-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Um0ncE3bGFkHq4qfQ2JgD8x2LQ1J6E6a01n/RgO1MhXAKkfqq9QNZF8tjaGCznaV 6TSNBm8I3lBQSbysvXukwg== 0000950123-97-006879.txt : 19970815 0000950123-97-006879.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950123-97-006879 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANDY & HARMAN CENTRAL INDEX KEY: 0000045333 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 135129420 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05365 FILM NUMBER: 97660733 BUSINESS ADDRESS: STREET 1: 555 THEODORE FREMD AVE CITY: RYE STATE: NY ZIP: 10580 BUSINESS PHONE: 9149254437 MAIL ADDRESS: STREET 1: 555 THEODORE FREMD AVE CITY: RYE STATE: NY ZIP: 10580 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended June 30, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 1-5365 HANDY & HARMAN (Exact name of registrant as specified in its charter) STATE OF NEW YORK 13-5129420 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 250 Park Avenue, New York, New York 10177 (Address of principal executive offices) (Zip code) (212) 661-2400 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last year.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares of issuer's Common Stock, par value $1.00 per share outstanding as of August 12, 1997 was 11,953,702. 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HANDY & HARMAN AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (unaudited-thousands of dollars except per share)
Three Months Ended Six Months Ended -------------------------------- --------------------------------- June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996 - -------------------------------------------------------------------------------------------------------------- Sales $ 115,971 $ 105,806 $ 220,903 $ 214,146 Cost of sales 86,086 84,377 169,431 171,368 - -------------------------------------------------------------------------------------------------------------- Gross profit 29,885 21,429 51,472 42,778 Selling, general and administrative expenses 13,820 11,502 25,634 22,926 - -------------------------------------------------------------------------------------------------------------- Income from operations 16,065 9,927 25,838 19,852 - -------------------------------------------------------------------------------------------------------------- Other deductions: Interest expense-net 3,954 2,133 6,738 4,187 Other-net 88 (41) (30) 162 - -------------------------------------------------------------------------------------------------------------- 4,042 2,092 6,708 4,349 - -------------------------------------------------------------------------------------------------------------- Income from continuing operations before income taxes 12,023 7,835 19,130 15,503 Income tax provision 5,014 3,381 8,034 6,686 - -------------------------------------------------------------------------------------------------------------- Income from continuing operations 7,009 4,454 11,096 8,817 - -------------------------------------------------------------------------------------------------------------- Discontinued Operations: Loss from operations, net of tax benefit of $1,026 -- -- -- (1,354) Loss on disposal, net of tax benefit of $4,550 -- -- -- (8,300) - -------------------------------------------------------------------------------------------------------------- -- -- -- (9,654) - -------------------------------------------------------------------------------------------------------------- Net Income (loss) $ 7,009 $ 4,454 $ 11,096 ($837) - -------------------------------------------------------------------------------------------------------------- Earnings (loss) per share Continuing operations $ .59 $ .32 $ .93 $.63 Discontinued operations -- -- -- (.69) - -------------------------------------------------------------------------------------------------------------- Net income (loss) $ .59 $ .32 $ .93 ($.06) - -------------------------------------------------------------------------------------------------------------- Dividends per share $ .12 $ .12 $ .18 $.18 - -------------------------------------------------------------------------------------------------------------- Average shares outstanding 11,957,000 14,023,000 11,973,000 14,027,000 - --------------------------------------------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements. -1- 3 HANDY & HARMAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (thousands of dollars)
June 30, 1997 December 31, 1996 (unaudited) - ----------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash $ 10,537 $ 9,701 Accounts receivable, less allowance for doubtful accounts of $1,850 in 1997 and $1,686 in 1996 66,420 51,572 Inventories 78,712 70,357 Prepaid expenses, deposits and other current assets 5,269 7,044 - ----------------------------------------------------------------------------------------------- Total current assets 160,938 138,674 - ----------------------------------------------------------------------------------------------- Investment in affiliates, at equity 3,682 3,122 Property, plant and equipment - at cost 209,431 195,623 Less accumulated depreciation and amortization 117,635 112,418 - ----------------------------------------------------------------------------------------------- 91,796 83,205 Prepaid retirement costs (net) 56,841 54,566 Intangibles, net of amortization 65,480 24,818 Other assets 14,052 12,079 - ----------------------------------------------------------------------------------------------- $ 392,789 $ 316,464 =============================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term borrowings $ -- $ 15,000 Accounts payable 44,252 30,163 Futures payable 10,398 9,246 Federal and Foreign taxes on income 1,224 792 Other current liabilities 20,555 21,637 - ----------------------------------------------------------------------------------------------- Total current liabilities 76,429 76,838 - ----------------------------------------------------------------------------------------------- Long-term debt 198,900 127,500 Minority interest 1,395 1,259 Deferred income taxes 13,371 15,261 - ----------------------------------------------------------------------------------------------- Shareholders' equity: Common stock - par value $1; 60,000,000 shares authorized; 14,611,432 shares issued 14,611 14,611 Capital surplus 13,683 13,432 Retained earnings 121,343 112,399 Foreign currency translation adjustment (887) (61) - ----------------------------------------------------------------------------------------------- 148,750 140,381 Less: Treasury stock 2,673,380 shares - 1997 and 2,618,421 shares - 1996 at cost 45,785 44,308 Unearned compensation 271 467 - ----------------------------------------------------------------------------------------------- Total shareholders' equity 102,694 95,606 - ----------------------------------------------------------------------------------------------- $ 392,789 $ 316,464 ===============================================================================================
See Accompanying Notes to Consolidated Financial Statements. -2- 4 HANDY & HARMAN AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited-thousands of dollars)
