-----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, COlFRqYIC+nJ11D+oLp6VP5o9aIjdZe2Lw17CUi9vJE4R+sLNb79ZRlWQGtn5clP JlUJ44Y527YF53rn5e+fPA== 0000950123-98-003025.txt : 19980330 0000950123-98-003025.hdr.sgml : 19980330 ACCESSION NUMBER: 0000950123-98-003025 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980327 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-K SEC ACT: SEC FILE NUMBER: 001-05365 FILM NUMBER: 98576743 BUSINESS ADDRESS: STREET 1: 250 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10177 BUSINESS PHONE: 9149254437 MAIL ADDRESS: STREET 1: 555 THEODORE FREMD AVE CITY: RYE STATE: NY ZIP: 10580 10-K 1 HANDY & HARMAN 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:
Number Outstanding Name of each exchange Title of each class as of March 26, 1998 on which Registered ------------------- -------------------- ------------------- 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
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. ================================================================================ 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 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 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 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 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 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:
Director or Name of Director or Executive Officer Age Position with the Company Officer Since ===================================================================================================================== 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 - ---------------------------------------------------------------------------------------------------------------------
(1) Member of the Executive Committee. (2) Member of the Audit Committee. (3) Member of the Compensation Committee. 6 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 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:
Annual Compensation Long-Term Compensation --------------------- ----------------------------------------------- Restricted Options All Other Name & Position Year Salary ($) Bonus ($) Stock Awards ($) Shares (#) Compensation (1) ($) ===================================================================================================================== 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 -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------
(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 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 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:
Shares Under Option Shares Available --------------------------- Weighted Average for Option Shares Range of Price Exercise Price =========================================================================================================== 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 - -----------------------------------------------------------------------------------------------------------
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
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% ================================================================================================================================== 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 - ----------------------------------------------------------------------------------------------------------------------------------
(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 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:
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 =============================================================================================== 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 - -------------------------------------------------------------------------------------------
(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 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.
Service at Annual Retirement Benefits from: Normal Retirement Normal ------------------------------------ Name Date Retirement Date Salary Bonus Total ================================================================================================ 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 - ------------------------------------------------------------------------------------------------
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 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 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 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):
Amount and Nature of Beneficial Percentage Name of Beneficial Owner Ownership (1),(6),(7) of Class =========================================================================================================== 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 - -----------------------------------------------------------------------------------------------------------
* 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 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 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 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 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 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.
Signature Title Date ============================================================================================================ /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)
20 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 23 S-1 HANDY & HARMAN AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Thousands of Dollars)
Balance, Balance, Beginning Deductions Close Description of Period Additions(a) From Reserve of Period ======================================================================================================= 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 - -------------------------------------------------------------------------------------------------------
1997 1996 1995 =========================== (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.
22 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.
(Thousands of Dollars) 1997 1996 1995 ====================================================================================== 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 ======================================================================================
* 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.
---------------------------------- Assets (Thousands of Dollars) 1997 1996 1995 ====================================================================================== 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 ======================================================================================
23 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.
Common Stock Dividend Paid on Sales Prices Common Stock High Low Per Share ============================================================================== 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) ==============================================================================
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.
