's Expected Monthly Normal Retirement
Pension on such given date, and
(b) equals such Active Participant's Service Ratio on such given date,
provided however, that the Accrued Monthly Pension for an Active
Participant on any given date shall in no case be less than the Accrued
Monthly Pension deter mined for him under the Pension Plan on any date
prior to such given date.
3A-2
<PAGE> 19
HANDY & HARMAN PENSION PLAN
Article 3
DEFINITIONS FOR COMPUTATION OF ACCRUED BENEFIT
Plan As In Effect At All Participating Companies
3.10 "Pay" shall mean the annual rate of an individual's regular fixed salary
or, in the case of an hourly-paid individual, 2,080 times his regular
fixed hourly wage rate paid by an Affiliated Corporation but shall not
include any amount payable as bonus, commission, overtime premium, shift
differential, reward, prize or any type of compensation other than
regular fixed salary or wage. If the annual rate so computed for an
individual is not an integral multiple of one hundred dollars, his Pay
shall be deemed to be the next higher integral multiple of one hundred
dollars.
3.11A The definition of Basic Pay in this Section 3.11A was in effect for the
period ended November 30, 1992. "Basic Pay" for the period ended
November 30, 1992 shall mean, in and for any Plan Year, an Active
Participant's Pay on either the September 1st preceding the commencement
of such Plan Year if the Active Participant was employed by an
Affiliated Corporation on such September 1st, or the date on which the
Active Participant was employed by an Affiliated Corporation if such
date was subsequent to the September 1st preceding such Plan Year. If an
Active
3-1
<PAGE> 20
Participant whose Continuous Service commenced prior to a given
September 1st does not have a regular fixed salary or regular fixed
hourly wage rate on such September 1st, then his regular fixed salary or
regular fixed hourly wage rate on such September 1st shall be deemed to
be equal to his regular fixed salary or regular fixed hourly wage rate
on the latest date preceding such September 1st as of which he did have
a regular fixed salary or regular fixed hourly wage rate.
3.11B The definition of Basic Pay in this Section 3.11B is effective for the
period starting December 1, 1992. "Basic Pay" for the period starting
December 1, 1992 shall mean, in and for any Plan Year beginning on or
prior to December 1, 1992, an Active Participant's Pay on either the
September 1st preceding the commencement of such Plan Year if the Active
Participant was employed by an Affiliated Corporation on such September
1st, or the date on which the Active Participant became employed by an
Affiliated Corporation if such date was subsequent to the September 1st
preceding such Plan Year. If an Active Participant whose Continuous
Service commenced prior to a given September 1st does not have a regular
fixed salary or regular fixed hourly wage rate on such September 1st,
then his regular fixed salary or regular fixed hourly wage rate on such
September 1st shall be deemed to be equal to his regular fixed salary or
regular fixed hourly wage rate on the latest date preceding such
September 1st as of which he did have a regular fixed salary or regular
fixed hourly wage rate.
3-2
<PAGE> 21
"Basic Pay" shall mean, in and for any Plan Year, beginning on or after
January 1, 1993, an Active Participant's Pay on either the January 1st
on which such Plan Year commenced if the Active Participant was employed
by an Affiliated Corporation on such January 1st, or the date on which
the Active Participant was employed by an Affiliated Corporation if such
date was subsequent to the January 1st on which such Plan Year
commenced. If an Active Participant whose Continuous Service commenced
prior to a given January 1st does not have a regular fixed salary or
regular fixed hourly wage rate on such January 1st, then his regular
fixed salary or regular fixed hourly wage rate on such January 1st shall
be deemed to be equal to his regular fixed salary or regular fixed
hourly wage rate on the latest date preceding such January 1st as of
which he did have a regular fixed salary or regular fixed hourly wage
rate.
3.12 Limitation on Pay. For each Plan Year beginning after 1988, the Basic
Pay or annual compensation of each participant taken into account under
the Plan for any year shall not exceed Two Hundred Thousand Dollars
($200,000) (One Hundred Fifty Thousand Dollars ($150,000) for 1994),
provided that the Commissioner of the Internal Revenue Service shall
adjust the amount as of January 1 of each calendar year commencing with
January 1, 1990. The adjusted limit shall be effective for any Plan Year
beginning in such calendar year except that such adjusted limit for each
calendar year through December 31, 1993 shall also apply to prior
calendar years for purposes of performing Plan calculations in the
calendar year of such adjustment. In addition, if the Plan determines
compensation for fewer than twelve
3-3
<PAGE> 22
(12) calendar months, the limit for the short period shall equal the annual
compensation limit for the calendar year in which the compensation period begins
multiplied by the fraction the numerator of which is the total number of months
in the period and the denominator of which is twelve (12). This limit applies to
the combined compensation of the participant and any family member aggregated
with the participant. The family members of a participant who are aggregated
with a participant for purposes of this limitation are the participant's spouse
and the participant's lineal descendants who are under age 19. If this $200,000
limitation applies to a participant and one or more of his family members, the
limitation will be prorated among them in proportion to their total
compensations in applying the contribution and allocation provisions of this
Plan. For each Plan Year beginning prior to 1989, this $200,000 limitation will
apply only if the Plan is top heavy, but the family aggregation rule will not
apply. For Plan Years beginning after 1993, $150,000 shall be substituted for
$200,000 throughout this paragraph, and the $150,000 compensation limit shall be
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code.
A "statutory 401(a)(17) employee" means an employee whose current Accrued
Monthly Pension as of any date on or after December 1, 1989 is based on an
amount of Basic Pay for a Plan Year beginning on or prior to December 1, 1988
that exceeded $200,000.
The Accrued Monthly Pension of each statutory 401(a)(17) employee will
3-4
<PAGE> 23
be equal to the greater of the Accrued Monthly Pension determined under (a) or
(b) where:
(a) equals the employee's Accrued Monthly Pension determined under the
benefit formula applicable for the Plan Year beginning on or after
December 1, 1989 as applied to the Active Participant's total years
of Benefit Service, and
(b) is equal to the sum of (i) and (ii) where
(i) the Active Participant's Accrued Monthly Pension as of November
30, 1989 determined under the Plan as in effect on November 30,
1989, frozen in accordance with Regulation 1.401(a)(4)-13 and,
(ii) equals the Active Participant's Accrued Monthly Pension
determined under the benefit formula applicable for the Plan Year
beginning on or after December 1, 1989 as applied to the Active
Participant's years of Benefit Service credited for Plan Years
beginning on or after December 1, 1989,
where all such calculations are determined under the benefit formula in
that Section 3.3 of the Plan that is applicable to him.
A "section 401(a)(17) employee" means an employee whose current Accrued Monthly
Pension as of any date on or after January 1, 1994 is based on an amount of
Basic Pay for a Plan Year beginning on or prior to January 1, 1993 that exceeded
$150,000.
The Accrued Monthly Pension of each section 401(a)(17) employee will be equal to
the greater of the Accrued Monthly Pension determined under (a) or (b) where:
3-5
<PAGE> 24
(a) equals the employee's Accrued Monthly Pension determined under the
benefit formula applicable for the Plan Year beginning on or after
January 1, 1994 as applied to the Active Participant's total years
of Benefit Service, and
(b) is equal to the sum of (i) and (ii) where
(i) the Active Participant's Accrued Monthly Pension as of
December 31, 1993 determined under the Plan as in effect on
December 31, 1993, frozen in accordance with Regulation
1.401(a)(4)-13 and,
(ii) equals the Active Participant's Accrued Monthly Pension
determined under the benefit formula applicable for the Plan
Year beginning on or after January 1, 1994 as applied to the
Active Participant's years of Benefit Service credited for
Plan Years beginning on or after January 1, 1994,
where all such calculations are determined under the benefit formula in
that Section 3.3 of the Plan that is applicable to him.
3.13A The definition of Average Monthly Basic Pay in this Section 3.13A was in
effect for the period ended November 30, 1992. "Average Monthly Basic
Pay" for the period ended November 30, 1992 shall mean for an Active
Participant in and for any Plan Year one-twelfth of the average of his
Basic Pay during those five consecutive Plan Years out of the ten Plan
Years ending with such Plan Year for which the sum of his Basic Pay for
such five consecutive Plan Years is the largest; provided, however, that
if there are not at least five consecutive Plan Years as to which
3-6
<PAGE> 25
Basic Pay is defined for the Active Participant, Average Monthly Basic
Pay for such Active Participant shall be equal to the average of his
Basic Pay for those consecutive Plan Years for which Basic Pay is
defined for him.
3.13B The definition of Average Monthly Basic Pay in this Section 3.13B is
effective for the period starting December 1, 1992. "Average Monthly
Basic Pay" for the period starting December 1, 1992 shall mean for an
Active Participant in and for any Plan Year one-twelfth of the average
of his Basic Pay during all his Plan Years beginning with the Plan Year
commencing on January 1, 1993 provided that at least five Plan Years
will be included in such average except that if there are not at least
five Plan Years as to which Basic Pay is defined for the Active
Participant, Average Monthly Basic Pay for such Active Participant shall
be equal to the average of his Basic Pay for all those Plan Years for
which Basic Pay is defined for him, and further provided that if such
Active Participant has any period of consecutive Plan Years beginning on
or after December 1, 1983 that includes the same number of Plan Years
that is included in his Average Monthly Basic Pay which results in a
larger amount of Average Monthly Basic Pay such larger Average Monthly
Basic Pay will be reflected in his calculation. In all cases if Basic
Pay for the January 1, 1993 through December 31, 1993 Plan Year is
included in his Average Monthly Basic Pay, then Basic Pay for the
December 1, 1992 through December 31, 1992 Plan Year will be excluded
from such Average.
3-7
<PAGE> 26
3.14 "Benefit Service", except as otherwise provided in Section 3.1, shall be
equal to Continuous Service except that in the case of any individual
who is an employee of any company (or a division, location or other part
of any company) that is acquired by any Affiliated Corporation after
December 31, 1982 and who is employed by the company on such acquisition
date, Benefit Service shall not include any period prior to the date of
acquisition unless otherwise specifically provided for by the Board of
Directors.
3.15 "Expected Period of Benefit Service At Normal Retirement Date" shall
mean for an Active Participant on any given date the greater of (a) and
(b) where:
(a) is equal to the sum of:
(i) his Benefit Service on the first day of the month
coinciding with (next preceding, if none coincides with)
such given date, and
(ii) the number of years, to the nearer one-twelfth of a year,
from such first day of the month to such Active
Participant's Normal Retirement Date, and
(b) is applicable only to an individual who is an Active Participant
after his Normal Retirement Date and is equal to his actual Benefit
Service on the given date.
3.16 "Service Ratio" shall mean for an Active Participant on any given date
3-8
<PAGE> 27
the ratio
of:
(a) his Benefit Service on such given date, to
(b) his Expected Period Of Benefit Service At Normal Retirement Date,
provided that such ratio shall not be greater than 1.0000.
3-9
<PAGE> 28
HANDY & HARMAN PENSION PLAN
Article 4A
BENEFITS FOR PARTICIPANTS, THEIR SURVIVING SPOUSES AND BENEFICIARIES
Plan As In Effect At Handy & Harman
(For Plan purposes also referred to as "Handy & Harman")
4.1 Normal Retirement Pension. Each Vested Participant who ceases to be an
Active Participant on or after his Normal Retirement Date will receive a
monthly Normal Retirement Pension beginning on the first day of the
month coincident with (next following, if none coincides with) the date
he ceases to be an Active Participant.
The amount of Normal Retirement Pension for a Vested Participant who is
not married at the time his pension commences shall be the greater of
(a) and (b), where (a) equals his Accrued Monthly Pension determined on
his Normal Retirement Date, increased, if the Active Participant ceases
to be an Active Participant after his Normal Retirement Date, by 3/4%
for each month in the period starting on his Normal Retirement Date and
ending on the earlier of last day of the month in which he ceased to be
an Active Participant and March 1, 1988 and (b) equals his Accrued
Monthly Pension determined on the first day of the month coincident with
(next following, if none coincides with)
4A-1
<PAGE> 29
the date he ceases to be an Active Participant. Such pension shall be
payable as a Ten Years Certain And Life Thereafter Pension.
The Normal Retirement Pension for a Vested Participant who is married at
the time his pension commences shall be payable as a 50% Joint And
Survivor Pension in an amount equal to the Actuarial Equivalent of the
pension amount the Participant would receive if he is not married at the
time his pension commences.
4.2 Disability Retirement Pension. Each Active Participant who becomes a
Disabled Participant will receive a Disability Retirement Pension
beginning on the date he becomes a Disabled Participant, and ending on
the first day of the month coincident with (next preceding, if none
coincides with) the date he ceases to be a Disabled Participant.
The following paragraph was in effect for the period through November
30, 1990.
The amount of Disability Retirement Pension for a Disabled Participant
who is not married at the time his pension commences shall be equal to
30% of his Average Monthly Basic Pay determined as of the date he ceases
to be an Active Participant, multiplied, if the Expected Period of
Benefit Service at Normal Retirement Date for him on the date he ceases
to be an Active Participant is
4A-2
<PAGE> 30
less than 25 years, by a percentage equal to 4% times such Expected
Period of Benefit Service at Normal Retirement Date. Such pension shall
be payable as a Ten Years Certain and Life Thereafter Pension.
The following paragraph is effective for the period starting December
1, 1990.
The amount of Disability Retirement Pension for a Disabled Participant
who is not married at the time his pension commences shall be equal to
the larger of (a) and (b) below, where:
(a) equals the Active Participant's Accrued Monthly Pension on that
date he ceases to be an Active Participant, and
(b) equals 70% of the Active Participant's Expected Monthly Normal
Retirement Pension on the date he ceases to be an Active
Participant based on his Average Monthly Basic Pay on the date he
ceases to be an Active Participant.
Such pension shall be payable as a Ten Years Certain and Life
Thereafter Pension.
The Disability Retirement Pension for a Disabled Participant who is
married at the time his pension commences shall be payable as a 50%
Joint And Survivor Pension in an amount equal to the Actuarial
Equivalent of the pension amount the Participant would receive if he is
not married at the time his pension commences.
4A-3
<PAGE> 31
4.3 Early Retirement Pension. Each Vested Participant who ceases to be an
Active Participant other than by death prior to his Normal Retirement
Date but on or after his Earliest Benefit Commencement Date shall be
eligible to receive an Early Retirement Pension. Such pension shall
commence on the first day of the month coincident with (next following,
if none coincides with) the date he ceases to be an Active Participant.
The amount of Early Retirement Pension for a Vested Participant who is
not married at the time his pension commences shall be equal to his
Accrued Monthly Pension on the date he ceases to be an Active
Participant. Such pension shall be payable as a Ten Years Certain And
Life Thereafter Pension.
The Early Retirement Pension for a Vested Participant who is married at
the time his pension commences shall be payable as a 50% Joint And
Survivor Pension in an amount equal to the Actuarial Equivalent of the
pension amount the Participant would receive if he is not married at the
time his pension commences.
4.4 Deferred Vested Pension. Each Vested Participant who is not entitled to
a pension pursuant to Section 4.1, 4.2 or 4.3 of this Article 4A on the
date he ceases to be an Active Participant shall be eligible for a
Deferred Vested
4A-4
<PAGE> 32
Monthly Pension. Such pension shall begin on:
(a) the Vested Participant's Normal Retirement Date, or
(b) the first day of any month elected by the Vested Participant which
is on or after his Earliest Benefit Commencement Date and on or
after the day on which he makes his election but prior to his
Normal Retirement Date.
If such Vested Participant is not married at the time his pension
commences, the amount of his pension shall be equal to a percentage of
his Accrued Monthly Pension on the date he ceases to be an Active
Participant. Such percentage shall be equal to 100%, minus 5/9th's of
1% for each month in the period beginning with the date his pension
commences and ending on his Normal Retirement Date. Such pension shall
be payable as a Ten Years Certain And Life Thereafter Pension.
If such Vested Participant is married at the time his pension
commences, the amount of his pension shall be payable as a 50% Joint
And Survivor Pension in an amount equal to the Actuarial Equivalent of
the pension amount the Participant would receive if he is not married
at the time his pension commences.
Single Sum Option for Deferred Vested Pension. Each Vested Participant
who becomes eligible for a Deferred Vested Monthly Pension pursuant to
4A-5
<PAGE> 33
this Section 4.4 may, within 30 days of the date he ceases to be in the
employment of an Affiliated Corporation, elect to receive, in lieu of
and in complete substitution for the benefits otherwise payable to him
or on his account, the single sum payment that is the Actuarial
Equivalent to the initial amount of monthly pension the Participant
would have been entitled to receive commencing on his Normal Retirement
Date if he were not married at that time, provided that effective
January 1, 1985, if the Participant is married and the amount of the
lump sum is more than $3,500., his spouse must consent to such
election. The Single Sum Option is eliminated for any increase in
benefits after October 31, 1992. The Single Sum Option is preserved for
the amount of Accrued Monthly Pension determined as of October 31, 1992
under the Plan as in effect on October 31, 1992.
4.5 Pre-retirement Spouse Pension. In the case of:
(a) a Vested Participant who ceases to be an Active Participant by
death on or after his Earliest Benefit Commencement Date, or
(b) a Vested Participant who ceases to be an Active Participant by
death prior to his Earliest Benefit Commencement Date but after
August 23, 1984, or,
(c) a former employee who ceased to be in the employment of an
Affiliated Corporation on or after December 1, 1976 whose death
occurs on or
4A-6
<PAGE> 34
after August 23, 1984 and who at the time of his death is entitled to a
deferred vested pension benefit that has not commenced prior to the
date of his death;
Then a Pre-retirement Spouse Pension will be payable to the surviving
spouse of the Participant or former employee if the surviving spouse
was married to the Participant or former employee for the entire one
year period ending on the date of death.
The monthly pension to the surviving spouse will commence on the
Earliest Benefit Commencement Date of the Active Participant or former
employee, or the first day of the month coincident with (next
following, if none coincides with) the date of death if later, if the
spouse survives to that date and will cease on the first day of the
month in which the spouse's death occurs.
The amount of pension payable to the surviving spouse will be the
amount that would have been payable to the surviving spouse if the
Active Participant or former employee had his pension payable as a 50%
Joint and Survivor Pension and:
(a) in the case of an Active Participant whose death occurs on or after
his Earliest Benefit Commencement Date, the Active Participant
retired on his date of death, or
4A-7
<PAGE> 35
(b) in the case of an Active Participant whose date of death was prior
to his Earliest Benefit Commencement Date, the Active Participant
terminated his employment for a reason other than death, survived
to his Earliest Benefit Commencement Date and had his pension
commence at that date, or
(c) in the case of a former employee whose death occurs on or after his
Earliest Benefit Commencement Date, the former employee had his
pension commence on the date of his death, or
(d) in the case of a former employee whose date of death was prior to
his Earliest Benefit Commencement Date, the former employee
survived to his Earliest Benefit Commencement Date and had his
pension commence at that date.
In each case where the calculation of the benefit to the surviving
spouse reflects a reduction on account of the early commencement of the
pension the spouse may elect prior to the date of the first pension
payment on a form authorized by the Committee, to defer the commencement
of the Pre-retirement Spouse Pension to the earliest date when such a
reduction for early commencement would not be applied.
4.6 Post-Retirement Single Sum Death Benefits. At the death of a former
Active Participant, who, at the time of his death, was receiving a
pension
4A-8
<PAGE> 36
pursuant to Section 4.1 or 4.3 of this Article 4A or was receiving a
Disability Retirement Pension pursuant to Section 4.2 on account of a
disability which had its onset after his 60th Birthday, a single sum
death benefit in the amount of $2,500 shall be paid to his beneficiary.
4.7A Cost of Living Increase. Effective on the July 1st following end of the
Plan Year in which a former Active Participant who is receiving pension
payments pursuant to Sub-section 4.1, 4.2, 4.3 or 4.4 of this Article
4A first commenced to receive such payment (such as July 1st for a
given former Active Participant being hereinafter referred to as his
"First CPI Increase Date"), and on each succeeding July 1st thereafter,
the pension amount payable to such former Active Participant will be
increased to an amount equal to the product of:
(a) the initial monthly amount of such former Active Participant's
pension, and
(b) the Cost Of Living Factor then applicable to him.
The Cost Of Living Factor applicable to such a former Active
Participant on any given July 1st shall be equal to Factor A below or
Factor B below whichever is smaller, where:
Factor A equals on such former Active Participant's First CPI Increase
Date the CPI Ratio for that date, and on any succeeding July 1st
4A-9
<PAGE> 37
equals Factor A on the preceding July 1st multiplied by the CPI Ratio
for such succeeding July 1st, and
Factor B equals on such former Active Participant's First CPI Increase
Date 1.04 and on any succeeding July 1st equals Factor B on the
preceding July 1st multiplied by 1.04;
provided, however, that in no case will the Cost Of Living Factor
applicable to a former Active Participant be less than 1; and provided
further, however, that in no case will the Cost Of Living Factor
applicable to a former Active Participant decrease.
For purposes of this Section 4.7A: "CPI Index" on any July 1st means
the arithmetic mean average of the Consumer Price Index prepared by the
Labor Department and used for determining Cost of Living Increases
under the Federal Social Security Act for the three months January,
February and March of the calendar year in which such July 1st occurs,
and
"CPI Ratio" on any July 1st means the ratio of:
(a) the CPI Index for such July 1st, to
(b) the CPI Index for the immediately preceding July 1st.
The Cost of Living Increase provision is eliminated for any increase in
benefit after October 31, 1992. The Cost of Living Increase provision
is preserved for the amount of Accrued Monthly Pension
4A-10
<PAGE> 38
determined as of October 31, 1992 under the Plan as in effect on
October 31, 1992. Therefore, each Vested Participant who receives a
pension will have his pension based on the greater of (a) his Accrued
Monthly Pension determined as of October 31, 1992 under the Plan in
effect on October 31, 1992 with the Cost of Living Increase and (b) the
Accrued Monthly Pension determined at the date he ceases to be an
Active Participant with no Cost of Living Increase.
4.7B. Each person who received a monthly pension payment from the Handy &
Harman Pension Plan on November 1, 1976, other than any such a person
who at the time he retired was a member of a bargaining unit, shall
continue to receive the benefits determined for him under the
provisions of the Handy & Harman Pension Plan as in effect on the date
he commenced to receive monthly pension payments except that each such
person shall have each monthly pension payment payable to him on and
after July 1, 1989 increased in accordance with this Section 4.7B.
Effective July 1, 1989, the monthly pension of each person described in
the first paragraph of this Section shall be increased by an amount
equal to the greater of (a) and (b) where:
(a) is equal to 4% of the amount of pension such employee received as
of June 1, 1989 and
4A-11
<PAGE> 39
(b) is equal to $20.00
Effective July 1, 1990 and on each succeeding July 1st thereafter the
pension payable to such an employee described in the first paragraph of
this Section will be increased to an amount equal to the product of (c)
and (d) where:
(c) is equal to the amount of monthly pension payable to such employee
effective July 1, 1989 and
(d) is equal to the Cost Of Living Factor then applicable to him.
The Cost Of Living Factor applicable to such an employee on any given
July 1st shall be equal to Factor A below or Factor B below, whichever
is smaller, where:
Factor A equals on July 1, 1990, the CPI Ratio for that date and on any
succeeding July 1st equals Factor A on the preceding July 1st
multiplied by the CPI Ratio for such succeeding July 1st, and
Factor B equals on July 1, 1990, 1.04 and on any succeeding July 1st
equals Factor B on the preceding July 1st multiplied by 1.04 provided,
however, that in no case will the Cost Of Living Factor applicable to
such an employee decrease.
If the surviving spouse of an employee described in the first paragraph
of this Section receives a pension on or after July 1, 1989 because of
the joint
4A-12
<PAGE> 40
and survivor form of pension elected by the employee, such spouse shall have
the pension otherwise payable to her on or after July 1, 1989 increased in
accordance with this Section 4.7B.
For purposes of this Section 4.7B the "CPI Index" and the "CPI Ratio" will
be as defined in Section 4.7A.
4.8 Each Active Participant who will have attained his 62nd birthday on or
before February 1, 1988 who terminates his employment in the period starting
on December 2, 1987 and ending on February 1, 1988 and who is employed in
New York, Fairfield, El Monte, Elk Grove Village, Attleboro, or East
Providence is entitled to an ERP Pension and an ERP Lump Sum Payment
determined as follows:
(a) The ERP Pension for an eligible Active Participant is equal to his
Accrued Monthly Pension as otherwise calculated under the Plan including the
calculation of the Active Participants' Average Monthly Basic Pay but
reflecting the additional service the participant would have if he continued
as an Active Participant until the latter (i) of his Normal Retirement Date
and (ii) six months after his effective date of retirement (i.e., July 1,
1988 or August 1, 1988 as applicable).
(b) The ERP Lump Sum Payment will be payable upon retirement in an
amount
4A-13
<PAGE> 41
equal to the product of (i) x (ii) where
(i) is equal to the Active Participant's Basic Pay at December
1, 1987 divided by 52 and
(ii) is equal to the Active Participant's Benefit Service at
his effective date of retirement with a maximum of 10 years.
4.9 Each Active Participant (a) who is eligible for an Early Retirement Pension
or a Normal Retirement Pension on January 1, 1992, (b) who has at least 10
years of Continuous Service on January 1, 1992, (c) whose job terminates or
is relocated outside of New York city after December 31, 1991 and before
October 2, 1992 and (d) who qualifies for the "Staying Bonus" related to
relocation of New York Office jobs outside of Manhattan is eligible to make
an election under the Early Retirement Plan. The election under the Early
Retirement Plan may be made during the 6 month period ending with the
elimination of the Active Participant's position in the New York city office
of Handy & Harman. The amount of pension for an eligible Active Participant
is equal to his Accrued Monthly Pension as otherwise calculated under the
Plan including the calculation of his Average Monthly Basic Pay except that
an additional 5 years of Benefit Service will be inputted into the
calculation.
4A-14
<PAGE> 42
HANDY & HARMAN PENSION PLAN
Article 4
BENEFITS FOR PARTICIPANTS, THEIR SURVIVING SPOUSES AND BENEFICIARIES
Plan As In Effect At All Participating Companies
4.10 Straight Life Pension. A monthly pension payable for the lifetime of the
Participant with no continuation in the event of the Participant's death
after the effective date of the Participant's benefit commencement to the
Participant's spouse or beneficiary.
4.11 Ten Years Certain And Life Thereafter Pension. A monthly pension payable
for the lifetime of the Participant with the further provision that in the
event of the Participant's death after the effective date of the
Participant's benefit commencement and prior to receipt by the Participant
of at least 120 monthly payments such payments shall continue to the
Participant's beneficiary until a total of 120 monthly payments has been
made to the Participant and his beneficiary.
4.12 50% Joint And Survivor Pension. A monthly pension payable for the lifetime
of the Participant with the further provision that if the Participant is
survived by the spouse to whom he was married at the time his pension
commenced, monthly pension payments will be made to such spouse beginning
on the first day of the month following the month in which such Participant
died and
4-1
<PAGE> 43
continuing for the remainder of such spouse's lifetime, with the last
monthly pension payment to such spouse to be made on the first day of
the month in which the death of the spouse occurred, and with the
amount of each such monthly pension payment to be made to such spouse
on any given date to be equal to one-half of the pension amount which
such Participant would have received on such date if he had survived to
receive such payment.
4.13 Optional Forms of Pension Benefit. Subject to written notice of the
Participant's election filed with the Committee in such form and manner
as the Committee may determine, and subject to such other requirements
as the Committee may establish and uniformly apply, a Participant
entitled to receive a pension may elect to receive a pension payable in
accordance with one of the following applicable forms of pension:
Option A - Applicable to all Participants - a Straight Life Pension as
described in Section 4.10.
Option B - Applicable to all Participants - a Ten Years Certain And
Life Thereafter Pension as described in Section 4.11.
Option C - Applicable to a Participant who will receive his pension
pursuant to Section 4.1, 4.2 or 4.3 and is married at the time his
pension is to
4-2
<PAGE> 44
commence - a 100% Joint And Survivor Pension which provides a reduced
pension for the lifetime of the Participant, with 100% of the reduced
amount payable to the Participant continued thereafter to the spouse he
was married to at his retirement for the remainder of the spouse's
lifetime.
Option D - Any other form of pension payable on a monthly basis that is
approved by the Committee, which option shall thereupon become
uniformly available to all similarly situated Participants.
Such optional form of pension shall be in lieu of and in complete
substitution of all other benefits that the Participant is otherwise
entitled to receive from the Plan; provided, however:
(a) The Committee shall provide each Married Participant no less than
30 days and not more than 90 days prior to the Annuity Starting
Date with a written explanation of the terms and conditions of the
pension provided under Article 4 including the Participant's right
to make and the effect of an election to receive an optional form
of benefit, the rights of the Participant's spouse; the right to
make and the effect of a revocation of a previous election to waive
the pension; and the amounts of the optional forms of benefit
available to the Participant under the Plan.
(b) The election by a Participant of Option A, B or D shall not be
effective unless (1) within ninety (90) days preceding the Annuity
Starting Date the Participant's spouse
4-3
<PAGE> 45
irrevocably consents in writing to the Participant's election and
to the naming of a specific non-spouse beneficiary (including any
class of beneficiaries or contingent beneficiaries); (ii) the terms
of such consent acknowledge the effect of the waiver; (iii) the
consent is witnessed by a representative of the Committee or
acknowledged before a notary public; and (iv) the election
designates a form of payment which may not be changed without
spousal consent. The provisions of this paragraph shall not be
applicable if the Committee is satisfied that the required consent
cannot be obtained because the Participant does not have a spouse;
because the spouse cannot be located; or because of such other
circumstances as the Secretary of the Treasury may prescribe by
regulations. Any consent by a spouse or the establishment that the
consent of a spouse cannot be obtained shall only be effective with
respect to such spouse.
(c) If the Participant elects before the Annuity Starting Date a form
of joint and survivor pension under Option C that satisfies the
requirements of this Section 4.13 and dies before the Annuity
Starting Date, that elected Option will be treated as the
Pre-retirement Spouse Pension in substitution for the
Pre-retirement Spouse Pension otherwise provided by the Plan.
4-4
<PAGE> 46
(d) If distributions commence on or after January 1, 1988 in the form
of a joint and survivor annuity for the joint lives of the
Participant and a nonspouse beneficiary, annuity payments to be
made on or after the Participant's required beginning date to the
designated beneficiary after the Participant's death must not at
any time exceed the applicable percentage of the annuity payment
for such period that would have been payable to the Participant
using the table set forth in Q&A-A6 of section 1.401(a)(9)-2 of the
Proposed Income Tax Regulations.
(e) If distributions commence prior to January 1, 1988 in the form of a
joint and survivor annuity for the joint lives of the Participant
and a nonspouse beneficiary, the present value of annuity payments
to be made to the designated beneficiary after the Participant's
death must not exceed 50% or more of the present value of the
benefits payable to both the Participant and his beneficiary.
(f) No pension with a period certain for a period extending beyond the
life expectancy on the benefit commencement date of the Participant
and his beneficiary may be elected.
(g) All options will be subject to the provision of any insurance or
annuity contract which provides all or part of the benefit payable
under the Plan to any Participant to the extent consistent with the
terms of this Plan.
4-5
<PAGE> 47
(h) If the single sum amount which is the Actuarial Equivalent of the
Participant's (or surviving spouse's) pension, as applicable, is
$3,500 or more, no lump sum payment will be made from the Plan
except as otherwise explicitly provided in this Plan.
(i) If a pension has already commenced to a Participant and/or spouse,
as applicable, no lump sum payment will be made from the Plan.
The amount of any pension payable in accordance with an option provided
in this Section shall be the Actuarial Equivalent of the pension that
would otherwise be payable to the Participant if he was not married on
his benefit commencement date and if no option had been elected.
4.14 Small Amounts. If the lump sum amount which is the Actuarial Equivalent
of the monthly benefit payable to any Participant or surviving spouse
from this Plan and all other defined benefit plans of an Affiliated
Corporation is less than $3,500. ($2,500 for determinations effective
on or after December 1, 1985 but prior to September 1, 1988 and $1,750.
for determinations effective prior to December 1, 1985), such lump sum
shall be distributed in lieu of the monthly benefit.
4-6
<PAGE> 48
4.15 Postponed Retirement. A Participant may continue in the employ of an
Affiliated Corporation beyond such Participant's Normal Retirement Date. In
such event, no pension shall be payable to such Participant until the
Participant's Postponed Retirement Date, which shall be the earlier of (a)
the first day of the month coincident with or next following the date of
the Participant's actual retirement, or (b) the first day of the month in
which the Participant's employment ceases to be substantial. For this
purpose, a Participant's employment will be substantial if the Participant
renders ten (10) days (or separate work shifts) in a calendar month. Each
Participant who is on Postponed Retirement shall receive from the Committee
the notice required by Section 4.18.
A Participant who retires on a Postponed Retirement Date, shall receive,
commencing on the Participant's Postponed Retirement Date, the pension
calculated pursuant to Section 4.1 based on the Participant's Postponed
Retirement Date.
4.16 Mandatory Commencement of Persons While Still Employed. Distribution of a
Participant's entire interest will commence not later than the April 1st
following the calendar year in which the Participant attains age 70-1/2 or,
in the case of an employee other than a 5% owner (as described in Code
Section 416(i)) who attained age 70 1/2 prior to January 1, 1988, the April
1st following the calendar year in which the Participant retires, if
4-7
<PAGE> 49
later.
The monthly benefit payable to a Participant shall reflect the
Participant's Accrued Monthly Pension determined as of the April 1st
following the calendar year in which the Participant attains age 70-1/2 and
shall be adjusted effective on the January 1 following the calendar year in
which the Participant's benefit payments commence and on each succeeding
January 1 that the Participant remains actively employed, to reflect the
effect of changes in the Participant's Accrued Monthly Pension since the
previous January 1. The final adjustment shall be made as of the
Participant's Postponed Retirement Date. Adjustments required by this
paragraph shall include a reduction equal to the Actuarial Equivalent of
benefit payments already made to the Participant. In no event, however,
shall the benefit payable to the Participant be reduced as a result of this
paragraph. Determination of monthly benefit payments under this paragraph
shall end with the payment made for the month in which occurs the
Participant's Postponed Retirement Date or date of death if earlier. The
date of the first payment to the Participant will be the Participant's
Annuity Starting Date and any optional form of pension elected under
Section 4.13 will be elected as of that date and will remain in effect.
4.17 Suspension of Benefits.
If a Participant resumes employment, and if such employment is substantial
as defined in Section 4.15, his pension shall be suspended during each
calendar month of such employment. Upon his subsequent
4-8
<PAGE> 50
retirement, his pension shall be recomputed, based on his Accrued Monthly
Pension accrued pursuant to Section 3.3 for his Benefit Service prior and
subsequent to such return to employment and his then attained age, and
reduced on an actuarial basis to take account of payments previously
received by him. Such recomputation and adjustment shall be to the extent
permitted by law. The Committee shall establish procedures which are
consistent with Department of Labor Regulation Section 2530.203-3,
including, but not limited to, procedures for the resumption of benefits
and the offsetting of benefit overpayments, if any, hereunder.
4.18 Notice of Suspension of Benefits.
The Committee shall prepare and deliver, to each Participant whose pension
is deferred pursuant to Section 4.15, or suspended pursuant to Section
4.17, a notice containing: (a) a description of the specific reasons for
the deferral or suspension of benefit payment; (b) a general description of
the Plan provisions relating to the deferral or suspension; (c) a copy of
such provisions; (d) a statement to the effect that applicable Department
of Labor regulations may be found in Section 2530.203-3 of the Code of
Federal Regulations; and (e) a description of the Plan's claims procedures.
Such notice shall be furnished to the Participant by personal delivery or
first class mail during the calendar month in which occurs his Normal
Retirement Date if his benefits are being deferred pursuant to Section
4.15, or during the first calendar month in which his benefits are
suspended pursuant to Section 4.17, whichever is applicable.
4-9
<PAGE> 51
4.19 Direct Rollovers (Effective January 1, 1993).
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Plan, a distributee may
elect, at the time and in the manner prescribed by the Committee, to have
any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
For purposes of this Section 4.19 the following definitions apply:
"Eligible Rollover Distribution" is any distribution of all or any portion
of the balance to the credit of the distributee, except that an eligible
rollover distribution does not include any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any distribution
that is not includible in gross income.
"Eligible Retirement Plan" is an individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in Section 403(a) of
the Code, or a qualified defined contribution plan described in Section
401(a) of the Code, that
4-10
<PAGE> 52
accepts that distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
"Distributee" includes an employee or former employee. In addition, the
employee's or former employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is the alternate payee under
a qualified domestic relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of the spouse or former
spouse.
"Direct Rollover" is a payment by the plan to the eligible retirement plan
specified by the distributee.