Increase (Decrease) in Cash Six Months Ended ----------------------------- June 30, 1997 June 30, 1996 - --------------------------------------------------------------------------------------- Cash flows from operating activities: Net income (loss) $ 11,096 $ (837) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 6,809 5,732 Provision for doubtful accounts 205 444 (Gain) loss on disposal of property, plant and equipment (10) 132 Net retirement cost (2,275) (1,575) Equity in earnings of affiliates (614) (350) Minority interest in net income 136 -- Earned compensation - 1988 long-term incentive and outside director stock option plans 274 296 Provision for disposal of business units -- 11,062 Changes in assets and liabilities: Accounts receivable (11,287) 2,729 Inventories (4,068) 3,679 Prepaid expenses 3,560 (50) Deferred charges and other assets (1,473) (663) Deferred financing costs (873) -- Accounts payable and other current liabilities 5,927 (10,218) Federal and foreign taxes on income 432 (6,363) Deferred income taxes (1) (22) - --------------------------------------------------------------------------------------- Net cash provided by operating activities 7,838 3,996 - --------------------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from sale of property, plant and equipment 21 14 Capital expenditures (9,100) (5,465) Acquisition, net of cash acquired (52,732) (3,700) - --------------------------------------------------------------------------------------- Net cash used by investing activities (61,811) (9,151) - --------------------------------------------------------------------------------------- Cash flows from financing activities: Increase/(decrease) in short-term borrowings (15,000) 8,800 Net decrease in revolving credit facility (120,000) (10,000) Proceeds from long-term financing 125,000 -- Increase in other long-term debt 66,400 -- Net decrease in futures receivable -- 7,681 Net increase in futures payable 1,152 1,927 Proceeds from joint venture partner -- 705 Dividends paid (1,436) (1,683) Purchase of treasury stock (net) (1,250) (773) - --------------------------------------------------------------------------------------- Net cash provided by financing activities 54,866 6,657 - --------------------------------------------------------------------------------------- Effect of exchange rate changes on net cash (57) (19) - --------------------------------------------------------------------------------------- Net change in cash 836 1,483 Cash at beginning of year 9,701 6,637 - --------------------------------------------------------------------------------------- Cash at end of period $ 10,537 $ 8,120 - ---------------------------------------------------------------------------------------
See Accompanying Notes to Consolidated Financial Statements. -3- 5 HANDY & HARMAN AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS a. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to a fair statement of the results for interim periods. These statements should be read in conjunction with the summary of Significant Accounting Policies and notes contained in the Registrant's Annual Report (Form 10-K for the year ending December 31, 1996). The results of operations for the quarter and six months ended June 30, 1997 are not necessarily indicative of the results of the entire fiscal year. b. Inventories at June 30, 1997 and December 31, 1996 are comprised as follows (in thousands):
June 30, 1997 December 31, 1996 (unaudited) - ----------------------------------------------------------------------------------- Precious metals: Fine and fabricated metals in various stages of completion $25,911 $26,569 Non-precious metals: Base metals, factory supplies and raw materials 25,499 20,993 Work in process 16,091 15,192 Finished goods 11,211 7,603 - ----------------------------------------------------------------------------------- $78,712 $70,357 ===================================================================================
LIFO inventory - the excess of period end market value over LIFO cost was $95,364,000 at June 30, 1997 and $97,996,000 at December 31, 1996. As a result of reductions in the quantities of precious metal inventories valued under the LIFO method of accounting, income for the quarter and six months ending June 30, 1997 increased $4,665,000 ($2,706,000 after-tax or $.23 per share). c. In 1997 and 1996 the third quarter dividend was declared in the second quarter to be paid in the third quarter. d. On February 28, 1997 the Company acquired 100% of the outstanding shares of Olympic Manufacturing Group, Inc. for approximately $53,000,000. This acquisition has been accounted for as a purchase; accordingly, the purchase price has been allocated to the underlying assets and liabilities based on their respective estimated fair values at the date of acquisition. The estimated fair value of assets acquired was $17,000,000 and liabilities assumed was $5,000,000. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed was $41,000,000 and is being amortized over a period of 40 years. The excess purchase price has a tax deductible basis of approximately $10,000,000. This business is not material to the revenues of the Company. e. In the second quarter of 1997, the Company completed additional long-term financing for $125,000,000 at a fixed rate of 7.31% due 2004. The Company's long-term revolving credit facility along with this new long-term financing gives the Company the ability to classify certain short-term obligations amounting to $66,400,00 as long-term debt as of June 30, 1997. -4- 6 HANDY & HARMAN AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS f. The following table presents certain selected financial data by industry segment (expressed in thousands of dollars) for the three months ended and six months ended June 30, 1997 and 1996:
Three Months Ended Six Months Ended ------------------------------------ ------------------------------------ June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996 - ----------------------------------------------------------------------------------------------------------------------- Sales: Wire/Tubing $ 43,602 $ 45,612 $ 86,850 $ 92,637 Precious metals 55,480 56,073 109,924 113,359 Other non-precious metal businesses 16,889 4,121 24,129 8,150 - ----------------------------------------------------------------------------------------------------------------------- Total $ 115,971 $ 105,806 $ 220,903 $ 214,146 - ----------------------------------------------------------------------------------------------------------------------- Profit contribution before unallocated expenses: Wire/Tubing $ 4,454 $ 5,547 $ 8,906 $ 10,589 Precious metals 9,518 4,323 14,542 8,955 Other non-precious metal businesses 2,455 548 3,320 1,046 - ----------------------------------------------------------------------------------------------------------------------- Total 16,427 10,418 26,768 20,590 - ----------------------------------------------------------------------------------------------------------------------- General corporate expenses (450) (450) (900) (900) Interest expense (net) (3,954) (2,133) (6,738) (4,187) - ----------------------------------------------------------------------------------------------------------------------- Income from continuing operations before taxes $ 12,023 $ 7,835 $ 19,130 $ 15,503 =======================================================================================================================