1997 Quarter Ended Mar. 31 June 30 Sept. 30 Dec. 31 ================================================================================ 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 ================================================================================
1996 Quarter Ended Mar. 31 June 30 Sept. 30 Dec. 31 ========================================================================================== Sales $108,340 $105,806 $95,890 $97,071 Gross profit 21,349 21,429 23,572 47,185 Earnings (loss): Continuing operations 4,363 4,454 5,684 19,272 Extraordinary item -- -- -- (2,889) Discontinued operations (9,654) -- -- (4,861) - ------------------------------------------------------------------------------------------ Net income (loss) ($5,291) $4,454 $5,684 $11,522 - ------------------------------------------------------------------------------------------ Earnings (loss) per share - 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 ==========================================================================================
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 26 handy & harman and subsidiaries Five Year Selected Financial Data
Dollars in thousands except per share figures 1997 1996 1995 1994 1993 ==================================================================================================================== 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 ======================================================================================================================
(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 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 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 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 30 handy & harman and subsidiaries Consolidated Statement of Income
Year ended December 31 1997 1996 1995 ======================================================================================================= 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 =======================================================================================================
The accompanying summary of significant accounting policies and notes are an integral part of the financial statements. 29 31 handy & harman and subsidiaries Consolidated Balance Sheet
December 31 1997 1996 ================================================================================================ 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 ================================================================================================
The accompanying summary of significant accounting policies and notes are an integral part of the financial statements. 30 32 handy & harman and subsidiaries Consolidated Statement of Shareholders' Equity Three Years Ended December 31, 1997
Foreign Par Value $1 Currency Total Common Capital Retained Translation Treasury Unearned Shareholders' Stock Surplus Earnings Adjustment Stock Compensation Equity =================================================================================================================================== 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 ===================================================================================================================================
The accompanying summary of significant accounting policies and notes are an integral part of the financial statements. 31 33 handy & harman and subsidiaries Consolidated Statement of Cash Flows
Increase (Decrease) in Cash ----------------------------------------------- Year Ended December 31, 1997 1996 1995 ============================================================================================================== 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 ==============================================================================================================
The accompanying summary of significant accounting policies and notes are an integral part of the financial statements. 32 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 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 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:
1997 1996 ================================================================================ 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 ================================================================================
Other inventory information at December 31:
1997 1996 ================================================================================ 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 ================================================================================
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:
1997 1996 ================================================================================ 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 ================================================================================
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:
1997 1996 ================================================================================ 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 ================================================================================
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 37 handy & harman and subsidiaries Note 4: Income Taxes The components of pre-tax income are as follows (in thousands):
1997 1996 1995 =============================================================================== 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 ===============================================================================
The provision for taxes on income was comprised of the following (in thousands):
1997 - -------------------------------------------------------------------------------- Current Deferred Total ================================================================================ 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 ================================================================================ 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 ================================================================================ 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 ================================================================================
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):
1997 - -------------------------------------------------------------------------------- Deferred Tax Deferred Tax Net Deferred Assets Liabilities Liability ================================================================================ 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) ================================================================================ 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) ================================================================================
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):
1997 1996 1995 ================================================================================ 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) ================================================================================
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 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:
1997 1996 1995 ================================================================================ 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% ================================================================================
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: ================================================================================ 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 ================================================================================
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:
Shares under option Weighted Shares ----------------------- Average Available Range of Exercise for Option Shares Price Price ================================================================================ 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 ================================================================================
Additional information on options outstanding and options exercisable at December 31, 1997 is as follows:
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 ================================================================================ $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 ================================================================================
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:
1997 1996 1995 ================================================================================ 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 ================================================================================
37 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:
1997 1996 1995 =============================================================================== 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 ===============================================================================
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:
1997 1996 1995 ================================================================================ 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 ================================================================================
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:
1997 1996 1995 ================================================================================ 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 ================================================================================
*Includes amortization of deferred financing fees of $685,000, $552,000, and $820,000 in 1997, 1996 and 1995, respectively.
Property, plant and equipment additions: 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 ================================================================================
Note 8: Supplemental Information
Life/Years 1997 1996 ================================================================================ 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 ================================================================================
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.
1997 1996 ================================================================================ 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 ================================================================================
38 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:
1997 1996 1995 ================================================================================ 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) ================================================================================
Assumptions used in the accounting at December 31 are:
1997 1996 1995 ================================================================================ 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% ================================================================================
The plans' funded status as of December 31 and the amounts recognized in the accompanying financial statements are as follows:
1997 1996 ================================================================================ 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 ================================================================================
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:
1997 1996 1995 ================================================================================ 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 ================================================================================
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:
1997 1996 =========== =========== 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 ================================================================================
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 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 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 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 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 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). 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). 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). 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. EX-2.D 2 AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER 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- 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 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 EX-4.E 3 NOTE PURCHASE AGREEMENT 1 HANDY & HARMAN --------------------------------------------------- NOTE PURCHASE AGREEMENT --------------------------------------------------- Dated as of April 17, 1997 $125,000,000 7.31% Senior Notes due April 30, 2004 2 TABLE OF CONTENTS
PAGE ---- 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
i 3 TABLE OF CONTENTS (cont.)
PAGE ---- 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
ii 4 TABLE OF CONTENTS (cont.)