4.20 Deemed Cash Out. If a Participant terminates service, and the present value
of the Participant's vested accrued benefit derived from employer and
employee contributions is not greater than $3,500, the Participant shall
receive a distribution of the present value of the entire vested portion of
such accrued benefit and the nonvested portion will be treated as a
forfeiture. For purposes of this section, if the present value of a
Participant's vested accrued benefit is zero, the Participant shall be
deemed to have received a distribution of such vested accrued benefit.
4-11
<PAGE> 53
If a Participant receives or is deemed to receive a distribution pursuant
to this section and the Participant resumes covered employment under the
Plan, he or she shall have the right to restore his or her employer-derived
accrued benefit (including all optional forms of benefits and subsidies
relating to such benefits) to the extent forfeited upon the repayment to
the Plan of the full amount of the distribution plus interest, compounded
annually from the date of distribution at the rate determined for purposes
of Section 411(c)(2)(C) of the Code. Such repayment must be made before the
earlier of five years after the first date on which the participant is
subsequently reemployed by the employer, or the date the participant incurs
5 consecutive 1-year breaks in service following the date of distribution.
4.21 Nonduplication Of Benefits - Transfer Provision. Any benefit payable under
this Pension Plan to or on account of a former Active Participant who was
in the employment of an Affiliated Corporation other than the Participating
Company prior to becoming an Active Participant shall be reduced by the
amount of any pension benefit or death benefit or benefits of a similar
nature, whether or not deferred, which are payable from
4-12
<PAGE> 54
a qualified pension, profit sharing, or annuity plan maintained by such
Affiliated Corporation.
Any benefit payable under this Pension Plan to or on account of a former
Active Participant who was an Active Participant at the time his employment
with a Participating Company terminated shall be reduced by the amount of
any benefit payable from any qualified pension plan, other than this
Pension Plan, maintained by that Participating Company.
If a person who terminated his employment with an Affiliated Corporation
and received benefits as either a lump sum or in monthly payments, from any
qualified retirement plan of an Affiliated Corporation subsequently becomes
an Active Participant under the Plan and his prior period of service is
included under this Plan for purposes of calculating the amount of his
benefit, then the benefit otherwise payable from this Plan will be reduced
by the Actuarial Equivalent of the benefits he received prior to his
reemployment date.
4.22 Commencement Date of Pensions.
Unless the Participant, surviving spouse or other beneficiary as applicable
elects otherwise, payment of benefits shall begin no later than 60 days
following the end of the Plan Year in which occurs the later of:
(a) the Participant's 65th Birthday, or
4-13
<PAGE> 55
(b) the Participant's actual termination of employment.
The Committee shall inform the Participant or the Participant's spouse as
applicable of the right to defer any distribution of the Participant's
Accrued Monthly Pension until the Participant's Normal Retirement Date
unless the present value of Participant's pension is payable under Section
4.14 Small Amounts.
4.23 A Vested Participant shall not forfeit any portion of his Accrued Monthly
Pension for cause.
4.24 At the death of a former Active Participant who, at the time of his death,
was receiving a pension, his remaining interest under the Plan, if any,
will be distributed at least as rapidly as under the form of payment in
effect at the Participant's death.
4-14
<PAGE> 56
HANDY & HARMAN PENSION PLAN
Article 5
CONTRIBUTIONS
5.1 The Company shall pay directly to and under the Pension Trust all
contributions to provide or purchase the benefits of the Pension Plan. The
amount of such contributions to be made by the Company in and for any Plan
Year shall be the amount determined by the Board of Directors, or by any
person or party authorized by the Board of Directors. For the purposes of
such determination, the Board of Directors and such authorized person or
party may rely upon any actuarial valuations and recommendations made by any
individual or firm or department appointed by the Committee and qualified to
act as the consulting actuary for the Pension Plan.
5.2 Forfeitures arising hereunder shall not increase the benefit of any
Participant, but shall be applied to reduce future Company contributions to
the Pension Plan.
5.3 Employees shall not make contributions to this Pension Plan. If any
amendment to the Pension Plan shall require any contributions from any
employees or class of employees, such amendment shall not become effective
until after the expiration of the Plan Year in which the amendment is
adopted by the Board of Directors.
2B-1
<PAGE> 57
5.4 All reasonable expenses incurred in connection with the administration of
the Plan, including but not limited to the compensation and reimbursement of
expenses of the accountant, actuary, investment counsel, legal counsel,
Trustee, or other person who shall be employed in connection with the
administration thereof, shall be paid from the Pension Trust to the extent
not paid by the Company.
2B-2
<PAGE> 58
HANDY & HARMAN PENSION PLAN
Article 6
PENSION TRUST
6.1 The Pension Trust shall form a part of the Pension Plan.
6.2 The Pension Trustee shall be the person or persons or party or parties
appointed by the Board of Directors to serve at its pleasure and shall have
the exclusive authority and discretion to manage and control Pension Plan
assets.
6.3 The Pension Trust shall be evidenced by a pension trust agreement, and all
subsequent amendments, made and executed by and between the Company and the
Pension Trustee. The Pension Trust shall contain such terms and conditions
as may be agreed upon from time to time between the Company and the Pension
Trustee, subject to the provisions of Section 6.4 hereof. In the event more
than one Pension Trustee is appointed, the Trustees shall make such rules
for the conduct of their business as they may deem appropriate.
6.4 It shall be impossible at any time prior to the satisfaction of all
liabilities with respect to Participants, beneficiaries and surviving
spouses under the Trust, for any part of the corpus or income, to be used
for, or diverted to, purposes other than for the exclusive benefit of
Participants, beneficiaries and surviving spouses, provided that nothing
herein shall be deemed to prevent the return of any
6-1
<PAGE> 59
employer contribution (a) resulting from a mistake of fact, (b) conditioned
upon initial qualification of the Pension Plan under Section 4O1(a) of the
Code, or (c) conditioned upon deductibility under Section 4O4 of the Code,
within one year after the date of (a) payment of the contribution, (b) the
denial of initial qualification, or (c) the disallowance of the
contribution, respectively.
6.5 The Pension Trustee shall have the power to obtain such outside advice and
assistance as he may deem appropriate in the performance of his duties, and
to delegate such of his responsibilities, other than his responsibility to
manage and control Pension Plan assets, to such person or persons he may
deem appropriate.
6.6 The Pension Trustee shall have the power to appoint one or more investment
managers to manage all or any part of the assets of the Pension Plan, and
upon such appointment, the Pension Trustee shall not be under any obligation
to invest or manage any asset subject to the management of such investment
manager and shall have no liability for the acts or omissions of such
investment manager.
6.7 The Pension Trustee shall have no liability hereunder except by reason of
failure to discharge his duties hereunder solely in the interest of
Participants and beneficiaries and surviving spouses thereof in accordance
with the
6-2
<PAGE> 60
Pension Plan documents, with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.
6.8 In the event more than one Pension Trustee is appointed, such Trustees shall
have the power to allocate their responsibilities hereunder among themselves
in any manner they deem appropriate, by a written agreement signed by all
the Trustees. A copy of any such agreement shall be delivered to the
Administrative Committee and to the Secretary of the Company. In the event
they should so a1locate their duties among themselves, each Pension Trustee
shall be responsible only for those duties specifically allocated to him and
for those duties not specifically allocated to any other Pension Trustee.
6.9 The Pension Trustee shall serve without compensation if he is otherwise
compensated by the Company; however, in the event the Company does not do so
directly, the Pension Plan may reimburse the Pension Trustee for such
expenses as are actually and properly incurred.
6-3
<PAGE> 61
HANDY & HARMAN PENSION PLAN
Article 7
ADMINISTRATION OF THE PENSION PLAN
7.1 The general operation and administration of this Pension Plan and the
authority for carrying out the provisions hereof shall be placed in a
Committee which shall be called the Handy & Harman Pension Plan
Administrative Committee and such Committee shall be the named fiduciary for
the administration of the Pension Plan.
7.2 The Committee shall consist of not less than three individuals who shall be
appointed from time to time by the Board of Directors to serve at the
pleasure of the Board of Directors.
7.3 The Committee may appoint one of its number to act as its chairman, and may
appoint a secretary who need not be one of its number.
7.4 The Committee may employ such outside assistants and advisors in the
performance of its duties as it may deem helpful and, in its sole
discretion, may delegate to another person or persons the responsibility of
carrying out such of its duties hereunder as it may deem appropriate. The
Committee, by a written instrument signed by all individuals then on the
Committee, may delegate to any individual or individuals, who need not be
one of its number, the power to
7-1
<PAGE> 62
execute and deliver in the name of and on behalf of the Committee any
written instrument of any type which may be required at any time by any
person or party.
7.5 The Committee may establish rules from time to time for the transaction of
its business and for the administration of the Pension Plan.
7.6 The Committee may maintain, or cause to be maintained, such accounts and
records as it may deem necessary or advisable to properly reflect the
administration of the Pension Plan. Such accounts and records shall be
subject to audit at the close of each Plan Year by the Board of Directors or
by any person or party authorized by the Board of Directors. Each
Participant shall be entitled to examine at any reasonable time any such
account or record directly pertaining to him, but he shall have no right to
examine any account or record directly pertaining to any other person.
7.7 No fee or compensation shall be paid to any individual serving on the
Committee; however, in the event the Company does not do so directly, the
plan may reimburse Committee members for such expenses as they may have
properly and actually incurred.
7.8 No member of the Committee shall be responsible or liable for any act
7-2
<PAGE> 63
or omission except for failure to discharge his duties hereunder solely in
the interest of Participants, their beneficiaries, and surviving spouses,
in accordance with Plan documents, with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims.
7.9 The members of the Committee shall have the power to allocate their
responsibilities among themselves in any manner they may deem appropriate,
by a written agreement signed by all the members of the Committee holding
office on the date of such agreement. A copy of any such agreement shall be
delivered to the Secretary of the Company and to the Pension Trustee. In
the event the members of the Committee should so allocate their
responsibilities, each Committee member shall be liable only for those
duties allocated to him and for those duties not specifically allocated to
any other member of the Committee.
7.10 Each Participant, beneficiary or surviving spouse entitled to receive a
benefit hereunder shall submit an application for benefits to the Committee
at 250 Park Avenue, New York, New York, 10177 its principal place of
business.
7-3
<PAGE> 64
Applications for benefits must be in writing on the forms prescribed by the
Committee and must be signed by the Participant, or in the case of a death
benefit, by the beneficiary or legal representative of the deceased
participant. The Committee reserves the right to require that the
Participant furnish proof of his age and that of his spouse or co-pensioner,
if any, prior to processing any application.
Each application shall be acted upon and approved or disapproved by the
Committee within sixty days following its receipt by the Committee. In the
event any application for benefits is denied, in whole or in part, the
Committee shall notify the applicant in writing of such denial and of his
right to a review by the Committee and shall set forth in a manner
calculated to be understood by the applicant, specific reasons for such
denial, specific references to pertinent Pension Plan provisions on which
the denial is based, a description of any additional material or information
necessary for the applicant to perfect his application, an explanation of
why such material or information is necessary, and an explanation of the
Pension Plan's review procedure.
Any person, or his duly authorized representative, whose application for
benefits is denied in whole or in part may appeal from such denial to the
Committee for
7-4
<PAGE> 65
a review of the decision by submitting to the Committee within one year
after receiving written notice from the Committee of the denial of his claim
a written statement:
(a) Requesting a review of his application for benefits by the
Committee;
(b) Setting forth all of the grounds upon which his request for review
is based and any facts in support thereof; and
(c) Setting forth any issues or comments which the applicant deems
pertinent to his application.
The Committee shall meet to review appeals submitted to it. The Committee
shall act upon each appeal within sixty days after receipt of all data
necessary for its determination by the Committee, or within one hundred and
twenty days under special circumstances.
The Committee may require the Affiliated Corporation or the applicant to
submit such additional facts, documents, or other evidence which the
Committee, in its sole discretion, deems necessary or advisable in making
such a review. On the basis of its review, the Committee shall make an
independent determination of the applicant's eligibility for benefits under
the Pension Plan. The decision of the Committee on any application for
benefits shall be final and conclusive upon all persons.
7-5
<PAGE> 66
7.11 Each person with respect to whom benefits from the Pension Plan may be
payable at death shall name a beneficiary to receive any such benefit
(other than a benefit payable to his surviving spouse as such) on a form
furnished by and filed with the Committee. Any such person shall during his
lifetime have the right to change his beneficiary by filing written notice
to that effect with the Committee on a form furnished by the Committee.
Such change shall take effect on receipt of such notice by the Committee.
Any payment made from the Pension Plan prior to the receipt of notice of
change of beneficiary shall to the extent of such payment relieve the
Pension Plan of its obligation.
If benefits are payable from the Pension Plan at the death of a person
(other than a benefit payable to his surviving spouse as such) but no
beneficiary named by the person is surviving to receive the benefits, the
following rules will apply:
(a) If the benefit payable is not in the form of a single sum, periodic
benefits payable shall be commuted to their Actuarial Equivalent.
(b) The benefit shall then be paid in a single sum to the surviving
relatives of such person in the following order: spouse, child or
children in equal parts, mother, father, or if no such relative
survives, then to the executor or administrator of the deceased
person.
7-6
<PAGE> 67
7.12 In the event that it is determined that a person who is entitled to
benefits from the Pension Plan is a minor or is unable to care for his
affairs because of illness, accident, or incompetency, either mental or
physical, unless claim shall have been made therefor by a legally appointed
guardian or other legal representative of such person, any payments due
such person may, but need not, be paid in the sole discretion of the
Committee to an individual or an institution who appears to the Committee
to assume responsibility for the care, custody or support of such person
and such payment shall to the extent thereof release the Pension Plan from
any further obligation or liability.
7.13 Notwithstanding any other provision contained herein, the Committee shall
have the sole and absolute discretion to determine eligibility for benefits
under the Plan and to construe and interpret the provisions of the Plan and
Trust Agreement, including, but not limited to, doubtful or disputed terms,
and to make factual determinations with respect thereto. The decision of a
majority of the then Committee shall govern and control and shall be final
and binding on the Participating Company, the Pension Trustee, each
Participant and beneficiary or surviving spouse thereof and every other
person or party. Such decision may be evidenced by a vote at any meeting at
which a majority of the Committee is present in person or by proxy or such
decision may be evidenced by a written instrument signed by a majority of
the Committee when no meeting is held.
7-7
<PAGE> 68
HANDY & HARMAN PENSION PLAN
Article 8
AMENDMENTS TO THE PENSION PLAN
8.1 The Board of Directors by board resolution shall have the exclusive right at
any time and from time to time (and retroactively if deemed necessary or
appropriate to meet the requirements of Section 401(a) of the Code and of
ERISA and any similar provisions of subsequent revenue or other laws, or the
rules and regulations from time to time in effect under any of such laws or
to conform with governmental regulations or other policies) to modify or
amend in whole or in part any or all of the provisions of the Plan;
provided, however, that no such modification or amendment shall make it
possible for any part of the corpus or income of the Trust Fund to be used
for, or diverted to, purposes other than for the exclusive benefit of
Participants and their joint or contingent annuitants and beneficiaries
under the Plan prior to the satisfaction of all liabilities with respect to
Participants and their joint or contingent annuitants and beneficiaries
under the Plan.
8.2 No amendment to the Plan, including a change in the actuarial basis for
determining optional or early retirement benefits, shall be effective to the
extent that it has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's accrued benefit may
be reduced to the extent permitted under Section 412(c)(8) of the Code. For
purposes of this paragraph, a Plan amendment which has the effect of (1)
eliminating or reducing
8-1
<PAGE> 69
an early retirement benefit or a retirement-type subsidy, or (2) eliminating
an optional form of benefit, with respect to benefits attributable to
service before the amendment shall be treated as reducing accrued benefits.
Furthermore, no amendment to the Plan shall have the effect of decreasing a
Participant's vested interest determined without regard to such amendment as
to the later of the date such amendment is adopted, or becomes effective.
8.3 If the Plan's vesting schedule is amended or if the Plan is amended in any
way that directly or indirectly affects the computation of a Participant's
nonforfeitable percentage, each Participant with three (3) or more years of
Continuous Service may elect within a reasonable period of time to have his
vested Accrued Monthly Pension determined under the Plan without regard to
such amendment or change unless such amendment automatically provides that
the higher nonforfeitable percentage will be applied. The period during
which the election may be made shall commence with the date the amendment is
adopted or deemed to be adopted and shall end on the latest of: (a) 60 days
after the amendment is adopted, (b) 60 days after the amendment becomes
effective; or (c) 60 days after the Participant is issued written notice of
the amendment by the Committee.
8-2
<PAGE> 70
HANDY & HARMAN PENSION PLAN
Article 9
TERMINATION OF THE PENSION PLAN
9.1 While the Company intends to continue the Plan indefinitely, nevertheless it
assumes no contractual obligation as to its continuation and the Board of
Directors may terminate or partially terminate the Plan or may discontinue
the participation in the Plan of the employees or any Participating Company
so that after the date of such discontinuance such employees shall accrue no
further benefits under the Plan. If the Plan is terminated or partially
terminated, the affected Participants shall be one hundred percent (100%)
vested in their accrued benefits to the extent then funded.
Upon termination of the Plan, or to determine the level of funding of an
accrued benefit in the event of a partial termination of the Plan, Plan
assets, after payment of all expenses of administration or liquidation,
shall be allocated in accordance with Section 4044 of ERISA provided such
allocation does not result in prohibited discrimination under section
401(a)(4) of the Code. If such allocation does result in prohibited
discrimination, Plan assets may be allocated, at the direction of the
Committee, in any manner acceptable to the Internal Revenue Service and the
Pension Benefit Guaranty Corporation.
Upon termination of partial termination of the Plan, benefits may be
provided through the purchase of annuities or by any other means
9-1
<PAGE> 71
deemed appropriate by the Committee. Solely to the extent required by ERISA,
a Participating Company shall make such additional contributions to the Plan
after the Plan terminates as shall be required by ERISA.
After satisfaction of all accrued liabilities of the Plan with respect to
Participants and their joint and contingent annuitants and beneficiaries
under the Plan, any assets that remain shall be deemed to be the result of
actuarial error and shall be paid to the then Participating Companies in
such proportion as the Committee shall determine.
9.2 The board of directors of any Participating Company shall have the right to
terminate the Plan with respect to its employees and Participants.
9-2
<PAGE> 72
HANDY & HARMAN PENSION PLAN
Article 10
TEMPORARY LIMITATION ON BENEFITS FOR HIGHLY-PAID EMPLOYEES
10.1 Prior to the date the pretermination restrictions in Section 10.3 are
effective, the benefits to be provided to certain participants will be
subject to the limitation set forth in this Section 10.1.
The provisions of this Article 10 shall apply to a Participant who is one
of the twenty-five highest-paid employees of any Participating Company on
any "Commencement Date" whose anticipated benefits under the Pension Plan
at his Normal Retirement Date exceed $1,500 per year. "Commencement Date"
shall mean the effective date of the Pension Plan or any amendment to the
Pension Plan which substantially increases the benefits provided thereby.
In the event that during the first 10 years following a Commencement Date
the Pension Plan is terminated, the amount of the benefits provided under
the Pension Plan for any such Participant shall not be greater than the
benefits that can be provided by the largest of the following amounts:
(a) The contributions (or funds attributable thereto) which would have been
applied to provide the benefit if the Pension Plan as in effect on the
day preceding such Commencement Date had been continued without change;
(b) $20,000; or
(c) The sum of (i) the contributions (or funds attributable thereto) which
would have been applied to provide benefits for the
10-1
<PAGE> 73
Participant if the Pension Plan had been terminated on the day before such
Commencement Date, plus (ii) an amount computed by multiplying the smaller
of $10,000 or twenty percent of the average annual remuneration of such
Participant during the last five years of service by the number of years
since such Commencement Date; or
(d) (i) with respect to a Participant who is one of the 25 highest-paid
employees and who is also a substantial owner (as defined in section
4022(b)(5) of ERISA) the present value of the benefit guaranteed for
such Participant under section 4022 of ERISA, or if the plan has not
terminated, the present value of the benefit that would be guaranteed
if the plan terminated on the date the benefit commences, determined in
accordance with regulations of the PBGC; and (ii) with respect to a
Participant who is one of the 25 highest-paid employees but not a
substantial owner, the present value of the maximum benefit described
in section 4022(b)(3)(B) of ERISA (determined on the earlier of the
date the plan terminates or the date benefits commence, and determined
in accordance with regulations of PBGC) without regard to any other
limitations in section 4022 of ERISA.
10.2 Any funds released by the operation of the provisions of Section 10.1 shall
be allocated in the manner provided for in Section 9.1, but excluding from
such allocation any person whose benefits are reduced by the provisions of
Section 10.1.
10-2
<PAGE> 74
10.3 New Pretermination Restrictions
(a) For Plan Years beginning on or after January 1, 1994, benefits
distributed to any of the 25 most highly compensated active and highly
compensated former employees with the greatest compensation in the
current or any prior year are restricted such that the annual payments
are no greater than an amount equal to the payment that would be made
on behalf of the employee under a straight life annuity that is the
actuarial equivalent of the sum of the employee's accrued benefit, the
employee's other benefits under the Plan (other than a social security
supplement, within the meaning of section 1.411(a)-7(c)(4)(ii) of the
Income Tax Regulations), and the amount the employee is entitled to
receive under a social security supplement.
(b) The preceding paragraph shall not apply if:
(i) after payment of the benefit to an employee described in the
preceding paragraph, the value of Plan assets equals or exceeds
110% of the value of current liabilities, as defined in section
412(l)(7) of the Internal Revenue Code,
(ii) the value of the benefits for an employee described above is less
than 1% of the value of current liabilities before distribution, or
(iii) the value of the benefits payable under the Plan to an employee
described above does not exceed $3,500.
(c) An employee's otherwise restricted benefit may be distributed in full
to the affected employee if prior to receipt of the
10-3
<PAGE> 75
restricted amount, the employee enters into a written agreement with
the Committee to secure repayment to the Plan of the restricted amount.
10-4
<PAGE> 76
HANDY & HARMAN PENSION PLAN
Article 11
LIMITATIONS ON BENEFITS
11.1 Annual Benefit. For purposes of this Article, "annual benefit" means
the benefit payable annually under the terms of the Plan (exclusive of
any benefit not required to be considered for purposes of applying the
limitations of Code Section 415 to the Plan) payable in the form of a
straight life annuity with no ancillary benefits. If the benefit under
the Plan is payable in any other form, the "annual benefit" shall be
adjusted to the equivalent of a straight life annuity pursuant to
Section 11.3(e).
11.2 Maximum Annual Benefit
(a) Notwithstanding the foregoing and subject to the exceptions
below, the maximum "annual benefit" payable to a participant
under this Plan in any "limitation year" shall equal the
lesser of: (1) $90,000 or (2) one hundred percent (100%) of
the participant's Compensation averaged over the three
consecutive "limitation years" (or actual number of
"limitation years" for participants who have been employed for
less than three consecutive "limitation years") during which
the participant had the greatest aggregate Compensation.
(b) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Plan Year.
(c) Notwithstanding anything in this Article to the contrary, if
the Plan was in existence on May 6, 1986, and had compiled at
all
11-1
<PAGE> 77
times with the requirements of Code Section 415, the maximum
"annual benefit" for any individual who is a participant as of
the first day of the "limitation year" beginning after
December 31, 1986, shall not be less than the "current accrued
benefit". "Current accrued benefit" shall mean a participant's
accrued benefit under the Plan, determined as if the
participant had separated from service as of the close of the
last "limitation year" beginning before January 1, 1987, when
expressed as an annual benefit within the meaning of Code
Section 415(b)(2). In determining the amount of a
participant's "current accrued benefit", the following shall
be disregarded: (1) any change in the terms and conditions of
the Plan after May 5, 1986; and (2) any cost of living
adjustment occurring after May 5, 1986.
(d) The dollar limitation under Code Section 415(b)(1)(A) stated
in paragraph (a)(1) above shall be adjusted annually as
provided in Code Section 415(d) pursuant to the applicable
regulations. The adjusted limitation is effective as of
January 1st of each calendar year and is applicable to
"limitation years" ending with or within the calendar year.
(e) The limitation stated in paragraph (a)(2) above for
participants who have separated from service with a
non-forfeitable right to an accrued benefit shall be adjusted
annually as provided in Code Section 415(d) pursuant to the
regulations prescribed by the Secretary of the Treasury.
(f) For the purpose of this Article, all qualified defined benefit
plans (whether terminated or not) ever maintained by the
employer
11-2
<PAGE> 78
shall be treated as one defined benefit plan, and all
qualified defined contribution plans (whether terminated or
not) ever maintained by the employer shall be treated as one
defined contribution plan.
(g) For the purpose of this Article, if the employer is a member
of a controlled group of corporations, trades or businesses
under common control (as defined by Code Section 1563(a) or
Code Section 414(b) and (c) as modified by Code Section
415(h)) or is a member of an affiliated service group (as
defined by Code Section 414(m)), all employees of such
employers shall be considered to be employed by a single
employer.
(h) For the purpose of this Article, if this Plan is a Code
Section 413(c) plan, all employers of a participant who
maintain this Plan will be considered to be a single employer.
11.3 Adjustments to Annual Benefit and Limitations
(a) If the "annual benefit" begins before the participant's Social
Security Retirement Age, but on or after age 62, the $90,000
limitation shall be reduced by: (1) in the case of a
participant whose Social Security Retirement Age is 65, 5/9 of
1% for each month by which benefits commence before the month
in which the participant attains age 65, or (2) in the case of
a participant whose Social Security Retirement Age is greater
than 65, 5/9 of 1% for each of the first 36 months and 5/12 of
1% for each of the additional months (up to 24) by which
benefits commence before the month in which the participant
attains his Social Security
11-3
<PAGE> 79
Retirement Age. If the "annual benefit" begins before age 62,
the $90,000 limitation shall be the actuarial equivalent of
the participant's limitation for benefits commencing at age
62, reduced for each month by which benefits commence before
the month in which the participant attains age 62. In order to
determine actuarial equivalence for this purpose, the interest
rate assumption is the greater of five percent (5%) or the
rate specified in Section 1.1.
(b) Notwithstanding Section 11.3 (a) above, for "limitation years"
beginning prior to January 1, 1987, the $90,000 limit shall
not be reduced if the annual benefit begins on or after age
62. If the "annual benefit" begins before age 62, the $90,000
limitation shall be reduced so that it is the actuarial
equivalent of the $90,000 limitation beginning at age 62.
However, the $90,000 limitation shall not be actuarially
reduced to less than: (1) $75,000 if the "annual benefit"
commences on or after age 55, or (2) the amount which is the
actuarial equivalent of the $75,000 limitation at age 55 if
the "annual benefit" commences prior to age 55. For purposes
of adjusting the $90,000 limitation applicable prior to age 62
or the $75,000 limitation applicable prior to age 55, the
adjustment shall be made pursuant to Section 1.01 except that
the interest rate assumption shall be the greater of five
percent (5%) or the rate specified in Section 1.1 and the
mortality decrement shall be ignored to the extent that a
forfeiture does not occur at death.
(c) If the "annual benefit" begins after the participant's Social
11-4
<PAGE> 80
Security Retirement Age (or for Plan Years beginning prior to
January 1, 1987, age 65) the $90,000 limitation shall be
increased so that it is the actuarial equivalent of the
$90,000 limitation at the participant's Social Security
Retirement Age (or for Plan Years beginning prior to January
1, 1987, age 65).
(d) For purposes of adjusting the "annual benefit" to a straight
life annuity, the adjustment shall be made pursuant to Section
1.1 except that the interest rate assumption shall be the
greater of five percent (5%) or the rate specified in Section
1.1.
(e) For purposes of adjusting the $90,000 limitation applicable
after the participant's Social Security Retirement Age (or for
Plan Years beginning prior to January 1, 1987, age 65) the
adjustment shall be made pursuant to Section 1.1 except that
the interest rate assumption shall be the lesser of five
percent (5%) or the rate specified in Section 1.1 and the
mortality decrement shall be ignored to the extent that a
forfeiture does not occur at death.
(f) For purposes of Sections 11.1, 11.3(a) and 11.3(b), no
adjustments under Code Section 415(d) shall be taken into
account before the "limitation year" for which such adjustment
first takes effect.
(g) For purposes of Section 11.1, no adjustment is required for
qualified joint and survivor annuity benefits, pre-retirement
death benefits and post-retirement medical benefits.
11-5
<PAGE> 81
11.4 Annual Benefit Not In Excess of $10,000. This Plan may pay an "annual
benefit" to any participant in excess of his maximum "annual benefit"
if the "annual benefit" derived from employer contributions under this
Plan and all other defined benefit plans maintained by the employer
does not in the aggregate exceed $10,000 for the "limitation year" or
for any prior "limitation year" and the employer has not at any time
maintained a defined contribution plan in which the participant
participated. For purposes of this paragraph, if this Plan provides for
voluntary or mandatory employee contributions, such contributions will
not be considered a separate defined contribution plan maintained by
the employer.
11.5 Participation Or Service Reductions. If a participant has less than ten
(10) years of participation in the Plan at the time he begins to
receive benefits under the Plan, the limitations in Section 11.2(a)(1)
and 11.3 shall be reduced by multiplying such limitations by a fraction
(a) the numerator of which is the number of years of participation (or
part thereof) in the Plan and (b) the denominator of which is ten (10),
provided, however, that said fraction shall in no event be less than
1/10th. The limitations of Section 11.2(a)(2) and 11.4 shall be reduced
in the same manner except the preceding sentence shall be applied with
respect to years of service with the Employer rather than years of
participation in the Plan.
11.6 Multiple Plan Reduction.
(a) If an employee is (or has been) a participant in one or more
11-6
<PAGE> 82
defined benefit plans and one or more defined contribution
plans maintained by the Employer, the sum of the defined
benefit plan fraction and the defined contribution plan
fraction for any "limitation year" may not exceed 1.0.
(b) The defined benefit plan fraction for any "limitation year" is
a fraction, the numerator of which is the sum of the
participant's projected annual benefits under all the defined
benefit plans (whether or not terminated) maintained by the
employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the
"limitation year" under Code Sections 415(b) and (d) or 140
percent of the highest average compensation, including any
adjustments under Code Section 415(b).
Notwithstanding the above, if the participant was a
participant as of the first day of the first "limitation year"
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125 percent of the sum of the annual
benefits under such plans which the participant had accrued as
of the close of the last "limitation year" beginning before
January 1, 1987, disregarding any changes in the terms and
conditions of the plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the
11-7
<PAGE> 83
requirements of Code Section 415 for all "limitation years"
beginning before January 1, 1987.
(c) (1) The defined contribution plan fraction for any
"limitation year" is a fraction, the numerator of
which is the sum of the annual additions to the
participant's account under all the defined
contribution plans (whether or not terminated)
maintained by the employer for the current and all
prior "limitation years" (including the annual
additions attributable to the Participant's
nondeductible employee contributions to all defined
benefit plans, whether or not terminated, maintained
by the employer, and the annual additions
attributable to all welfare benefit funds, as defined
in Code Section 419(e), and individual medical
accounts, as defined in Code Section 415(l)(2),
maintained by the employer), and the denominator of
which is the sum of the maximum aggregate amounts for
the current and all prior "limitation years" of
service with the employer (regardless of whether a
defined contribution plan was maintained by the
employer). The maximum aggregate amount in any
"limitation year" is the lesser of 125 percent of the
dollar limitation determined under Code Section
415(b) and (d) in effect under Code Section
415(c)(1)(A) or 35 percent of the participant's
Compensation for such year.
If the employee was a participant as of the end of
the first day of the first "limitation year"
beginning after December
11-8
<PAGE> 84
31, 1986, in one or more defined contribution plans
maintained by the employer which were in existence on
May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount
equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from
the numerator of this fraction. The adjustment is
calculated using the fractions as they would be
computed as of the end of the last "limitation year"
beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Code Section
415 limitation applicable to the first "limitation
year" beginning on or after January 1, 1987. The
annual addition for any "limitation year" beginning
before January 1, 1987 shall not be recomputed to
treat all employee contributions as annual additions.
(2) For purposes of this Article, the term "participant's
account" shall mean the account established and
maintained by the administrator for each participant
with respect to his total interest in the defined
contribution plan maintained by the employer
resulting from "annual additions".
(3) For purposes of this Article, the term "annual
additions" shall mean the sum credited to a
"participant's account" for
11-9
<PAGE> 85
any "limitation year" of (A) employer contributions,
(B) employee contributions, (C) forfeitures, (D)
amounts allocated after March 31, 1984, to an
individual medical account, as defined in Code
Section 415(l)(2) which is part of a pension or
annuity plan maintained by the Employer, and (E)
amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending
after such date, which are attributable to
post-retirement medical benefits allocated to the
separate account of a key employee (as defined in
Code Section 419A(d)(3)) under a welfare benefit plan
(as defined in Code Section 419(e)) maintained by the
Employer. Except, however, the percentage limitation
referred to in (4)(B) below shall not apply to: (1)
any contribution for medical benefits (within the
meaning of Code Section 419A(f)(2)) after separation
from service which is otherwise treated as an "annual
addition", or (2) any amount otherwise treated as an
"annual addition" under Code Section 415(l)(1).
Notwithstanding the foregoing, for "limitation years"
beginning prior to January 1, 1987, only that portion
of employee contributions equal to the lesser of
employee contributions in excess of six percent (6%)
of Compensation or one-half of employee contributions
shall be considered an "annual addition".
(4) If, as a result of a reasonable error in estimating a
participant's Compensation or other facts and
circumstances to which Regulation 1.415-6(b)(6) shall
be applicable,
11-10
<PAGE> 86
voluntary employee contributions for the "limitation
year" would cause the "annual additions" credited to
a "participant's account" to exceed the lesser of (A)
$30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code Section 415(b)(1)(A))
or (B) twenty-five percent (25%) of the participant's
Compensation for such limitation year, the
administrator shall, pursuant to Regulation
1.415-6(b)(6)(iv), return such voluntary employee
contributions so the participant to the extent
necessary so that "annual additions" for the
"limitation year" do not exceed the lesser of (A) or
(B).
(d) Notwithstanding the foregoing, for any "limitation year" in
which the Plan is a Top Heavy Plan, 100 percent shall be
substituted for 125 percent in Sections 11.6(b) and 11.6(c)(1)
unless the extra minimum benefit is being provided pursuant to
Section 12.4. However, for any "limitation year" in which the
Plan is a Super Top Heavy Plan, 100 percent shall be
substituted for 125 percent in any event.
(e) If the sum of the defined benefit plan fraction and the
defined contribution plan fraction shall exceed 1.0 in any
"limitation year" for any participant in this Plan, the
Committee shall adjust the numerator of the defined benefit
plan fraction so that the sum of both fractions shall not
exceed 1.0 in any "limitation year" for such participant.
11.7 Incorporation By Reference. Notwithstanding anything contained in
11-11
<PAGE> 87
this Article to the contrary, the limitations, adjustments and other
requirements prescribed in this Article shall at all times comply with
the provisions of Code Section 415 and the Regulations thereunder, the
terms of which are specifically incorporated herein by reference.
11.8 "Compensation" with respect to any participant for purposes of Article
11 and 12 means such participant's wages as defined in Code Section
3401(a) and all other payments of compensation by the Employer (in the
course of the Employer's trade or business) for a Plan Year for which
the Employer is required to furnish the participant a written statement
under Code Sections 6041(d), 6051(a)(3) and 6052. "Compensation" must
be determined without regard to any rules under Code Section 3401(a)
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
11.9 "Social Security Retirement Age" means the age used as the retirement
age under Section 216(l) of the Social Security Act, except that such
section shall be applied without regard to the age increase factor and
as if the early retirement age under Section 216(l)(2) of such Act were
62.
11-12
<PAGE> 88
HANDY & HARMAN PENSION PLAN
Article 12
TOP-HEAVY PROVISIONS
12.1 Top Heavy Plan Requirements. For any Top Heavy Plan Year, the Plan
shall provide the special vesting requirements of Code Section 416(b)
pursuant to Section 12.3 of the Plan and the special minimum benefit
requirements of Code Section 416(c) pursuant to Section 12.4 of the
Plan.
12.2 Determination of Top Heavy Status.
(a) This Plan shall be a Top Heavy Plan for any Plan Year
commencing after December 31, 1983 in which, as of the
Determination Date, (1) the Present Value of Accrued Benefits
of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation
Group, exceeds sixty percent (60%) of the Present Value of
Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an
Aggregation Group.
If any participant is a Non-Key Employee for any Plan Year,
but such participant was a Key Employee for any prior Plan
Year, such participant's Present Value of Accrued Benefit
and/or Aggregate Account balance shall not be taken into
account for purposes of determining whether this Plan is a Top
Heavy or Super Top Heavy Plan (or whether any Aggregation
Group which includes this Plan is a Top Heavy Group). In
addition, for Plan Years beginning
12-1
<PAGE> 89
after December 31, 1984, if a participant or former
participant has not performed any services for any employer
maintaining the Plan at any time during the five year period
ending on the Determination Date, any accrued benefit for such
participant or former participant shall not be taken into
account for the purposes of determining whether this Plan is a
Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
commencing after December 31, 1983 in which, as of the
Determination Date, (1) the Present Value of Accrued Benefits
of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees Under this Plan and all plans of an Aggregation
Group, exceeds ninety percent (90%) of the Present Value of
Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an
Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date shall be determined under applicable
provisions of the defined contribution plan used in
determining Top Heavy Plan status.