See also Note b. g. Revenue and expenses for 1996 reflect the sale (completed in the third quarter 1996) of the Company's Refining Division business, exclusive of the Company's satellite refining operations located in Singapore and Canada, accounted for as a discontinued operation. A charge associated with exiting this business of $12,850,000 ($8,300,000 after-tax or $.59 per share) was recorded in the first quarter of 1996. -5- 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA The Company's precious metal inventories, consisting principally of gold and silver, is readily convertible to cash. Furthermore, these precious metal inventories which are stated in the Balance Sheet at LIFO cost have a market value of $95,364,000 in excess of such cost as of June 30, 1997. It is the Company's policy to obtain funds necessary to finance inventories and receivables from various banks under commercial credit facilities. Fluctuations in the market prices of gold and silver have a direct effect on the dollar volume of sales and the corresponding amount of customer receivables resulting from sale of precious metal products. In addition, receivables resulting from the sale of precious metal bullion for future delivery are also financed by bank borrowings. The Company adjusts the level of its credit facilities from time to time in accordance with its borrowing needs for receivables and inventories and maintains bank credit facilities well in excess of anticipated requirements. Consistent with other companies that produce precious metal fabricated products, some of the Company's gold and silver requirements are furnished by customers and suppliers on a consignment basis. Title to the consigned gold and silver remains with the Consignor. The value of consigned gold and silver held by the Company is not included in the Company's Balance Sheet. The Company's gold and silver requirements are provided from a combination of owned inventories, precious metals which have been purchased and sold for future delivery, and gold and silver received from suppliers and customers on a consignment basis. The Company has a $200,000,000 Revolving Credit Facility which provides $150,000,000 for a three year period and $50,000,000 for 364 days. As of June 30, 1997 there were no borrowings under this facility. In addition to the Revolving Credit Facility, banks also provide $111,750,000 of Gold and Silver Fee Consignment Facilities. The Fee Consignment Facility of $83,812,500 is for a three-year period and the short-term Fee Consignment Facility of $27,937,500 is for 364 days. All gold and silver consigned to the Company pursuant to these Consignment agreements is located at the Company's plant in Fairfield, Connecticut. As of June 30, 1997 there were 7,000 ounces of gold and 14,544,000 ounces of silver leased under these fee consignment facilities. On April 17, 1997 the Company completed additional long-term financing for $125,000,000 at a fixed rate of 7.31% due 2004. -6- 8 On May 14, 1996, Handy & Harman announced that it had decided to exit the refining business, exclusive of the Company's satellite refining operations located in Singapore and Canada. The Company completed the sale of the Handy & Harman Refining Division in the third quarter of 1996. Accordingly, operations for this major division have been classified as discontinued operations. A charge associated with exiting this business of $22,350,000 ($13,161,000 after-tax) was recorded in 1996. The sale of this division released a significant portion of the Company's owned precious metal inventory position, making this potential liquidity, along with the Company's credit facilities available for deployment in continuing operations, acquisition of new businesses and the repurchase of 1.8 million shares of the Company's common stock via a "Dutch Auction", completed in December 1996. On February 28, 1997 the Company acquired Olympic Manufacturing Group, Inc. for approximately $53,000,000. In the second quarter 1997 a LIFO gain of $4,665,000 ($2,706,000 after-tax or $.23 per share) was realized from the sale of gold inventories. During 1997 the Financial Accounting Standards Board issued SFAS No. 128 "Earnings per Share" effective for interim and annual periods ending after December 31, 1997. The adoption of this standard has no effect on the Company's earnings per share calculation since, under the prior method which had considered common stock equivalents for primary earnings per share, there was no dilutive effect for outstanding stock options. Statements contained in Management's Discussion and Analysis are forward-looking statements and are made pursuant to the safe harbor provision of the private securities litigation reform act of 1995. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, product demand, pricing, market acceptance, precious metal and other raw materials price fluctuations, intellectual property rights and litigation, risks in product and technology development and other risk factors detailed in the Company's Securities and Exchange Commission filings. OPERATING ACTIVITIES Net cash provided by operating activities amounted to $7,838,000 in 1997 and $3,996,000 in 1996. The cash provided by operating activities increased $3,842,000 primarily due to a decrease in working capital requirements amounting to $3,125,000. Included in cash provided by operating activities is a gain generated by the reduction of precious metal inventories valued under the LIFO method of accounting. -7- 9 INVESTING ACTIVITIES. Net cash used by investing activities amounted to $61,811,000 in 1997 and $9,151,000 in 1996. The net cash used in 1997 includes approximately $53,000,000 for the purchase of Olympic Manufacturing Group, Inc. on February 28, 1997 and capital expenditures of $9,100,000. Capital expenditures include a major modernization program of our precious metal product facility in Fairfield, Connecticut and the retrofitting of the former karat gold facility in East Providence, Rhode Island by the Electronic Materials Group. Net cash used in investing activities of $9,151,000 in 1996 was primarily due to the acquisition of the ele Corporation, which resulted in a net cash outlay of $3,700,000 and the increased production space added at Sumco in 1996 and machinery and equipment for the wire and tubing segment. FINANCING ACTIVITIES Net cash provided by financing activities amounted to $54,866,000 in 1997 and $6,657,000 in 1996. 