PAGE ---- 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
iii 5 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
iv 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 70 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NEW YORK LIFE INSURANCE COMPANY - -------------- ------------------------------- 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
Schedule A-1 71 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NEW YORK LIFE INSURANCE COMPANY - -------------- ------------------------------- Other Instructions NEW YORK LIFE INSURANCE COMPANY By_______________________ Name: Title: Instructions re Law Department of Purchaser Delivery of Notes Tax Identification Number 13-5582869
Schedule A-2 72 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION - -------------- ----------------------------------------------- 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
Schedule A-3 73 SCHEDULE A INFORMATION RELATING TO PURCHASES
Purchaser Name NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION - -------------- ----------------------------------------------- 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
Schedule A-4 74 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf of one or more separate accounts - -------------- ------------------------------------------- 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:
Schedule A-5 75 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf of one or more separate accounts - -------------- ------------------------------------------- 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
Schedule A-6 76 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PACIFIC EMPLOYERS INSURANCE COMPANY - -------------- ----------------------------------- 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
Schedule A-7 77 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PACIFIC EMPLOYERS INSURANCE COMPANY - -------------- ----------------------------------- 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
Schedule A-8 78 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name INA LIFE INSURANCE COMPANY OF NEW YORK - -------------- -------------------------------------- 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
Schedule A-9 79 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name INA LIFE INSURANCE COMPANY OF NEW YORK - -------------- -------------------------------------- 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
Schedule A-10 80 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name LIFE INSURANCE COMPANY OF NORTH AMERICA - -------------- --------------------------------------- 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:
Schedule A-11 81 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name LIFE INSURANCE COMPANY OF NORTH AMERICA - -------------- --------------------------------------- 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
Schedule A-12 82 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA - -------------- ---------------------------------------------------- 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:
Schedule A-13 83 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA - -------------- ---------------------------------------------------- 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
Schedule A-14 84 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name JEFFERSON-PILOT LIFE INSURANCE COMPANY - -------------- -------------------------------------- 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:
Schedule A-15 85 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name JEFFERSON-PILOT LIFE INSURANCE COMPANY - -------------- -------------------------------------- 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
Schedule A-16 86 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA - -------------- ---------------------------------------------- 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:
Schedule A-17 87 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA - -------------- ---------------------------------------------- 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
Schedule A-18 88 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name FORT DEARBORN LIFE INSURANCE COMPANY - -------------- ------------------------------------ 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
Schedule A-19 89 SCHEDULE A INFORMATION RELATING TO PURCHASERS Schedule A-20 90 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NATIONWIDE LIFE INSURANCE COMPANY - -------------- --------------------------------- 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:
Schedule A-21 91 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NATIONWIDE LIFE INSURANCE COMPANY - -------------- --------------------------------- 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
SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY - -------------- --------------------------------------------- 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
Schedule A-22 92 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY - -------------- --------------------------------------------- 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
Schedule A-23 93 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY - -------------- ------------------------------------------- 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:
Schedule A-24 94 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PROVIDIAN LIFE AND HEALTH INSURANCE COMPANY - -------------- ------------------------------------------- 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)
Schedule A-25 95 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name AMERICAN BANKERS INSURANCE COMPANY - -------------- ---------------------------------- 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
Schedule A-26 96 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name AMERICAN BANKERS LIFE ASSURANCE COMPANY - -------------- --------------------------------------- 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
Schedule A-27 97 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name RGA REINSURANCE COMPANY - -------------- ----------------------- 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:
Schedule A-28 98 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name RGA REINSURANCE COMPANY - -------------- ----------------------- 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
Schedule A-29 99 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name THE OHIO NATIONAL LIFE INSURANCE COMPANY - -------------- ---------------------------------------- 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
Schedule A-30 100 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY - -------------- ------------------------------------------- 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
Schedule A-31 101 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY - -------------- ------------------------------------------- Tax Identification Number 64-0283583
Schedule A-32 102 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PROVIDENT MUTUAL LIFE INSURANCE COMPANY - -------------- --------------------------------------- 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
Schedule A-33 103 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PROVIDENT MUTUAL LIFE INSURANCE COMPANY - -------------- --------------------------------------- Tax Identification Number 23-099-045-0