(d) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the
employer in which a Key Employee is a participant in
the Plan Year containing the Determination Date or
any of the four preceding Plan Years, and each other
plan of the employer
12-2
<PAGE> 90
which enables any plan in which a Key Employee
participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each
plan in the group will be considered a Top Heavy Plan
if the Required Aggregation Group is a Top Heavy
Group. No plan in the Required Aggregation Group will
be considered a Top Heavy Plan if the Required
Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The employer may also
include any other plan not required to be included in
the Required Aggregation Group, provided the
resulting group, taken as a whole, would continue to
satisfy the provisions of Code Sections 401(a)(4) and
410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group
will be considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in
the Permissive Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is
not a Top Heavy Group.
(3) Only those plans of the employer in which the
Determination
12-3
<PAGE> 91
Dates fall within the same calendar year shall be
aggregated in order to determine whether such plans
are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated
plan of the employer if it was maintained within the
last five (5) years ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last
day of such Plan Year.
(f) "Key Employee" means an employee, a former employee, or the
beneficiary under the Plan of a former employee who, in the
Plan Year containing the Determination Date, or any of the 4
preceding Plan Years, is:
(1) An officer of the employer having an annual
compensation greater than 50% of the amount in effect
under Section 415(b)(1)(A) of the Code, for any such
Plan Year. (Not more than 50 employees or, if lesser,
the greater of 3 employees or 10% of the employees
shall be considered as officers for purposes of this
paragraph);
(2) One of the 10 employees owning (or considered as
owning within the meaning of Section 318 of the
Internal Revenue Code of 1986, as amended) the
largest interest in the employer, who has more than
0.5% ownership interest in value, and whose
Compensation equals or exceeds the maximum dollar
limitation under Section 415(c)(1)(A) of the Code, as
in effect for the calendar year in which the
Determination
12-4
<PAGE> 92
Date falls;
(3) A 5% owner of the employer; or
(4) A 1% owner of the employer having an annual
Compensation from the employer of more than $150,000.
Whether an employee is a 5% owner or a 1% owner shall be
determined in accordance with Section 416(i) of the Code.
(g) Present Value of Accrued Benefit: In the case of a defined
benefit plan, a participant's Present Value of Accrued Benefit
shall be determined:
(1) in the case of a participant other than a Key
Employee, using the single accrual method used for
all plans of the employer and affiliated employers,
or if no such single method exists, using a method
which results in benefits accruing not more rapidly
than the slowest accrual rate permitted under Code
Section 411(b)(1)(C).
(2) as of the most recent "actuarial valuation date",
which is the most recent valuation date within a
twelve (12) month period ending on the Determination
Date.
(3) for the first Plan Year, as if (a) the participant
terminated service as of the Determination Date; or
(b) the participant terminated service as of the
actuarial valuation date, but taking into account the
estimated accrued benefits as of the Determination
Date.
(4) for the second Plan Year, the accrued benefit taken
into account for a current participant must not be
less than the
12-5
<PAGE> 93
accrued benefit taken into account for the first Plan
Year unless the difference is attributable to using
an estimate of the accrued benefit as of the
Determination Date for the first Plan Year and using
the actual accrued benefit for the second Plan Year.
(5) for any other Plan Year, as if the participant
terminated service as of the actuarial valuation
date.
(6) the actuarial valuation date must be the same date
used for computing the defined benefit plan minimum
funding costs, regardless of whether a valuation is
performed that Plan Year.
(7) by not taking into account proportional subsidies.
(8) by taking into account nonproportional subsidies.
(h) The calculation of a participant's Present Value of Accrued
Benefit as of a Determination Date shall be the sum of:
(1) the Present Value of Accrued Benefit using the
actuarial assumptions of Section 1.1, which
assumptions shall be identical for all defined
benefit plans being tested for Top Heavy Plan status.
(2) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four
(4) preceding Plan Years. However, in the case of
distributions made after the valuation date and prior
to the Determination Date, such distributions are not
included as distributions for top heavy purposes to
the extent that such distributions are already
included in the participant's Present Value of
12-6
<PAGE> 94
Accrued Benefit as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated
plan which if it had not been terminated would have
been required to be included in an Aggregation Group,
will be counted. Further, benefits paid on account of
death, to the extent such benefits do not exceed the
Present Value of Accrued Benefits existing
immediately prior to death, shall be treated as
distributions for the purposes of this paragraph.
(3) any employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible Qualified Voluntary Employee Contributions
shall not be considered to be a part of the
participant's Present Value of Accrued Benefit.
(4) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the
employee and made from a plan maintained by one
employer to a plan maintained by another employer),
if this Plan provides the rollovers or plan-to-plan
transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the
purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers,
it shall not consider such rollovers or plan-to- plan
transfers accepted after December 31,1983, as part of
the participant's Present Value of Accrued Benefit.
12-7
<PAGE> 95
However, rollovers or plan-to-plan transfers accepted
prior to January 1, 1984, shall be considered as part
of the participant's Present Value of Accrued
Benefit.
(5) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the employee
or made to a plan maintained by the same employer),
if this Plan provides the rollovers or plan-to-plan
transfers, it shall not be counted as a distribution
for purposes of this Section. If this Plan is the
plan accepting such rollovers or plan-to-plan
transfers, it shall consider such rollovers or
plan-to-plan transfers as part of the participant's
Present Value of Accrued Benefit, irrespective of the
date on which such rollovers or plan-to-plan
transfers are accepted.
(6) for the purposes of determining whether two employers
are to be treated as the same employer in (4) and (5)
above, all employers aggregated under Code Section
414(b), (c), (m) or (o) are treated as the same
employer.
(i) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included in
the group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum
determined for all participants.
12-8
<PAGE> 96
12.3 Vesting For Top Heavy Plan. Notwithstanding the vesting provided for in
Section 2.5, for any Top Heavy Plan Year, the vested portion of the
accrued benefit of any participant who has an Hour of Service after the
Plan becomes top heavy shall be a percentage of the participant's
accrued benefit determined on the basis of the participant's number of
years of service according to the following schedule:
Vesting Schedule
Continuous Service Percentage
------------------ ----------
Less than 3 0%
3 100%
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy Plan,
the Committee shall revert to the vesting schedule in effect before
this Plan became a Top Heavy Plan. Any such reversion shall be treated
as a Plan amendment pursuant to the terms of the Plan.
12.4 Minimum Benefit Requirement For Top Heavy Plan
(a) The minimum accrued benefit derived from employer
contributions to be provided under this Section for each
employee who is a participant during a Top Heavy Plan Year
shall equal the product of (1) one-twelfth (1/12th) of
Compensation averaged over the five (5) consecutive
"limitation years" (or actual number of "limitation years," if
less) which produce the highest average, and (2) the lesser of
(i) two percent (2%) multiplied by Credited Service, or (ii)
twenty percent (20%), expressed as a single life annuity.
12-9
<PAGE> 97
However, for any Plan Year when (1) the Plan is a Top Heavy
Plan but not a Super Top Heavy Plan and (2) a Key Employee is
a participant in both this Plan and a defined contribution
plan included in a Required Aggregation Group which is top
heavy, the extra minimum accrued benefit (required by Section
11.6(d) to provide the higher limitations) shall be provided
for each employee who is a participant by substituting three
percent (3%) for two percent (2%) and thirty percent (30%) for
twenty percent (20%) above.
(b) For purposes of providing the minimum benefit under Code
Section 416, an employee who is not a participant solely
because (1) his Compensation is below a stated amount or (2)
he declined to make mandatory contributions (if required) to
the plan will be considered to be a participant. Furthermore,
such minimum benefit shall be provided regardless of whether
such employee is employed on a specified date.
(c) For purposes of this Section, Benefit Service for any Plan
Year beginning before January 1, 1984, or for any Plan Year
during which the Plan was not a Top Heavy Plan shall be
disregarded.
(d) For purposes of this Section Compensation, for any "limitation
year" ending in a Plan Year which began prior to January 1,
1984, subsequent to the last "limitation year" during which
the Plan is a Top Heavy Plan, or in which the participant
failed to complete a year of service, shall be disregarded.
(e) If Article 4 provides for the Normal Retirement Benefit to be
paid in a form other than a single life annuity, the accrued
12-10
<PAGE> 98
benefit under this Section shall be the Actuarial Equivalent
of the minimum Accrued benefit under (a) above pursuant to
Section 1.1.
(f) If payment of the minimum accrued benefit commences at a date
other than Normal Retirement Date, the minimum accrued benefit
shall be the Actuarial Equivalent of the minimum accrued
benefit commencing at Normal Retirement Date pursuant to
Section 1.1.
(g) If a Non-Key Employee participates in this Plan and a defined
contribution plan included in a Required Aggregation Group
which is top heavy, the minimum benefits shall be provided
under this Plan for any Plan Year beginning prior to January
1, 1993.
(h) Notwithstanding the foregoing, for Plan Years beginning after
December 31, 1992, the minimum benefit requirement for a Top
Heavy Plan shall be determined in the following manner:
(1) Each employee who is a participant during a Top Heavy
Plan Year shall be provided the minimum accrued
benefit pursuant to (a) above.
(2) For any Plan Year when (i) the Plan is a Top Heavy
Plan but not a Super Top Heavy Plan and (ii) a Key
Employee is a participant in both this Plan and a
defined contribution plan included in a required
Aggregation Group which is top heavy, the extra
minimum accrued benefit (required by Section 11.6(d)
to provide the higher limitations) shall be provided
for each employee who is a participant by
substituting three percent (3%) for two percent (2%)
and thirty percent (30%) for twenty percent (20%) in
(a) above.
12-11
<PAGE> 99
(3) the extra minimum accrued benefit (required by
Section 11.6(d) to provide the higher limitations)
will not be provided.
(i) To the extent required to be nonforfeitable under Section
12.3, the minimum accrued benefit under this Section may not
be forfeited under Code Section 411(a)(3)(B) or Code Section
411(a)(3)(D).
12.5 Cancellation of Section. In the event that it should subsequently be
determined by statute, Supreme Court decision, ruling by the
Commissioner of Internal Revenue, or otherwise that the provisions of
this Article 12 are no longer necessary to qualify the Plan under the
Internal Revenue Code, this Article 12 shall become ineffective without
amendment to the Plan.
12-12
<PAGE> 100
HANDY & HARMAN PENSION PLAN
Article 13
MERGER, CONSOLIDATION, OR ASSET OR LIABILITY TRANSFER
13.1 In the event that this Pension Plan and the Pension Trust merges or
consolidates with, or transfers its assets or liabilities to, any other
plan of deferred compensation qualified under Code Section 401(a), no
Participant herein shall, solely on account of such merger,
consolidation or transfer, be entitled to a benefit immediately
following such event which is less than the benefit to which he was
entitled immediately preceding such event. For the purpose of this
Section, the benefit to which a Participant is entitled shall be
calculated based upon the assumption that the Pension Plan terminated
and distribution of assets occurred on the day as of which the amount
of the Participant's entitlement is being determined.
13-1
<PAGE> 101
HANDY & HARMAN PENSION PLAN
Article 14
MISCELLANEOUS PROVISIONS
14.1 The text of any Section shall always govern and control in the event of
any conflict with the heading of such Section.
14.2 The terms of the Pension Plan shall always govern and control in the
event of any conflict with the terms of any booklet or other document
relating to the Pension Plan distributed to any Participant,
beneficiary or spouse.
14.3 The amount of any benefit to which any person is entitled under the
Pension Plan shall always be governed and controlled by the Pension
Plan in the event of any conflict with the amount of such benefit set
forth in any booklet or other document relating to the Pension Plan
distributed to any Participant, beneficiary or spouse.
14.4 Wherever applicable, any word used in the masculine shall include the
feminine, and any word used in the singular shall include the plural.
14.5 Each Participating Company and each Participant, beneficiary and
surviving spouse shall be bound by all of the terms and provisions of
the Pension Plan and the Pension Trust.
14.6 Except to comply with the applicable requirements of a Qualified
14-1
<PAGE> 102
Domestic Relations Order or to the extent otherwise expressly required
by law, no benefit payable under or purchased by the Pension Plan or
Pension Trust shall be subject to the claims of any creditor of any
Participant or his spouse or beneficiary, nor shall the same be subject
to attachment, garnishment or other legal or equitable process by any
creditor of the Participant or his spouse or beneficiary, nor shall any
Participant or his spouse or beneficiary have any right to alienate,
anticipate, commute, pledge, encumber or assign any such benefits.
14.7 Any discretionary act taken or any discretionary decision made by the
Committee at any time shall not constitute or result in discrimination
in favor of employees who are officers, shareholders, or
highly-compensated employees.
14.8 Any act or procedure specified or permitted by the Pension Plan shall
be subject to such change as the Committee may deem necessary in order
to conform to the requirements of any applicable law.
14.9 If an individual enters the military service of the United States after
he has become a Participant, his rights under the Pension Plan during
the period of such military service shall be determined by the Company.
Such determination
14-2
<PAGE> 103
shall be binding and conclusive on such individual and on all other
persons and parties concerned. However, such decision shall not
constitute or result in discrimination in favor of individuals who are
officers, shareholders, or highly-compensated employees.
14.10 The adoption and maintenance of the Pension Plan shall not be construed
or interpreted in any way as constituting a contract of employment
between any Participating Company and any of its Employees or
Participants, or as constituting an inducement to or consideration for
the employment by the Participating Company of any of its Employees or
Participants. Any Participating Company shall have the right at any
time to terminate the employment of any of its Employees or
Participants with the same force and effect as if the Pension Plan had
never been adopted.
14.11 Nothing herein shall be deemed to prohibit a member of the Committee,
the Pension Trustee or Trustees, or any other Pension Plan fiduciary or
official from serving in more than one fiduciary capacity with respect
to the Pension Plan.
14-3
<PAGE> 104
FIRST AMENDMENT TO THE
HANDY & HARMAN PENSION PLAN
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 1, 1989)
(THE "PLAN")
The Handy & Harman Pension Plan is amended in the following respects:
1) Section 1.1 of the Plan defining "Actuarial Equivalent" as in effect for
all participating companies is hereby amended effective June 1, 1995, to
apply to all Participants who have an Hour of Service on or after June 1,
1995, to read as follows:
"1.1 'Actuarial Equivalent' shall mean when applicable to a benefit
payable as a monthly pension hereunder that the benefit has, at the
date of determination, the same value as the applicable other
benefit payable as a monthly pension hereunder when computed with
interest at 8% per year, compounded annually, and with mortality in
accordance with the Unisex Pension 1984 Mortality Table without age
adjustment in the case of the Participant and set back three years
in the case of a spouse.
In any case where the Actuarial Equivalent of the benefit payable
to any Participant who has an Hour of Service on or after June 1,
1995, or the surviving spouse of such a Participant, is determined
as a single sum amount, such Actuarial Equivalent shall be based on
the applicable calculation period, the applicable interest rate and
the applicable mortality table. The applicable calculation period
is the calendar quarter in which the individual's Annuity Starting
Date occurs. The applicable interest rate is the interest rate on
30-year Treasury securities for the second month prior to the
beginning of the applicable calculation period, as specified by the
Internal Revenue Service, and as adjusted for the required one year
transition period. The applicable mortality table is the 1983 Group
Annuity Mortality Table with a 50% male and 50% female composite as
published in Revenue Ruling 95-6. However, the single sum amount
will not be less than the amount based on the Participant's Accrued
Monthly Pension as of June 1, 1995 under the Plan as in effect on
June 1, 1995 computed with interest at 8% per
<PAGE> 105
year, compounded annually, and with mortality in accordance with
the Unisex Pension 1984 Mortality Table without age adjustment in
the case of the Participant and set back three years in the case
of the spouse, and reflecting the age of the individual at the
Annuity Starting Date. In determining any single sum amount the
determination shall be made assuming the Participant is not
married and elects no optional form of pension. In the case of
determining the single sum amount for a Participant who is not
entitled to an immediate pension, such single sum amount shall be
determined reflecting the amount of pension commencing at the
Participant's Normal Retirement Date."
2) Section 2.4 of the Plan regarding "Active Participant" as in effect for
all participating companies is hereby amended effective June 1, 1995 to
read as follows:
"2.4 Active Participant. Each Member Of The Eligible Class shall become
an Active Participant on the earliest January 1st or July 1st
coincident with (next following, if none coincides with) the date
as of which he has both completed one year of Continuous Service
and attained his 21st Birthday. An Active Participant shall cease
to be an Active Participant on the date as of which he ceases to
be a Member Of The Eligible Class."
<PAGE> 106
SECOND AMENDMENT TO THE
HANDY & HARMAN PENSION PLAN
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 1, 1989)
(THE "PLAN")
The Handy & Harman Pension Plan is amended effective January 1, 1997 in the
following respects:
(1) Section 3.3 of the Plan defining "Accrued Monthly Pension" as in effect
for all Participating Companies is hereby amended by adding the following
wording at the end of the present section 3.3:
", provided that the Accrued Monthly Pension of any Participant who had
any period of coverage under the Optional Preretirement Spouse Pension
described in Section 4.25 shall have his Accrued Monthly Pension reduced
for the cost of that coverage as determined under Section 4.25."
(2) A new Section 4.25 regarding Optional Preretirement Spouse Pension is
hereby added to the Plan to read as follows:
"4.25 Optional Preretirement Spouse Pension. An Active Participant may
elect to increase the Preretirement Spouse Pension described in Section
4.5 to the amount that would be provided by substituting a 100% Joint And
Survivor Pension election for the deemed 50% Joint And Survivor Pension
election provided under Section 4.5.
<PAGE> 107
An Active Participant may elect to have this coverage become effective on
either Option Effective Date 1 or Option Effective Date 2 determined as
follows:
Option Effective Date 1 shall be the latest of (a), (b) and (c):
(a) the date five years prior to the Active Participant's Earliest Benefit
Commencement Date,
(b) the first day of the month coincident with or next following the Active
Participant's first anniversary of his marriage to his spouse,
(c) January 1, 1997.
Option Effective Date 2 shall be the latest of (d), (e) and (f):
(d) the Active Participant's Earliest Benefit Commencement Date,
(e) the first day of the month coincident with or next following the Active
Participant's first anniversary of his marriage to his spouse,
(f) January 1, 1997.
An Active Participant may elect the coverage in the 90 day period ending on
Option Effective Date 1 or Option Effective Date 2. If the Active Participant
elects the coverage to become effective on Option Effective Date 1, it will be
presumed that the coverage will continue during the period beginning on Option
Effective Date 2 unless the Participant makes a timely written election to
cancel the coverage effective on Option Effective Date 2.
The election for this coverage is irrevocable and with one exception it may not
be revoked during the remainder of the period up to the Participant's benefit
commencement date, whether or not the pension commences at the Participant's
termination of employment. The one exception is when the Participant elects
coverage at Option Effective Date 1 in which case the Participant may elect to
discontinue the coverage at Option Effective Date 2 provided written notice is
provided to the Administrative Committee on a form authorized by the
Administrative Committee during the 90 day period ending on Option Effective
Date 2.
<PAGE> 108
An election made under this Section 4.25 will result in the Preretirement
Spouse Pension described under Section 4.5 being determined by substituting a
100% Joint And Survivor Pension for the 50% Joint And Spouse Pension otherwise
provided thereunder.
A charge of 4/100% (i.e. .0004) of the Participant's Accrued Monthly Pension
shall be made for each month the coverage is in effect (i.e. .48% per year).
This charge will be made whether the pension is payable as a retirement benefit
to the Participant or as a survivor pension to the spouse. A month of
coverage will be each calendar month beginning with the Option Effective Date 1
or Option Effective Date 2 as applicable, and ending with the date of benefit
commencement (Participant's date of death if earlier) during which the
Participant has a spouse (or ex-spouse for whom a qualified domestic relation
order applies). A Participant's coverage will cease upon divorce provided a
qualified domestic relations order does not require continued coverage, or upon
the death of the spouse. If a Participant whose elected coverage ceases because
of divorce or death of the spouse subsequently remarries, months of coverage
under this Section 4.25 and the charge applicable thereto will recommence
twelve months after the Participant's remarriage."
<PAGE> 109
FOURTH AMENDMENT TO THE
HANDY & HARMAN PENSION PLAN
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 1, 1989)
(THE "PLAN")
The Handy & Harman Pension Plan is amended effective January 1, 1997 in the
following respects:
1) The first sentence of the second paragraph of Section 1.1 of the Plan
defining "Actuarial Equivalent" as in effect for all participating
companies is hereby amended to read as follows:
"In any case where the Actuarial Equivalent of the benefit payable to any
Participant who has an Hour of Service on or after June 1, 1995 or whose
monthly pension would otherwise commence on or after July 1, 1997, or the
surviving spouse of such a Participant, is determined as a single sum
amount, such Actuarial Equivalent shall be based on the applicable
calculation period, the applicable interest rate and the applicable
mortality rate."
2) Section 1.1 of the Plan defining "Actuarial Equivalent" as in effect for
former hourly employees of Conn-Form Corporation and former salaried
employees of Platina Laboratories, Inc. is hereby amended to add an
additional paragraph to the end of the present Section 1.1 to read as
follows:
"Notwithstanding the above, in the case of a former hourly employee of
Conn-Form Corporation whose pension was determined during or prior to
1987 to be payable as a lump sum amount, and in the case of a former
salaried employee of Platina Laboratories, Inc. whose pension was
determined during or prior to 1991 to be payable as a lump sum but whose
amount of lump sum was inadvertently not paid, then a revised amount of
lump sum shall be calculated and paid to the Participant even if such
revised amount of lump sum exceeds $3,500. The recalculated amount will be
equal to the amount of lump sum previously determined and increased with
interest to reflect the period from the prior calculation date to the
expected payment date at an annual rate of interest equal to the PBGC
immediate interest rate reflected in the original calculation of the lump
sum amount."
3) Section 1.10 of the Plan defining "Employee" as in effect for all
participating companies, is hereby amended to read as follows:
"1.10 'Employee' shall mean each individual who is in the employment of
an Affiliated Corporation on or after December 1, 1989 or such
later date that the employment unit which employs him became a
Participating Company. An individual shall be considered an
Employee for the purpose of the Plan only if the individual is a
common law employee of the employer who is also initially treated
as a common law employee on the payroll records of the employer."
<PAGE> 110
4) Section 4.22 of the Plan regarding "Commencement Date of Pensions" as in
effect for all participating companies is hereby amended to add the
following paragraph at the end of the present Section 4.22:
"If a Participant applies for a benefit after the date on which the
Participant's benefit would otherwise have commenced in an unreduced
amount (but not earlier than the first day of the month following the
Participant's termination of employment), payments will be made to the
Participant in an actuarially increased amount reflecting the date of the
Participant's application for the benefit (but not later than the April
1st following the calendar year in which the Participant attains age
70 1/2). The Participant may elect before the first such actuarially
increased payment is made to him, to instead receive payments retroactive
to the date that monthly payments otherwise would have been paid in an
unreduced amount. If the Participant elects retroactive payments and the
period of retroactive payments is 12 months or more, the sum of the back
payments will be increased with interest at the annual rate of 8%
reflecting the date that each such retroactive payment would have been
paid."
5) Paragraph (e) of Section 11.2 of the Plan regarding "Maximum Annual
Benefit" is hereby amended to read as follows:
"(e) The limitations stated in Paragraph (a) regarding the dollar
limitation and regarding the 100% of compensation limitation shall
be adjusted annually as provided in Code Section 415(b) pursuant
to the regulations prescribed by the Secretary of the Treasury for
participants who have separated from service with a nonforfeitable
right to an accrued benefit."
<PAGE> 111
FIFTH AMENDMENT TO THE
HANDY & HARMAN PENSION PLAN
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 1, 1989)
(THE "PLAN")
The Handy & Harman Pension Plan as in effect at all Participating Companies is
hereby amended effective January 1, 1998 in the following respects:
(1) Amend the first sentence of Section 3.13B of the Plan to read as follows:
"3.13B The definition of Average Monthly Basic Pay in this Section 3.13B
is effective for the period starting December 1, 1992 and ending
December 31, 1997."
(2) Add a new section 3.13C to the Plan to read as follows:
"3.13C The definition of Average Monthly Basic Pay in this Section 3.13C
is effective for the period starting January 1, 1998. "Average
Monthly Basic Pay" for the period starting January 1, 1998 shall
mean for an Active Participant in and for any Plan Year
one-twelfth of the average of his Basic Pay during all his Plan
Years beginning with the Plan Year commencing on January 1, 1998
provided that at least five Plan Years will be included in such
average except that if there are not at least five Plan Years as to
which Basic Pay is defined for the Active Participant, Average
Monthly Basic Pay for such Active Participant shall be equal to
the average of his Basic Pay for all those Plan Years for which
Basic Pay is defined for him, and further provided that if such
Active Participant has any period of consecutive Plan Years
beginning on or after December 1, 1988 that includes the same
number of Plan Years that is included in his Average Monthly Basic
Pay which results in a larger amount of Average Monthly Basic Pay
such larger Average Monthly Basic Pay will be reflected in his
calculation."
<PAGE> 1
[EXECUTION COPY]
U.S. $200,000,000
REVOLVING CREDIT AGREEMENT,
dated as of September 29, 1997
among
HANDY & HARMAN,
as the Borrower,
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
and
THE BANK OF NOVA SCOTIA,
as the Administrative Agent.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms............................................... 2
SECTION 1.2 Use of Defined Terms........................................ 29
SECTION 1.3 Cross-References............................................ 29
SECTION 1.4 Accounting and Financial Determinations; No Duplication;
Consolidation............................................ 29
ARTICLE II
COMMITMENTS, BORROWING, BIDDING AND ISSUANCE PROCEDURES, NOTE
SECTION 2.1 Commitments................................................. 29
SECTION 2.1.1 Revolving Loan Commitment and Swing Line Loan Commitment.... 30
SECTION 2.1.2 Lenders Not Permitted or Required to Make Revolving Loans
or Swing Line Loans...................................... 30
SECTION 2.1.3 Letter of Credit Commitment................................. 30
SECTION 2.1.4 Issuer Not Permitted or Required to Issue Letters of Credit. 31
SECTION 2.2 Reduction of Commitment Amounts............................. 31
SECTION 2.3 Revolving Loan and Swing Line Loan Borrowing Procedure and
Funding Maintenance...................................... 31
SECTION 2.3.1 Revolving Loans............................................. 31
SECTION 2.3.2 Swing Line Loans............................................ 32
SECTION 2.3.3 Continuation and Conversion Elections....................... 33
SECTION 2.3.4 Funding..................................................... 33
SECTION 2.4 Competitive Bid Loans....................................... 33
SECTION 2.5 Notes....................................................... 38
SECTION 2.6 Issuing the Letters of Credit............................... 39
SECTION 2.6.1 Drawings under the Letters of Credit........................ 39
SECTION 2.6.2 Reimbursement on Demand..................................... 39
SECTION 2.6.3 Obligations Absolute........................................ 40
SECTION 2.6.4 Action in Respect of the Letters of Credit.................. 40
SECTION 2.6.5 Indemnification............................................. 41
SECTION 2.6.6 Deemed Disbursements........................................ 41
SECTION 2.6.7 Other Lenders' Participation................................ 42
SECTION 2.7 Extension of Stated Maturity Date and Maturity of Loans..... 42
SECTION 2.7.1 Request for Extension of Stated Maturity Date and Maturity
of Loans................................................. 42
SECTION 2.7.2 Consent to Extension of Stated Maturity Date and Maturity
of Loans................................................. 43
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
SECTION 2.8 Increase of Loan Commitment Amount.......................... 44
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 Repayments and Prepayments.................................. 45
SECTION 3.1.1 Final Maturity.............................................. 45
SECTION 3.1.2 Voluntary Prepayments....................................... 45
SECTION 3.1.3 Mandatory Prepayments....................................... 46
SECTION 3.1.4 Acceleration of Stated Maturity Date........................ 46
SECTION 3.2 Interest Provisions......................................... 46
SECTION 3.2.1 Rates....................................................... 46
SECTION 3.2.2 Post-Maturity Rates......................................... 47
SECTION 3.2.3 Payment .................................................... 48
SECTION 3.3 Fees........................................................ 48
SECTION 3.3.1 Facility Fee................................................ 48
SECTION 3.3.2 Letter of Credit Fee........................................ 49
SECTION 3.3.3 Administrative Agents' Fee.................................. 49
SECTION 3.3.4 Certain Other Fees.......................................... 49
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1 LIBO Rate Lending Unlawful.................................. 49
SECTION 4.2 Deposits Unavailable........................................ 50
SECTION 4.3 Increased LIBO Rate Loan Costs, etc......................... 50
SECTION 4.4 Funding Losses.............................................. 51
SECTION 4.5 Increased Capital Costs..................................... 51
SECTION 4.6 Taxes....................................................... 52
SECTION 4.7 Payments, Computations, etc................................. 53
SECTION 4.8 Sharing of Payments......................................... 53
SECTION 4.9 Setoff...................................................... 54
SECTION 4.10 Use of Proceeds............................................. 54
SECTION 4.11 Replacement of Lenders...................................... 55
</TABLE>
ii-
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1 Initial Credit Extension.................................... 55
SECTION 5.1.1 Resolutions, etc............................................ 56
SECTION 5.1.2 Delivery of Notes........................................... 56
SECTION 5.1.3 Payment of Outstanding Indebtedness, etc.................... 56
SECTION 5.1.4 Opinions of Counsel......................................... 56
SECTION 5.1.5 Closing Fees, Expenses, etc................................. 57
SECTION 5.1.6 Termination of Existing Agreements......................... 57
SECTION 5.1.7 Litigation.................................................. 57
SECTION 5.1.8 Material Adverse Change..................................... 57
SECTION 5.1.9 Compliance Certificate...................................... 57
SECTION 5.2 All Credit Extensions....................................... 57
SECTION 5.2.1 Compliance with Warranties, No Default, etc................. 57
SECTION 5.2.2 Credit Extension Request.................................... 58
SECTION 5.2.3 Satisfactory Legal Form..................................... 58
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1 Organization, etc........................................... 59
SECTION 6.2 Due Authorization, Non-Contravention, etc................... 59
SECTION 6.3 Government Approval, Regulation, etc........................ 59
SECTION 6.4 Validity, etc............................................... 59
SECTION 6.5 Financial Information....................................... 60
SECTION 6.6 No Material Adverse Change.................................. 60
SECTION 6.8 Subsidiaries................................................ 60
SECTION 6.9 Ownership of Properties..................................... 60
SECTION 6.10 Taxes....................................................... 60
SECTION 6.11 Pension and Welfare Plans................................... 61
SECTION 6.12 Environmental Warranties.................................... 61
SECTION 6.13 Regulations G, U and X...................................... 63
SECTION 6.14 Accuracy of Information..................................... 63
</TABLE>
iii-
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
ARTICLE VII
COVENANTS
SECTION 7.1 Affirmative Covenants....................................... 63
SECTION 7.1.1 Financial Information, Reports, Notices, etc................ 63
SECTION 7.1.2 Compliance with Laws, etc................................... 65
SECTION 7.1.3 Maintenance of Properties................................... 65
SECTION 7.1.4 Insurance................................................... 66
SECTION 7.1.5 Books and Records........................................... 66
SECTION 7.1.6 Environmental Covenant...................................... 66
SECTION 7.2 Negative Covenants.......................................... 67
SECTION 7.2.1 Business Activities......................................... 67
SECTION 7.2.2 Debt Incurrence............................................. 67
SECTION 7.2.3 Liens....................................................... 68
SECTION 7.2.4 Financial Condition......................................... 71
SECTION 7.2.5 Investments................................................. 72
SECTION 7.2.6 Restricted Payments, etc.................................... 72
SECTION 7.2.7 Transactions with Affiliates................................ 72
SECTION 7.2.8 Sale-and-Leasebacks......................................... 73
SECTION 7.2.9 Precious Metal Transactions................................. 73
SECTION 7.2.10 Consolidation, Merger, etc.................................. 73
SECTION 7.2.11 Asset Dispositions, etc..................................... 75
SECTION 7.2.12 Restrictive Agreements, etc................................. 76
SECTION 7.2.13 Designation of Subsidiaries................................. 77
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Listing of Events of Default................................ 78
SECTION 8.1.1 Non-Payment of Obligations.................................. 78
SECTION 8.1.2 Breach of Warranty.......................................... 79
SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations........ 79
SECTION 8.1.4 Non-Performance of Other Covenants and Obligations.......... 79
SECTION 8.1.5 Default on Other Debt or Agreements......................... 79
SECTION 8.1.6 Judgments................................................... 79
SECTION 8.1.7 Pension Plans............................................... 80
SECTION 8.1.8 Control of the Borrower..................................... 80
SECTION 8.1.9 Bankruptcy, Insolvency, etc................................. 80
</TABLE>
iv-
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
SECTION 8.2 Action if Bankruptcy........................................ 81
SECTION 8.3 Action if Other Event of Default............................ 81
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.1 Actions..................................................... 82
SECTION 9.2 Funding Reliance, etc....................................... 82
SECTION 9.3 Exculpation................................................. 83
SECTION 9.4 Successor................................................... 83
SECTION 9.5 Credit Extensions by the Administrative Agent............... 84
SECTION 9.6 Credit Decisions............................................ 84
SECTION 9.7 Copies, etc................................................. 84
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Waivers, Amendments, etc.................................... 85
SECTION 10.2 Notices..................................................... 86
SECTION 10.3 Payment of Costs and Expenses............................... 86
SECTION 10.4 Indemnification............................................. 87
SECTION 10.5 Survival.................................................... 88
SECTION 10.6 Severability................................................ 88
SECTION 10.7 Headings.................................................... 88
SECTION 10.8 Execution in Counterparts, Effectiveness, etc............... 88
SECTION 10.9 Governing Law; Entire Agreement............................. 88
SECTION 10.10 Successors and Assigns...................................... 89
SECTION 10.11 Sale and Transfer of Loans and Note; Participations
in Loans and Note........................................... 89
SECTION 10.11.1 Assignments................................................. 89
SECTION 10.11.2 Participations.............................................. 91
SECTION 10.12 Confidentiality............................................. 91
SECTION 10.13 Other Transactions.......................................... 92
SECTION 10.14 Forum Selection and Consent to Jurisdiction................. 92
SECTION 10.15 Waiver of Jury Trial........................................ 93
</TABLE>
v-
<PAGE> 7
EXHIBIT A-1 Form of Revolving Loan Note
EXHIBIT A-2 Form of Competitive Bid Loan Note
EXHIBIT A-3 Form of Swing Line Note
EXHIBIT B-1 Form of Revolving Loan Borrowing Request
EXHIBIT B-2 Form of Competitive Bid Loan Borrowing Request
EXHIBIT B-3 Form of Issuance Request
EXHIBIT C-1 Form of Invitation for Bid Loan Quotes
EXHIBIT C-2 Form of Competitive Bid Loan Offer
EXHIBIT C-3 Form of Competitive Bid Loan Acceptance
EXHIBIT D Form of Lender Assignment Agreement
EXHIBIT E Form of Compliance Certificate
EXHIBIT F Form of Continuation/Conversion Notice
EXHIBIT G Form of Extension Request
EXHIBIT H Form of Opinion of Counsel to the Borrower
EXHIBIT I Form of Opinion of Counsel to the Borrower
vi-
<PAGE> 8
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of September 29, 1997, among
HANDY & HARMAN, a New York corporation (the "Borrower"), the various financial
institutions as are or may become parties hereto (collectively, the "Lenders")
and THE BANK OF NOVA SCOTIA ("Scotiabank"), as administrative agent (in such
capacity, together with any successor appointed pursuant to Section 9.4, the
"Administrative Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower is engaged directly and through its various
Subsidiaries in the businesses described in the Borrower's Annual Report on Form
10-K for the 1996 Fiscal Year;
WHEREAS, the Borrower desires to obtain Commitments from the Lenders
pursuant to which Revolving Loans, Swing Line Loans and Letters of Credit
(including the Existing Letters of Credit), in a maximum aggregate principal and
stated amount at any one time outstanding not to exceed $200,000,000, subject to
Section 2.8, will be made to, or issued for the account of, the Borrower from
time to time prior to the Commitment Termination Date;
WHEREAS, the Borrower also desires the Lenders to provide a procedure
pursuant to which the Borrower may invite the Lenders to bid for (on an
uncommitted basis) and to make short-term loans (in the form of Competitive Bid
Loans) to the Borrower;
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to:
(a) extend such Commitments;
(b) make Revolving Loans to the Borrower;
(c) issue (or participate in) Letters of Credit (including the
Existing Letters of Credit) for the benefit of the Borrower and its
Restricted Subsidiaries; and
(d) provide such a procedure to make Competitive Bid Loans.