1997's primary financing activity was the purchase of Olympic Manufacturing Group, Inc. with long-term debt for approximately $53,000,000. The Company also completed long-term financing for $125,000,000 on April 17, 1997 at a fixed rate of 7.31% due 2004, the proceeds of which were used to reduce borrowings under the revolving credit facility. In 1996 financing activities consisted primarily of net proceeds from a decrease in futures receivable (the sale of precious metal inventory for future delivery) of $7,681,000, the increase of futures payable of $1,927,000 (the purchase of precious metal inventory for future receipt) and the receipt of $705,000 from a joint venture partner. These sources of cash were partially offset by the payment of debt of $1,200,000, the payment of dividends of $1,683,000 and net treasury stock transactions of $773,000. The Company's foreign operations consist of four wholly owned subsidiaries, (one in Canada, two in the United Kingdom and one in Denmark), and one equity investment in Asia. Substantially all unremitted earnings of such entities are free from legal or contractual restrictions. The Company's program to expand productive capacity through acquisition of new businesses and expenditures for new property, plant and equipment will continue to be financed with internally generated funds and long-term debt, if necessary. COMPARISON OF SECOND QUARTER OF 1997 VERSUS SECOND QUARTER OF 1996 Sales for the wire/tubing segment decreased $2,010,000 (4%) primarily due to decreased sales of stainless steel tubing caused by the continued weakness in the semiconductor fabrication industry which began in the third -8- 10 quarter of 1996. The profit contribution (pre-tax income before deducting interest and corporate expenses) decreased $1,093,000 (20%) primarily due to the decreased sales noted above. Although the weakness in the semiconductor fabrication industry is expected to continue through year end, it is anticipated that second half sales and contribution will exceed the comparable 1996 period. Sales for the precious metal segment decreased $593,000 (1%) due to decreased sales experienced in the Electronic Materials Group caused by changing customer needs, and the effect of lower precious metal prices on the dollar volume of sales. This decrease was partially offset by the addition of ele Corporation on June 27, 1996. The average price for gold was $343.02 per ounce in 1997 and $390.18 in 1996 and the average price for silver was $4.76 per ounce in 1997 and $5.30 in 1996. The profit contribution increased $5,195,000 (120%) primarily due to a reduction of precious metal inventories valued under the LIFO method of accounting resulting in a gain of $4,665,000 ($2,706,000 after-tax). The balance of the increase in contribution was primarily due to improved operating performance of the Precious Metals Fabrication Group of companies partially offset by the decreased sales of the Electronic Materials Group mentioned above. The completion of several capital projects should enhance this segment's profit contribution in the second half of 1997. In the other non-precious metal segment, sales increased $12,768,000 (310%) and profit contribution increased by $1,907,000 (348%) due to the addition of Olympic Manufacturing Group, Inc., purchased on February 28, 1997. Due to Olympic's business cycle, a comparable increase in profit contribution is expected for the third quarter as well. Interest expense increased $1,821,000 (86%) due to increased borrowings as a result of the purchase of Olympic Manufacturing Group, Inc. on February 28, 1997 and the purchase of 1.8 million shares of the Company's common stock via a "Dutch Auction" completed in December 1996. The Company's income taxes are primarily composed of U.S. Federal and state income taxes. COMPARISON OF SIX MONTHS OF 1997 VERSUS SIX MONTHS OF 1996 Sales of the wire/tubing segment decreased $5,787,000 (6%) due to decreased sales of stainless steel tubing caused by the continued weakness in the semiconductor fabrication industry and the effects of the strengthened British pound against other European currencies on our United Kingdom subsidiary's export sales. The profit contribution decreased $1,683,000 (16%) due to the decreased sales noted above. Sales for the precious metal segment decreased $3,435,000 (3%) primarily due to the exit from low margin -9- 11 business in Canada, the effect of lower precious metal prices on the dollar volume of sales and reduced sales in the Electronic Materials Group due to changing customer needs. These decreases were partially offset by the addition of ele Corporation acquired on June 27, 1996. The average price for gold was $347.10 per ounce in 1997 and $395.10 in 1996. The average price for silver was $4.88 per ounce in 1997 and $5.42 in 1996. The profit contribution increased $5,587,000 (62%) primarily due to a reduction of precious metal inventories valued under the LIFO method of accounting resulting in a gain of $4,665,000 ($2,706,000 after-tax). The balance of the increase in contribution was primarily due to improved operating performance of the Precious Metals Fabrication Group of companies partially offset by the decreased sales of the Electronic Materials Group mentioned above. In the other non-precious metals segment sales increased $15,979,000 (196%) and profit contribution increased $2,274,000 (217%) primarily due to the addition of Olympic Manufacturing Group, Inc. purchased on February 28, 1997. Interest expense increased $2,551,000 (61%) primarily due to substantially increased levels of borrowings as discussed in the quarterly analysis. The effective income tax rate for 1997 is 42% and 1996 was 43.13%. The reason for the decrease in rates is primarily due to decreased foreign losses, for which a valuation allowance has been provided, as a percentage of income before taxes. -10- 12 PART II OTHER INFORMATION Item 1. Legal Proceedings Reference is made to the Company's Form 10-K Annual Report for the year ended December 31, 1996, and to the proceedings described therein under Part I, Item 3. Legal Proceedings and under Part II, Item I. Legal Proceedings of the Company's Form 10-Q for the quarter ended March 31, 1997. Negotiations and discovery procedures are continuing in this matter. Item 4. Submission of Matters to a Vote of Security Holders At the Company's Annual Meeting of Shareholders held May 13, 1997, the shareholders representing 10,932,633 shares voted to elect the nine nominated Directors and to ratify the appointment of KPMG Peat Marwick LLP as the Company's auditors. The Company's Proxy Statement dated April 2, 1997 describes these matters in detail. The votes were as follows:
Votes Votes Votes Brokers For Against Withheld Abstentions Non-Votes DIRECTORS - ------------------------------------------------------------------------------------------------------------------ C.A. Abramson 10,807,667 0 124,966 -- -- R.E. Cornelia 10,808,405 0 124,228 -- -- R.N. Daniel 10,803,469 0 129,164 -- -- G.G. Garbacz 10,821,341 0 111,292 -- -- F.E. Grzelecki 10,820,462 0 112,171 -- -- G.M. Nichols 10,798,988 0 133,645 -- -- H.P. Sotos 10,815,441 0 117,192 -- -- E.J. Sussman 10,815,579 0 117,054 -- -- R.E. Tetrault 10,821,605 0 111,028 -- -- AUDITORS 10,866,142 28,206 0 38,284 0