Schedule A-34 104 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA - -------------- --------------------------------------------------- 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:
Schedule A-35 105 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PROVIDENTMUTUAL LIFE AND ANNUITY COMPANY OF AMERICA - -------------- --------------------------------------------------- Instructions re Law Department of Purchaser Delivery of Notes Tax Identification Number 23-161-908-2
Schedule A-36 106 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name MID-WESTERN NATIONAL LIFE INSURANCE COMPANY - -------------- ------------------------------------------- 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
Schedule A-37 107 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name MID-WESTERN NATIONAL LIFE INSURANCE COMPANY - -------------- ------------------------------------------- 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
Schedule A-38 108 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name MERRILL LYNCH LIFE INSURANCE COMPANY - -------------- ------------------------------------ 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:
Schedule A-39 109 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name MERRILL LYNCH LIFE INSURANCE COMPANY - -------------- ------------------------------------ Instructions re Law Department of Purchaser Delivery of Notes Tax Identification Number 91-132-5756
Purchaser Name MODERN WOODMEN OF AMERICA - -------------- ------------------------- 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
Schedule A-40 110 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name MODERN WOODMEN OF AMERICA - -------------- ------------------------- Tax Identification Number 36-1493430
Schedule A-41 111 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NATIONAL GUARDIAN LIFE INSURANCE COMPANY - -------------- ---------------------------------------- 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
Schedule A-42 112 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name NATIONAL GUARDIAN LIFE INSURANCE COMPANY - -------------- ---------------------------------------- Tax Identification Number 39-049-3780
Schedule A-43 113 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PAN-AMERICAN LIFE INSURANCE COMPANY - -------------- ----------------------------------- 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
Schedule A-44 114 SCHEDULE A INFORMATION RELATING TO PURCHASERS
Purchaser Name PAN-AMERICAN LIFE INSURANCE COMPANY - -------------- ----------------------------------- Tax Identification Number 72-0281240
Schedule A-45 115 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-1 116 "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-2 117 (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-3 118 "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-4 119 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-5 120 "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-6 121 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-7 122 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-8 123 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-9 124 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-10 125 "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-11 126 "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-12 127 "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-13 128 "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-14 129 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-15 130 (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-16 131 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-17 132 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-18 133 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 1-1 134 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 1-2 135 By _____________________________ Name: Title: Exhibit 1-3 136 EXHIBIT 4.4(a) FORM OF OPINION OF COUNSEL TO THE COMPANY Exhibit 4.4(a)-1 137 EXHIBIT 4.4(b) FORM OF OPINION OF SPECIAL COUNSEL TO THE PURCHASERS Exhibit 4.4(b)-1 EX-10.LL 4 HANDY & HARMAN PENSION PLAN, INCLUDING AMENDMENTS 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. 2 HANDY & HARMAN PENSION PLAN TABLE OF CONTENTS
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
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. 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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. 12-12 100 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. 13-1 101 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 14-1 102 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 14-2 103 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. 14-3 104 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 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." 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. 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. 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." 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." 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." 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." EX-10.MM 5 REVOLVING CREDIT AGREEMENT 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. 2 TABLE OF CONTENTS
Section Page 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
3
Section Page 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
ii- 4
Section Page 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
iii- 5
Section Page 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
iv- 6
Section Page 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
v- 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- 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 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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- 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 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 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 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 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 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 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 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 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 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 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 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 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.
STATE OF OWNERSHIP NAME INCORPORATION % BUSINESS DESCRIPTION ------------------- ------------- ---------- --------------------
Existing Unrestricted Subsidiaries
STATE OF OWNERSHIP NAME INCORPORATION % BUSINESS DESCRIPTION ------------------- ------------- ---------- --------------------
ITEM 6.11 Employee Benefit Plans. 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- EX-21 6 LIST OF SUBSIDIARIES 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. EX-27 7 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 1 7,259 0 60,718 1,634 77,294 158,248 218,052 123,064 392,797 67,007 190,880 0 0 14,611 97,797 392,797 451,110 451,110 349,411 349,411 0 333 14,452 36,051 15,141 20,910 0 0 0 20,910 1.75 1.74
-----END PRIVACY-ENHANCED MESSAGE-----