WHEREAS, the Swing Line Lender is willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to:
(a) extend the Swing Line Loan Commitments; and
<PAGE> 9
(b) make Swing Line Loans to the Borrower; and
WHEREAS, the proceeds of such Credit Extensions will be used to refinance
in full all amounts under the Existing Agreements and for the general corporate
purposes of the Borrower and its Restricted Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender, a fixed rate of interest per annum (rounded to the nearest 1/100th
of 1%) offered by such Lender and accepted by the Borrower.
"Absolute Rate Auction" means a solicitation of Competitive Bid Loan
quotes at an Absolute Rate pursuant to Section 2.4.
"Absolute Rate Loan" means a Competitive Bid Loan which bears interest at
an Absolute Rate.
"Adjusted Debt" means, at any time, and with respect to any Person, the
sum (without duplication) of:
(a) all Debt of such Person
plus
(b) the aggregate notional amount at such time of all Future
Payables Transactions of such Person net of the amount of any cash pledged
to secure the payment obligations in respect of Future Payables
Transactions
minus
(c) an amount equal to 70% of the Fair Market Value of Owned
Precious Metal Inventory of such Person at such time, so long as none of
such Owned Precious Metal
2-
<PAGE> 10
Inventory is subject to any Lien in favor of any Person other than the
Borrower or a Restricted Subsidiary.
"Administrative Agent" is defined in the preamble.
"Affected LIBO Lender" is defined in Section 4.3.
"Affected Subsidiary" is defined in Section 8.1.9.
"Affiliate" means, at any time, and with respect to any Person,
(a) any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by, or is
under common Control with, such first Person; or
(b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests of the
Borrower or any Restricted Subsidiary or any corporation of which the
Borrower and the Restricted Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of voting or
equity interests.
As used in this definition, "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting Securities, by
contract or otherwise.
"Agreement" means, on any date, this Revolving Credit Agreement as
originally in effect on the Effective Date and as thereafter from time to time
amended, restated, supplemented, amended and restated, or otherwise modified and
in effect on such date.
"Alternate Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently established by the
Administrative Agent at its Domestic Office as its base rate for Dollar
loans in the United States; and
(b) the Federal Funds Rate for such date plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Administrative Agent in connection with extensions of
credit. Changes in the rate of interest on any Loans or other Obligations
accruing interest at the Alternate Base Rate will take effect simultaneously
with each change in the Alternate Base Rate. The Administrative Agent will give
prompt notice to the Borrower and the Lenders of changes in the Alternate Base
Rate.
3-
<PAGE> 11
"Applicable Facility Fee" means the lowest per annum rate determined by
reference to the Leverage Ratio and the Interest Coverage Ratio, in each case
that is satisfied for each of such ratios in a given clause below and as
indicated in the Compliance Certificate most recently delivered pursuant to
clause (c) of Section 7.1.1 or, with respect to the initial Credit Extension,
the Compliance Certificate delivered pursuant to Section 5.1.9, equal to:
(a) 0.125% if the Leverage Ratio is less than or equal to 1.75:1 and
the Interest Coverage Ratio is greater than or equal to 5.0:1;
(b) 0.150% if the Leverage Ratio is less than or equal to 2.25:1 and
the Interest Coverage Ratio is greater than or equal to 3.75:1;
(c) 0.200% if the Leverage Ratio is less than or equal to 2.75:1 and
the Interest Coverage Ratio is greater than or equal to 3.00:1; and
(d) 0.250% if the Leverage Ratio is greater than 2.75:1 or the
Interest Coverage Ratio is less than 3.00:1.
The Leverage Ratio and the Interest Coverage Ratio used to compute the
Applicable Facility Fee shall be the Leverage Ratio and the Interest Coverage
Ratio, as the case may be, set forth in the Compliance Certificate most recently
delivered by the Borrower to the Administrative Agent pursuant to clause (c) of
Section 7.1.1 or, with respect to the initial Credit Extension, the Compliance
Certificate delivered pursuant to Section 5.1.9; changes in the Applicable
Facility Fee resulting from a change in the Leverage Ratio and/or the Interest
Coverage Ratio, as the case may be, shall become effective upon delivery by the
Borrower to the Administrative Agent of a new Compliance Certificate pursuant to
clause (c) of Section 7.1.1. If the Borrower shall fail to deliver a Compliance
Certificate within the number of days after the end of any Fiscal Quarter as
required pursuant to clause (c) of Section 7.1.1 (without giving effect to any
grace period), the Applicable Facility Fee from and including the first day
after the date on which such Compliance Certificate was required to be delivered
to but not including the date the Borrower delivers to the Administrative Agent
a Compliance Certificate shall conclusively equal the highest Applicable
Facility Fee set forth above.
"Applicable Four Quarter Period" means, at any time, the period of four
complete consecutive Fiscal Quarters of the Borrower then most recently ended as
to which either or both of the following conditions have been met: (i) 45 days
have elapsed since the end of such period or (ii) the Lenders have received the
financial statements required to be delivered to them pursuant to Section
7.1.1(a) or Section 7.1.1(b), as the case may be, with respect to the last
Fiscal Quarter of such period.
"Applicable LIBO Rate Margin" means, with respect to any Loan made or
maintained as a LIBO Rate Loan, the lowest per annum rate determined by
reference to the Leverage Ratio and the Interest Coverage Ratio, in each case
that is satisfied for each of such ratios in a given clause
4-
<PAGE> 12
below and as indicated in the Compliance Certificate most recently delivered
pursuant to clause (c) of Section 7.1.1 or, with respect to the initial Credit
Extension, the Compliance Certificate delivered pursuant to Section 5.1.9, equal
to:
(a) 0.3250% if the Leverage Ratio is less than or equal to 1.75:1
and the Interest Coverage Ratio is greater than or equal to 5.0:1;
(b) 0.45% if the Leverage Ratio is less than or equal to 2.25:1 and
the Interest Coverage Ratio is greater than or equal to 3.75:1;
(c) 0.550% if the Leverage Ratio is less than or equal to 2.75:1 and
the Interest Coverage Ratio is greater than or equal to 3.00:1; and
(d) 0.750% if the Leverage Ratio is greater than 2.75:1 or the
Interest Coverage Ratio is less than 3.00:1.
The Leverage Ratio and the Interest Coverage Ratio used to compute the
Applicable LIBO Rate Margin shall be the Leverage Ratio and the Interest
Coverage Ratio, as the case may be, set forth in the Compliance Certificate most
recently delivered by the Borrower to the Administrative Agent pursuant to
clause (c) of Section 7.1.1 or, with respect to the initial Credit Extension,
the Compliance Certificate delivered pursuant to Section 5.1.9; changes in the
Applicable LIBO Rate Margin resulting from a change in the Leverage Ratio and/or
the Interest Coverage Ratio, as the case may be, shall become effective upon
delivery by the Borrower to the Administrative Agent of a new Compliance
Certificate pursuant to clause (c) of Section 7.1.1. If the Borrower shall fail
to deliver a Compliance Certificate within the number of days after the end of
any Fiscal Quarter as required pursuant to clause (c) of Section 7.1.1 (without
giving effect to any grace period), the Applicable LIBO Rate Margin from and
including the first day after the date on which such Compliance Certificate was
required to be delivered to but not including the date the Borrower delivers to
the Administrative Agent a Compliance Certificate shall conclusively equal the
highest Applicable LIBO Rate Margin set forth above.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the Borrower or
another Restricted Subsidiary; and
(ii) Transfer from the Borrower to a Restricted Subsidiary;
so long as immediately before and immediately after the consummation of
any such Transfer and after giving effect thereto, no Default or Event of
Default exists;
5-
<PAGE> 13
(b) any Transfer (including, without limitation, the Transfer of
Precious Metals) made in the ordinary course of business;
(c) any Transfer of Owned Precious Metal Inventory by the Borrower
or any Restricted Subsidiary in exchange for consideration having a Fair
Market Value at least equal to that of the Owned Precious Metal Inventory
being Transferred;
(d) any Transfer of Precious Metals by the Borrower or any
Restricted Subsidiary in connection with a Future Payables Transaction
involving the same quantity of Precious Metals so Transferred;
(e) any Transfer of Property if, as part of the same transaction or
series of transactions, the Borrower or any Restricted Subsidiary shall
enter into a capital lease (as lessee) with respect to such Property or
Property it intends to use for the same purposes;
(f) the Singapore Joint Venture Asset Disposition; and
(g) the Transfer of Subsidiary Stock of any Unrestricted Subsidiary.
"Assignee Lender" is defined in Section 10.11.1.
"Attributable Debt" means, at any time, as to any particular lease
relating to a Sale-and-Leaseback Transaction (other than a Sale-and-Leaseback
Transaction the Net Proceeds Amount in respect of which is to be applied as
described in Section 7.2.8(b)), the present value of all base rentals required
to be paid by the Borrower or any Restricted Subsidiary under such lease during
the remaining term thereof (determined in accordance with GAAP using a discount
factor equal to the interest rate implicit in such lease if known or, if not
known, 8% per annum); provided, however, that if such lease is a non-recourse
lease, Attributable Debt shall mean the lesser of (x) such present value or (y)
the Fair Market Value of the Property subject to such transaction as determined
at such time by the Borrower in good faith. As used in this definition, "base
rentals" means all rentals payable by a lessee under a lease, less all amounts
required to be paid by the lessee in respect of maintenance and repairs,
insurance, taxes, assessments, water rates, reimbursement of expenses,
indemnities and similar charges.
"Authorized Officer" means those officers of the Borrower whose signatures
and incumbency shall have been certified to the Administrative Agent and the
Lenders pursuant to Section 5.1.1.
"Base Rate Loan" means a Revolving Loan bearing interest at a fluctuating
rate determined by reference to the Alternate Base Rate.
"Borrower" is defined in the preamble.
6-
<PAGE> 14
"Borrowing" means, as the context may require, either a Competitive Bid
Loan Borrowing, a Swing Line Loan Borrowing or a Revolving Loan Borrowing.
"Borrowing Request" means, as the context may require, either a Revolving
Loan Borrowing Request or a Competitive Bid Loan Borrowing Request.
"Business Day" means:
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York, New York; and
(b) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loans or Competitive Bid Loans made as a result of a LIBOR
Auction, any day on which dealings in Dollars are carried on in the London
interbank market.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrower or any of its Restricted Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as capitalized
leases, and, for purposes of this Agreement and each other Loan Document, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Capital Stock" means, with respect to any Person any class of capital
stock, share capital or similar equity interest of such Person.
"Cash Equivalent Investment" means, at any time:
(a) any obligation issued or guaranteed by the United States
Government or any agency thereof, maturing not more than one year after
such time;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by:
(i) a corporation (other than the Borrower or an Affiliate of
the Borrower) organized under the laws of any state of the United
States or of the District of Columbia and rated A-1 by Standard &
Poor's Corporation or P-1 by Moody's Investors Service, Inc., or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by either:
7-
<PAGE> 15
(i) a commercial banking institution that is a member of the
Federal Reserve System and has total assets of not less than
$5,000,000,000 and commercial paper rated A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc., or
(ii) any Lender (or its holding company); or
(d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in clause
(c)(i)) which:
(i) is secured by a fully perfected security interest (which
may be hold in custody, tri-party custodian or deliver out) in any
obligation of the type described in any of clauses (a) through (c),
and
(ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase obligation
of such Lender (or other commercial banking institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 30% or more of the outstanding shares of voting stock of the
Borrower.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, as the context may require, the Revolving Loan
Commitment, the Swing Line Loan Commitment or the Letter of Credit Commitment.
"Commitment Increase Supplement" means the supplement (i) executed by each
of the Borrower, the Administrative Agent, and each financial institution
consenting to and participating in the increase in the Loan Commitment Amount
and (ii) delivered to the Administrative Agent pursuant to Section 2.8.
"Commitment Termination Date" means, as the context may require, the
Letter of Credit Commitment Termination Date or the Loan Commitment Termination
Date.
8-
<PAGE> 16
"Commitment Termination Event" means:
(a) the occurrence of any Default described in clauses (a) through
(d) of Section 8.1.9; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable
pursuant to Section 8.3, or
(ii) in the absence of such declaration, the giving of notice
by the Administrative Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been terminated.
"Competitive Bid Loan" means a loan made by a Lender to the Borrower based
on the LIBO Rate or the Absolute Rate as part of a Competitive Bid Loan
Borrowing resulting from the procedure described in Section 2.4.
"Competitive Bid Loan Acceptance" means an acceptance by the Borrower of a
Competitive Bid Loan Offer pursuant to clause (e) of Section 2.4, substantially
in the form of Exhibit C-3 attached hereto.
"Competitive Bid Loan Borrowing" means Competitive Bid Loans made pursuant
to the same Competitive Bid Loan Request by the Lender or each of the Lenders
whose offer to make such Competitive Bid Loans as part of such requested
Borrowing has been accepted by the Borrower pursuant to clause (e) of Section
2.4.
"Competitive Bid Loan Borrowing Request" means a certificate requesting
that the Lenders extend offers to make Competitive Bid Loans, duly executed by
an Authorized Officer substantially in the form of Exhibit B-2 attached hereto.
"Competitive Bid Loan Maturity Date" is defined in clause (a)(iii) of
Section 2.4.
"Competitive Bid Loan Note" means any promissory note of the Borrower, in
the form of Exhibit A-2 hereto (as such promissory note may be amended, endorsed
or otherwise modified from time to time), evidencing the aggregate indebtedness
of the Borrower to such Lender resulting from Competitive Bid Loans outstanding
from such Lender, and also means all other promissory notes accepted from time
to time in substitution therefor or renewal thereof.
"Competitive Bid Loan Offer" means an offer by a Lender to make a
Competitive Bid Loan pursuant to clause (c) of Section 2.4, substantially in the
form of Exhibit C-2 attached hereto.
9-
<PAGE> 17
"Competitive Bid Rate" means, as the context may require, either the
Absolute Rate or the LIBO Rate (plus the LIBO Rate Bid Margin) offered by a
Lender in a Competitive Bid Loan Offer in respect of a Competitive Bid Loan
proposed pursuant to Section 2.4.
"Compliance Certificate" means a certificate duly executed and delivered
by an Authorized Officer pursuant to Section 5.1.9 and Section 7.1.1, in
substantially the form of Exhibit E hereto.
"Consignment Arrangement" means any financing arrangement by the Borrower
or any Restricted Subsidiary whereby the Borrower or such Restricted Subsidiary
acquires possession of Precious Metals from any other Person (other than the
Borrower or a Restricted Subsidiary), for use in its manufacturing process, by
way of consignment or lease (it being understood that, for purposes of this
Agreement, neither the Borrower nor any Restricted Subsidiary acquires any
ownership interest in such Precious Metals until such time as it purchases such
Precious Metals in accordance with the terms of such financing arrangement). In
no event shall Consignment Arrangements include any Precious Metals of any
customer of the Borrower or any Restricted Subsidiary.
"Consolidated Adjusted Cash Flow" means, with respect to any period, the
sum of:
(a) Consolidated Net Income for such period,
plus
(b) the amount of all (i) interest expense, (ii) depreciation,
amortization and other non-cash charges, (iii) income taxes, and (iv)
non-recurring charges, in each case, only to the extent deducted in the
determination of Consolidated Net Income for such period,
minus
(c) Non-Cash Income (except for Non-Cash Income arising from the
over funding of pension plans as provided in Statement of Financial
Accounting Standards No. 87), only to the extent included in the
determination of Consolidated Net Income for such period,
minus
(d) gains on sales of Owned Precious Metal Inventory (except for any
such gains on sales attributable to Owned Precious Metal Inventory
incorporated in products manufactured by the Borrower or any Restricted
Subsidiary).
Subject to the next succeeding sentence, Consolidated Adjusted Cash Flow for any
period shall be determined on the basis that all acquisitions or dispositions of
Subsidiary Stock of Restricted
10-
<PAGE> 18
Subsidiaries or other Property acquired or disposed of during such period
occurred on the first day of such period. In addition, as used in Sections
7.2.2, 7.2.3, 7.2.8, and 7.2.11 Consolidated Adjusted Cash Flow with respect to
the Applicable Four Quarter Period referred to in each of such sections shall be
determined on the basis that all acquisitions or dispositions of Subsidiary
Stock or other Property acquired or disposed of at any time subsequent to the
commencement of such period, and at or prior to the time of determination
referred to in each of such sections, occurred on the first day of such period.
"Consolidated Adjusted Debt" means, at any time, Adjusted Debt at such
time as determined for the Borrower and the Restricted Subsidiaries on a
consolidated basis, after eliminating all offsetting debts and credits between
the Borrower and the Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Borrower and the Restricted Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period, the sum
(without duplication) of (in each case, eliminating all offsetting debits and
credits between the Borrower and the Restricted Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Borrower and the Restricted Subsidiaries in
accordance with GAAP),
(a) all interest (other than amortization of Debt expense) in
respect of Debt of the Borrower and the Restricted Subsidiaries (including
imputed interest on Capitalized Lease Liabilities deducted in determining
Consolidated Net Income for such period) for such period as determined in
accordance with GAAP, together with all interest (other than amortization
of Debt expense) capitalized or deferred during such period and not
deducted in determining Consolidated Net Income for such period,
plus
(b) all debt discount amortized or required to be amortized in the
determination of Consolidated Net Income for such period,
plus
(c) in a Future Payables Transaction, the amount by which the
purchase price of Precious Metal to be acquired on a future date exceeds
the price of the Owned Precious Metal Inventory sold in such transaction,
to the extent such excess is attributable to such period (it being
understood that such excess shall be attributed ratably to each day in the
period from the date of such Future Payables Transaction to and including
such future date).
"Consolidated Net Income" means, with respect to any period, the net
income (or loss) of the Borrower and the Restricted Subsidiaries for such period
(taken as a cumulative whole), as
11-
<PAGE> 19
determined in accordance with GAAP, after eliminating all offsetting debits and
credits between the Borrower and the Restricted Subsidiaries and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements of the Borrower and the Restricted Subsidiaries in
accordance with GAAP; provided, however, that, for the purpose of calculating
"Net Worth Increase Amount" with respect to any Fiscal Quarter, "Consolidated
Net Income" shall exclude 50% of the gains or losses of the Borrower and the
Restricted Subsidiaries arising from any disposition of Precious Metals outside
the ordinary course of their business.
"Consolidated Net Worth" means at any time:
(a) the total assets of the Borrower and its Restricted Subsidiaries
which would be shown as assets on a consolidated balance sheet of the
Borrower and the Restricted Subsidiaries at such time, prepared in
accordance with GAAP, after eliminating all amounts properly attributable
to minority interests, if any, in the stock and surplus of Restricted
Subsidiaries,
minus
(b) the total liabilities of the Borrower and its Restricted
Subsidiaries which would be shown as liabilities on a consolidated balance
sheet of the Borrower and its Restricted Subsidiaries at such time,
prepared in accordance with GAAP;
provided, however, that the amount to be included in Consolidated Net Worth in
respect of the Capital Stock of Unrestricted Subsidiaries shall be calculated by
using the equity method, and Consolidated Net Worth shall not be increased or
decreased by an amount in excess of $5,000,000 for the sum of the aggregate
amount of such Capital Stock and the aggregate principal amount of all Debt
owing to the Borrower and its Restricted Subsidiaries by all Unrestricted
Subsidiaries.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer, substantially
in the form of Exhibit F attached hereto.
"Contract" is defined in clause (a) of Section 2.6.3.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
12-
<PAGE> 20
"Credit Extension" means, as the context may require,
(a) the making of a Loan by a Lender; or
(b) the issuance of any Letter of Credit by the Issuer.
"Credit Extension Request" means any Borrowing Request or Issuance
Request.
"Debt" means, with respect to any Person at any time, without duplication,
(a) the principal amount of borrowed money that (subject to the last
sentence of this definition) appears on the balance sheet of such Person
as a liability in accordance with GAAP;
(b) the deferred purchase price of Property acquired by such Person
(including, without limitation, all liabilities created or arising under
any conditional sale or other title retention agreement with respect to
any such Property) that (subject to the last sentence of this definition)
appears on the balance sheet of such Person as a liability in accordance
with GAAP;
(c) its Capitalized Lease Liabilities;
(d) all liabilities for the principal amount of borrowed money of
any other Person that is secured by any Lien with respect to any Property
owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a
type described in any of paragraphs (a) through (d) hereof.
In no event shall "Debt" include Consignment Arrangements, Future Payables
Transactions or accounts payable arising in the ordinary course of business of
the Borrower and the Restricted Subsidiaries.
Debt of any Person shall include all obligations of such Person of the character
described in paragraphs (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Debt Prepayment Application" means, with respect to any Transfer, the
application by the Borrower or the Restricted Subsidiaries of cash in an amount
equal to all or any portion of the Net Proceeds Amount with respect to such
Transfer to pay Senior Debt or obligations under any Future Payables Transaction
(other than Senior Debt owing to the Borrower, any of the Restricted
Subsidiaries or any Affiliate and Debt in respect of any revolving credit or
similar credit facility (including this Agreement) providing the Borrower or any
of the Restricted
13-
<PAGE> 21
Subsidiaries with the right to obtain loans or other extensions of credit from
time to time, except to the extent that in connection with such payment of Debt
the availability of credit under such credit facility (including this Agreement)
is permanently reduced by an amount not less than the amount of such proceeds
applied to the payment of such Debt).
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disbursement" means any payment made under a Letter of Credit by the
Issuer thereof to the beneficiary (or its assignee or transferee) of such Letter
of Credit.
"Disbursement Date" is defined in Section 2.6.1.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Administrative Agent and
the Required Lenders.
"Disposition Value" means, at any time, with respect to any Property:
(a) in the case of Property that does not constitute Subsidiary
Stock, the net book value thereof, valued at the time of such disposition
in good faith by the Borrower, and
(b) in the case of Property that constitutes Subsidiary Stock, an
amount equal to that percentage of the net book value of the net assets of
the Restricted Subsidiary that issued such stock as is equal to the
percentage that the net book value of such Subsidiary Stock represents of
the net book value of all of the outstanding capital stock of such
Restricted Subsidiary (assuming, in making such calculations, that all
Securities convertible into such capital stock are so converted and giving
full effect to all transactions that would occur or be required in
connection with such conversion) determined at the time of the disposition
thereof, in good faith by the Borrower.
"Dollar" and the symbol "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other party
hereto.
"Effective Date" means the date this Agreement becomes effective pursuant
to Section 10.8.
14-
<PAGE> 22
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Existing Agreements" means each of the Revolving Credit Agreement and the
Short Term Revolving Credit Agreement, each dated as of September 28, 1994 (as
each may be amended or otherwise modified from time to time prior to the
Effective Date), each among the Borrower, certain financial institutions parties
thereto, The Bank of Nova Scotia, The Bank of New York and The Chase Manhattan
Bank as the co-agents and The Bank of Nova Scotia, as administrative agent.
"Existing Letters of Credit" means each of the letters of credit
identified in Item 1 of the Disclosure Schedule.
"Extension Request" means an extension request duly executed by an
Authorized Officer, substantially in the form of Exhibit G hereto.
"Fair Market Value" means, at any time and with respect to any Property,
the sale value of such Property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell). For purposes of
determining the Fair Market Value of any Precious Metals as of any date of
determination, the Borrower may base such value on the average of the prices of
such metal, as published by the Borrower (or, if not so published, by the London
P.M. Fix) on each day during the three month period ending on such date of
determination.
"Federal Funds Rate" means, for any day, a fluctuating interest rate per
annum equal for such day to the weighted average of the rates on overnight
federal funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is not a
Business Day in the City of New York, for the next preceding Business Day) by
the Federal Reserve Bank of New York; provided, however, that if such rate is
not so published for any day which is a Business Day in the City of New York,
the rate for such day shall be the average of the quotations for such day on
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the confidential letter agreement, dated as of August
26, 1997, by and between the Borrower and Scotiabank and as further amended,
restated, supplemented, amended and restated or otherwise modified from time to
time.
15-
<PAGE> 23
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Quarter Net Worth Increase Amount" means, for any Fiscal Quarter
of the Borrower ended after December 31, 1996, the greater of (a) 50% of
Consolidated Net Income for such Fiscal Quarter and (b) $0.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "1996 Fiscal Year") refer to the Fiscal Year
ending on the December 31 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"Future Payables Transaction" means, as of any date, a financing
arrangement of the Borrower or any Restricted Subsidiary involving the sale of
Precious Metals actually owned by the Borrower as of such date and the
contemporaneous purchase, on a future payment and delivery basis, by the
Borrower or such Restricted Subsidiary of a substantially equivalent quantity of
Precious Metals of the same type.
"GAAP" is defined in Section 1.4.
"Governmental Authority" means:
(a) the government of:
(i) the United States of America or any state or other political
subdivision thereof, or
(ii) any jurisdiction in which the Borrower or any Subsidiary
conducts all or any part of its business, or that asserts
jurisdiction over any Properties of the Borrower or any Subsidiary,
or
(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt of any other Person in any manner, whether directly or indirectly,
including, without limitation, obligations incurred through an agreement,
contingent or otherwise, by such Person:
(a) to purchase such Debt or any Property constituting security
therefor;
16-
<PAGE> 24
(b) to advance or supply funds (i) for the purchase or payment of
such Debt, or (ii) to maintain any working capital or other balance sheet
condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment
of such Debt;
(c) to lease Properties or to purchase Properties or services
primarily for the purpose of assuring the owner of such Debt of the
ability of any other Person to make payment of the Debt; or
(d) otherwise to assure the owner of such Debt against loss in
respect thereof.
In any computation of the Debt of the obligor under any Guaranty, the Debt that
is the subject of such Guaranty shall be assumed to be direct obligations of
such obligor. The amount of any Person's obligation under any Guaranty shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount of the Debt guaranteed thereby.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act;
(c) any crude oil or petroleum or any fraction thereof;
(d) asbestos, radioactive materials or polychlorinated biphenyls in
any form or condition; or
(e) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or
certification:
17-
<PAGE> 25
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
the Borrower to be in default of any of its obligations under Section
7.2.4.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that there shall be no inference
or implication of limiting a general statement, which, for purposes of
clarification only, is followed by or referable to an enumeration of specific
matters or to matters specifically mentioned.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Interest Coverage Ratio" means, as of the end of any Fiscal Quarter, the
ratio, computed for the period consisting of such Fiscal Quarter and each of the
three immediately preceding Fiscal Quarters, of:
(a) Consolidated Adjusted Cash Flow
to
(b) Consolidated Interest Expense.
"Interest Period" means:
(a) relative to any LIBO Rate Loan, the period beginning on (and
including) the date on which such LIBO Rate Loan is made or continued as,
or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.3.1 and
shall end on (but exclude) the day which numerically corresponds to such
date one, two, three, six, nine (or, if available to all Lenders, 12)
months thereafter (or, if such month has no numerically corresponding day,
on the last Business Day of such month), as the Borrower may select in its
relevant notice pursuant to Section 2.3 or 2.3.1; provided, however, that
(i) Interest Periods commencing on the same date for Revolving
Loans comprising part of the same Borrowing shall be of the same
duration,
18-
<PAGE> 26
(ii) if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the
next following Business Day; provided, however, that if such next
following Business Day is the first Business Day of a calendar
month, such Interest Period shall end on the next preceding Business
Day, and
(iii) no Interest Period may end later than the Stated
Maturity Date; and
(b) relative to each Competitive Bid Loan made at a LIBOR Auction,
the period commencing on the date of such Borrowing and ending one, two,
three, six, nine (or, if available to the relevant Lenders, 12) months
thereafter, as the Borrower may elect in accordance with Section 2.4;
provided that:
(i) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day; provided, however, that if such next
following Business Day is the first Business Day of a calendar
month, such Interest Period shall end on the next preceding Business
Day, and
(ii) no Interest Period may end later than the Stated Maturity
Date.
No more than ten Interest Periods shall be in effect at any one time.
"Investment" means any investment in any Person, whether by means of share
purchase, capital, equity or similar contribution, loan, advance or otherwise
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business, time deposits and Cash Equivalent
Investments). The amount of any Investment shall be the original principal or
capital amount thereof less all returns of principal or equity thereon (and
without adjustment by reason of the financial condition of such other Person)
and shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to the
fair market value of such property, as reasonably determined in good faith by
the Borrower at the time of such transfer or exchange.
"Invitation for Bid Loan Quotes" means an Invitation for Bid Loan Quotes
delivered by the Administrative Agent to the Lenders pursuant to clause (b) of
Section 2.4, in substantially the form of Exhibit C-1 hereto.
"Issuance Date" is defined in Section 2.6.
"Issuance Request" means an issuance request duly completed and executed
by an Authorized Officer, substantially in the form of Exhibit B-3 hereto.
19-
<PAGE> 27
"Issuer" means, (i) Scotiabank in its individual capacity hereunder (and
not in its capacity as the Administrative Agent), (ii) at the request of
Scotiabank and with the Borrower's consent, another Lender issuing one or more
Letters of Credit hereunder, or (iii) at such time that the long-term unsecured
debt of Scotiabank is not rated at least AA3 or AA- or its equivalent by Moody's
Investors Service or Standard & Poor's Corporation, respectively, at the
Borrower's request and with a Lender's consent, such Lender issuing one or more
Letters of Credit hereunder.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit D attached hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" means the Existing Letters of Credit and each other
letter of credit issued hereunder by the Issuer for the account of the Borrower,
in form customarily used by the Issuer and in a Stated Amount requested by the
Borrower.
"Letter of Credit Commitment" means the Issuer's obligation to issue
Letters of Credit for the account of the Borrower pursuant to Section 2.6 and,
with respect to each of the other Lenders, the obligation of each such Lender to
participate in such Letter of Credit pursuant to Section 2.6.7.
"Letter of Credit Commitment Amount" means, on any date, a maximum amount
of $30,000,000, as such amount may be reduced from time to time pursuant to
Section 2.2.
"Letter of Credit Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Letter of Credit Commitment Amount or the
Loan Commitment Amount is terminated in full or reduced to zero pursuant
to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Letter of
Credit Commitment shall terminate automatically and without any further action.
"Letter of Credit Outstandings" means, on any date, an amount equal to the
sum of
(a) the then aggregate amount which is undrawn and available under
all issued and outstanding Letters of Credit
20-
<PAGE> 28
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"Leverage Ratio" means, at any time, the ratio of
(a) Consolidated Adjusted Debt at such time
to
(b) Consolidated Adjusted Cash Flow for the most recently completed
period of four consecutive Fiscal Quarters.
"LIBO Rate" is defined in Section 3.2.1.
"LIBO Rate Bid Margin" means, in respect of Competitive Bid Loans based on
a LIBOR Auction, the margin above or below the applicable LIBO Rate offered for
each such Competitive Bid Loan, expressed as a percentage (rounded to the
nearest 1/10,000th of 1%) to be added to such rate.
"LIBO Rate Loan" means a Revolving Loan bearing interest, at all times
during an Interest Period applicable to such Revolving Loan, at a fixed rate of
interest determined by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.
"LIBOR Auction" means a solicitation of Competitive Bid Loan quotes
pursuant to Section 2.4 hereof based on the LIBO Rate.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender as designated from time to
time by notice from such Lender to the Borrower and the Administrative Agent,
whether or not outside the United States, which shall be making or maintaining
LIBO Rate Loans or Competitive Bid Loans based on a LIBOR Auction.
"LIBOR Reserve Percentage" is defined in Section 3.2.1.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
21-
<PAGE> 29
"Loan Commitment Amount" means, on any day, $200,000,000, as such amount
may be reduced from time to time pursuant to Section 2.2, and as such amount may
be increased pursuant to Section 2.8.
"Loan Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Loan Commitment Amount is terminated in
full or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Revolving
Loan Commitment, the Swing Line Loan Commitment and the Letter of Credit
Commitment shall terminate automatically and without further action.
"Loan Document" means this Agreement, the Notes, each Letter of Credit,
the Fee Letter and each other agreement, document or instrument delivered
pursuant hereto or thereto, whether or not mentioned herein or therein.
"Loans" means, as the context may require, either a Competitive Bid Loan,
a Swing Line Loan or a Revolving Loan.
"Material Adverse Effect" means a material adverse effect on (i) the
business, operations, affairs, financial condition or Properties of the Borrower
and its Subsidiaries taken as a whole, or (ii) the ability of the Borrower to
perform its obligations under this Agreement or any other Loan Document, or
(iii) the validity or enforceability of this Agreement or any other Loan
Document.
"Net Proceeds Amount" means, with respect to any Transfer by any Person,
an amount equal to:
(a) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of such
Transfer) received by such Person in respect of such Transfer,
minus
(b) all reasonable out-of-pocket costs, fees, commissions and other
expenses incurred by such Person in connection with such Transfer and
income taxes paid or reasonably estimated to be payable in connection
therewith,
minus
22-
<PAGE> 30
(c) all obligations required to be paid by the Borrower or a
Restricted Subsidiary as a result of such Transfer.
"Non-Cash Income," for any period and without duplication, means:
(i) the income (or loss) of any Person in which the Borrower
or any Restricted Subsidiary has an ownership interest (other than
the Borrower's or a Restricted Subsidiary's ownership interest in a
Restricted Subsidiary), except to the extent that any such income
has been actually received by the Borrower or such Restricted
Subsidiary in the form of cash dividends or similar cash
distributions,
(ii) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of
income accrued during such period,
(iii) any gains resulting from any write-up of any assets (but
not any loss resulting from any write-down of any assets),
(iv) any gain arising from the acquisition of any Debt which
is a Security, or the extinguishment, under GAAP, of any Debt, of
the Borrower or any Restricted Subsidiary,
(v) any net income, net loss or gain or loss during such
period from (x) any change in accounting principles in accordance
with GAAP or (y) any prior period adjustments resulting from any
change in accounting principles in accordance with GAAP, and
(vi) any deferred credit representing the excess of equity in
any Restricted Subsidiary at the date of acquisition over the cost
of investment in such Restricted Subsidiary.
It is understood that Non-Cash Income may be negative.
"Non-Consenting Lender" is defined in clause (d) of Section 2.7.2.
"Non-Recourse Joint Venture" means a joint venture (i) to which a
Non-Recourse Subsidiary is a party and (ii) whose Debt is non-recourse to the
Borrower or any of its Restricted Subsidiaries which is not a Non-Recourse
Subsidiary party thereto or any of their respective assets (other than equity
interests in such joint venture).
"Non-Recourse Subsidiary" means a direct or indirect Subsidiary of the
Borrower (i) which was formed solely for the purpose of entering into a
Non-Recourse Joint Venture and (ii)
23-
<PAGE> 31
whose Debt is non-recourse to the Borrower or any Restricted Subsidiary of the
Borrower or any of their respective assets (other than equity interests in such
joint venture).
"Note" means, as the context may require, a Competitive Bid Loan Note, a
Swing Line Note or a Revolving Loan Note.
"Note Purchase Agreement" means several Note Purchase Agreements, each
dated as of April 17, 1997, among the Borrower and the respective Purchasers
named therein, with respect to the Borrower's $125,000,000 7.31% Senior Notes
Due April 30, 2004.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower arising under or in connection with this Agreement, the Notes, the
Letters of Credit and each other Loan Document.
"Organic Document" means, relative to the Borrower, its certificate of
incorporation and its by-laws.
"Owned Precious Metal Inventory" means all Precious Metals acquired by the
Borrower or a Restricted Subsidiary in a Future Payables Transaction and all
Precious Metals owned by the Borrower or any Restricted Subsidiary up to an
aggregate amount of ounces for each type of Precious Metal as set forth below:
Gold - 116,076 ounces
Silver - 14,749,005 ounces
Platinum - 943 ounces
Palladium - 80,755 ounces
"Participant" is defined in Section 10.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or
any corporation, trade or business that is, along with the Borrower, a member of
a Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted
24-
<PAGE> 32
from time to time pursuant to Lender Assignment Agreement(s) executed by such
Lender and its Assignee Lender(s) and delivered pursuant to Section 10.11.1.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Precious Metals" means any precious metals, including, without
limitation, gold, silver, palladium and platinum.
"Priority Debt" means, without duplication, at any time, the sum of:
(a) all Debt of the Borrower and the Restricted Subsidiaries secured
by any Lien with respect to any Property owned by the Borrower or any of
the Restricted Subsidiaries permitted by clause (a) (xi) of Section 7.2.3
(other than Debt owing to the Borrower or a Restricted Subsidiary), plus
(b) all Adjusted Debt of the Restricted Subsidiaries (other than
Debt in respect of Capitalized Lease Liabilities, pollution control bonds
or industrial revenue bonds) outstanding at such time (other than Debt
owing to the Borrower or another Restricted Subsidiary), plus
(c) all Attributable Debt of the Borrower and the Restricted
Subsidiaries (other than Attributable Debt owing to the Borrower or a
Restricted Subsidiary).