Item 5. The Company has entered into certain agreements with change of control provisions with the following officers: Robert F. Burlinson, Paul E. Dixon and Dennis C. Kelly. (Filed as Exhibit 10 (u) to the Company's 1996 Annual Report on Form 10-K). The Company has amended and supplemented with change of control provisions the Employment Agreement dated October 22, 1996 with Robert D. LeBlanc. (Filed as Exhibit 10 (v) to the Company's 1996 Annual Report on Form 10-K.) -11- 13 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits as required by Item 601 of Regulation S-K: Exhibit 10(u) and 10(v) to Form 10-K. (b) Reports on Form 8-K: None filed during the quarter for which this report is submitted. -12- 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HANDY & HARMAN ----------------------------- (Registrant) Date: August 12, 1997 R.F. Burlinson /s/ --------------- ------------------------------ R.F. Burlinson, Vice President Treasurer Date: August 12, 1997 D.C. Kelly /s/ --------------- ------------------------------ D.C. Kelly - Controller -13- EX-10.U 2 EMPLOYMENT AGREEMENT 1 Exhibit 10 (u) AGREEMENT Agreement is made this 14th day of May, 1997 between Handy & Harman (H&H) and __________________________. WHEREAS, _________________________ is employed by H&H; and WHEREAS, H&H desires to retain the services of _________________________ in the event of a Change of Control (as defined herein) of H&H; NOW THEREFORE, in consideration of the agreements and provisions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows. 1. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect thereafter, unless, not later than any September 30, H&H shall have given notice that it will not extend this Agreement beyond the ensuing December 31; provided, further, that, notwithstanding any such notice by H&H to terminate, if a change of control shall have occurred during the term of this Agreement, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the date on which the change of control occurs. 2. Change of Control of H&H. No benefits shall be payable unless there is a change of control (Change of Control) of H&H. A Change of Control shall be deemed to have occurred if: (a) any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the stockholders of H&H in substantially the same proportions as their ownership of stock of H&H), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of H&H representing 25% or more of the combined voting power of H&H's then outstanding securities; (b) during any period of not more than two (2) consecutive years (not including any period prior to the adoption of the Plan), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with H&H to effect a transaction described in clause (a), (c) or (d) of this Section) whose election by the Board of Directors or nomination for election by H&H's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; 2 (c) the stockholders of H&H approve a merger or consolidation of H&H with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of H&H outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of H&H or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of H&H (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of H&H's then outstanding securities; or (d) the stockholders of H&H approve a plan of complete liquidation of H&H or an agreement for the sale or disposition by H&H of all or substantially all of H&H's assets. 3. Termination Following Change of Control. If any of the events described in Section 2 above constituting a Change of Control shall have occurred, you shall be entitled to the benefits provided in Section 4 hereof upon termination of your employment with H&H during the two (2) year period following the Change of Control unless such termination is (A) a result of your death or retirement, or (B) your resignation for other than Good Reason, or (C) your being terminated by H&H for Disability or for Cause. (a) Cause. For purposes of this Agreement, "Cause" shall mean your willful breach of duty in the course of your employment, or your habitual neglect of your employment duties. (b) Disability. For purposes of this Agreement, "Disability" shall mean your absence from your duties with H&H for three hundred sixty-five (365) consecutive days as a result of your physical or mental illness. (c) Good Reason. You shall be entitled to terminate your employment for Good Reason. For the purpose of this Agreement, "Good Reason" shall mean the occurrence of any of the following circumstances: (i) the assignment to you of any duties inconsistent with your status as a ______________________________ (or any higher position to which you have been promoted at the time) or as a substantial diminution in the nature or status of your responsibilities from those in effect immediately prior to the Change of Control; (ii) as a reduction in your annual base salary as in effect on the date of the Change of Control; 3 (iii) the relocation of the office in which you are located prior to the Change of Control to a location more than sixty (60) miles from New York City, except for required travel on the business of H&H to an extent substantially consistent with your present business travel obligations; (iv) or pursuant to an action taken by H&H you are selectively excluded from a compensation, bonus, stock option or stock ownership plan otherwise in existence at the time of the Change of Control or thereafter put into effect for the benefit of others in a similar situation; (v) except as a required by law, the failure by H&H to continue to provide you with benefits at least as favorable as those enjoyed by you under the employee benefit and welfare plans of H&H in which you were participating at the time of the Change of Control or the taking of any action by H&H which would materially reduce any of the benefits enjoyed by you at the time of the Change of Control; (vi) the failure of H&H to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5 hereof; or (vii) any purported termination of your employment not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(d) below; for purposes of this Agreement, no such purported termination shall be effective. Your continued employment shall not constitute consent to, or as a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. (d) Notice of Termination. Any termination of your employment by H&H or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice indicating the specific termination provision in this Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. (e) Date of Termination, Etc. "Date of Termination" shall mean thirty (30) days after the date specified in the Notice of Termination. 4. Compensation Upon Termination. Following a Change of Control of H&H, as defined herein, upon termination of your employment by (a) H&H other than for Cause or (b) by you for Good Reason, you shall be entitled to the following benefits: 4 (a) H&H shall pay you a severance payment (the "Severance Payment") equal to one years' full base salary at your highest rate in effect during the twelve (12) months preceding the date on which the Notice of Termination is given; (b) For a twelve (12) month period after termination of your employment, H&H shall arrange to provide you with life, medical and dental insurance benefits substantially similar to those which you are receiving or entitled to receive immediately prior to the Notice of Termination, unless you are eligible to receive such benefits from as a subsequent employer or as a spouse's employer; (c) H&H shall pay you the Severance Payment no later than the fifth (5th) day following the Date of Termination; 5. Successors; Binding Agreement. H&H will require any successor to all or substantially all of the business and/or assets of H&H to expressly assume and agree to perform this Agreement in the same manner and to the same extent that H&H is required to perform it. Failure of H&H to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from H&H in the same amount and on the same terms as you would be entitled to if you had terminated your employment for Good Reason following a Change of Control of H&H, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. All references to H&H shall be deemed to include its successors. (a) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you die while any amount is payable to you hereunder, all such amounts shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate. 6. Section 280G - Excise Tax Limitation. Notwithstanding other provisions of this Agreement, in the event of a change of control, as defined in paragraph 2 (a) (b) (c) and (d) herein, payments would only be made to you to the extent that they are deductible by H&H and not subject to the excise tax provisions of Section 280G of the Internal Revenue Code. 7. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to H&H shall be directed to the attention of the Office of the Vice President and General Counsel of H&H, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 5 8. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by both parties. No waiver by either party at any time of any breach by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior or subsequent time. No agreements or representations, oral or written, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. 9. Validity. This invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first written above. Handy & Harman - -------------------------- -------------------------- by: by: EX-10.V 3 EMPLOYMENT AGREEMENT 1 Exhibit 10 (v) EMPLOYMENT AGREEMENT This Agreement (the "Agreement"), dated as of October 22, 1996, will confirm that Handy & Harman, a New York corporation (the "Company") has offered, and you have accepted, the position of Executive Vice President of the Company. 1. The initial term of your employment shall be from November 11, 1996 through May 11, 1999, subject to earlier termination pursuant to the provisions set forth below; provided, however, that at no time during the initial term or thereafter shall the term of this agreement be less than one year. 2. You agree to use your best efforts to promote the interest of the Company, and devote your full business time and energies to the business and affairs of the Company. You agree to perform such services as are customary to your position and as shall from time to time be assigned to you by the President and Chief Operating Officer of the Company. 3. Your annual base salary shall be no less than $300,000, less applicable federal, state and local tax deductions, payable in accordance with the Company's customary payroll practices. Any increases in your annual salary shall be in the sole discretion of the Company's Board of Directors. 2 4. (a) You shall be eligible to participate in the following compensation plans that may be offered from time to time by the Company, in accordance with the terms and provisions of such plans and subject to the discretion of the Compensation Committee of the Company's Board of Directors (the "Committee"): the Handy & Harman Management Incentive Plan (the "Bonus Plan"), the Handy & Harman Long-Term Incentive Plan (the "Stock Plan") and the Handy & Harman 1995 Omnibus Stock Incentive Plan (the "Option Plan"), in each case as described below. (b) You shall be eligible to participate in the Bonus Plan beginning in respect of the 1997 plan year; provided, however, that any bonus amounts payable thereunder are contingent upon the Company's attainment of performance goals established by the Committee in its sole discretion and further, provided, that your maximum annual bonus opportunity shall not exceed 100% of your annual base salary. (c) You shall be eligible to participate in the Stock Plan beginning in respect of the 1997-through-1999 cycle; provided, however, that any awards granted and any amounts payable thereunder are contingent upon the Company's attainment of performance goals established by the Committee in its sole discretion and further, 2 3 provided, that your level of participation shall be 40% of your annual base salary (as in effect on January 1, 1997). (d) You shall be granted, effective as of the date of your employment, options (the "Options") to purchase 50,000 shares of common stock of the Company. The Options shall (i) be granted under, and subject to the terms of, the Omnibus Stock Option Plan, (ii) be non-qualified options (i.e., not incentive stock options), (iii) have a ten-year term (subject to earlier termination as provided in the Option Plan and the form of grant agreement thereunder), (iv) vest and become exercisable with respect to 25% of the shares of common stock subject thereto on each of the first four anniversaries of the date of grant and (v) have an exercise price per share of common stock equal to the fair market value of the common stock as of the date of grant. 5. (a) You shall be eligible to participate in all Company employee benefit plans and programs which are made generally available to salaried employees of the Company, in accordance with the terms and provisions of such plans. With respect to such plans and programs, you shall not be subject to any eligibility waiting periods, except for any waiting period under any pension benefit 3 4 plan intended to be qualified under Section 401(a) of the Internal Revenue Code. (b) You shall be eligible to participate in the Handy & Harman Supplemental Executive Retirement Plan and the Handy & Harman Executive Life Insurance and Post-Retirement Life Insurance Program, in each case in accordance with the terms and provisions of such plans. 6. (a) The Company shall reimburse you for all reasonable business expenses incurred by you in accordance with the Company's policy on reimbursement for business expenses as then in effect. (b) The Company shall reimburse you for initiation fees and annual membership fees with respect to your membership in a country club selected by you; provided, however, that your selection of a country club shall be subject to the approval of the Company. (c) You agree to permanently relocate your primary place of residence to the Westchester County area as soon as practicable after the date hereof. The Company shall promptly reimburse you for (i) all normal moving costs involved in relocating your family's belongings and household furnishings, (ii) the real estate brokerage commission (up to a maximum of 6% of the sales price) in connection with the sale of your current house 4 5 and (iii) any legal fees and other customary closing costs in connection with the sale of such house and the purchase of a house in the Westchester County area (collectively, the "Moving Expenses"). In the event your current house is not sold by the time you purchase a home in the Westchester County area, if required, the Company will provide you with a bridge loan for the purpose of enabling you to purchase a house in the Westchester County area, which loan shall (i) bear interest at applicable Federal rates, (ii) be for a term of not more than one year, and (iii) have such other terms, including principal amount, as the Company and you shall reasonably agree. (d) The Company shall pay to you a cash signing bonus (the "Signing Bonus") in an amount equal to (i) $140,000, less (ii) the amount of bonus paid to you by your former employer in respect of the 1996 calendar year, less (iii) applicable federal, state and local tax deductions. You shall promptly notify the Company of any and all amounts received by you from your former employer and provide the Company with satisfactory evidence of the amount you receive in respect of such 1996 bonus. The Company shall pay the Signing Bonus to you as soon as 5 6 practicable following receipt of such satisfactory evidence. (e) The Company shall reimburse you for the reasonable cost of obtaining temporary housing for a period of not more than six months following the date hereof; provided, however, that such costs are subject to the approval of the Company. (f) You and your spouse shall be entitled to receive post-retirement health insurance benefits from the Company under the Company's Post-Retirement Medical Plan in effect for employees of the Company prior to 1992 on such terms and conditions in place for other employees covered by the Plan. (g) You shall be provided with a Company-owned automobile in accordance with the Company's existing policies and procedures in place for other executive officers of the Company. 