"Property or Properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"Property Reinvestment Application" means, with respect to any Transfer of
Property, the application of, or the entering into of an agreement to apply, an
amount equal to all or any portion of the Net Proceeds Amount with respect to
such Transfer to the acquisition or construction by the Borrower or any
Restricted Subsidiary of assets of the Borrower or any Restricted Subsidiary to
be used in the business of such Person, to the acquisition of a business or of
all or substantially all of the assets of another Person, or to the acquisition
of equity interests in a Person that becomes a Restricted Subsidiary as a result
thereof; provided, however, that in order for any such agreement to apply,
immediately after such agreement shall be entered into, the Unapplied Portions
of the Net Proceeds Amounts for all Asset Dispositions shall not exceed 30% of
the Borrower's consolidated assets. Any Transfer which is, in whole or in part,
a barter Transfer of Property for the assets, business or equity interests
referred to above shall be automatically deemed to be a Property Reinvestment
Application to the extent of the assets, business or equity interests received.
25-
<PAGE> 33
"Quarterly Payment Date" means the last day of each March, June, September
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"Reimbursement Obligation" is defined in Section 2.6.3.
"Reinvestment Notice" is defined in Section 7.2.11.
"Release" means a "release", as such term is defined in CERCLA.
"Replacement Notice" is defined in Section 4.11.
"Required Lenders" means, at any time,
(a) with respect to any provision of this Agreement (including the
termination of Commitments pursuant to Section 8.3) other than the
declaration of the acceleration of the Stated Maturity Date and of the
maturity of all or any portion of the outstanding principal amount of the
Credit Extensions (after giving effect to Section 2.6.7) and, without
duplication, Letter of Credit Outstandings and other Obligations to be due
and payable pursuant to Section 8.3, Lenders whose Percentages exceed 50%;
or
(b) with respect to the declaration of the acceleration of the
maturity of all or any portion of the outstanding principal amount of the
Credit Extensions and, without duplication, Letter of Credit Outstandings
and other Obligations to be due and payable pursuant to Section 8.3,
Lenders holding in excess of 50% of the aggregate principal amount of the
Credit Extensions (after giving effect to Section 2.6.7) then outstanding.
"Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 690, et seq., as in effect from time to
time.
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Borrower with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Payments" is defined in Section 7.2.6.
"Restricted Subsidiary" means, on the date of the initial Credit
Extension, each Subsidiary set forth in Item 6.8 of the Disclosure Schedule and,
at any time after the Effective Date, each Subsidiary then designated (or deemed
designated) a Restricted Subsidiary pursuant to Section 7.2.13.
26-
<PAGE> 34
"Revolving Loan" is defined in Section 2.1.1.
"Revolving Loan Borrowing" means Revolving Loans of the same type and, in
the case of LIBO Rate Loans, having the same Interest Period, made by all
Lenders on the same Business Day pursuant to the same Revolving Loan Borrowing
Request in accordance with Section 2.1.
"Revolving Loan Borrowing Request" means a certificate requesting
Revolving Loans duly executed by an Authorized Officer, substantially in the
form of Exhibit B-1 attached hereto.
"Revolving Loan Commitment" is defined in Section 2.1.1.
"Revolving Loan Note" means any promissory note of the Borrower in the
form of Exhibit A-1 hereto (as such promissory note may be amended, endorsed or
otherwise modified from time to time), evidencing the aggregate indebtedness of
the Borrower to such Lender resulting from Revolving Loans outstanding from such
Lender, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Sale-and-Leaseback Transaction" means any transaction or series of
transactions commencing on or after the Effective Date pursuant to which the
Borrower or any Restricted Subsidiary shall, more than 180 days after the later
of the acquisition or occupancy of any Property, sell or transfer to any Person
(other than the Borrower or a Restricted Subsidiary) such Property (other than
any Precious Metals), whether now owned or hereafter acquired with an intent of
leasing it back, and, as part of the same transaction or series of transactions,
the Borrower or any Restricted Subsidiary shall rent or lease as lessee (other
than pursuant to a capital lease), or similarly acquire the right to possession
or use of, such Property or one or more other Properties which it intends to use
for the same purpose or purposes as such Property for a period of 36 months or
longer.
"Scotiabank" is defined in the preamble.
"Security" means "security" as defined in the Securities Act of 1933, as
amended from time to time.
"Senior Debt" means (a) any Debt of the Borrower (other than any Debt that
is in any manner subordinated in right of payment or security in any respect to
the Debt evidenced by the Notes) and (b) any Debt of a Restricted Subsidiary.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Singapore Joint Venture Asset Disposition" means the Transfer, or series
of related Transfers, of all or substantially all of the Borrower's equity
interest in Handy & Harman Manufacturing (Singapore) Pte. Ltd., or all or
substantially all of the assets thereof, but only in
27-
<PAGE> 35
respect of the Borrower's direct or indirect portion of the Net Proceeds Amount
attributable thereto that does not exceed Seven Million Five Hundred Thousand
Dollars ($7,500,000) and the entire amount of such portion of such Net Proceeds
Amount is applied to a Property Reinvestment Application (whether or not within
180 days before or after such Transfer).
"Stated Amount" of each Letter of Credit means the amount available to be
drawn thereunder upon the issuance thereof or, if higher, the maximum amount
that may be drawn under such Letter of Credit prior to the Stated Expiration
Date therefor.
"Stated Expiration Date" means the date on which any Letter of Credit is
stated, by its terms, to expire, which date shall in no event be later than the
earlier of one year from the date of its issuance and the Letter of Credit
Commitment Termination Date.
"Stated Maturity Date" means September 30, 2002, as such date may be
extended pursuant to Section 2.7.
"Subject Lender" is defined in Section 4.11.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other business entity of which more than 50% of
the outstanding capital stock or other ownership interest having ordinary voting
power to elect a majority of the board of directors (or an equivalent entity) of
such corporation, partnership, joint venture or other business entity
(irrespective of whether at the time capital stock or other ownership interest
of any other class or classes of such entity shall or might have voting power
upon the occurrence of any contingency) is at the time directly or indirectly
owned by such Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person.
"Subsidiary Stock" means, with respect to any Person, the Capital Stock
(or any options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of any Subsidiary of such Person.
"Swing Line Lender" means Scotiabank in its individual capacity hereunder
(and not in its capacity as Administrative Agent). At the request of Scotiabank
another Lender consented to by the Borrower (such consent not to be unreasonably
withheld) may become a successor Swing Line Lender.
"Swing Line Loan" is defined in Section 2.1.1(b).
"Swing Line Loan Borrowing" means Swing Line Loans (which shall be Base
Rate Loans) made by the Swing Line Lender on the same Business Day pursuant to
the same Revolving Loan Borrowing Request in accordance with Section 2.1.
"Swing Line Loan Commitment" is defined in Section 2.1.1(b).
28-
<PAGE> 36
"Swing Line Loan Commitment Amount" means, on any date, $10,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2.
"Swing Line Note" means a promissory note of the Borrower payable to
Scotiabank, in the form of Exhibit A-3 hereto (as such promissory note many be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate indebtedness of the Borrower to Scotiabank resulting from outstanding
Swing Line Loans, and also means all other promissory notes accepted from time
to time in substitution therefor or renewal thereof.
"Taxes" is defined in Section 4.6.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers, or leases (as lessor) pursuant to a
capital lease, ownership of any of its Property (including, without limitation,
Subsidiary Stock and Property sold in a Sale-and-Leaseback Transaction) and
includes any consolidation or merger of a Restricted Subsidiary with any other
Person if the Person surviving such consolidation or merger is not a Restricted
Subsidiary and any redesignation of a Restricted Subsidiary as an Unrestricted
Subsidiary pursuant to Section 7.2.13.
"Type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"Unapplied Portion of the Net Proceeds Amount," with respect to any Asset
Disposition as to which the Borrower has given a Reinvestment Notice, means, at
any time, the Disposition Value of the Property subject to such Asset
Disposition multiplied by a fraction of which the numerator is the portion of
the Net Proceeds Amount subject to such Reinvestment Notice which has not been
applied to a Property Reinvestment Application or a Debt Prepayment Application
at such time and the denominator of which is the entire amount of the portion of
the Net Proceeds Amount subject to such Reinvestment Notice.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Unrestricted Subsidiary" means a Subsidiary of the Borrower that is not a
Restricted Subsidiary.
"Welfare Plan" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and in any Loan
Document, Borrowing Request, Issuance Request, Continuation/Conversion Notice,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
29-
<PAGE> 37
SECTION 1.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations; No Duplication;
Consolidation. Unless otherwise specified, (i) all accounting terms used herein
or in any other Loan Document shall be interpreted, all accounting
determinations and computations hereunder or thereunder (including under Section
7.2.4) shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared in accordance with, those generally
accepted accounting principles ("GAAP") applied in the preparation of the
audited annual financial statements referred to in Section 6.5, and (ii) all
accounting determinations and computations hereunder or under any other Loan
Documents (including under Section 7.2.4) shall be made without duplication and
on a consolidated basis for the Borrower and its Restricted Subsidiaries.
ARTICLE II
COMMITMENTS, BORROWING, BIDDING AND
ISSUANCE PROCEDURES, NOTES AND LETTERS OF CREDIT
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article V),
(a) each Lender severally agrees to make Revolving Loans pursuant to
the Revolving Loan Commitment described in Section 2.1.1;
(b) the Swing Line Lender agrees to make Swing Line Loans pursuant
to the Swing Line Loan Commitment described in Section 2.1.1; and
(c) the Issuer agrees that it will issue Letters of Credit pursuant
to Section 2.1.3, and each other Lender severally agrees that it will
purchase participation interests in such Letters of Credit pursuant to
Section 2.6.7.
SECTION 2.1.1. Revolving Loan Commitment and Swing Line Loan Commitment.
(a) From time to time on any Business Day occurring prior to the Loan Commitment
Termination Date, each Lender will make loans (relative to such Lender, and of
any type, its "Revolving Loans") to the Borrower equal to such Lender's
Percentage of the aggregate amount of the Revolving Loan Borrowing requested by
the Borrower to be made on such day. The commitment of each Lender described in
this Section 2.1.1 is herein referred to as its "Revolving Loan Commitment". On
the terms and subject to the conditions hereof, the Borrower may from
30-
<PAGE> 38
time to time prior to the Loan Commitment Termination Date borrow, prepay and
reborrow Revolving Loans.
(b) From time to time on any Business Day occurring prior to the Loan
Commitment Termination Date, the Swing Line Lender will make loans (its "Swing
Line Loan") to the Borrower equal to the principal amount of the Swing Line Loan
requested by the Borrower to be made on such day. The commitment of the Swing
Line Lender described in this Section 2.1.1(b) is herein referred to as its
"Swing Line Loan Commitment". On the terms and subject to the conditions hereof,
the Borrower may from time to time borrow, prepay and reborrow Swing Line Loans.
SECTION 2.1.2. Lenders Not Permitted or Required to Make Revolving Loans
or Swing Line Loans. No Lender shall be permitted or required to make any
Revolving Loan or Swing Line Loan if, after giving effect thereto and to any
repayment of Credit Extensions to be made with the proceeds thereof, the
aggregate unpaid principal amount of :
(a) all Loans outstanding to all Lenders, together with the
aggregate amount of all Letter of Credit Outstandings, would exceed the
Loan Commitment Amount; or
(b) all Swing Line Loans would exceed the Swing Line Loan Commitment
Amount.
SECTION 2.1.3. Letter of Credit Commitment. From time to time on any
Business Day occurring prior to the Letter of Credit Commitment Termination
Date, the Issuer:
(a) will issue one or more Letters of Credit; and
(b) may, upon request of the Borrower, extend the Stated Expiration
Date of an existing Letter of Credit previously issued hereunder to a date
not later than the earlier of (x) the Letter of Credit Commitment
Termination Date and (y) one year from the date of such extension.
SECTION 2.1.4. Issuer Not Permitted or Required to Issue Letters of
Credit. The Issuer shall not be permitted or required to issue any Letter of
Credit if, after giving effect thereto,
(a) the aggregate amount of all Letter of Credit Outstandings would
exceed the Letter of Credit Commitment Amount; or
(b) the sum of all Letter of Credit Outstandings plus the aggregate
unpaid principal amount of all Loans then outstanding would exceed the
Loan Commitment Amount.
31-
<PAGE> 39
SECTION 2.2. Reduction of Commitment Amounts. The Borrower may, from time
to time on any Business Day occurring after the time of the initial Borrowing
hereunder, voluntarily reduce the amount of the Loan Commitment Amount, the
Swing Line Loan Commitment Amount or the Letter of Credit Commitment Amount;
provided, however, that (i) all such reductions shall require at least three
Business Days' prior written irrevocable notice to the Administrative Agent and
be permanent, (ii) any partial reduction of (A) the Loan Commitment Amount shall
be in a minimum amount of $10,000,000 and in an integral multiple of $1,000,000
and (B) the Letter of Credit Commitment Amount or the Swing Line Loan Commitment
Amount shall be in a minimum amount of $1,000,000 and in an integral multiple of
$250,000, (iii) except as provided below, the Loan Commitment Amount may not be
so reduced to an amount less than the sum of the then existing Letter of Credit
Commitment Amount and Swing Line Loan Commitment Amount and (iv) except as
provided below, the Borrower may not reduce the Letter of Credit Commitment
Amount to an amount less than the then Letter of Credit Outstandings; and
provided, further, that the Borrower may terminate the Commitments in whole if,
at the time of and as a condition of such termination, (x) the Borrower shall
have repaid in full the aggregate outstanding principal amount of all Revolving
Loans, Swing Line Loans and Reimbursement Obligations, together with all accrued
interest and fees thereon to the date of termination, and (y) all unexpired
Letters of Credit shall have been returned to the Issuer for cancellation or
cash-collateralized pursuant to arrangements and documentation reasonably
satisfactory to the Issuer.
SECTION 2.3. Revolving Loan and Swing Line Loan Borrowing Procedure and
Funding Maintenance. Revolving Loans shall be made by the Lenders in accordance
with Section 2.3.1, and Swing Line Loans shall be made by the Swing Line Lender
in accordance with Section 2.3.2.
SECTION 2.3.1. Revolving Loans. By delivering a Revolving Loan Borrowing
Request to the Administrative Agent, on a Business Day the Borrower may from
time to time irrevocably request, (x) on not less than three nor more than five
Business Days' notice (but before 10:00 a.m. (New York City time) on the
applicable Business Day), in the case of LIBO Rate Loans, and (y) on not more
than five Business Days' notice (but before 10:30 a.m. (New York City time) on
the date such Borrowing is to occur), in the case of Base Rate Loans, that a
Revolving Loan Borrowing be made by all the Lenders in a minimum amount of
$10,000,000 and an integral multiple of $1,000,000, or, if less, in the unused
amount of the Revolving Loan Commitment. The Administrative Agent shall promptly
notify each Lender of the receipt of a Revolving Loan Borrowing Request. On the
terms and subject to the conditions of this Agreement, each Revolving Loan
Borrowing shall be comprised of the type of Revolving Loans, and shall be made
on the Business Day, specified in such Revolving Loan Borrowing Request. On or
before 11:00 a.m. (New York City time) (in the case of LIBO Rate Loans), and
12:00 (noon) (New York City time), in the case of a Base Rate Loan, on the
Business Day that such Revolving Loan Borrowing is to be made, each Lender shall
deposit with the Administrative Agent immediately available funds in an amount
equal to such Lender's Percentage of the requested Revolving Loan Borrowing.
Such deposit will be made to an account which the Administrative Agent shall
specify from time to time by notice to the Lenders. To the extent funds are
received from the Lenders, the Administrative Agent shall make such funds
available
32-
<PAGE> 40
to the Borrower by wire transfer to the accounts the Borrower shall have
specified in its Revolving Loan Borrowing Request. No Lender's obligation to
make any Revolving Loan shall be affected by any other Lender's failure to make
any Revolving Loan.
SECTION 2.3.2. Swing Line Loans. (a) By written or telephonic notice to
the Swing Line Lender on or before 11:00 a.m. (New York City time), on a
Business Day the Borrower may from time to time request that Swing Line Loans be
made by the Swing Line Lender on such Business Day (or the next succeeding
Business Day) in an aggregate minimum principal amount of $1,000,000 and an
integral multiple of $250,000. All telephonic notices shall be confirmed on the
same Business Day by the delivery to the Administrative Agent of an
appropriately completed Revolving Loan Borrowing Request. All Swing Line Loans
shall be made as Base Rate Loans. Provided that notice is received by the Swing
Line Lender in accordance with the first sentence of this Section 2.3.2, the
proceeds of each Swing Line Loan shall be made available by the Swing Line
Lender to the Borrower by 2:00 p.m. on the requested Borrowing Date by wire
transfer of such proceeds to such transferees, or to such accounts of the
Borrower, as the Borrower shall have specified in its notice therefor.
(b) If (i) any Swing Line Loan is or will be outstanding on a date when
the Borrower requests that a Revolving Loan be made; or (ii) any Default shall
occur and be continuing, each Lender (other than the Swing Line Lender)
irrevocably agrees that it will, at the request of Scotiabank, make a Revolving
Loan (which shall initially be funded as a Base Rate Loan) in an amount equal to
such Lender's Percentage of the aggregate principal amount of all such Swing
Line Loans.
(c) If the outstanding principal amount of any Swing Line Loan is not
repaid when due pursuant to the terms of this Agreement, each Lender (other than
the Swing Line Lender) irrevocably agrees that it will, upon receipt of a notice
from the Swing Line Lender, promptly (and in any event within one Business Day)
transfer to the Swing Line Lender, in immediately available funds, an amount
equal to such Lender's Percentage of the then aggregate outstanding amount of
all Swing Line Loans, and thereafter such Loans shall constitute a Revolving
Loan made by such Lender hereunder.
SECTION 2.3.3. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m. (New York City time), on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than three nor more than five Business Days'
notice that all, or any portion in an aggregate minimum amount of $10,000,000
and an integral multiple of $1,000,000, of any Revolving Loans be, in the case
of Base Rate Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate
Loans, on the last day of an Interest Period with respect thereto be converted
into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan
at least three Business Days before the last day of the then current Interest
Period with respect thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan); provided, however, that
33-
<PAGE> 41
(i), except as provided in Section 4.1, each such conversion or continuation
shall be pro rated among the applicable outstanding Revolving Loans of all
Lenders, and (ii) at the Administrative Agent's election by notice to the
Borrower, no portion of the outstanding principal amount of any Revolving Loan
may be continued as, or be converted into, a LIBO Rate Loan when any Default has
occurred and is continuing.
SECTION 2.3.4. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder, or to make a
Competitive Bid Loan based on a LIBOR Auction, by causing one of its foreign
branches or affiliates (or an international banking facility created by such
Lender) to make or maintain such LIBO Rate Loan or Competitive Bid Loan, as the
case may be; provided, however, that such LIBO Rate Loan or Competitive Bid
Loan, as the case may be, shall nonetheless be deemed to have been made and to
be held by such Lender, and the obligation of the Borrower to repay such LIBO
Rate Loan or Competitive Bid Loan, as the case may be, shall nevertheless be to
such Lender for the account of such foreign branch, affiliate or international
banking facility. In addition, the Borrower hereby consents and agrees that, for
purposes of any determination to be made for purposes of Section 4.1, 4.2, 4.3
or 4.4, it shall be conclusively assumed that each Lender elected to fund all
LIBO Rate Loans and Competitive Bid Loans based on a LIBOR Auction by purchasing
Dollar deposits in its LIBOR Office's interbank Eurodollar market.
SECTION 2.4. Competitive Bid Loans. Subject to the terms and conditions of
this Agreement (including Article V), each Lender severally agrees that the
Borrower may request that Competitive Bid Loan Borrowings under this Section 2.4
be made from time to time on any Business Day prior to the date occurring 15
Business Days prior to the Loan Commitment Termination Date in the manner set
forth below; provided, however, that following the making of each Competitive
Bid Loan Borrowing, the aggregate amount of all Loans and Letter of Credit
Outstandings then outstanding shall not exceed the Loan Commitment Amount and
the Borrower hereby agrees to make a mandatory prepayment of Loans on the date
of each Competitive Bid Loan Borrowing with the proceeds of Competitive Bid
Loans to the extent necessary (i) to reduce the outstanding principal amount of
all Loans and Letter of Credit Outstandings (after giving effect to such
Competitive Bid Loan Borrowing) to an amount not in excess of the Loan
Commitment Amount, and (ii) to prepay all Swing Line Loans.
(a) Competitive Bid Loan Borrowing Request. The Borrower may request
Competitive Bid Loan Borrowings under this Section 2.4 by delivering to
the Administrative Agent, not later than 10:00 a.m. (New York City time)
at least (x) five Business Days prior to the date of the proposed
Competitive Bid Loan Borrowing (in the case of LIBOR Auctions) or (y) one
Business Day prior to the date of the proposed Competitive Bid Loan
Borrowing (in the case of an Absolute Rate Auction), a revocable
Competitive Bid Loan Borrowing Request (which shall constitute an
invitation to the Lenders to extend Competitive Bid Loan quotes to the
Borrower, and which may contain requests for up to three different
Competitive Bid Loan Borrowings), specifying
34-
<PAGE> 42
(i) the proposed date (which shall be a Business Day) and
aggregate principal amount or amounts of each Competitive Bid Loan
to be made as part of such proposed Competitive Bid Loan Borrowing
(each of which such Competitive Bid Loan shall be in a minimum
principal amount of $10,000,000 and in an integral multiple of
$1,000,000) (and, subject to the proviso contained in the first
sentence of this Section 2.4, which principal amount may exceed the
Loan Commitment Amount then available to be borrowed),
(ii) whether the Competitive Bid Loan quotes requested are to
set forth a LIBO Rate Bid Margin or an Absolute Rate (or a
combination thereof),
(iii) the proposed maturity date or dates (each a "Competitive
Bid Loan Maturity Date") for repayment of each Competitive Bid Loan
to be made as part of such Competitive Bid Loan Borrowing (which
maturity date or dates may not (A) with respect to Absolute Rate
Loans, be (i) earlier than 7 days; or (ii) later than 180 days; and
(B) with respect to Competitive Bid Loans based on a LIBOR Auction,
be later than the date occurring six months after the date of such
Competitive Bid Loan Borrowing and (C) with respect to any
Competitive Bid Loan, occur later than the Loan Commitment
Termination Date), and
(iv) in the case of Competitive Bid Loans based on the LIBOR
Auction, the proposed duration of the Interest Period applicable
thereto.
(b) Invitation for Bid Loan Quotes. Promptly upon receipt of a
Competitive Bid Loan Borrowing Request but in no event later than 2:30
p.m. (New York City time) on the date of such receipt, the Administrative
Agent shall send to the Lenders by facsimile an Invitation for Bid Loan
Quotes substantially in the form of Exhibit C-1 attached hereto containing
the information contained in the applicable Competitive Bid Loan Request
and which shall constitute an invitation by the Borrower to each Lender to
submit Competitive Bid Loan quotes in response thereto.
(c) Submission and Contents of Bid Loan Quotes.
(i) If any Lender, in its sole discretion, elects to offer to
make a Competitive Bid Loan to the Borrower as part of such proposed
Competitive Bid Loan Borrowing at a rate of interest specified by
such Lender in its sole discretion, it shall deliver to the
Administrative Agent not later than (x) 11:00 a.m. (New York City
time) on the fourth Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:30 a.m. (New York
City time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction, a Competitive Bid Loan Offer, which must
comply with the requirements of this clause, in the form of Exhibit
C-2 hereto; provided, that Competitive Bid Loan quotes submitted by
the Administrative Agent (or any
35-
<PAGE> 43
affiliate of the Administrative Agent) in the capacity of a Lender
may be submitted, and may only be submitted, if the Administrative
Agent or such affiliate notifies the Borrower of the terms of the
offer or offers contained therein not later than (x) 10:45 a.m. (New
York City time) on the fourth Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) 9:15 a.m.
(New York City time) on the proposed date of Borrowing, in the case
of an Absolute Rate Auction. Subject to Articles V and VIII, such
Competitive Bid Loan Offer shall be irrevocable except with the
written consent of the Administrative Agent, given on the
instructions of the Borrower, and shall specify
(A) the proposed date of Borrowing, which shall be the
same as that set forth in the applicable Invitation for Bid
Loan Quotes,
(B) the principal amount of the Competitive Bid Loan
which such Lender would be willing to make as part of such
proposed Competitive Bid Loan Borrowing, which principal
amount may be greater than, less than or equal to such
Lender's Percentage of the Loan Commitment Amount, but which
amount shall be in a minimum principal amount of $5,000,000
and in an integral multiple of $1,000,000,
(C) in the case of a LIBOR Auction, the LIBO Rate Bid
Margin, and in the case of an Absolute Rate Auction, the
Absolute Rate therefor, and
(D) the identity of the quoting Lender.
(ii) Any Competitive Bid Loan Offer that:
(A) is not substantially in the form of Exhibit C-2
hereto or does not specify all of the information required in
clause (c) of this Section 2.4;
(B) contains qualifying, conditional or similar
language;
(C) contains proposed terms other than or in addition to
those set forth in the applicable Invitation for Bid Loan
Quotes; or
(D) arrives after the time set forth in clause (c) of
this Section 2.4
shall be disregarded by the Administrative Agent.
(d) Notice to Borrower. The Administrative Agent shall (by telephone
confirmed by telecopy), by 1:00 p.m. (New York City time) (on the fourth
Business Day prior to the
36-
<PAGE> 44
proposed date of Borrowing, in the case of a LIBOR Auction) and 10:00 a.m.
(New York City time) (on the proposed date of Borrowing, in the case of an
Absolute Rate Auction) notify the Borrower of the terms of any Competitive
Bid Loan Offer submitted by a Lender that is in accordance with clause (c)
of this Section 2.4. Any subsequent Competitive Bid Loan Offer of a Lender
shall be disregarded by the Administrative Agent unless such subsequent
Competitive Bid Loan Offer is submitted solely to correct a manifest error
in such earlier Competitive Bid Loan Offer. The Administrative Agent's
notice to the Borrower shall specify (A) the aggregate principal amount of
Competitive Bid Loans for which offers have been received in respect of
the related Invitation for Bid Loan Quotes, (B) the respective principal
amounts and Competitive Bid Rates so offered, and (C) the identity of such
quoting Lenders.
(e) Competitive Bid Loan Acceptance. The Borrower shall, in turn,
before (x) 4:00 p.m. (New York City time) on the fourth Business Day prior
to the proposed date of Borrowing, in the case of a LIBOR Auction, or (y)
12:00 (noon) (New York City time) on the date of such proposed Competitive
Bid Loan Borrowing, in the case of an Absolute Rate Auction, either
(i) irrevocably cancel the Competitive Bid Loan Borrowing
Request that requested such Competitive Bid Loan Borrowing by giving
the Administrative Agent (which shall promptly notify each Lender)
telephonic notice (promptly confirmed in writing) to that effect
(and, for purposes of this Section 2.4, a failure on the part of the
Borrower to timely notify the Administrative Agent under the terms
of this clause shall be deemed to be non-acceptance of all offers so
notified to it pursuant to clause (d) above), or
(ii) irrevocably accept one or more of the offers made by any
Lender or Lenders pursuant to clause (d) above, in its sole
discretion, by giving the Administrative Agent telephonic notice
(and the Administrative Agent shall, promptly upon receiving such
telephonic notice from the Borrower, notify each Lender whose
Competitive Bid Loan Offer has been accepted) (promptly confirmed in
writing by delivery to the Administrative Agent of a Competitive Bid
Loan Borrowing Notice, copies of which shall thereafter be forwarded
to each of the Lenders) of
(A) the amount of the Competitive Bid Loan Borrowing to
be made on such date,
and
(B) the amount of the Competitive Bid Loan (which amount
shall not be greater than, but which may be less than, the
amount offered by such Lender for such Competitive Bid Loan
pursuant to clause (d) above)
37-
<PAGE> 45
to be made by such Lender as part of such Competitive Bid Loan
Borrowing, and reject any remaining offers made by Lenders
pursuant to clause (d) above by giving the Administrative
Agent (which shall promptly give to the Lenders) notice to
that effect;
provided, however, that
(C) the aggregate amount of the Competitive Bid Loan
Offers accepted by the Borrower shall not exceed the principal
amount specified in the applicable Competitive Bid Loan
Borrowing Request,
(D) except as a result of the application of the last
sentence of this paragraph (e), no Lender shall, without its
prior written consent (in its sole discretion), be required to
make a Competitive Bid Loan in a principal amount of less than
$5,000,000 and an integral multiple of $1,000,000;
(E) except as a result of the application of the last
sentence of this paragraph (e), no bid shall be accepted for a
Competitive Bid Loan unless such Competitive Bid Loan is in a
minimum principal amount of $5,000,000 (except as provided in
clause (D) above) and an integral multiple of $1,000,000 and
is part of a Competitive Bid Loan Borrowing in a minimum
principal amount of $10,000,000,
(F) the Borrower may not accept any offer that is
described in clause (c)(ii) of this Section 2.4, or that
otherwise fails to comply with the requirements of this
Agreement.
(G) acceptance of offers may, subject to clause (H)
below, be made only in ascending order of the applicable
Competitive Bid Rates, as the case may be, in each case
beginning with the lowest rate so offered;
(H) the Borrower may not accept any offer where the
Administrative Agent has advised the Borrower that such offer
fails to comply with clause (C) or otherwise fails to comply
with the requirements of this Agreement.
If offers are made by two or more Lenders with the same applicable Competitive
Bid Rates for a greater aggregate principal amount than the amount in respect of
which offers are accepted for the related Interest Period or, as the case may
be, maturity, the principal amount of Competitive Bid Loans in respect of which
such offers are accepted shall be allocated by the Borrower among such Lenders
as nearly as possible in proportion to the aggregate principal amount of such
offers. Determinations by the Borrower of the amounts of Competitive Bid Loans
shall be conclusive in the absence of manifest error.
38-
<PAGE> 46
(f) Funding of Competitive Bid Loans. Not later than 11:00 a.m. (New
York City time) (in the case of a Borrowing based on a LIBOR Auction) and
1:00 p.m. (New York City time) (in the case of a Borrowing based on an
Absolute Rate Auction), in each case on the date specified for each
Competitive Bid Loan hereunder, each Lender participating therein shall
make available the amount of the Competitive Bid Loan to be made by it on
such date to the Administrative Agent in immediately available funds, for
the account of the Borrower, such deposit to be made to an account
maintained by the Administrative Agent, as the Administrative Agent shall
specify from time to time by notice to the Lenders or as otherwise agreed
to in writing by the Administrative Agent and the Borrower. The amount so
received by the Administrative Agent shall promptly be made available to
the Borrower by depositing the same in immediately available funds in an
account of the Borrower's notified to the Administrative Agent in writing.
SECTION 2.5. Notes. Each Lender's Loans under its Commitments shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to
(a) in the case of Revolving Loans, such Lender's Percentage of the
original Loan Commitment Amount; and
(b) in the case of Swing Line Loans, $10,000,000; and
(c) in the case of Competitive Bid Loans, $200,000,000.
The Borrower hereby irrevocably authorizes each Lender to make (or cause to be
made) appropriate notations on the grid attached to such Lender's Note (or on
any continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal amount of, and the interest rate
and Interest Period (in the case of Revolving Loan Notes) and the Competitive
Bid Loan Maturity Dates and Interest Period (if applicable) (in the case of
Competitive Bid Loan Notes) applicable to the Loans evidenced thereby. Such
notations shall be prima facie evidence of the matters stated therein, absent
manifest error; provided, however, that the failure of any Lender to make any
such notations shall not limit or otherwise affect any Obligations of the
Borrower.
SECTION 2.6. Issuing the Letters of Credit. (a) Not later than 10:00 a.m.
(New York City time) on the third Business Day prior to the date of a requested
issuance of a Letter of Credit, and on not less than 30 nor more than 60 days'
prior notice in the case of a request for an extension of the Stated Expiration
Date of a Letter of Credit (in each case, an "Issuance Date"), the Borrower may,
by delivery to the Issuer of an Issuance Request specifying (i) the Issuance
Date, (ii) the Stated Amount of the Letter of Credit, (iii) the Stated
Expiration Date thereof, (iv) the beneficiary of such Letter of Credit, and (v)
the terms and conditions upon which the Letter of Credit may be drawn by the
beneficiary of such Letter of Credit, request that the Issuer issue or extend
the Stated Expiration Date of a Letter of Credit. Each Issuance Request shall be
revocable until 10:00 a.m. (New York City time) on the proposed Issuance Date,
at which time it
39-
<PAGE> 47
shall become irrevocable. On the Issuance Date and upon fulfillment of the
applicable conditions set forth in Article V, the Issuer will issue, or extend
the Stated Expiration Date of, such Letter of Credit in accordance with its
terms. All Letters of Credit shall expire not later than the earlier to occur of
one year from the Issuance Date and the Letter of Credit Commitment Termination
Date.
(b) The Existing Letters of Credit (i) to the extent still outstanding on
the Effective Date, shall automatically and without further action of the
parties hereto be deemed to be Letters of Credit issued pursuant to this Section
2.6 and shall be subject to the provisions hereof (including with respect to the
payment of fees specified in Section 3.3.2, as if the Existing Letters of Credit
had been issued on the Effective Date), (ii) the Stated Amount of such letters
of credit shall be included in the calculation of Letter of Credit Outstandings,
and (iii) all liabilities of the Borrower with respect to the Existing Letters
of Credit shall constitute Obligations subject to all of the terms and
conditions hereof.
SECTION 2.6.1. Drawings under the Letters of Credit. In the event there
occurs one or more drawings under any Letter of Credit, the Issuer shall, not
later than 2:00 p.m. (New York City time) on the Business Day on which such
drawing is required to be honored pursuant to such Letter of Credit (the
"Disbursement Date"), make available to the beneficiary under such Letter of
Credit, in same day funds, the amount drawn on the Issuer pursuant to such
drawing.
SECTION 2.6.2. Reimbursement on Demand. On (or promptly after) each
Disbursement Date the Issuer shall notify the Borrower of a drawing under a
Letter of Credit, and the Issuer will promptly thereafter furnish to the
Borrower copies of (i) each draft drawn under such Letter of Credit and (ii)
each certificate accompanying any such draft; provided, however, that the
failure to give such notice or to provide such copies shall not affect the
obligations of the Borrower hereunder. Upon demand by the Issuer, and in any
event within one Business Day thereof, the Borrower will, as reimbursement for
such payment by the Issuer, immediately and unconditionally pay to the Issuer
the amount of each payment made under each Letter of Credit; provided, however,
that, if no Default shall have then occurred and be continuing, the Borrower
may, upon notice to the Administrative Agent, which shall promptly notify each
Lender, deem the amount drawn under a Letter of Credit to be a Revolving Loan
constituting a Base Rate Loan and each Lender (other than the Issuer) will
deliver to the Issuer immediately available funds in an amount equal to such
Lender's Percentage of such Base Rate Loan. To the extent an amount drawn under
a Letter of Credit is not so deemed to be a Base Rate Loan and in any event,
from and including the Disbursement Date, interest will accrue on any amount
remaining unpaid by the Borrower to the Issuer under this Section 2.6.2 from the
Disbursement Date until such amount is paid in full at an interest rate per
annum equal to the Alternate Base Rate in effect from time to time plus, if such
amounts are overdue, 2%.
SECTION 2.6.3. Obligations Absolute. The obligation (a "Reimbursement
Obligation") of the Borrower to reimburse the Issuer with respect to each
payment under each Letter of Credit, and each Lender's obligation under Section
2.6.7 to reimburse the Issuer, shall be
40-
<PAGE> 48
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit
or any related contract, instrument or other agreement in support of which
the Letter of Credit has been issued (collectively referred to as a
"Contract");
(b) any amendment or waiver of, or any consent to or departure from,
any Contract;
(c) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against any beneficiary of any
Letter of Credit (or any persons for whom any such beneficiary may be
acting), the Issuer or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or in such Letter of
Credit or any Contract or any unrelated transaction;
(d) any certificate or any other document presented under any Letter
of Credit proving to be forged, fraudulent or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or
(e) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
Notwithstanding the foregoing, if the Borrower shall make payment as above
provided, the Borrower shall have a claim against the Issuer, and the Issuer
shall be liable to the Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential, damages suffered by the Borrower as the
result of the wilful misconduct or gross negligence on the part of the Issuer in
determining whether documents presented under any Letter of Credit comply with
the terms thereof.
SECTION 2.6.4. Action in Respect of the Letters of Credit. The Borrower
assumes all risks of the acts or omissions of the beneficiaries under the
Letters of Credit with respect to their use of the Letters of Credit. Neither
the Issuer, the Administrative Agent or any Lender, nor any of their respective
officers, employees, agents or directors shall be liable or responsible for:
(i) the use which may be made with any Letter of Credit;
(ii) the form, sufficiency, accuracy or genuineness of
certificates or other documents delivered under or in connection
with any Letter of Credit, even if such certificates or other
documents should prove to be insufficient, fraudulent or forged;
41-
<PAGE> 49
(iii) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telex,
telecopy, telegraph, wireless or otherwise; or
(iv) errors in translation or for errors in interpretation of
technical terms.
The Issuer may accept certificates or other documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary. In furtherance and not in limitation
of the foregoing provisions, the Borrower agrees that, except for the Issuer's
gross negligence or wilful misconduct, any action, inaction or omission taken or
suffered by the Issuer in good faith in connection with any Letter of Credit, or
the relative drafts, certificates or other documents, shall be binding on the
Borrower and shall not result in any liability of the Issuer to the Borrower.
SECTION 2.6.5. Indemnification. The Borrower hereby indemnifies and holds
harmless the Issuer from and against any and all claims, damages, losses,
liabilities, or reasonable costs or expenses which the Issuer or any of its
officers, employees, agents or directors may incur or which may be claimed
against the Issuer by any person by reason of or in connection with the
execution and delivery or payment or failure to make payment under, any Letter
of Credit; provided, however, that the Borrower shall not be required to
indemnify the Issuer pursuant to this Section 2.6.5 for any claims, damages,
losses, liabilities, costs or expenses to the extent caused by (i) the Issuer's
or any of its officers, employees, agents or directors wilful misconduct or
gross negligence in determining whether documents presented under the Letter of
Credit comply with the terms of such Letter of Credit or (ii) the Issuer's
wilful failure to make lawful payment under any Letter of Credit after
presentation to it by a beneficiary of a draft and certificate strictly
complying with the terms and conditions of such Letter of Credit.
SECTION 2.6.6. Deemed Disbursements. (a) Upon the occurrence and during
the continuation of any Default of the nature set forth in Section 8.1.9, or any
other Event of Default, an amount equal to the then aggregate amount of each
Letter of Credit which is undrawn and available under all issued and outstanding
Letters of Credit shall, without demand upon or notice to the Borrower, be
deemed to have been paid or disbursed by the Issuer under such Letters of Credit
(notwithstanding that such amount may not in fact have been so paid or
disbursed); and
(b) in the case of a Default under Section 8.1.9, or in the case of any
other Event of Default upon notification by the Administrative Agent to the
Borrower of its obligations under this Section 2.6.6, the Borrower shall, in
each case, be immediately obligated to reimburse the Issuer for the amount
deemed to have been so paid or disbursed by the Issuer.
Any amounts so payable by the Borrower pursuant to this Section 2.6.6 shall be
deposited in immediately available funds in an interest bearing cash collateral
account maintained with the Administrative Agent, and held as collateral
security for the Obligations, and in furtherance of the foregoing, the Borrower
hereby grants to each Lender a continuing security interest in any
42-
<PAGE> 50
and all balances, credits, deposits, accounts or moneys of the Borrower then or
thereafter maintained with such Lender; provided that any such appropriation
shall be subject to the provisions of Section 4.8. At such time when all
Defaults of the nature set forth in Section 8.1.9 and all Events of Default
shall have been cured or waived, the Administrative Agent shall return to the
Borrower all amounts then on deposit with the Administrative Agent pursuant to
this Section 2.6.6 which have not been applied towards satisfaction of the
Obligations.
SECTION 2.6.7. Other Lenders' Participation. Upon the issuance of each
Letter of Credit issued by the Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) shall be deemed to have irrevocably
purchased, to the extent of its Percentage, a participation interest in such
Letter of Credit (including the contingent liability and any Reimbursement
Obligation with respect thereto), and such Lender shall, to the extent of its
Percentage, be responsible for reimbursing promptly (and in any event within one
Business Day) the Issuer for Reimbursement Obligations, except to the extent
reimbursed by the Borrower in accordance with Section 2.6.2. In addition, such
Lender shall, to the extent of its Percentage, be entitled to receive (i) a
ratable portion of the fees payable to such Lender pursuant to Section 3.3.2
with respect to each Letter of Credit, (ii) payments of Reimbursement
Obligations to the extent such Lender has reimbursed the Issuer therefor
pursuant to this Section 2.6.7 and (iii) interest on such reimbursement from and
after the date such Lender has funded such Reimbursement Obligation.
SECTION 2.7. Extension of Stated Maturity Date and Maturity of Loans. Each
of (i) the Stated Maturity Date and (ii) the obligation, pursuant to Section
3.1.1, to make a mandatory repayment of the outstanding principal amount of
Loans on the Stated Maturity Date, shall be subject to extension or
postponement, as the case may be, as set forth in this Section 2.7.
SECTION 2.7.1. Request for Extension of Stated Maturity Date and Maturity
of Loans. Any term or provision of this Agreement to the contrary
notwithstanding, no earlier than 60 days nor later than 45 days prior to the
first anniversary of the Effective Date, or each and any successive anniversary
thereof (if the Revolving Loan Commitment then remains in effect), the Borrower
may, by delivery of a duly completed Extension Request to the Administrative
Agent, irrevocably request that each Lender and each Issuer
(a) extend for a one year period the then existing Stated Maturity
Date relating to such Lender's Revolving Loan Commitment or the Swing Line
Lender's Swing Line Loan Commitment; and
(b) extend for a one year period the then existing Stated Maturity
Date relating to such Issuer's Letter of Credit Commitment and each
Lender's obligation to participate, pursuant to Section 2.6.7, in the
Letters of Credit.
43-
<PAGE> 51
SECTION 2.7.2. Consent to Extension of Stated Maturity Date and Maturity
of Loans.
(a) The Administrative Agent shall, promptly after receipt of any
such Extension Request pursuant to Section 2.7.1, notify each Lender and
each Issuer thereof by providing them a copy of such Extension Request.
(b) Each Lender and Issuer shall, within 30 days of receipt of the
notice described in clause (a), notify the Administrative Agent whether or
not it consents to the requests of the Borrower set forth in such
Extension Request, such consent to be in the sole discretion of such
Lender or Issuer, as the case may be. Each Lender hereby acknowledges and
agrees that its consent to the Borrower's request to extend the then
existing Stated Maturity Date shall also be deemed to be a consent by such
Lender to an extension of its obligations to participate, pursuant to
Section 2.6.7, in the Letters of Credit. If any Lender or Issuer does not
so notify the Administrative Agent of its decision within such 30 day
period, such Lender or Issuer, as the case may be, shall be deemed not to
have consented to such requests of the Borrower.
(c) The Administrative Agent shall promptly notify the Borrower
whether the Lenders and Issuers have consented to such request. If the
Administrative Agent does not so notify the Borrower within 5 days prior
to the next occurring anniversary of the Effective Date, the
Administrative Agent shall be deemed to have notified the Borrower that
the Lenders and Issuers have not consented to the Borrower's request.
(d) Each Lender that elects not to provide a new Revolving Loan
Commitment upon the expiration of the then effective Stated Maturity Date
or that fails to so notify the Administrative Agent of such consent (a
"Non-Consenting Lender") hereby agrees that if, on or prior to the then
effective Stated Maturity Date, any other Lender or other financial
institution acceptable to the Borrower and the Administrative Agent offers
to purchase such Non-Consenting Lender's Percentage of the Revolving Loan
Commitment for a purchase price equal to the sum of all amounts then owing
with respect to the Revolving Loans and all other amounts accrued for the
account of such Non-Consenting Lender, such Non-Consenting Lender will
assign, sell and transfer on the then effective Stated Maturity Date all
of its right, title, interest and obligations with respect to the
foregoing to such other Lender or financial institution pursuant to the
terms of Section 10.11.1, and the fee payable pursuant to Section 10.11.1
shall be payable by the Borrower or such Assignee Lender.
(e) The Revolving Loans of any Non-Consenting Lender that were not
purchased pursuant to clause (d) will mature and be due and payable on the
then scheduled Stated Maturity Date, and the Commitments of such
Non-Consenting Lender will thereupon terminate. On such Stated Maturity
Date, the Loan Commitment Amount will be automatically reduced by an
amount equal to the product of
44-
<PAGE> 52
(i) the sum of the Percentages of all Non-Consenting Lenders
that were not purchased pursuant to clause (d), and
(ii) the Loan Commitment Amount (whether used or unused) on
such Stated Maturity Date immediately prior to such calculation.
(f) On the date that would have been the Stated Maturity Date had
the Revolving Loan Commitment not been extended pursuant to the terms of
this Section 2.7.2, the Percentages of the remaining Lenders which have
consented to an extension of their Commitment hereunder shall be adjusted
accordingly by the Administrative Agent, based on such Lenders' pro rata
share of the remaining Loan Commitment Amount.
Notwithstanding anything to the contrary contained in this Section 2.7.2, the
Stated Maturity Date of those Lenders consenting to such an extension shall not
be extended for an additional one year period unless Lenders whose Percentages
equal or exceed 75% of the Loan Commitment Amount as of the Effective Date
(after giving effect to the operation of clause (d)) have so consented to such
extension.
SECTION 2.8. Increase of Loan Commitment Amount. (a) At the request of the
Borrower to the Administrative Agent, the combined Loan Commitment Amount
hereunder may be increased from time to time after the Closing Date by not more
than $100,000,000; provided that (i) each such increase is in a minimum amount
of $10,000,000, (ii) each Lender whose Commitment is increased consents and
(iii) the consent of the Administrative Agent (in such capacity) is obtained,
such consent not to be unreasonably withheld.
(b) In the event that the Borrower and one or more of the Lenders
(or other financial institutions which may elect to participate with the
consent of the Administrative Agent, such consent not to be unreasonably
withheld) shall agree, in accordance with clause (a) of this Section 2.8,
upon such an increase in the aggregate Loan Commitment Amount, the
Borrower, the Administrative Agent and each financial institution in
question shall enter into a Commitment Increase Supplement setting forth
the amounts of the increase in the Loan Commitment Amount (and the
increase in the Commitment of each such financial institution party
thereto) and providing that the additional financial institutions
participating shall be deemed to be included as Lenders for all purposes
of this Agreement. Upon the execution and delivery of such Commitment
Increase Supplement as provided above, and upon satisfaction of such other
conditions as the Administrative Agent may specify (including the delivery
of certificates and legal opinions on behalf of the Borrower relating to
the amendment and, if requested, new Notes), this Agreement shall be
deemed to be amended accordingly.
(c) No Lender shall have any obligation to increase its Commitment
in the event of such a request by the Borrower hereunder.
45-
<PAGE> 53
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. Repayments and prepayments of
Loans shall be made as set forth in this Section 3.1. Each repayment or
prepayment of any Loan made pursuant to this Section 3.1 shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
prepayment of principal of any Revolving Loans or Swing Line Loans shall cause a
reduction in the Loan Commitment Amount or the Swing Line Loan Commitment
Amount, as the case may be.
SECTION 3.1.1. Final Maturity. The Borrower shall repay in full the entire
unpaid principal amount of each Revolving Loan and Swing Line Loan upon the
Stated Maturity Date therefor, and each Competitive Bid Loan upon the
Competitive Bid Loan Maturity Date therefor.
SECTION 3.1.2. Voluntary Prepayments. (a) From time to time on any
Business Day, the Borrower may make a voluntary prepayment, in whole or in part,
of the outstanding principal amount of any
(i) Loans (other than Swing Line Loans), provided, however, that
(A) any such prepayment of Revolving Loans shall be made
pro rata among Revolving Loans of the same type and, if
applicable, having the same Interest Period of all Lenders;
(B) no such prepayment of any LIBO Rate Loan or a
Competitive Bid Loan may be made on any day other than the
last day of the Interest Period for such Loan, unless the
Borrower shall have given the Administrative Agent at least
two (but no more than five) Business Days' notice, and has
paid any costs required pursuant to Section 4.4;
(C) all such voluntary prepayments shall require at
least one but no more than five Business Days' prior written
notice to the Administrative Agent, which shall promptly
notify the Lenders; and
(D) all such voluntary partial prepayments shall be in
an aggregate minimum amount of $10,000,000 and an integral
multiple of $500,000; and
(ii) Swing Line Loans, provided that
(A) all such voluntary prepayments shall require prior
telephonic notice to Scotiabank on or before 1:00 p.m., New
York City time, on the
46-
<PAGE> 54
day of such prepayment (such notice to be confirmed in writing
within 24 hours thereafter); and
(B) all such voluntary partial prepayments shall be in
an aggregate minimum amount of $1,000,000 and an integral
multiple of $250,000.
SECTION 3.1.3. Mandatory Prepayments. On each date when (a) the sum of (i)
the aggregate outstanding principal amount of all outstanding Loans (after
giving effect to the use of proceeds of any Borrowing made on such date) and
(ii) Letter of Credit Outstandings exceeds the Loan Commitment Amount, as it may
have been reduced pursuant to Section 2.2 or 2.7.2 or increased pursuant to
Section 2.8, the Borrower shall make a mandatory prepayment of all Loans equal
to the excess, if any, of the amount of such sum over the Loan Commitment Amount
and (b) a Lender or Lenders make a Competitive Bid Loan or a Revolving Loan, the
Borrower shall prepay the aggregate principal amount of all Swing Line Loans
then outstanding.
SECTION 3.1.4. Acceleration of Stated Maturity Date. Immediately upon any
acceleration of the Stated Maturity Date of any Loans pursuant to Section 8.2 or
Section 8.3, the Borrower shall repay all Loans to the full extent of such
acceleration.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at any of the following rates per annum:
(i) On that portion of such Borrowing maintained as Base Rate Loans,
such rate shall be equal to the Alternate Base Rate from time to time in
effect;
(ii) On that portion of such Borrowing maintained as LIBO Rate
Loans, during each Interest Period applicable thereto, such rate shall be
equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest
Period plus the Applicable LIBO Rate Margin; and
(iii) On that portion of such Borrowing maintained as Competitive
Bid Loans, equal to the applicable Competitive Bid Rate specified by the
Lender making such Competitive Bid Loan in its Competitive Bid Loan Offer
with respect thereto delivered by such Lender and accepted by the Borrower
pursuant to Section 2.4.
The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) determined pursuant to the following formula:
47-
<PAGE> 55
LIBO Rate = LIBO Rate
(Reserve Adjusted) -------------------------------
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Administrative Agent on the basis of the LIBOR
Reserve Percentage in effect on, and the applicable rate determined by the
Administrative Agent two Business Days before the first day of such Interest
Period, subject, however, to the last sentence contained in the definition of
"LIBO Rate".
"LIBO Rate" means, relative to any Interest Period, the rate of interest
equal to the (rounded upwards, if necessary, to the nearest 1/16 of 1%) rate per
annum at which Dollar deposits in immediately available funds are offered to the
Administrative Agent's LIBOR Office in the London interbank market as at or
about 11:00 a.m. (London time), two Business Days prior to the beginning of such
Interest Period for delivery on the first day of such Interest Period, and in an
amount approximately equal to the amount of the Administrative Agent's LIBO Rate
Loan in the case of Revolving Loans, and, in the case of Competitive Bid Loans
based on a LIBOR Auction, determined as if the Administrative Agent were
participating in such Competitive Bid Loan in an amount equal to the
Administrative Agent's Percentage (in its capacity as a Lender) of the principal
amount of the Competitive Bid Loan being requested, and for a period
approximately equal to such Interest Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the average
maximum reserve requirements of the Lenders (without giving effect to the branch
or agency in which such Lender funds such Loans) (including all basic,
emergency, supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
All LIBO Rate Loans and Competitive Bid Loans based on a LIBOR Auction
shall bear interest from and including the first day of the applicable Interest
Period to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such LIBO Rate Loan or Competitive Bid
Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal amount of
any Loan or Reimbursement Obligation is due and payable (whether on the Stated
Maturity Date, upon acceleration or otherwise), or after any other monetary
Obligation of the Borrower shall have become due and payable, the Borrower shall
pay interest (after as well as before judgment) on such overdue amounts at a
rate per annum equal to the Alternate Base Rate plus a margin of 2%.
48-
<PAGE> 56
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) other than in the case of Base Rate Borrowings, on the date of
any payment or prepayment, in whole or in part, of principal outstanding
on such Loan on the amount prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the initial Borrowing hereunder;
(d) with respect to Competitive Bid Loans based on an Absolute Rate,
on each Competitive Bid Loan Maturity Date and, with respect to
Competitive Bid Loans based on an Absolute Rate with a Competitive Bid
Loan Maturity Date in excess of three months, on each Quarterly Payment
Date occurring after the making of such Loan;
(e) with respect to LIBO Rate Loans and Competitive Bid Loans based
on a LIBOR Auction, the last day of each applicable Interest Period (and,
if such Interest Period shall exceed three months, on each three month
anniversary of such Interest Period);
(f) with respect to any Base Rate Loans converted into LIBO Rate
Loans on a day when interest would not otherwise have been payable
pursuant to clause (c), on the date of such conversion; and
(g) on that portion of any Loans the Stated Maturity Date of which
is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon
such acceleration.
Interest accrued on Loans or other monetary Obligations, including Reimbursement
Obligations, arising under this Agreement or any other Loan Document after the
date such amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth in this
Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Facility Fee. The Borrower agrees to pay to the
Administrative Agent for the pro rata account of each Lender, an ongoing
facility fee equal to the Applicable Facility Fee of the Loan Commitment Amount
(regardless of usage), as it may be reduced pursuant to Section 2.2 or 2.7.2 and
as it may be increased pursuant to Section 2.8, such fee to accrue for the
period commencing on the Effective Date to but excluding the Loan Commitment
Termination Date (including any period thereof when any availability under the
Commitment is suspended by
49-
<PAGE> 57
reason of the Borrower's inability to satisfy any condition of Article V). Such
facility fees shall be payable by the Borrower in arrears on each Quarterly
Payment Date, commencing with the second such day following the Effective Date,
and on the Commitment Termination Date.
SECTION 3.3.2. Letter of Credit Fee. The Borrower agrees to pay (x) to the
Administrative Agent, for the pro rata account of the Issuer and each other
Lender, a Letter of Credit fee in an amount equal to the Applicable LIBO Rate
Margin of the Stated Amount of each Letter of Credit, and (y) to the Issuer, for
its own account, an issuing fee at the rate of 0.125% per annum of such Stated
Amount and the Issuer's other customary administrative and issuance costs and
expenses, such amounts to be payable quarterly in arrears on each Quarterly
Payment Date following the issuance of such Letter of Credit until the
expiration date of such Letter of Credit, and on such expiration date.
SECTION 3.3.3. Administrative Agents' Fee. The Borrower agrees to pay to
the Administrative Agent, for the Administrative Agent's own account, those
fees, in the amounts and on the dates, set forth in the Fee Letter.
SECTION 3.3.4. Certain Other Fees. The Borrower agrees to pay to the
Administrative Agent the up-front fees in the amounts and payable as agreed upon
by the Borrower and the Administrative Agent, and, as set forth in the Fee
Letter, the Administrative Agent agrees to pay to each Lender the up-front fee
previously agreed to between the Administrative Agent and each Lender.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination, upon notice thereof to the Administrative Agent (which
notice the Administrative Agent agrees it will as promptly as practicable
forward to the Borrower), absent manifest error, shall be prima facie evidence
of the facts stated therein) that the introduction of or any change in or in the
interpretation of any law makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for such Lender to make,
continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan,
or to make or maintain any Competitive Bid Loan based on a LIBOR Auction, the
obligations of such Lender to make, continue, maintain or convert any such Loans
shall, upon such determination, forthwith be suspended until such Lender shall
notify the Administrative Agent that the circumstances causing such suspension
no longer exist (which notification such Lender agrees to give as promptly as
practicable when such circumstances no longer exist), and all LIBO Rate Loans of
such Lender shall automatically convert into Base Rate Loans at the end of the
then current Interest Periods with respect thereto or sooner, if required by
such law or assertion. If any Lender shall make such determination with respect
to the making or maintaining a Competitive Bid Loan based on a LIBOR Auction and
50-
<PAGE> 58
such Competitive Bid Loan is required by law or assertion to be prepaid on a
date prior to the end of the Interest Period therefor, then the Borrower shall
prepay such Competitive Bid Loan on such date.
SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have
determined that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the Administrative Agent (in its
individual capacity) in its relevant market; or
(b) by reason of circumstances affecting the Administrative Agent
(in its individual capacity) or the relevant market, adequate means do not
exist for ascertaining the interest rate applicable hereunder to LIBO Rate
Loans or Competitive Bid Loans based on a LIBOR Auction,
then, upon notice from the Administrative Agent to the Borrower and the Lenders,
the obligations of all Lenders under Section 2.3.1 and Section 2.3.2 to make or
continue upon the expiration of the then applicable Interest Period any Loans
as, or to convert any Loans into, LIBO Rate Loans or the right of the Borrower
to solicit any Competitive Bid Loans based on a LIBOR Auction shall forthwith be
suspended until the Administrative Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist, which
notice the Administrative Agent shall give as promptly as practicable when such
circumstances no longer exist.
SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Revolving Loans into, LIBO Rate Loans or Competitive Bid Loans based on LIBOR
Auctions. Such Lender shall promptly notify the Administrative Agent in writing
(which notice the Administrative Agent agrees it will as promptly as practicable
forward to the Borrower) of the occurrence of any such event, such notice to
state, in reasonable detail, the reasons therefor and the additional amount
required fully to compensate such Lender for such increased cost or reduced
amount. Such additional amounts shall be payable by the Borrower directly to
such Lender within five days of its receipt of such notice, and such notice
shall, in the absence of manifest error, be prima facie evidence of the matters
stated therein. If the Borrower is requested to pay increased costs by any
Lender (the "Affected LIBO Lender") pursuant to this Section 4.3, the Borrower
may, by telephonic notice (promptly confirmed in writing) to the Administrative
Agent (which shall give prompt notice thereof to the Affected LIBO Lender),
(a) as to any outstanding LIBO Rate Loans of such Affected LIBO
Lender, prepay such Loan in full, without premium or penalty (other than
as may be provided in
51-
<PAGE> 59
Section 4.4), but with such increased costs as well as any accrued
interest to the date of such prepayment on the principal amount prepaid,
without simultaneously making a prepayment of the Loans of each other
Lender and simultaneously borrow a Base Rate Loan in an equal principal
amount (without the necessity that the conditions set forth in Section 5.2
are met), and
(b) with respect to any Borrowing Request or Continuation/Conversion
Notice, request such Affected LIBO Lender (i) to make the LIBO Rate Loan
then or thereafter subject to a Borrowing Request as a Base Rate Loan, or
(ii) to maintain the outstanding Base Rate Loan or LIBO Rate Loan of such
Lender then or thereafter the subject of a Continuation/Conversion Notice
as a Base Rate Loan.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any loss
(excluding, in any event, lost profits) or expense (including any loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to make, continue or maintain any portion of
the principal amount of any Loan as a LIBO Rate Loan or a Competitive Bid Loan
based on a LIBOR Auction, or to convert any portion of the principal amount of
any Revolving Loan into, a LIBO Rate Loan) as a result of
(a) any repayment or prepayment of the principal amount of any LIBO
Rate Loans or Competitive Bid Loans based on LIBOR Auctions or any
conversion of a LIBO Rate Loan on a date other than the scheduled last day
of the Interest Period applicable thereto, whether pursuant to Section 3.1
or otherwise;
(b) any Loans (i) not being made as, or (ii) being made as Loans
other than as, LIBO Rate Loans or Competitive Bid Loans based on LIBOR
Auctions, in each case, in accordance with the Revolving Loan Borrowing
Request or Competitive Bid Loan Acceptance therefor, as the case may be;
or
(c) any Revolving Loans not being continued as, or converted into,
LIBO Rate Loans in accordance with the Continuation/Conversion Notice
therefor,
then, following the written notice of such Lender to the Administrative Agent
(which notice the Administrative Agent agrees it will as promptly as practicable
forward to the Borrower), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be prima facie evidence of the matters
stated therein.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required
52-
<PAGE> 60
or expected to be maintained by any Lender or any Person controlling such Lender
(without duplication of any other amounts payable by the Borrower pursuant to
Section 3.2.1 or Article IV), and such Lender determines (in its sole and
absolute discretion) that the rate of return on its or such controlling Person's
capital as a consequence of its Commitment or the Loans made by or Letters of
Credit issued or participated in by such Lender is reduced to a level below that
which such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Administrative Agent (which notice the
Administrative Agent agrees it will as promptly as practicable forward to the
Borrower), the Borrower shall promptly, and in any event within five days of its
receipt of such notice, pay directly to such Lender additional amounts
sufficient to compensate such Lender or such controlling Person for such
reduction in rate of return. A statement of such Lender as to any such
additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be prima facie evidence of the
matters stated therein. In determining such amount, such Lender may use any
method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder (including in
respect of fees and Reimbursement Obligations) shall be made free and clear of
and without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other charges of
any nature whatsoever imposed by any taxing authority, but excluding franchise
taxes and taxes imposed on or measured by any Lender's net income or receipts
imposed by the jurisdiction of incorporation or organization of such Lender or
the jurisdiction where such Lender has its Domestic Office or LIBOR Office (such
non-excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will
(a) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(b) promptly forward to the Administrative Agent an official receipt
or other documentation satisfactory to the Administrative Agent evidencing
such payment to such authority; and
(c) pay to the Administrative Agent for the account of the Lenders
such additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if the Administrative Agent or any Lender is obligated to pay any
Taxes with respect to any payment received by the Administrative Agent or such
Lender hereunder, the Administrative Agent or such Lender may pay such Taxes and
the Borrower will promptly pay
53-
<PAGE> 61
such additional amounts as is necessary in order that the net amount received by
such Person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such Person would have received had
such Taxes not been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 4.6, a distribution hereunder by the
Administrative Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
Each Lender that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for U.S. Federal Income Tax purposes agrees to
deliver to the Borrower and the Administrative Agent on or prior to the
Effective Date, or in the case of a Lender that is an assignee or transferee of
an interest under this Agreement pursuant to Section 10.11.1 (unless the
respective Lender was already a Lender hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such
Lender, (i) two accurate and complete original signed copies of Internal Revenue
Service Form 4224 or 1001 (or successor forms) certifying to such Lender's
entitlement to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Note, or (ii)
if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (x) a certificate of a duly authorized officer of
such Lender to the effect that such Lender is not (I) a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (II) a "10 percent shareholder" of
the Borrower within the meaning of Section 881(c)(3)(B) of the Code or (III) a
controlled foreign corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Code (any such certificate, a
"Section 4.6 Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Lender agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
(to the extent it remains legally entitled to do so) deliver to the Borrower and
the Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section 4.6
Certificate, as the case may be, and such other forms as may reasonably be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note. Notwithstanding anything
to the contrary contained in this Section, but subject to Section 10.11.1 and
the immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, Fees or
54-
<PAGE> 62
other amounts payable hereunder for the account of any Lender which is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) for U.S. Federal income tax purposes to the extent that such Lender has
not provided to the Borrower U.S. Internal Revenue Service Forms that establish
a complete exemption from such deduction or withholding and (y) the Borrower
shall not be obligated pursuant to this Section to gross-up payments to be made
to a Lender in respect of income or similar taxes imposed by the United States
(I) if such Lender has not provided to the Borrower the Internal Revenue service
Forms required to be provided to the Borrower pursuant to this Section or (II)
in the case of a payment, other than interest, to a Lender described in clause
(ii) above, to the extent that such Forms do not establish a complete exemption
from withholding of such taxes. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section and except as
set forth in Section 10.11.1, the Borrower agrees to pay additional amounts and
to indemnify each Lender in the manner set forth in this Section (without regard
to the identity of the jurisdiction requiring the deduction or withholding) in
respect of any Taxes deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Effective Date (or, if
later, the date such Lender became party to this Agreement) in any applicable
law, treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of such Taxes.
If the Borrower pays any additional amount under this Section to a Lender
and such Lender determines in its sole discretion that it has actually received
any refund of the Taxes with respect to which such additional amount was paid,
such Lender shall pay to the Borrower an amount that the Lender shall, in its
sole discretion, determine is equal to the amount of such refund.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes,
each Letter of Credit or any other Loan Document shall be made by the Borrower
to the Administrative Agent for the pro rata account of the Lenders entitled to
receive such payment. All such payments required to be made to the
Administrative Agent shall be made, without setoff, deduction or counterclaim,
not later than 1:00 p.m. (New York City time), on the date due, in immediately
available funds, to such account as the Administrative Agent shall specify from
time to time by notice to the Borrower. Funds received after that time shall be
deemed to have been received by the Administrative Agent on the next succeeding
Business Day. The Administrative Agent shall promptly remit in same day funds to
each Lender its share, if any, of such payments received by the Administrative
Agent for the account of such Lender. All interest and fees shall be computed on
the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest or fee is
payable over a year comprised of 360 days (or, in the case of interest on a Base
Rate Loan, 365 days or, if appropriate, 366 days). Whenever any payment to be
made shall otherwise be due on a day which is not a Business Day, such payment
shall (except as otherwise required by clause (a)(i) of the definition of the
term "Interest Period" with respect to LIBO Rate Loans and clause (a)(ii) of the
definition of "Interest Period" with respect to Competitive Bid Loans based on
the LIBOR Auction) be made on the next succeeding
55-
<PAGE> 63
Business Day and such extension of time shall be included in computing interest
and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan or Reimbursement Obligation (other than
pursuant to the terms of Sections 4.3, 4.4, 4.5, 4.6 and 10.3) in excess of its
pro rata share of payments then or therewith obtained by all Lenders, such
Lender shall purchase from the other Lenders such participations in Credit
Extensions made by them as shall be necessary to cause such purchasing Lender to
share the excess payment or other recovery ratably with each of them; provided,
however, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery together with an amount equal to such selling Lender's
ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 4.8 may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section 4.8 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section 4.8 to share in the benefits of any
recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of any Default
described in clauses (a) through (d) of Section 8.1.9 or, with the consent of
the Required Lenders, upon the occurrence of any other Event of Default, have
the right to appropriate and apply to the payment of the Obligations owing to it
(whether or not then due) any and all balances, credits, deposits, accounts or
moneys of the Borrower then or thereafter maintained with such Lender; provided,
however, that any such appropriation and application shall be subject to the
provisions of Section 4.8. Each Lender agrees promptly to notify the Borrower
and the Administrative Agent after any such setoff and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such setoff and application. The rights of each Lender
56-
<PAGE> 64
under this Section 4.9 are in addition to other rights and remedies (including
other rights of setoff under applicable law or otherwise) which such Lender may
have.
SECTION 4.10. Use of Proceeds. The Borrower shall apply the proceeds of
the Credit Extensions to refinance and repay in full the indebtedness described
in Item 5.1.3 ("Indebtedness to be Paid or Replaced") of the Disclosure
Schedule, to deem the Existing Letters of Credit to be Letters of Credit
hereunder and for the general corporate purposes of the Borrower and its
Restricted Subsidiaries; without limiting the foregoing, no proceeds of any Loan
will be used and no Letter of Credit will be requested or issued in violation of
F.R.S. Board Regulation U.
SECTION 4.11. Replacement of Lenders. Each Lender hereby severally agrees
that if such Lender (a "Subject Lender") makes a demand upon the Borrower for
(or if the Borrower is otherwise required to pay) amounts pursuant to Section
4.3, Section 4.5 or Section 4.6 or such Lender delivers a notice pursuant to
Section 4.1, the Borrower may, within 90 days of receipt by the Borrower of such
demand (or the occurrence of such other event causing the Borrower to be
required to pay such compensation) give notice (a "Replacement Notice") in
writing to the Administrative Agent and such Lender of its intention to replace
such Lender with a financial institution designated in such Replacement Notice.
If the Administrative Agent shall, in the exercise of its reasonable discretion
and within 30 days of its receipt of such Replacement Notice, notify the
Borrower and such Subject Lender in writing that the designated financial
institution is satisfactory to the Administrative Agent, then such Lender shall,
so long as no Default shall have occurred and be continuing, assign, in
accordance with Section 10.11.1, all of its Commitments, Loans, Notes and other
rights and obligations under this Agreement and all other Loan Documents
(including, without limitation, Reimbursement Obligations) to such designated
financial institution; provided, however, that (i) such assignment shall be
without recourse, representation or warranty and shall be on terms and
conditions reasonably satisfactory to such Lender and such designated financial
institution and (ii) the purchase price paid by such designated financial
institution shall be in the amount of such Lender's Loans and its Percentage of
outstanding Reimbursement Obligations, together with all accrued and unpaid
interest and fees in respect thereof, plus all other amounts (including the
amounts demanded and unreimbursed under Section 4.3, 4.5 or 4.6, as the case may
be), owing to the Subject Lender hereunder. Upon the effective date of such
Assignment, the Borrower shall issue a replacement Note or Notes, as the case
may be, to such designated financial institution and such institution shall
become a "Lender" for all purposes under this Agreement and the other Loan
Documents. The Administrative Agent agrees to use all commercially reasonable
efforts to assist the Borrower in locating a replacement financial institution
to replace any Subject Lender; provided, however, that the Borrower agrees to
pay all reasonable costs and expenses (and the fee payable to the Administrative
Agent pursuant to Section 10.11.1) incurred by the Administrative Agent in
providing such assistance.
57-
<PAGE> 65
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1. Initial Credit Extension. The obligations of the Lenders to
fund the initial Borrowing and of the Issuer to issue Letters of Credit shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 5.1.
SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have
received from the Borrower a certificate, dated the date of the initial Credit
Extension, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
(b) true and complete copies of the Borrower's Organic Documents;
and
(c) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each other
Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of the Borrower canceling or
amending such prior certificate.
SECTION 5.1.2. Delivery of Notes. The Administrative Agent shall have
received (i) for the account of each Lender, such Lender's Revolving Notes and
its Competitive Bid Loan Notes, and (ii) for the account of the Swing Line
Lender, the Swing Line Note, in each case, duly executed and delivered by the
Borrower.
SECTION 5.1.3. Payment of Outstanding Indebtedness, etc. All indebtedness
identified in Item 5.1.3 ("Indebtedness to be Paid or Replaced") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the initial Credit
Extension) and all commitments thereunder shall have been terminated, and
evidence thereof shall have been delivered to the Administrative Agent; and all
Liens (if any) securing payment of any such indebtedness shall have been
released and the Administrative Agent shall have received all Uniform Commercial
Code Form UCC-3 termination statements or other instruments as may be suitable
or appropriate in connection therewith.
SECTION 5.1.4. Opinions of Counsel. The Administrative Agent shall have
received opinions, dated the date of the initial Credit Extension and addressed
to the Administrative Agent and all Lenders, from
58-
<PAGE> 66
(a) Paul E. Dixon, Vice President and General Counsel of the
Borrower, substantially in the form of Exhibit H hereto (and the Borrower
hereby expressly instructs such counsel to deliver such opinion to the
Administrative Agent and the Lenders); and
(b) Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the
Borrower, substantially in the form of Exhibit I hereto (and the Borrower
hereby expressly instructs such counsel to deliver such opinion to the
Lenders).
SECTION 5.1.5. Closing Fees, Expenses, etc. The Administrative Agent shall
have received for its own account, or for the account of each Lender, as the
case may be, all fees, costs and expenses due and payable pursuant to Sections
3.3 and 10.3, if then invoiced.
SECTION 5.1.6. Compliance Certificate. The Administrative Agent shall have
received, with counterparts for each Lender, an initial Compliance Certificate
with respect to the computations of the applicable covenants as at June 30,
1997, dated the date of the initial Credit Extension, duly executed (and with
all schedules thereto duly completed) and delivered by a Senior Financial
Officer that is an Authorized Officer of the Borrower.
SECTION 5.1.7. Litigation. The Administrative Agent shall be satisfied in
all respects that there exists no actions, suits or proceedings pending or
threatened against or affecting the Borrower or any of its Subsidiaries or any
Property of the Borrower or any of its Subsidiaries in any court or before any
arbitrator of any kind or before or by any governmental authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
SECTION 5.1.8. Material Adverse Change. The Administrative Agent and the
Lenders shall be satisfied that there has been no material adverse change in the
property, assets, financial condition, operations or business of the Borrower
and its Subsidiaries, taken as a whole, since December 31, 1996.
SECTION 5.2. All Credit Extensions. The obligation of each Lender and the
Issuer to fund any Loan or to issue any Letter of Credit on the occasion of any
Borrowing and issuance of any Letter of Credit, as the case may be (including
the initial Credit Extension) shall be subject to the satisfaction of each of
the conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension (but, if any Default of the
nature referred to in Section 8.1.5 shall have occurred with respect to any
Debt, without giving effect to any application, directly or indirectly, of the
proceeds thereof to cure such Default) the following statements shall be true
and correct
59-
<PAGE> 67
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in Section 6.7 for any Credit
Extension occurring after the initial Borrowing hereunder) shall be true
and correct in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date);
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to Section 6.7 or Section 6.12
(i) no litigation, arbitration or governmental investigation
or proceeding shall be pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries which may
reasonably be expected to have a Material Adverse Effect; and
(ii) no development shall have occurred in any litigation,
arbitration or governmental investigation or proceeding disclosed
pursuant to Section 6.7 or Section 6.12 which may reasonably be
expected to have a Material Adverse Effect;
(c) the sum of (x) the aggregate outstanding principal amount of all
Loans and, without duplication, (y) all Letter of Credit Outstandings does
not exceed the Loan Commitment Amount; and
(d) no Default shall have then occurred and be continuing, and
neither the Borrower nor any of its Subsidiaries are in material violation
of any law or governmental regulation or court order or decree the
violation of which would have a Material Adverse Effect.