7. (a) The Company may terminate your employment at any time, without prior notice, for any of the following reasons: (i) your engaging in conduct which is materially injurious to the Company, its subsidiaries or affiliates, or any of their respective customer or supplier relationships, monetarily or otherwise; (ii) your engaging in any act of fraud, misappropriation or embezzlement or any act which would constitute a felony 6 7 (other than minor traffic violations); or (iii) your material breach of this Agreement. (b) If, as a result of your incapacity due to physical or mental illness, you shall have been absent from the full-time performance of your duties hereunder for a period of time (at least 60 days within any 12 consecutive months excluding vacation time actually used in accordance with the Company's policy thereon) which the Company determines, in its reasonable discretion, to have had an adverse impact on the Company, your employment may be terminated by the Company, upon written notice in accordance with paragraph 10 hereof without further notice. (c) The Company, in its sole discretion, may terminate your employment at any time for any reason other than those stated in paragraphs 7(a) or 7(b) upon thirty days prior written notice. 8. (a) If your employment is terminated by the Company pursuant to paragraph 7(a), you shall receive your salary through the date of termination and the Company shall have no further obligations to you under this Agreement. (b) If your employment is terminated by the Company pursuant to paragraph 7(b) or by your death, 7 8 you or your personal representative, guardian, or the representative of your estate shall continue to receive your salary for a period of 12 months payable in accordance with the Company's customary payroll practices. However, your salary shall be offset by any payments you receive pursuant to the Company's disability plans and programs. Thereafter, the Company shall have no further obligations under this Agreement to you, your estate, personal representative, guardian, or your beneficiaries. (c) If your employment is terminated by the Company pursuant to paragraph 7(c), you shall continue to receive your salary through the end of the term or for a period of 12 months, whichever is longer, payable in accordance with the Company's customary payroll practices. You shall also continue to participate in the Company's employee benefit plans and programs in accordance with paragraph 5 hereof, to the extent permissible under the terms of such plans and programs, through the end of the term, provided that following your termination of employment you shall no longer accrue any vacation benefits. Thereafter, the Company shall have no further obligations to you under this Agreement. (d) During the period you are receiving any payments or benefits under paragraphs 8(b) 8(c), you 8 9 agree to promptly notify the Company upon your acceptance of any other employment. During any such employment (i) you shall not receive the salary provided hereunder; provided, however, that if your salary pursuant to such employment is less than the salary provided hereunder, you shall receive the differential and (ii) upon your eligibility for any medical benefits or insurance by your new employer you shall no longer be eligible to participate in any of the Company's benefit plans and arrangements. 9. Simultaneous herewith, you are executing the Non-Competition Agreement annexed hereto. 10. Any notices required by this Agreement shall be in writing and shall be deemed to have been given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, as follows: if to you: Mr. Robert D. LeBlanc 4 Totten Drive Bridgewater, New Jersey 08807 if to the Company: 555 Theodore Fremd Avenue Rye, New York 10580 Attention: Paul E Dixon, Esq. Vice President and General Counsel 9 10 or to such other address as either party may furnish to the other in writing in accordance with this paragraph. Notices of change of address shall only be effective upon receipt. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its conflict of laws principles. 12. This Agreement sets forth the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, arrangements and understandings among the Company and you with respect to such subject matter. This Agreement can be modified only by a writing signed by both you and the Company. If any provision of this Agreement shall be held to be void or unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect. This Agreement shall inure to the benefit of and be binding upon the Company's successors and assigns. 10 11 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. HANDY & HARMAN By: _______________________________ Name: Frank E. Grzelecki Title: President & Chief Operating Officer Agreed to this 25th day of October 1996 - ------------------------- 11 12 Exhibit 10 (v) SUPPLEMENTAL AGREEMENT Notwithstanding the terms and conditions set forth in an Employment Agreement (the "Agreement") dated October 22, 1996 between you and Handy & Harman (H&H), the terms and conditions stated herein are intended to supplement that Agreement by adding Change of Control provisions and not to duplicate or enhance the compensation recited therein. Further, at any time that you are receiving payments under provisions of paragraph 8 of the Agreement, those terms and conditions will apply and this Supplemental Agreement will not be in effect or enforceable by you. WHEREAS, H&H desires to retain the services of Robert D. LeBlanc in the event of a Change of Control (as defined herein) of H&H; NOW THEREFORE, in consideration of the agreements and provisions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows. 1. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect thereafter, unless, not later than any September 30, H&H shall have given notice that it will not extend this Agreement beyond the ensuing December 31; provided, further, that, notwithstanding any such notice by H&H to terminate, if a change of control shall have occurred during the term of this Agreement, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the date on which the change of control occurs. 