SECTION 5.2.2. Credit Extension Request. The Administrative Agent shall
have received a Borrowing Request, if Loans are being requested, or an Issuance
Request, if the Borrower is requesting that a Letter of Credit be issued or
extended, for such Credit Extension. Each of the delivery of a Borrowing Request
or Issuance Request, as the case may be, and the acceptance by the Borrower of
the proceeds or the receipt of the benefit of such Credit Extension shall
constitute a representation and warranty by the Borrower that on the date of
such Credit Extension (both immediately before and after giving effect to such
Credit Extension and the application of the proceeds thereof) the statements
made in Section 5.2.1 are true and correct.
SECTION 5.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries in connection with such Credit Extension shall be satisfactory in
form and substance to the Administrative Agent and its counsel; the
Administrative Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Administrative Agent or its
counsel may reasonably request.
60-
<PAGE> 68
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Issuer and the Administrative Agent to
enter into this Agreement and to make Credit Extensions hereunder, the Borrower
represents and warrants to each such party as set forth in this Article VI.
SECTION 6.1. Organization, etc. The Borrower and each of its Subsidiaries
is a corporation or partnership validly organized and existing and in good
standing under the laws of the State of its incorporation or organization, is
duly qualified to do business and is in good standing as a foreign corporation
or partnership in each jurisdiction where the nature of its business requires it
to be so qualified except where such failure would not, singly or in the
aggregate, have a Material Adverse Effect, and has full power and authority and
holds all requisite governmental licenses, permits and other approvals to (i)
enter into and perform its Obligations under this Agreement, the Notes and each
other Loan Document and (ii) to own and hold under lease its property and to
conduct its business substantially as currently conducted by it, except for the
failure to hold such licenses, permits or other approvals which such failure
would not, singly or in the aggregate, have a Material Adverse Effect.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, are within the Borrower's
corporate powers, have been duly authorized by all necessary corporate action,
and do not
(a) contravene the Borrower's Organic Documents;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting the Borrower;
or
(c) result in, or require the creation or imposition of, any Lien on
any of the Borrower's properties.
SECTION 6.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower of this Agreement, the Notes or any
other Loan Document. Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
61-
<PAGE> 69
SECTION 6.4. Validity, etc. This Agreement constitutes, and the Notes and
each other Loan Document executed by the Borrower will, on the due execution and
delivery thereof, constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms, except that the
enforceability thereof may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and the effect of general principles of equity.
SECTION 6.5. Financial Information. The balance sheets of the Borrower and
each of its Subsidiaries as at December 31, 1996, and June 30, 1997 and the
related statements of earnings and cash flow of the Borrower and each of its
Subsidiaries, copies of which have been furnished to the Administrative Agent
and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended.
SECTION 6.6. No Material Adverse Change. Since the date of the financial
statements described in Section 6.5, there has been no material adverse change
in the financial condition, operations, assets, business or properties of the
Borrower and its Subsidiaries, taken as a whole.
SECTION 6.7. Litigation, etc. (a) There is no pending or, to the knowledge
of the Borrower, threatened litigation, action or proceeding affecting the
Borrower or any of its Subsidiaries, or any of their respective properties,
businesses, assets or revenues, which may reasonably be expected to have a
Material Adverse Effect.
(b) To the actual knowledge of any Responsible Officer, neither the
Borrower nor any Subsidiary is in default under any term of any agreement or
instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or
is in violation of any applicable law, ordinance, rule or regulation (including,
without limitation, Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
SECTION 6.8. Subsidiaries. The Borrower has no Subsidiaries, except those
Subsidiaries
(a) which are identified in Item 6.8 ("Existing Restricted
Subsidiaries" and "Existing Unrestricted Subsidiaries") of the Disclosure
Schedule; or
(b) which are permitted to have been acquired or created in
accordance with Section 7.2.5 or 7.2.10.
SECTION 6.9. Ownership of Properties. The Borrower and each of its
Subsidiaries owns good and marketable title to, or a valid leasehold interest
in, all of its material real
62-
<PAGE> 70
properties and personal property and other assets, tangible and intangible, of
any nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 7.2.3 or disclosed pursuant to
Section 6.7.
SECTION 6.10. Taxes. The Borrower and each of its Subsidiaries has filed
all tax returns and reports required by law to have been filed by it and has
paid all material taxes and governmental charges thereby shown to be owing,
except any such taxes or charges (whether or not material) which are not yet due
and payable or which are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
SECTION 6.11. Pension and Welfare Plans. During the twelve-consecutive-
month period prior to the date of the execution and delivery of this Agreement
and prior to the date of any Credit Extension hereunder, no steps have been
taken to terminate any Pension Plan, and no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which would reasonably be expected to result in the
incurrence by the Borrower or any member of the Controlled Group of any material
liability, fine or penalty. Except as disclosed in Item 6.11 ("Employee Benefit
Plans") of the Disclosure Schedule, neither the Borrower nor any member of the
Controlled Group has any material contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.12. Environmental Warranties. To the knowledge of the Borrower,
after all reasonable inquiry, except as set forth in Item 6.12 of the Disclosure
Schedule:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower or the Borrower and its
Subsidiaries in material compliance with all Environmental Laws except for
such noncompliance, that singly or in the aggregate, does not have or may
not reasonably be expected to have a Material Adverse Effect;
(b) there have been no past, and there are no pending or threatened
(i) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries with respect to
any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower or any
of its Subsidiaries regarding potential liability under any
Environmental Law,
63-
<PAGE> 71
that, singly or in the aggregate, have, or may reasonably be expected to
have, a Material Adverse Effect;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now owned or leased or, to the knowledge of the
Borrower, previously owned or leased, by the Borrower or any of its
Subsidiaries that, singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect;
(d) the Borrower and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses
and other authorizations relating to environmental matters and necessary
for their businesses except such permits, certificates, approvals,
licenses and authorizations the absence of which will not, singly or in
the aggregate, have or may reasonably be expected to have, a Material
Adverse Effect;
(e) neither the Borrower nor any Subsidiary of the Borrower has
received notification that any property now or previously owned or leased
by the Borrower or any of its Subsidiaries is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the CERCLIS
or on any similar state list of sites requiring investigation or clean-up
except for (i) as disclosed in Item 6.12 ("Environmental Warranties") of
the Disclosure Schedule and (ii) such properties as disclosed by the
Borrower to the Lenders pursuant to clause (b)(i) (B)(I) of Section 7.1.6
and for which the Borrower's or such Subsidiaries' liability in respect
thereof is not singly or in the aggregate, reasonably expected to have a
Material Adverse Effect;
(f) there is no liability related to offsite transport, treatment or
disposal of Hazardous Material generated or handled by the Borrower or any
of its Subsidiaries except for such liability that singly, or in the
aggregate, which may not reasonably be expected to have a Material Adverse
Effect;
(g) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or, to the
knowledge of the Borrower, previously, owned or leased by the Borrower or
any of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a Material Adverse Effect;
(h) neither the Borrower nor any Subsidiary of the Borrower has
directly transported or directly arranged for the transportation of any
Hazardous Material to any location which is listed or proposed for listing
on the National Priorities List pursuant to CERCLA, on the CERCLIS or on
any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material
claims against the Borrower or such Subsidiary thereof for any remedial
work, damage to
64-
<PAGE> 72
natural resources or personal injury, including claims under CERCLA, which
claims singly or in the aggregate, may reasonably be expected to have a
Material Adverse Effect;
(i) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously, owned or leased by the Borrower
or any Subsidiary of the Borrower that, singly or in the aggregate, have,
or may reasonably be expected to have, a Material Adverse Effect; and
(j) other than as stated above, no conditions exist at, on or under
any property now or previously, owned or leased by the Borrower which,
with the passage of time, or the giving of notice or both, would give rise
to liability under any Environmental Law that, singly or in the aggregate,
have or may reasonably be expected to have a Material Adverse Effect.
SECTION 6.13. Regulations G, U and X. Neither the Borrower nor any
Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no proceeds of any Loan will be used
and no Letters of Credit will be requested or issued for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation G, U or X.
Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section 6.13 with such meanings.
SECTION 6.14. Accuracy of Information. All factual information heretofore
or contemporaneously furnished by or on behalf of the Borrower in writing to the
Administrative Agent, the Issuer or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all other
such factual information hereafter furnished by or on behalf of the Borrower to
the Administrative Agent, the Issuer or any Lender will be, when taken as a
whole, true and accurate in every material respect on the date as of which such
information is dated or certified and, if heretofore delivered, as of the date
of execution and delivery of this Agreement by the Administrative Agent, the
Issuer and such Lender, and such information, when taken as a whole, is not, or
shall not be, as the case may be, incomplete by omitting to state any material
fact necessary to make such information not misleading.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with the Issuer,
the Administrative Agent and each Lender that, until all Letters of Credit have
been terminated or cash-collateralized or have expired, all Commitments have
terminated and all non-contingent monetary Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
Section 7.1.
65-
<PAGE> 73
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The Borrower
will furnish, or will cause to be furnished, to each Lender, the Issuer and the
Administrative Agent copies of the following financial statements, reports,
notices and information:
(a) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrower, (i) consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such Fiscal Quarter and consolidated
statements of income, changes in shareholders' equity and cash flows of
the Borrower and its Subsidiaries for such Fiscal Quarter (in the case of
the second and third Fiscal Quarters) and for the period commencing at the
end of the previous Fiscal Year and ending with the end of such Fiscal
Quarter, and (ii) consolidated balance sheets of the Borrower and its
Restricted Subsidiaries as of the end of such Fiscal Quarter and
consolidated statements of income, changes in shareholders' equity and
cash flows of the Borrower and its Restricted Subsidiaries for such Fiscal
Quarter (in the case of the second and third Fiscal Quarters) and for the
period commencing at the end of the previous Fiscal Year and ending with
the end of such Fiscal Quarter in each case, certified by the chief
financial Authorized Officer of the Borrower;
(b) as soon as available and in any event within 90 days after the
end of each Fiscal Year of the Borrower, (i) a copy of the annual audit
report for such Fiscal Year for the Borrower and its Subsidiaries,
including therein consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and consolidated statements
of income, changes in shareholders' equity and cash flows of the Borrower
and its Subsidiaries for such Fiscal Year, and (ii) consolidated balance
sheets of the Borrower and its Restricted Subsidiaries as of the end of
such Fiscal Year and consolidated statements of income, changes in
shareholders' equity and cash flows of the Borrower and its Restricted
Subsidiaries for such Fiscal Year, in each case certified (without any
Impermissible Qualification) by KMPG Peat Marwick or other independent
public accountants reasonably acceptable to the Administrative Agent and
the Required Lenders;
(c) as soon as available and in any event within 45 days after the
end of each Fiscal Quarter (or 90 days in the case of the last Fiscal
Quarter of a Fiscal Year), a completed Compliance Certificate containing a
computation of, and showing compliance with, each of the financial ratios
and restrictions contained in Section 7.2.4;
(d) as soon as possible and in any event within five days after a
Responsible Officer of the Borrower has knowledge thereof, the occurrence
of each Default, a statement of the chief financial Authorized Officer
setting forth details of such Default and the action which the Borrower
has taken and proposes to take with respect thereto;
(e) as soon as possible and in any event within three days after a
Responsible Officer of the Borrower has knowledge thereof, (x) the
occurrence of any material
66-
<PAGE> 74
adverse development with respect to any litigation, action or proceeding
described in Section 6.7 or (y) the commencement of any litigation, action
or proceeding, including any proceeding before any Governmental Authority
or arbitration board which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect, notice thereof and copies of
all documentation relating thereto;
(f) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its security holders, and all
reports and registration statements without exhibits incorporated by
reference therein which the Borrower or any of its Subsidiaries files with
the Securities and Exchange Commission or any national securities
exchange;
(g) immediately upon a Responsible Officer of the Borrower becoming
aware of the institution of any steps by the Borrower or any other Person
to terminate any Pension Plan, or the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under section 302(f) of ERISA, or the taking of any action
with respect to a Pension Plan which could result in the requirement that
the Borrower furnish a bond or other security to the PBGC or such Pension
Plan, or the occurrence of any event with respect to any Pension Plan
which could result in the incurrence by the Borrower of any material
liability, fine or penalty, or any material increase in the contingent
liability of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating thereto;
(h) promptly, and in any event within 30 days of a Responsible
Officer of the Borrower's receipt thereof, copies of any notice to the
Borrower or any Subsidiary from any Federal or state Governmental
Authority relating to any order ruling, statute or other law or regulation
that could reasonably be expected to have a Material Adverse Effect; and
(i) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as any
Lender through the Administrative Agent may from time to time reasonably
request.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which any of them is subject, including
Environmental Laws, and will obtain and maintain in effect all licences,
certificates, permits, franchises and other governmental authorizations
necessary to maintain and operate their respective Properties or to conduct
their businesses, except to the extent any such failure to comply, obtain,
maintain or operate could not reasonably be expected to result in a Material
Adverse Effect, such compliance to include (without limitation):
67-
<PAGE> 75
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation except where the failure to so
qualify would not have a Material Adverse Effect; and
(b) the payment, before the same become delinquent, of all material
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
SECTION 7.1.3. Maintenance of Properties. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep those of
its material properties in good repair, working order and condition, and make
necessary useful or necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be properly conducted
at all times unless the Borrower or such Subsidiary determines in good faith
that the continued maintenance of any of its properties is no longer
economically desirable.
SECTION 7.1.4. Insurance. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses and will, upon request of the
Administrative Agent, furnish to each Lender at reasonable intervals a
certificate of an Authorized Officer setting forth the nature and extent of all
insurance maintained by the Borrower and its Subsidiaries in accordance with
this Section 7.1.4.
SECTION 7.1.5. Books and Records. The Borrower shall permit the
Administrative Agent and each Lender or any of their respective representatives:
(a) if no Default or Event of Default then exists, at the expense of
the Administrative Agent or the applicable Lender, as the case may be, and
upon reasonable prior notice to the Borrower,
(i) to visit the principal executive office of the Borrower,
and to discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with the Borrower's officers, and
(ii) with the consent of the Borrower (which consent shall not
be unreasonably withheld) and in the presence of Senior Financial
Officers (if such presence is requested by the Borrower), to discuss
the affairs, finances and accounts of the Borrower and its
Subsidiaries with its independent public accountants and to visit
the other offices and Properties of the Borrower and each
Subsidiary,
68-
<PAGE> 76
all at such reasonable times during the normal business hours and as often
as may be reasonably requested in writing and in a manner so as not to
interfere, to the extent reasonably possible, with the conduct of the
business of the Borrower and its Subsidiaries; and
(b) if a Default or Event of Default then exists, at the expense of
the Borrower, to visit and inspect any of the offices or Properties of the
Borrower or any Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copes and extracts
therefrom, and to discuss their respective affairs, finances and accounts
with their respective officers and, in the presence of Senior Financial
Officers (if such presence is requested by the Borrower), its independent
public accountants (and by this provision the Borrower authorizes said
accountants to discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries), all at such times and as often as may be requested.
SECTION 7.1.6. Environmental Covenant. The Borrower will, and will cause
each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in compliance therewith, and
handle all Hazardous Materials in compliance with all applicable
Environmental Laws, except in each case where the failure to do so would
not reasonably be expected to result in a Material Adverse Effect;
(b) (i) promptly, following a Responsible Officer becoming aware,
notify the Administrative Agent (A) and provide copies of all material
written claims, complaints, notices or inquiries relating to the
environmental condition of its facilities and properties or non-compliance
with Environmental Laws which could singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect and (B) (I) of the listing
or proposal for listing of any property owned or leased by the Borrower or
any of its Subsidiaries on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list of sites requiring
investigation or cleanup and (II) upon its determination by the Borrower
or its Subsidiary, as the case may be, of the estimate of the amount of
the liability of the Borrower or such Subsidiary with respect to any such
property, and, (ii) shall either diligently contest or pursue settlement
of, in good faith and by appropriate proceedings, or promptly undertake to
correct such condition or non-compliance and have dismissed any such
actions and proceedings relating to compliance with Environmental Laws;
and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to evidence
compliance with this Section 7.1.6.
69-
<PAGE> 77
SECTION 7.2. Negative Covenants. The Borrower agrees with the Issuer, the
Administrative Agent and each Lender that, until all Letters of Credit have been
terminated or cash-collateralized (pursuant to arrangements and documentation
reasonably satisfactory to the Issuer) or have expired, all Commitments have
terminated and all non-contingent monetary Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business which is substantially
different from those described in the first recital and is not a products
manufacturing business or a business that is incidental or related thereto.
SECTION 7.2.2. Debt Incurrence. (a) The Borrower will not at any time,
directly or indirectly, create, incur, assume, guarantee, or otherwise become
directly or indirectly liable with respect to, any Debt (except for intercompany
payables arising from operation of the Borrower's cash management system in the
ordinary course of its business), unless on the date the Borrower becomes liable
with respect to any such Debt and immediately after giving effect thereto, the
application of the proceeds thereof and the concurrent retirement of any other
Debt,
(i) no payment Default, no Default with respect to the covenant set
forth in Section 7.2.4(a), and no Event of Default exists, and
(ii) Consolidated Adjusted Debt on such date does not exceed 350% of
Consolidated Adjusted Cash Flow for the Applicable Four Quarter Period.
Notwithstanding the foregoing, the Borrower will not at any time, directly or
indirectly, assume, guarantee or otherwise become directly or indirectly liable
with respect to Debt of an Unrestricted Subsidiary if a Default or an Event of
Default would have occurred or would have been continuing at such time if such
Unrestricted Subsidiary was a Restricted Subsidiary. For the purposes of this
Section 7.2.2, any Person extending, renewing or refunding any Debt shall be
deemed to have incurred such Debt at the time of such extension, renewal or
refunding.
(b) The Borrower will not permit any Restricted Subsidiary to, at any
time, directly or indirectly, create, incur, assume, guarantee, or otherwise
become directly or indirectly liable with respect to, any Debt, except Debt
owing to the Borrower or another Restricted Subsidiary, unless on the date such
Restricted Subsidiary becomes liable with respect to any such Debt and
immediately after giving effect thereto, the application of the proceeds thereof
and the concurrent retirement of any other Debt,
(i) no payment Default, no Default with respect to the covenant set
forth in Section 7.2.4(a), and no Event of Default exists,
70-
<PAGE> 78
(ii) Consolidated Adjusted Debt on such date does not exceed 350% of
Consolidated Adjusted Cash Flow for the Applicable Four Quarter Period,
and
(iii) Priority Debt does not exceed the lesser of (i) 20% of
Consolidated Net Worth determined as of the end of the Applicable Four
Quarter Period, or (ii) 50% of Consolidated Adjusted Cash Flow for the
Applicable Four Quarter Period.
Notwithstanding the foregoing, the Borrower will not permit any Restricted
Subsidiary to, at any time, directly or indirectly, assume, guarantee or
otherwise become directly or indirectly liable with respect to Debt of an
Unrestricted Subsidiary if a Default or an Event of Default would have occurred
or would have been continuing at such time if such Unrestricted Subsidiary was a
Restricted Subsidiary.
SECTION 7.2.3. Liens. (a) Negative Pledge. The Borrower will not and will
not permit any of the Restricted Subsidiaries to, directly or indirectly create,
incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any Property or asset (including,
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Borrower or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, except:
(i) Liens for material taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, (x) incurred in the ordinary course of business for sums not yet
due, (y) which are not material or (z) which are being contested in good
faith;
(iii) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business:
(A) (I) in connection with workers' compensation, unemployment
insurance and other types of social security or retirement benefits
or (II) to secure (or to obtain letters of credit that secure) the
performance of tenders, statutory obligations, surety bonds, appeal
bonds, bids, leases (other than capital leases), performance bonds,
purchase, construction or sales contracts and other similar
obligations, in each case not incurred or made in connection with
the borrowing of money, the obtaining of advances or credit or the
payment of the deferred purchase price of Property, or
71-
<PAGE> 79
(B) in connection with margin calls made in respect of Future
Payables Transactions;
(iv) any attachment or judgment Lien, unless the judgment it secures
(A) shall not, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have
been discharged within 30 days after the expiration of any such stay or
(B) exceeds $5,000,000 (less the amount represented by such attachment or
judgment which is covered by insurance so long as the relevant insurer has
not rejected coverage with respect thereto in writing);
(v) consignments to or from the Borrower or any Restricted
Subsidiary (including, without limitation, Liens on Property subject to
such consignments and the proceeds thereof), leases or subleases and
licenses and sublicenses granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case
incidental to, and not interfering with, the ordinary conduct of the
business of the Borrower or any of the Restricted Subsidiaries;
(vi) Liens on Property or assets of the Borrower or any of the
Restricted Subsidiaries securing Debt owing to the Borrower or to any of
the Restricted Subsidiaries;
(vii) Liens existing on the Effective Date and securing the Debt of
the Borrower and the Restricted Subsidiaries, provided that any such Debt
which is in excess of $5,000,000 is identified in Item 7.2.3(a) of the
Disclosure Schedule ("Existing Liens Securing Ongoing Debt") and the
aggregate amount of Debt so secured and not listed on such Schedule does
not exceed $5,000,000;
(viii) any Lien (including, without limitation, any capital lease)
created to secure all or any part of the purchase price, or to secure Debt
incurred or assumed to pay all or any part of the purchase price or cost
of construction, of Property (or any improvement thereon) acquired or
constructed by the Borrower or a Restricted Subsidiary after the Effective
Date, provided that:
(A) any such Lien shall extend solely to the item or items of
such Property (or improvement thereon) so acquired or constructed
and other Property (or improvement thereon) which is an improvement
to or is acquired for specific use in connection with such acquired
or constructed Property (or improvement thereon) or which is real
property being improved by such acquired or constructed Property (or
improvement thereon) and proceeds of any of the foregoing,
(B) unless such Debt is non-recourse, the principal amount of
the Debt secured by any such Lien shall at no time exceed an amount
equal to 100% of the lesser of (I) the cost to the Borrower or such
Restricted Subsidiary of the Property
72-
<PAGE> 80
(or improvement thereon) so acquired or constructed and (II) the
Fair Market Value (as determined in good faith by the Borrower) of
such Property (or improvement thereon) at the time of such
acquisition or construction, and
(C) any such Lien shall be created contemporaneously with, or
within 180 days after, the acquisition or construction of such
Property (it being understood that, with respect to the improvement
of previously acquired Property, such period shall be determined
with reference to the completion of such improvement and not the
date of acquisition of such Property);
(ix) any Lien existing on Property of a Person immediately prior to
its being consolidated with or merged into the Borrower or a Restricted
Subsidiary or its becoming a Restricted Subsidiary, or any Lien existing
on any Property acquired by the Borrower or any Restricted Subsidiary at
the time such Property is so acquired (whether or not the Debt secured
thereby shall have been assumed), provided that (A) no such Lien shall
have been created or assumed by such Person in contemplation of such
consolidation or merger or such Person's becoming a Restricted Subsidiary
or such acquisition of Property, and (B) each such Lien shall extend
solely to the item or items of Property so acquired and, if required by
the terms of the instrument originally creating such Lien, other Property
which is an improvement to or is acquired for specific use in connection
with such acquired Property;
(x) any Lien renewing, extending or refunding any Lien permitted by
clauses (a) (vii) through (ix), inclusive, of this Section 7.2.3, provided
that (A) the principal amount of Debt secured by such Lien immediately
prior to such extension, renewal or refunding is not increased (except to
the extent that any increase in principal amount represents capitalization
of the transaction costs incurred in connection with such renewal,
extension or refunding, so long as the aggregate amount of all such costs
so capitalized (and not amortized) in connection with all such renewals,
extensions and refundings does not exceed $2,500,000 immediately after
giving effect to the renewal, extension or refunding of such secured
Debt), (B) such Lien is not extended to any other Property, and (C)
immediately after such extension, renewal or refunding no payment Default,
no Default with respect to the covenant set forth in Section 7.2.4(a) and
no Event of Default would exist; or
(xi) other Liens not otherwise permitted by clauses (a) (i) through
(x), inclusive, of this Section 7.2.3, granted contemporaneously with the
incurrence of Debt by the Borrower or any Restricted Subsidiary, provided
that immediately after giving effect to the creation of any such Lien,
Priority Debt does not exceed the lesser of (A) 20% of Consolidated Net
Worth determined as of the end of the Applicable Four Quarter Period, or
(B) 50% of Consolidated Adjusted Cash Flow for the Applicable Four Quarter
Period.
73-
<PAGE> 81
(b) Equitable and Ratable Lien. In case any Property shall be subjected to
a Lien not permitted by clause (a), the Borrower will forthwith make or cause to
be made, to the fullest extent permitted by applicable law, provision whereby
its obligations hereunder will be secured equally and ratably with all other
obligations secured by such Lien pursuant to such agreements and instruments as
shall be approved by the Required Lenders in their reasonable discretion, and
the Borrower will cause to be delivered to each Lender an opinion of independent
counsel (selected by the Borrower and reasonably satisfactory to the Required
Lenders) to the effect that such agreements and instruments are enforceable in
accordance with their terms (subject to customary exceptions, assumptions and
qualifications). Regardless of whether the Borrower complies with the provisions
of the immediately preceding sentence, in case any Property shall be subjected
to a Lien not permitted by clause (a), the obligations hereunder shall have the
benefit, to the fullest extent that, and with such priority as, the Lenders may
be entitled under applicable law, of an equitable Lien on such Property securing
such obligations. A violation of clause (a) will constitute an Event of Default,
whether or not provision is made for an equal and ratable Lien pursuant to this
clause (b).
SECTION 7.2.4. Financial Condition. The Borrower will not permit:
(a) its Consolidated Net Worth, at any time, to be less than the sum
of:
(i) $80,000,000
plus
(ii) the sum of the Fiscal Quarter Net Worth Increase Amounts
for all fiscal quarters of the Borrower ended after December 31,
1996.
(b) its Leverage Ratio as of the last day of any Fiscal Quarter to
be greater than 3.50:1.00; and
(c) the Interest Coverage Ratio as at the last day of any Fiscal
Quarter to be less than 2.25:1.00.
SECTION 7.2.5. Investments. The Borrower will not, and will not permit any
of its Restricted Subsidiaries to, make, incur or assume any Investment in:
(a) any Unrestricted Subsidiary (which shall be governed by clause
(b)) or any other Person (other than the Borrower or a Restricted
Subsidiary) if prior to or after giving effect to such Investment, a
Default or an Event of Default shall have occurred or be continuing, or
74-
<PAGE> 82
(b) an Unrestricted Subsidiary if a Default or an Event of Default
would have occurred or would have been continuing at such time if such
Unrestricted Subsidiary was a Restricted Subsidiary.
SECTION 7.2.6. Restricted Payments, etc. On and at all times after the
Effective Date, the Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class of
capital stock (now or hereafter outstanding) of the Borrower or on any warrants,
options or other rights with respect to any shares of any class of capital stock
(now or hereafter outstanding) of the Borrower (except any such dividend or
distribution made with Capital Stock) or apply, or permit any of its Restricted
Subsidiaries to apply, any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of, or agree or permit any of its
Restricted Subsidiaries to purchase or redeem, any shares of any class of
capital stock (now or hereafter outstanding) of the Borrower, or warrants,
options or other rights with respect to any shares of any class of capital stock
(now or hereafter outstanding) of the Borrower (the foregoing collectively
referred to as "Restricted Payments") if, to the extent that either before or
after giving effect to such Restricted Payment (or, in the case of a dividend,
the declaration thereof), a Default described in Section 8.1.1 or an Event of
Default shall have occurred and shall be continuing.
SECTION 7.2.7. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Restricted Subsidiaries to, enter into, directly or
indirectly, any transaction or material group of related transactions
(including, without limitation, the purchase, lease, sale or exchange of
Properties of any kind or the rendering of any service) with any Affiliate
(other than the Borrower or any of its Restricted Subsidiaries), except pursuant
to the reasonable requirements of the Borrower's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower
and the Restricted Subsidiaries, taken as a whole, than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate, provided,
that this Section 7.2.7 shall not apply to the pension plan-related services
provided to the Borrower and the Restricted Subsidiaries by Affiliates thereof
so long as there is no significant change subsequent to the Effective Date,
which is adverse to the Borrower or any Restricted Subsidiary, in the terms and
conditions pursuant to which such services are provided.
SECTION 7.2.8. Sale-and-Leasebacks. The Borrower will not, and will not
permit any Restricted Subsidiary to, enter into any Sale-and-Leaseback
Transaction unless,
(a) immediately after giving effect to such Sale-and-Leaseback
Transaction and the application of the proceeds thereof, Priority Debt
does not exceed the lesser of (i) 20% of Consolidated Net Worth determined
as of the end of the Applicable Four Quarter Period, or (ii) 50% of
Consolidated Adjusted Cash Flow for the Applicable Four Quarter Period, or
(b) the Borrower, in accordance with and pursuant to Section 7.2.11,
promptly gives a Reinvestment Notice to the Lenders that, within 180 days
before or after the
75-
<PAGE> 83
Transfer of Property in such Sale-and-Leaseback Transaction, the Borrower
applied, or will apply, an amount equal to the Net Proceeds Amount arising
therefrom to a Debt Prepayment Application or a Property Reinvestment
Application.
The Borrower's failure to apply the Net Proceeds Amount in respect of such
Sale-and-Leaseback Transaction in accordance with the Reinvestment Notice and
within such 360-day period shall have the effect set forth in the penultimate
paragraph of Section 7.2.11.
SECTION 7.2.9. Precious Metal Transactions. The Borrower will not, and
will not permit any Restricted Subsidiary to, enter into any transaction with
respect to Precious Metals for speculative or other purposes not directly
related to the acquisition of Precious Metals for incorporation in the products
of the Borrower or any Restricted Subsidiary, the reduction of its inventory of
Precious Metals, hedging in connection with any such acquisition or reduction,
Future Payables Transactions and any transactions incidental to, and in
furtherance of, the foregoing activities.
SECTION 7.2.10. Consolidation, Merger, etc. (a) The Borrower. The Borrower
will not consolidate with or merge with any other corporation or, except as
permitted by Section 7.2.11, convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any Person; provided
that the Borrower may consolidate, merge, or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to, any Person so long as:
(i) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Borrower as an entirety, as the
case may be (the "Successor Corporation"), shall be a solvent corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia;
(ii) if the Borrower is not the Successor Corporation, such
corporation shall have executed and delivered to each Lender its
assumption, satisfactory in form and substance to the Administrative
Agent, of the due and punctual performance and observance of each covenant
and condition of this Agreement and the Notes, and the Borrower or the
Successor Corporation shall have caused to be delivered to each Lender an
opinion of nationally recognized independent counsel, or other independent
counsel reasonably satisfactory to the Administrative Agent, to the effect
that all agreements or instruments effecting such assumption are
enforceable in accordance with their respective terms and comply with the
terms hereof (it being understood that such opinion may contain customary
exceptions, qualifications and assumptions, and that the General Counsel
of the Borrower may give the necessary opinions with respect to the
matters addressed by the opinion delivered on the Effective Date together
with such other matters that the Administrative Agent may agree to); and
76-
<PAGE> 84
(iii) immediately after giving effect to such transaction:
(A) no Default or Event of Default exists or would exist, and
(B) the Successor Corporation would be permitted by the
provisions of Section 7.2.2 to incur at least $1.00 of additional
Debt owing to a Person other than a Restricted Subsidiary.
Any such conveyance or transfer, but not any such lease, of substantially all of
the assets of the Borrower shall have the effect of releasing the Borrower from
its liability under this Agreement or the Notes, except to the extent set forth
herein.
(b) Restricted Subsidiaries. The Borrower will not permit any Restricted
Subsidiary to consolidate with or merge with any other corporation or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to any Person except that a Restricted Subsidiary may:
(i) consolidate with or merge with, or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to, a Restricted Subsidiary or the Borrower,
(ii) consolidate with or merge with any Person if, immediately after
giving effect to such transaction, (A) the Person surviving such
consolidation or merger is a Restricted Subsidiary, (B) no Default or
Event of Default exists or would exist, (C) the Borrower would be
permitted by the provisions of Section 7.2.2 to incur at least $1.00 of
additional Debt owing to a Person other than a Restricted Subsidiary and
(D) such Restricted Subsidiary would be permitted by the provisions of
Section 7.2.2 to incur at least $1.00 of additional Debt owing to a Person
other than the Borrower or another Restricted Subsidiary, and
(iii) consolidate with or merge with, or convey, transfer or lease
its assets in a single transaction or a series of transactions to, any
Person, in each case in compliance with the provisions of Section 7.2.11.
SECTION 7.2.11. Asset Dispositions, etc. Except as permitted under Section
7.2.10, the Borrower will not, and will not permit any of the Restricted
Subsidiaries to, make any Asset Disposition unless:
(a) in the good faith opinion of the Borrower, the Asset Disposition
is in exchange for consideration having a Fair Market Value at least equal
to that of the Property exchanged, as determined by the Borrower in good
faith;
(b) immediately after giving effect to the Asset Disposition,
77-
<PAGE> 85
(i) no Default or Event of Default would exist (provided, that
if such proposed Asset Disposition is made to an Unrestricted
Subsidiary, such proposed Asset Disposition shall not be permitted
if a Default or an Event of Default would have occurred or would
have been continuing at such time if such Unrestricted Subsidiary
was a Restricted Subsidiary), and
(ii) the Borrower would be permitted by the provisions of
Section 7.2.2 to incur at least $1.00 of additional Debt owing to a
Person other than a Restricted Subsidiary; and
(c) immediately after giving effect to the Asset Disposition, the
aggregate Disposition Value of the Property subject to such Asset
Disposition, and all other Property that was the subject of any Asset
Disposition occurring in the period of 365 days ending on and including
the date of such Asset Disposition, would not exceed 50% of Consolidated
Adjusted Cash Flow for the Applicable Four Quarter Period; provided,
however, that:
(i) if the Borrower gives prompt written notice (a
"Reinvestment Notice") to the Administrative Agent that, within 180
days before or after any Transfer, an amount equal to all or any
portion of the Net Proceeds Amount arising therefrom was, or is
intended to be, applied by the Borrower or such Restricted
Subsidiary to a Debt Prepayment Application or a Property
Reinvestment Application, then such Transfer (to the extent of the
amounts actually so applied within such period) shall be deemed not
to be an Asset Disposition as of any date for purposes of
determining compliance by the Borrower and the Restricted
Subsidiaries with this clause (c),
(ii) the time period set forth in the preceding clause (c)(i)
may be computed, at the Borrower's option, with respect to the date
that the Borrower or any Restricted Subsidiary receives cash
(instead of the date of such Transfer) in respect of (A) up to
$5,000,000 in the aggregate for all Net Proceeds Amounts arising
from the Transfer of excess buildings and land from sold operations
and (B) up to 10% of any Net Proceeds Amount to the extent such
amount is required to be held in escrow pursuant to customary
"hold-back" provisions set forth in any document relating to the
Transfer giving rise to such Net Proceeds Amount, and
(iii) immediately after giving effect to such Asset
Disposition, the Unapplied Portions of the Net Proceeds Amounts for
all Asset Dispositions shall not exceed 30% of the Borrower's
consolidated assets.
If the Borrower shall fail to apply an amount equal to the entire amount
of the Net Proceeds Amount subject to the Reinvestment Notice in respect of such
Transfer, within such 360-day period, to a Property Reinvestment Application or
a Debt Prepayment Application, the
78-
<PAGE> 86
Borrower shall be deemed to have consummated an Asset Disposition to which
clause (c)(i) does not apply in an amount equal to the Unapplied Portion of the
Net Proceeds Amount in respect of such Asset Disposition. Such deemed Asset
Disposition shall be deemed to have occurred on the date of the original Asset
Disposition and the Borrower's compliance with this Section 7.2.11 shall be
determined, as of such date, as if such Unapplied Portion of the Net Proceeds
Amount had not been included in the Reinvestment Notice.
If any Restricted Subsidiary shall cease to be a Restricted Subsidiary as
a result of any Asset Disposition consisting of Subsidiary Stock, all Debt owing
by the Borrower or any other Restricted Subsidiary to such Restricted Subsidiary
after giving effect to such Asset Disposition and to the transactions entered
into in connection therewith (and any Liens securing such Debt) shall be deemed
for all purposes of this Agreement to have been incurred by the Borrower or such
other Restricted Subsidiary immediately after giving effect to such Asset
Disposition.
SECTION 7.2.12. Restrictive Agreements, etc. The Borrower will not, and
will not permit any of its Restricted Subsidiaries to, enter into any agreement
(excluding this Agreement, any other Loan Document, any agreement governing any
Debt in existence on the Effective Date as in effect on the Effective Date and
(in the case of clause (b)) provisions contained in agreements governing or
securing Debt incurred to finance the acquisition of assets purchased with such
Debt) prohibiting
(a) the ability of the Borrower to amend or otherwise modify this
Agreement or any other Loan Document; or
(b) the ability of any Restricted Subsidiary to make any payments,
directly or indirectly, to the Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on
investments, or any other agreement or arrangement which restricts the
ability of any such Restricted Subsidiary to make any payment, directly or
indirectly, to the Borrower.
The parties agree that the prohibition contained in clause (b) shall not be
deemed to be breached in the case of (i) provisions which restrict the amount
payable to the Borrower to no greater than the pro rata percentage of the equity
interest owned by the Borrower in such Restricted Subsidiary, (ii) provisions
which restrict amounts payable to the Borrower to the prior approval of a
majority (or more) of the equity or other interest of such Restricted Subsidiary
if, the Borrower is able to cause, directly or indirectly (by means of ownership
of a sufficient equity interest, by contract, or otherwise) such approval to be
obtained or delivered or (iii) provisions which prohibit any such payments to
the extent such payment would violate any applicable law.
79-
<PAGE> 87
SECTION 7.2.13. Designation of Subsidiaries.
(a) Right of Designation. Subject to satisfaction of the
requirements of clause(c), the Borrower shall have the right to designate
each Subsidiary acquired after the Effective Date as a Restricted
Subsidiary or an Unrestricted Subsidiary by delivering to the
Administrative Agent a writing, signed by an Authorized Officer, so
designating such Subsidiary within 30 days of the acquisition thereof by
the Borrower or any Restricted Subsidiary. Any such Subsidiary not so
designated within such 30-day period shall be deemed, on and after such
date and without any further action by the Borrower or any Lenders (but
subject to clause (b)), to have been designated by the Borrower as a
Restricted Subsidiary. Each Subsidiary designated as a "Restricted
Subsidiary" in Item 6.8 of the Disclosure Schedule shall be a Restricted
Subsidiary for all purposes herein until such time as such Restricted
Subsidiary is redesignated pursuant to clause (b) and each Subsidiary, if
any, listed in Item 6.8 of the Disclosure Schedule as an "Unrestricted
Subsidiary" shall be an Unrestricted Subsidiary for all purposes herein
until such time as such Unrestricted Subsidiary is redesignated pursuant
to clause (b).
(b) Right of Redesignation. Subject to the satisfaction of the
requirements of clause (c), the Borrower may at any time designate:
(i) any Unrestricted Subsidiary as a Restricted Subsidiary, or
(ii) any Restricted Subsidiary as an Unrestricted Subsidiary,
by delivering a written notice to such effect, signed by an Authorized
Officer, to the Administrative Agent.
(c) Designation Criteria. (i) No Subsidiary shall at any time after
the Effective Date be designated as a Restricted Subsidiary unless:
(A) immediately after giving effect to such designation,
and assuming that all obligations and liabilities of such
Subsidiary being so designated were incurred contemporaneously
with such designation,
(1) no Default or Event of Default exists or would
exist,
(2) the Borrower would be permitted by the
provisions of Section 7.2.2 to incur at least $1.00 of
additional Debt owing to a Person other than a
Restricted Subsidiary, and
(3) no Unrestricted Subsidiary, directly or
indirectly, owns or holds any Debt or Capital Stock of
such Subsidiary; and
80-
<PAGE> 88
(B) such Subsidiary shall not previously have been
designated (including, without limitation, deemed designation
pursuant to clause (a)) pursuant to this Section 7.2.13 more
than twice.
Any Person designated a Restricted Subsidiary hereunder shall be
deemed to have incurred all of its then outstanding Debt at the time
of such designation.
(ii) No Subsidiary shall at any time after the Effective Date
be designated as an Unrestricted Subsidiary unless:
(A) immediately after giving effect to such designation,
(1) no Default or Event of Default exists or would
exist;
(2) the Borrower would be in compliance with
Section 7.2.11; and
(3) such Subsidiary does not, directly or
indirectly, own or hold any Debt or Capital Stock of the
or any Restricted Subsidiary; and
(B) such Subsidiary shall not previously have been
designated (including, without limitation, deemed designation
pursuant to clause (a)) pursuant to this Section 7.2.13 more
than twice.
(iii) Notwithstanding anything in this paragraph (c) to the
contrary, any Person which shall become a Subsidiary at any time
when a Default or an Event of Default shall exist shall be an
Unrestricted Subsidiary.
(d) Effectiveness. Other than as set forth in the last two sentences
of clause (a), any designation under this Section 7.2.13 that satisfies
all of the conditions set forth in this Section 7.2.13 shall become
effective on the day that notice thereof shall have been sent by the
Borrower to the Administrative Agent or as of such subsequent date as may
be set forth in such notice.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an "Event of
Default".
81-
<PAGE> 89
SECTION 8.1.1. Non-Payment of Obligations. (a) The Borrower shall default
in the payment or prepayment when due of (i) any principal of any Loan, or (ii)
any Reimbursement Obligation or any deposit of cash in an account notified to
the Borrower by the Administrative Agent pursuant to Section 2.6.6; or (b) the
Borrower shall default (and such default shall continue unremedied for a period
of five Business Days) in the payment when due of any interest on any Loan or
fee or of any other Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty of the
Borrower made or deemed to be made hereunder or in any other Loan Document or
any other writing or certificate furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender for the purposes of or in connection with
this Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made or deemed
made in any material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations. (a)
The Borrower shall default in the due performance and observance of any of its
obligations under Section 7.1.6 or Section 7.2 (other than clause (a) of Section
7.2.4); or
(b) the Borrower shall default in the due performance and observance
of its obligations under clause (a) of Section 7.2.4 and such default is
not remedied within three Business Days after the earlier of (i) a
Responsible Officer obtaining actual knowledge of such default and (ii)
the Borrower receiving written notice of such default from the
Administrative Agent (any such written notice to be identified as a
"notice of default" and to refer specifically to this clause (b)(ii) of
Section 8.1.3).
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations. The
Borrower shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document (other than as set
forth in Section 8.1.1 or 8.1.3), and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual knowledge
of such default and (ii) the Borrower receiving written notice of such default
from the Administrative Agent (any such written notice to be identified as a
"notice of default" and to refer specifically to this Section 8.1.4).
SECTION 8.1.5. Default on Other Debt or Agreements. A default shall occur
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Debt (other than Debt described in Section
8.1.1) of the Borrower or any of its Restricted Subsidiaries having a principal
amount, individually or in the aggregate, in excess of $5,000,000, or a default
shall occur in the performance or observance of any obligation or condition with
respect to such Debt if the effect of such default is to accelerate the maturity
of any such Debt or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such Debt, or any
trustee or agent for such holders, to cause such Debt to become due and payable
prior to its expressed maturity.
82-
<PAGE> 90
SECTION 8.1.6. Judgments. Any judgment or order for the payment of money
in excess of $5,000,000 (excluding that portion of a judgment or order covered
by insurance as to which the Borrower has filed an insurance claim and where
such insurance carrier has not denied liability with respect thereto in writing)
shall be rendered against (i) the Borrower or any of its Restricted Subsidiaries
or (ii) any Unrestricted Subsidiary if the Borrower or any Restricted Subsidiary
is required or shall become liable for an amount in excess of $5,000,000 which
is payable pursuant to such judgment or order (excluding that portion of a
judgment or order covered by insurance as to which the Borrower has filed an
insurance claim and where such insurance carrier has not denied liability with
respect thereto in writing), and
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION 8.1.7. Pension Plans. Any of the following events shall occur with
respect to any Pension Plan
(a) the institution of any steps by the Borrower, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as a
result of such termination, the Borrower or any such member could be
required to make a contribution to such Pension Plan, or could reasonably
expect to incur a liability or obligation to such Pension Plan, in excess
of $5,000,000; or
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 8.1.8. Control of the Borrower. Any Change in Control shall occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any Affected
Subsidiary shall
(a) become insolvent or generally fail to pay, or admit in writing
its inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or any
of its Affected Subsidiaries (other than Non-Recourse Subsidiaries) or any
property of any thereof, or make a general assignment for the benefit of
creditors;
83-
<PAGE> 91
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its Affected
Subsidiaries (other than Non-Recourse Subsidiaries) or for a substantial
part of the property of any thereof, and such trustee, receiver,
sequestrator or other custodian shall not be discharged within 60 days,
provided that the Borrower and each Affected Subsidiary hereby expressly
authorizes the Administrative Agent and each Lender to appear in any court
conducting any relevant proceeding during such 60-day period to preserve,
protect and defend their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of the Borrower or any of its Affected
Subsidiaries (other than Non-Recourse Subsidiaries), and, if any such case
or proceeding is not commenced by the Borrower or such Affected
Subsidiary, such case or proceeding shall be consented to or acquiesced in
by the Borrower or such Affected Subsidiary or shall result in the entry
of an order for relief or shall remain for 60 days undismissed, provided
that the Borrower and each Affected Subsidiary hereby expressly authorize
the Administrative Agent and each Lender to appear in any court conducting
any such case or proceeding during such 60-day period to preserve, protect
and defend their rights under the Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of the
foregoing;
provided, that, the foregoing shall not apply to any Affected Subsidiary or
Affected Subsidiaries of the Borrower, the value of whose assets individually or
in the aggregate for the Fiscal Quarter most recently ended accounted for an
amount equal to or less than 5% of Consolidated Net Worth. For the purpose of
this Section 8.1.9, "Affected Subsidiary" means all Restricted Subsidiaries and
any Unrestricted Subsidiary that was a Restricted Subsidiary within 120 days
prior to the date of the applicable event or events specified in clauses (a)
through (e) of this Section 8.1.9.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the Commitments of each
Lender (if not theretofore terminated) shall automatically terminate, the Stated
Maturity Date shall automatically be accelerated and the outstanding principal
amount of all outstanding Loans, Letter of Credit Outstandings and all other
Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare the Stated Maturity
84-
<PAGE> 92
Date to be accelerated and/or direct the Administrative Agent to declare all or
any portion of the outstanding principal amount of the Loans, Letter of Credit
Outstandings and other Obligations to be due and payable and/or the Commitments
of each Lender (if not theretofore terminated) to be terminated, whereupon the
Stated Maturity Date shall be accelerated, the full unpaid amount of such Loans,
Letter of Credit Outstandings and other Obligations which shall be so declared
due and payable shall be and become immediately due and payable, without further
notice, demand or presentment, and/or, as the case may be, the Commitments shall
terminate.
ARTICLE IX
THE ADMINISTRATIVE AGENT
SECTION 9.1. Actions. Each Lender hereby appoints Scotiabank as its
Administrative Agent, under and for purposes of this Agreement, the Notes and
each other Loan Document. Each Lender authorizes Scotiabank, in its capacity as
the Administrative Agent, to act on behalf of such Lender under this Agreement,
the Notes and each other Loan Document in such capacity and, in the absence of
other written instructions from the Required Lenders received from time to time
by the Administrative Agent (with respect to which the Administrative Agent
agrees that it will comply, except as otherwise provided in this Section 9.1 or
as otherwise advised by counsel), to exercise such powers hereunder and
thereunder as are specifically delegated to or required of the Administrative
Agent by the terms hereof and thereof, together with such powers as may be
reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity
shall survive any termination of this Agreement) the Administrative Agent, pro
rata according to such Lender's Percentage, from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever to the extent not otherwise paid by the Borrower which may
at any time be imposed on, incurred by, or asserted against, the Administrative
Agent in any way relating to or arising out of this Agreement, the Notes and any
other Loan Document, including reasonable attorneys' fees, and as to which the
Administrative Agent is required to be, but is not reimbursed by the Borrower;
provided, however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, claims, costs or expenses
which are determined to have resulted solely from the Administrative Agent's
gross negligence or wilful misconduct. The Administrative Agent shall not be
required to take any action hereunder, under the Notes or under any other Loan
Document except such actions expressly provided for hereunder, or to prosecute
or defend any suit in respect of this Agreement, the Notes or any other Loan
Document, unless it is indemnified hereunder to its satisfaction. If any
indemnity in favor of the Administrative Agent shall be or become, in the
Administrative Agent's determination, inadequate, the Administrative Agent may
call for additional indemnification from the Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given.
SECTION 9.2. Funding Reliance, etc. Unless the Administrative Agent shall
have been notified by telephone, confirmed in writing, by any Lender by 5:00
p.m. (New York City time),
85-
<PAGE> 93
on the day prior to a Borrowing of other than Base Rate Loans that are to be
made on the same date requested by the Borrower that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing in
the case of Revolving Loans, or the amount of its Competitive Bid Loan Offer
that has been accepted by the Borrower pursuant to clause (e)(ii) of Section
2.4, in the case of Competitive Bid Loans, in each case on the date specified
therefor, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In the case
of a Borrowing of Base Rate Loans that are to be made on the same date requested
by the Borrower, the Administrative Agent may assume that each Lender will make
available to the Administrative Agent the amount which would constitute its
Percentage of such Borrowing in the case of Revolving Loans, or the amount of
its Competitive Bid Loan Offer that has been accepted by the Borrower pursuant
to clause (e)(ii) of Section 2.4, in the case of Competitive Bid Loans, and, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay the Administrative Agent forthwith on demand, without
duplication, such corresponding amount together with interest thereon, for each
day from the date the Administrative Agent made such amount available to the
Borrower to the date such amount is repaid to the Administrative Agent, in the
case of the Borrower, at the interest rate applicable at the time to Loans
comprising such Borrowing, and in the case of such Lender, for the period from
the date such funds were advanced to the Borrower to (and including) three days
thereafter, at the rate customarily charged for inter-bank loans in the U.S.,
and following such third day, at the interest rate applicable at the time to
Loans comprising such Borrowing.
SECTION 9.3. Exculpation. Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness or, other than with respect to the
Administrative Agent, enforceability, validity or due execution of this
Agreement or any other Loan Document (as it relates to the Administrative
Agent), nor to make any inquiry respecting the performance by the Borrower of
its obligations hereunder or under any other Loan Document. Any such inquiry
which may be made by the Administrative Agent shall not obligate it to make any
further inquiry or to take any action. The Administrative Agent shall be
entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which the Administrative
Agent believes to be genuine and to have been presented by a proper Person.
SECTION 9.4. Successor. The Administrative Agent may resign as such at any
time upon at least 30 days' prior notice to the Borrower and all Lenders. If the
Administrative Agent at any time shall resign, the Required Lenders may, with
the written consent of the Borrower so long as no Default has occurred and is
continuing (which consent shall not be unreasonably withheld), appoint another
Lender as a successor Administrative Agent, which shall thereupon
86-
<PAGE> 94
(subject to its consent) become the Administrative Agent hereunder. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders (after obtaining the Borrower's consent in accordance with the preceding
sentence), and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall (subject to its consent and the Borrower's
written consent so long as no Default has occurred and is continuing (which
consent (in the case of the Borrower) shall not be unreasonably withheld)) be
one of the Lenders or a commercial banking institution organized under the laws
of the U.S. (or any State thereof) or a U.S. branch or agency of a commercial
banking institution, and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall be entitled to receive from the retiring Administrative Agent such
documents of transfer and assignment as such successor Administrative Agent may
reasonably request, and shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as the Administrative Agent, the provisions of
(a) this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Administrative Agent
under this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure to its
benefit.
SECTION 9.5. Credit Extensions by the Administrative Agent. The
Administrative Agent shall have the same rights and powers with respect to (x)
the Loans made by it or any of its respective affiliates, and (y) the Notes held
by it or any of its respective affiliates as any other Lender and may exercise
the same as if it were not the Administrative Agent. The Administrative Agent
and its affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrower or any Subsidiary or Affiliate of the
Borrower as if the Administrative Agent were not the Administrative Agent
hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Administrative Agent and each other Lender, and based on
such Lender's review of the financial information of the Borrower, this
Agreement, the other Loan Documents (the terms and provisions of which being
satisfactory to such Lender) and such other documents, information and
investigations as such Lender has deemed appropriate, made its own credit
decision to extend its Commitment. Each Lender also acknowledges that it will,
independently of the Administrative Agent and each other Lender, and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
87-
<PAGE> 95
SECTION 9.7. Copies, etc. The Administrative Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Administrative Agent by the Borrower pursuant to the terms of this
Agreement (unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; provided, however, that no such
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders shall be effective
unless consented to by each Lender;
(b) except as set forth in Section 2.7 or 2.8, modify this Section
10.1, change the definition of "Required Lenders", increase the Commitment
Amount or the Percentage of any Lender, or extend the Commitment
Termination Date shall be made without the consent of each Lender;
(c) extend the due date for, or reduce the amount of, any scheduled
or mandatory repayment or prepayment of principal of or interest on or
fees in respect of any Loan or any other amounts payable to a Lender
hereunder (or reduce the principal amount of or rate of interest on any
Loan) shall be made without the consent of such Lender;
(d) affect adversely the interests, rights or obligations of the
Agent or an Issuer qua such Issuer shall be made without consent of the
Agent or such Issuer, respectively; or
(e) extend the time for payments of or reduce any amounts payable in
respect of any Reimbursement Obligation, including any interest thereon,
in which the Lenders have purchased a participating interest, shall be
made without the consent of each Lender (including the Issuer).
88-
<PAGE> 96
No failure or delay on the part of the Administrative Agent, any Lender, the
Issuer or the holder of any Note in exercising any power or right under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on the Borrower in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by the
Administrative Agent, the Issuer, any Lender or the holder of any Note under
this Agreement or any other Loan Document shall, except as may be otherwise
stated in such waiver or approval, be applicable to subsequent transactions. No
waiver or approval hereunder shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted upon receipt of electronic confirmation of transmission.
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay on
demand all reasonable out-of-pocket expenses of the Administrative Agent
(including the reasonable fees and out-of-pocket expenses of a single counsel to
the Administrative Agent and of local counsel, if any, who may be retained by
counsel to the Administrative Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, (the costs and expenses associated with the
formation of the syndicate of Lenders) waivers, consents, supplements or
other modifications to this Agreement or any other Loan Document as may
from time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated;
(b) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document; and
(c) the administration and monitoring of this Agreement and the Loan
Documents, and compliance of the parties hereto with respect to the terms
hereof.
The Borrower further agrees to pay, and to save the Administrative Agent and the
Lenders harmless from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this Agreement, the
Borrowings hereunder, or the issuance of the
89-
<PAGE> 97
Notes or any other Loan Documents. The Borrower also agrees to reimburse the
Administrative Agent and each Lender upon demand for all reasonable
out-of-pocket expenses (including reasonable attorneys' fees and legal expenses)
incurred by the Administrative Agent or such Lender in connection with (x) the
negotiation of any restructuring or "workout", whether or not consummated, of
any Obligations and (y) the enforcement of any Obligations; provided, that the
Borrower shall only be obligated to reimburse such legal expenses of one legal
firm representing the Lenders in their capacity as Lenders and the fees and
expenses of one consulting firm engaged by (or on behalf of) the Administrative
Agent, unless (in the case of the legal firm) the representation of all of the
Lenders by a single law firm would give rise to a conflict of interest for such
firm (including by way of representing the Administrative Agent in its capacity
as Administrative Agent).
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by the Issuer and each Lender and the extension of
the Commitments, the Borrower hereby indemnifies, exonerates and holds the
Administrative Agent, the Issuer and each Lender and each of their respective
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan;
(b) any transaction supported by or relating to a Letter of Credit;
(c) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article V not to make a
Credit Extension due to the failure of the Borrower to meet the conditions
for such Credit Extension);
(d) any investigation, litigation or proceeding involving the
Borrower or any of its Subsidiaries or property now or previously owned or
leased by the Borrower or any of its Subsidiaries related to any
environmental cleanup, compliance or other similar matter relating to the
protection of the environment by the Borrower or any of its Subsidiaries
or the Release by the Borrower or any of its Subsidiaries of any Hazardous
Material; provided; that the Indemnified Party shall have given the
Borrower notice of any such matter and an opportunity to participate in,
but not (except at the sole discretion of the Indemnified Parties) to
manage or control, the defense or settlement of any such matters which may
give rise to any Indemnified Liabilities;
90-
<PAGE> 98
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releasing from, any real
property owned or operated by the Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control
of, the Borrower or such Subsidiary; or
(f) any breach of warranty contained in Section 6.12, without giving
effect to the exceptions based upon the materially adverse effect and any
qualification based on materiality or knowledge;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct; provided, that the Borrower shall only be
obligated to reimburse such legal expenses of one legal firm representing the
Indemnified Parties and the fees and expenses of one consulting firm engaged by
(or on behalf of) the Administrative Agent, unless (in the case of a legal firm)
the representation of all of the Indemnified Parties by a single law firm would
give rise to a conflict of interest for such firm (including by way of
representing the Administrative Agent in its capacity as Administrative Agent).
If and to the extent that the foregoing undertaking may be unenforceable for any
reason, the Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
Section 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations, the termination and/or cancellation of the
Letters of Credit and the termination of all Commitments. The representations
and warranties made by the Borrower in this Agreement and in each other Loan
Document shall survive the execution and delivery of this Agreement and each
such other Loan Document.
SECTION 10.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
91-
<PAGE> 99
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Borrower and the Administrative Agent and be
deemed to be an original and all of which shall constitute together but one and
the same agreement. This Agreement shall become effective when counterparts
hereof executed on behalf of the Borrower, the Administrative Agent, the Issuer
and each Lender (or notice thereof satisfactory to the Administrative Agent)
shall have been received by the Administrative Agent and notice thereof shall
have been given by the Administrative Agent to the Borrower and each Lender.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of all Lenders;
and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Note; Participations in
Loans and Note. Each Lender may assign, or sell participations in, its Loans and
Commitment to one or more other Persons in accordance with this Section 10.11.
SECTION 10.11.1. Assignments. Any Lender,
(a) with the written consents of the Borrower and the Administrative
Agent (which consents shall not be unreasonably delayed or withheld and
which consent, in the case of the Borrower, shall be deemed to have been
given in the absence of a written notice delivered by the Borrower to the
Administrative Agent, on or before the fifth Business Day after receipt by
the Borrower of such Lender's request for consent, stating, in reasonable
detail, the reasons why the Borrower proposes to withhold such consent
(provided, that the failure to deliver such consent shall not be a
"Default" for purposes of satisfying the conditions to Credit Extensions
set forth in clause (d) of Section 5.2.1)) may at any time assign and
delegate to one or more commercial banks or other financial institutions;
92-
<PAGE> 100
(b) with notice to the Borrower and the Administrative Agent, but
without the consent of any Person, may (i) assign and delegate to any
other Lender, and (ii) assign and/or delegate to any of its affiliates or
Subsidiaries; and
(c) with notice to the Administrative Agent, but without the consent
of any Person, may pledge its Loans (and related rights thereto) to a
Federal Reserve Bank in support of borrowings made by such Lender from
such Federal Reserve Bank;
(each Person described in the foregoing clauses as being the Person to whom such
assignment and delegation is to be made, being hereinafter referred to as an
"Assignee Lender"), all or any fraction of such Lender's total Loans and
Commitment (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Loans and Commitment) in a
minimum aggregate amount of $5,000,000 in the case of an assignment described in
clauses (a) and (b) of this Section 10.11.1 (such amount to be reduced pro rata
by any permanent reductions in the amount of the Commitment), or if less, all of
such Lender's Loans and Commitment; provided, however, that any such Assignee
Lender will comply, if applicable, with the provisions contained in the last
sentence of Section 4.6 and further, provided, that, the Borrower and the
Administrative Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned and delegated to
an Assignee Lender until
(i) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower and the
Administrative Agent by such Lender and such Assignee Lender;
(ii) the conditions precedent to such assignment have been satisfied
or waived and such Assignee Lender shall have executed and delivered to
the Borrower and the Administrative Agent a Lender Assignment Agreement,
accepted by the Administrative Agent; and
(iii) the processing fees described below shall have been paid.
From and after the date that the Administrative Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of notice that the
Administrative Agent has received an executed Lender Assignment Agreement, the
Borrower shall execute and deliver to the Administrative Agent (for
93-
<PAGE> 101
delivery to the relevant Assignee Lender) a new Note evidencing such Assignee
Lender's assigned Loans and Commitment and, if the assignor Lender has retained
Loans and a Commitment hereunder, a replacement Note in the principal amount of
the Loans and Commitment retained by the assignor Lender hereunder (such Note to
be in exchange for, but not in payment of, that Note then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Note. The
assignor Lender shall mark the predecessor Note "exchanged" and deliver it to
the Borrower. Accrued interest on that part of the predecessor Note evidenced by
the new Note, and accrued fees, shall be paid as provided in the Lender
Assignment Agreement. Accrued interest on that part of the predecessor Note
evidenced by the replacement Note shall be paid to the assignor Lender. Accrued
interest and accrued fees shall be paid at the same time or times provided in
the predecessor Note and in this Agreement. Such assignor Lender or such
Assignee Lender must also pay a processing fee to the Administrative Agent upon
delivery of any Lender Assignment Agreement in the amount of $3,500 (provided,
however, that such processing fee shall not be required to be paid by a Lender
in the case of a pledge of such Lender's Loans to a Federal Reserve Bank
pursuant to clause (c) of Section 10.11.1. Any attempted assignment and
delegation not made in accordance with this Section 10.11.1 shall be null and
void.
SECTION 10.11.2. Participations. Any Lender may at any time sell to one or
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "Participant") participating interests in any of
the Loans, its Commitment, or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this Section 10.11.2 shall
relieve such Lender from its Commitment or its other obligations hereunder
or under any other Loan Document;
(b) such Lender shall remain solely responsible for the performance
of its Commitment and such other obligations;
(c) the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and each of the other Loan
Documents;
(d) no Participant, unless such Participant is an affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in clause (b) or (c) of Section 10.1; and
94-
<PAGE> 102
(e) the Borrower shall not be required to pay any amount hereunder
that is greater than the amount which it would have been required to pay
had no participating interest been sold.
The Borrower acknowledges and agrees that, subject to clause (e) above, each
Participant, for purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and
10.4, shall be considered a Lender.
SECTION 10.12. Confidentiality. Each Lender agrees to hold all non-public
information (which has been identified as such by the Borrower or is financial
in nature) obtained in connection with this Agreement in accordance with its
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event each Lender
may make disclosure to any of their examiners, affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement or as
reasonably required by any bona fide transferee, Participant or assignee of
Loans and Commitments or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided, however, that
(a) unless specifically prohibited by applicable law or court order,
each Lender shall notify the Borrower of any request by any governmental
agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender
by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information;
(b) prior to any such disclosure, each Lender shall require any such
bona fide transferee, Participant and assignee receiving a disclosure of
non-public information to agree in writing for the benefit of the Borrower
(1) to be bound by the requirements above; and
(2) to require such person to require any other person to whom
such person discloses such non-public information to be similarly
bound by the requirements above; and
(c) except as may be required by an order of a court of competent
jurisdiction and to the extent set forth therein, no Lender shall be
obligated or required to return any materials furnished by the Borrower or
any Subsidiary.
SECTION 10.13. Other Transactions. Nothing contained herein shall preclude
the Administrative Agent or any other Lender from engaging in any transaction,
in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
95-
<PAGE> 103
SECTION 10.14. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE ISSUER,
THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE CITY AND STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY, FOR ITSELF AND ITS PROPERTY, SUBMITS TO THE EXTENT PERMITTED BY
APPLICABLE LAW TO THE JURISDICTION OF THE COURTS OF THE CITY AND STATE OF NEW
YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.15. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, THE ISSUER,
THE LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF
96-
<PAGE> 104
SUCH AGENT, THE ISSUER, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A
PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE
AGENT, THE ISSUER AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH
OTHER LOAN DOCUMENT.
97-
<PAGE> 105
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
HANDY & HARMAN
By:_________________________________________
Name:
Title:
Address: 250 Park Avenue
New York, New York 10177
Facsimile No.: (914) 925-4498
Attention: Mr. Robert Burlinson
Vice President and Treasurer
THE BANK OF NOVA SCOTIA,
in its capacity as
Administrative Agent and the Issuer
By:_________________________________________
Name:
Title:
Address: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: Mr. Brian Allen
98-
<PAGE> 106
PERCENTAGE
- ----------
11.50000%
THE BANK OF NOVA SCOTIA,
as a Lender
By:_________________________________________
Name:
Title:
Operations Contact:
The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Facsimile No.: (212) 225-5090
Telephone No.: (212) 225-5030
Attention: Brian Allen
<PAGE> 107
PERCENTAGE
- ----------
10.00000%
THE BANK OF NEW YORK
By:_________________________________________
Name:
Title:
Operations Contact:
The Bank of New York
One Wall Street
22nd Floor
New York, New York 10286
Facsimile No.: (212) 635-6397
Telephone No.: (212) 635-6720
Attention: Ms. Rosa Leonard
<PAGE> 108
PERCENTAGE
- ----------
10.00000%
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:_________________________________________
Name:
Title:
Operations Contact:
Bank of Tokyo-Mitsubishi Trust Company
1251 Avenue of the Americas
New York, New York 10020
Facsimile No.: (212) 766-3127
Telephone No.: (212) 766-3157
Attention: Mr. Rolando Uy
<PAGE> 109
PERCENTAGE
- ----------
10.00000%
THE CHASE MANHATTAN BANK
By:_________________________________________
Name:
Title:
Operations Contact:
The Chase Manhattan Bank
One Chase Plaza
48th Floor New York, New York 10081
Facsimile No.: (212) 552-5662
Telephone No.: (212) 552-7402
Attention: Mr. Vito Cipriano
<PAGE> 110
PERCENTAGE
- ----------
7.50000%
COMERICA BANK
By:_________________________________________
Name:
Title:
Operations Contact:
Comerica Bank
U.S. Banking East
500 Woodward Avenue
9th Floor, MC 3280
Detroit, MI 48275-3280
Facsimile No.: (313) 222-3330
Telephone No.: (313) 222-3678
Attention: Diana M. Pascoe
Secondary Name: Venus Moses
Facsimile No.: (313) 222-3319
Telephone No.: (313) 222-3330
<PAGE> 111
PERCENTAGE
- ----------
5.00000%
DEN DANSKE BANK AKTIESELSKAB, CAYMAN
ISLANDS BRANCH
By:_________________________________________
Name:
Title:
By:_________________________________________
Name:
Title:
Operations Contact:
Den Danske Bank, New York Branch
280 Park Avenue
4th Floor East Building
New York, New York 10017
Facsimile No.: (212) 490-0252
Telephone No.: (212) 984-8462
Attention: Loan Administration
<PAGE> 112
PERCENTAGE
- ----------
5.00000%
FIRST UNION NATIONAL BANK
By:_________________________________________
Name:
Title:
Operations Contact:
First Union National Bank
50 Main Street
White Plains, New York 10606
Facsimile No.: (914) 286-5001
Telephone No.: (914) 286-5035
Attention: Barbara Telesha
<PAGE> 113
PERCENTAGE
- ----------
10.00000%
FLEET PRECIOUS METALS
By:_________________________________________
Name:
Title:
Operations Contact:
Fleet Precious Metals
111 Westminster Street
Providence, Rhode Island 02903
Facsimile No.: (401) 272-3440
Telephone No.: (401) 278-5785
Attention: David Deuel
<PAGE> 114
PERCENTAGE
- ----------
7.00000%
KEYBANK NATIONAL ASSOCIATION
By:_________________________________________
Name:
Title:
Operations Contact:
KeyBank National Association
127 Public Square
Cleveland, OH 44114
Facsimile No.: (216)689-4981
Telephone No.: (216) 680-0206
Attention: Loree Kuttler
<PAGE> 115
PERCENTAGE
- ----------
7.50000%
THE LONG TERM CREDIT BANK OF JAPAN,
LIMITED
By:_________________________________________
Name:
Title:
Operations Contact:
165 Broadway
49th Floor
New York, New York 10006
Facsimile No.: (212) 608-2371
Telephone No.: (212) 335-4801
Attention: Robert Pacifici
<PAGE> 116
PERCENTAGE
- ----------
9.00000%
NATIONSBANK, N.A.
By:_________________________________________
Name:
Title:
Operations Contact:
101 N. Tryon Street
15th Floor
Charlotte, North Carolina 28255
Facsimile No.: (704) 386-8694
Telephone No.: (704) 386-8389
Attention: Carole Greene
<PAGE> 117
PERCENTAGE
- ----------
7.50000%
PNC BANK, NATIONAL ASSOCIATION
By:_________________________________________
Name:
Title:
Operations Contact:
249 Fifth Avenue, One PNC Plaza
PI-POPP-02-04, 2nd Floor
Pittsburgh, PA 15222-2707
Facsimile No.: (412) 768-4586
Telephone No.: (412) 768-8219
Attention: Hillary Guttman
<PAGE> 118
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 1. Existing Letters of Credit.
Stated Amount Beneficiary
ITEM 5.13 Indebtedness to be Paid or Replaced.
All amounts outstanding and payable under the Existing
Agreements.
ITEM 6.7 Litigation.
Description of Proceeding Action or Claim Sought
ITEM 6.8 Existing Restricted Subsidiaries.
<TABLE>
<CAPTION>
STATE OF OWNERSHIP
NAME INCORPORATION % BUSINESS DESCRIPTION
------------------- ------------- ---------- --------------------
<S> <C> <C> <C>
</TABLE>
Existing Unrestricted Subsidiaries
<TABLE>
<CAPTION>
STATE OF OWNERSHIP
NAME INCORPORATION % BUSINESS DESCRIPTION
------------------- ------------- ---------- --------------------
<S> <C> <C> <C>
</TABLE>
ITEM 6.11 Employee Benefit Plans.
<PAGE> 119
ITEM 6.12 Environmental Matters.
ITEM 7.2.3(a) Existing Liens Securing Ongoing Debt.
Creditor Outstanding Principal Amount
-------- ----------------------------
ITEM 7.2.7 Pension-Related Services Provided by Affiliates
2-
<PAGE> 1
Exhibit 21
HANDY & HARMAN
SUBSIDIARIES AS OF DECEMBER 31, 1997
Alloy Ring Service, Inc.
Camdel Metals Corporation
Continental Industries, Inc.
Daniel Radiator Corporation
Ele Corporation
H&H Ltd.
H&H Productions, Inc. (Formerly Greenback Industries, Inc.)
Handy & Harman Automotive Group, Inc.
(Handy & Harman Radiator Corporation and Handy & Harman
Automotive Group, Inc. merger)
Handy & Harman Electronic Materials Corporation
Handy & Harman Europe Ltd.
Handy & Harman of Canada, Limited
Handy & Harman International, Ltd.
Handy & Harman Peru, Inc.
Handy & Harman Tube Company, Inc.
Handy & Harman UK Holdings Limited
Indiana Tube Corporation
Indiana Tube Danmark A/S
KJ-VMI Realty, Inc. (Formerly Valley Metals Inc.)
Lucas-Milhaupt, Inc.
Maryland Specialty Wire, Inc.
Micro-Tube Fabricators, Inc.
Olympic Manufacturing Group, Inc.
Pal-Rath Realty, Inc. (Formerly Rathbone Corporation)
Platina Labortories, Inc.
Rigby-Maryland (Stainless), Ltd.
Sheffield Street Corporation
(Formerly American Chemical & Refining Company, Incorporated)
Sumco Inc.
SWM, Inc.
(Formerly South Windsor Metallurgical, Inc.)
Willing B Wire Corporation
In addition to the wholly-owned subsidiaries listed above, the Company
has a 5% interest in Mizuno Handy Harman, Ltd. and a 50% interest in Handy &
Harman (Asia), S.A. Handy & Harman (Asia), S.A. owns 100% of Handy & Harman
(HK) Limited and 75% of Handy & Harman Manufacturing (Singapore) Pte. Ltd. The
Company owns 12 1/2% of Handy & Harman Manufacturing (Singapore) Pte. Ltd.
The Company, through Handy & Harman Peru, has a 70% interest in the
Electro-Connection Finishers joint venture.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 7,259
<SECURITIES> 0
<RECEIVABLES> 60,718
<ALLOWANCES> 1,634
<INVENTORY> 77,294
<CURRENT-ASSETS> 158,248
<PP&E> 218,052
<DEPRECIATION> 123,064
<TOTAL-ASSETS> 392,797
<CURRENT-LIABILITIES> 67,007
<BONDS> 190,880
0
0
<COMMON> 14,611
<OTHER-SE> 97,797
<TOTAL-LIABILITY-AND-EQUITY> 392,797
<SALES> 451,110
<TOTAL-REVENUES> 451,110
<CGS> 349,411
<TOTAL-COSTS> 349,411
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 333
<INTEREST-EXPENSE> 14,452
<INCOME-PRETAX> 36,051
<INCOME-TAX> 15,141
<INCOME-CONTINUING> 20,910
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,910
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.74
</TABLE>