2. Change of Control of H&H. No benefits shall be payable unless there is a change of control (Change of Control) of H&H. A Change of Control shall be deemed to have occurred if: (a) any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the stockholders of H&H in substantially the same proportions as their ownership of stock of H&H), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of H&H representing 25% or more of the combined voting power of H&H's then outstanding securities; (b) during any period of not more than two (2) consecutive years (not including any period prior to the adoption of the Plan), individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with H&H to effect a transaction described in clause (a), (c) or (d) of this Section) whose election by the Board of Directors or nomination for election by H&H's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or 13 whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; (c) the stockholders of H&H approve a merger or consolidation of H&H with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of H&H outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of H&H or such surviving entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of H&H (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of H&H's then outstanding securities; or (d) the stockholders of H&H approve a plan of complete liquidation of H&H or an agreement for the sale or disposition by H&H of all or substantially all of H&H's assets. 3. Termination Following Change of Control. If any of the events described in Section 2 above constituting a Change of Control shall have occurred, you shall be entitled to the benefits provided in Section 4 hereof upon termination of your employment with H&H during the two (2) year period following the Change of Control unless such termination is (A) a result of your death or retirement, or (B) your resignation for other than Good Reason, or (C) your being terminated by H&H for Disability or for Cause. (a) Cause. For purposes of this Agreement, "Cause" shall mean your willful breach of duty in the course of your employment, or your habitual neglect of your employment duties. (b) Disability. For purposes of this Agreement, "Disability" shall mean your absence from your duties with H&H for three hundred sixty-five (365) consecutive days as a result of your physical or mental illness. (c) Good Reason. You shall be entitled to terminate your employment for Good Reason. For the purpose of this Agreement, "Good Reason" shall mean the occurrence of any of the following circumstances: (i) the assignment to you of any duties inconsistent with your status as an Executive Vice President (or any higher position to which you have been promoted at the time) or as a substantial diminution in the nature or status of your responsibilities from those in effect immediately prior to the Change of Control; (ii) as a reduction in your annual base salary as in effect on the date of the Change of Control; 14 (iii) the relocation of the office in which you are located prior to the Change of Control to a location more than sixty (60) miles from New York City, except for required travel on the business of H&H to an extent substantially consistent with your present business travel obligations; (iv) or pursuant to an action taken by H&H you are selectively excluded from a compensation, bonus, stock option or stock ownership plan otherwise in existence at the time of the Change of Control or thereafter put into effect for the benefit of others in a similar situation; (v) except as a required by law, the failure by H&H to continue to provide you with benefits at least as favorable as those enjoyed by you under the employee benefit and welfare plans of H&H in which you were participating at the time of the Change of Control or the taking of any action by H&H which would materially reduce any of the benefits enjoyed by you at the time of the Change of Control; (vi) the failure of H&H to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 5 hereof; or (vii) any purported termination of your employment not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(d) below; for purposes of this Agreement, no such purported termination shall be effective. Your continued employment shall not constitute consent to, or as a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. (d) Notice of Termination. Any termination of your employment by H&H or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice indicating the specific termination provision in this Agreement relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. (e) Date of Termination, Etc. "Date of Termination" shall mean thirty (30) days after the date specified in the Notice of Termination. 4. Compensation Upon Termination. Following a Change of Control of H&H, as defined herein, upon termination of your employment by (a) H&H other than for Cause or (b) by you for Good Reason, you shall be entitled to the following benefits: 15 (a) H&H shall pay you a severance payment (the "Severance Payment") equal to one years' full base salary at your highest rate in effect during the twelve (12) months preceding the date on which the Notice of Termination is given; (b) For a twelve (12) month period after termination of your employment, H&H shall arrange to provide you with life, medical and dental insurance benefits substantially similar to those which you are receiving or entitled to receive immediately prior to the Notice of Termination, unless you are eligible to receive such benefits from as a subsequent employer or as a spouse's employer; (c) H&H shall pay you the Severance Payment no later than the fifth (5th) day following the Date of Termination; 5. Successors; Binding Agreement. H&H will require any successor to all or substantially all of the business and/or assets of H&H to expressly assume and agree to perform this Agreement in the same manner and to the same extent that H&H is required to perform it. Failure of H&H to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from H&H in the same amount and on the same terms as you would be entitled to if you had terminated your employment for Good Reason following a Change of Control of H&H, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. All references to H&H shall be deemed to include its successors. (a) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you die while any amount is payable to you hereunder, all such amounts shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate. 6. Section 280G - Excise Tax Limitation. Notwithstanding other provisions of this Agreement, in the event of a change of control, as defined in paragraph 2 (a) (b) (c) and (d) herein, payments would only be made to you to the extent that they are deductible by H&H and not subject to the excise tax provisions of Section 280G of the Internal Revenue Code. 7. Notice. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, provided that all notices to H&H shall be directed to the attention of the Office of the Vice President and General Counsel of H&H, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 16 8. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by both parties. No waiver by either party at any time of any breach by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or any prior or subsequent time. No agreements or representations, oral or written, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. 9. Validity. This invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first written above. Handy & Harman - ----------------------------- ----------------------------- by: by: Dated as of this 14th day of May, 1997 EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 1 10,537 0 68,270 1,850 78,712 160,938 209,431 117,635 392,789 76,429 198,900 0 0 14,611 88,083 392,789 220,903 220,903 169,431 169,431 (30) 205 6,738 19,130 8,034 11,096 0 0 0 11,096 .93 .93
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