XXXXXXXXX, XXXXXX & XXXXXXXX
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
0000 Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, XX 00000-0000
January __, 1998
PRIVATE AND CONFIDENTIAL
WHX Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx XxXxx, Chairman of the Board
Gentlemen:
This letter agreement (the "Agreement") confirms our understanding that
WHX Corporation ("WHX"or the "Company") has engaged Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation ("DLJ") to act as its exclusive financial advisor for a
period of 12 months commencing upon your acceptance of this Agreement, with
respect to the possible acquisition of Handy & Xxxxxx ("Target"), in one or a
series of transactions, by merger, consolidation or any other business
combination, by purchase involving all or a substantial amount of the business,
securities or assets of the Target, or otherwise (each a "Transaction").
As discussed, we propose to undertake certain services on your behalf,
to the extent requested by you, which shall consist of the following: (i)
assisting you in evaluating the Target, its operations, its historical
performance and its future prospects; (ii) advising on a proposed purchase price
and form of consideration; (iii) assisting you in structuring the Transaction;
(iv) advising you in connection with any proxy solicitation undertaken by the
Company in connection with a Transaction; and (v) negotiating the financial
aspects of any Transaction under your guidance. In addition we will act as
exclusive dealer/manager for the Company in any tender or exchange offer
relating to a Transaction commenced after the date hereof. The specific terms
and conditions of such engagement will be further delineated in a separate
agreement, which agreement shall contain normal and customary provisions for
such agreements where DLJ acts as a dealer/manager. If requested, we will
deliver our opinion to the Board of Directors of the Company as to the fairness
to the Company and its stockholders from a financial point of view of the
consideration to be paid by the Company in a Transaction. The
scope, form and substance of the opinion shall be such as DLJ considers
appropriate and, in the case of a stock-for-stock merger, may be an opinion as
to the fairness from a financial point of view of the ratio to be applied for
the exchange of common shares in the merger.
As compensation for the services to be provided by DLJ hereunder, the
Company agrees (i) to pay to DLJ (a) a retainer fee of $1 million, payable
promptly upon execution of this Agreement and (b) additional cash compensation
as set forth below, and (ii) upon request by DLJ from time to time, to reimburse
DLJ promptly for all reasonable and documented out-of-pocket expenses up to a
maximum of $250,000 (including the reasonable fees and expenses of counsel),
incurred by DLJ in connection with its engagement hereunder, whether or not a
Transaction is consummated. As DLJ will be acting on your behalf, the Company
agrees to the indemnification and other obligations set forth in Schedule 1
attached hereto, which Schedule is an integral part hereof.
The additional cash compensation referred to in clause (i)(b) above
shall be $1,000,000. Such additional compensation shall be payable in cash if
the Transaction is consummated within 12 months commencing upon your acceptance
of this Agreement. For purposes of this Agreement, a Transaction shall be deemed
to have been consummated upon the earliest of any of the following events to
occur: (a) the acquisition by the Company or any of its affiliates of a majority
of the outstanding common stock of the Target calculated on a fully-diluted
basis; (b) a merger or consolidation of the Target with the Company or an
affiliate of the Company; (c) the acquisition by the Company or any of its
affiliates of assets of the Target representing a majority of the Target's book
value; (d) control by the Company of the Board of Directors of the Target; or
(e) in the case of any other Transaction, the consummation thereof.
The Company shall make available to DLJ all financial and other
information concerning its business and operations that DLJ reasonably requests
as well as any other information relating to any Transaction prepared by the
Company or any of its other advisors. In performing its services hereunder
(including, without limitation, giving an opinion of the type referred to in the
second paragraph hereof), DLJ shall be entitled to rely without investigation
upon all information that is available from public sources as well as all other
information supplied to it by or on behalf of the Company or its advisors or the
Target or its advisors and shall not in any respect be responsible for the
accuracy or completeness of, or have any obligation to verify, the same or to
conduct any appraisal of any assets or liabilities. To the extent consistent
with legal requirements, all information given to DLJ by the Company, unless
publicly available or otherwise available to DLJ without restriction or breach
of any confidentiality agreement, will be held by DLJ in confidence and will not
be disclosed to
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anyone other than DLJ's agents and advisors without the Company's prior approval
or used for any purpose other than those referred to in this Agreement.
Any opinion requested by the Company and any advice, written or oral,
provided by DLJ pursuant to this Agreement will be treated by the Company as
confidential, will be solely for the information and assistance of the Company
in connection with its consideration of the Transaction and will not be
reproduced, summarized, described or referred to, or furnished to any other
party or used for any other purpose, except in each case with our prior written
consent. It is further understood and agreed that, in the event that any opinion
of DLJ delivered pursuant to this Agreement is to be included in any proxy
statement mailed in connection with the Transaction, the opinion will be
reproduced therein in full and any description of or reference to DLJ or any
summary of the opinion or presentation of DLJ included in such document shall be
in form and substance acceptable to DLJ and its legal counsel.
Please note that DLJ is a full service securities firm engaged in
securities trading and brokerage activities, as well as providing investment
banking and financial advisory services. In the ordinary course of our trading
and brokerage activities, DLJ or its affiliates may at any time hold long or
short positions, and may trade or otherwise effect transactions, for our own
account or on the accounts of customers, in debt or equity securities of the
Company or other entities that may be involved in the Transaction. We recognize
our responsibility for compliance with Federal laws in connection with any such
activities.
The Company acknowledges and agrees that DLJ has been retained solely
to provide the advice or services set forth in this Agreement. DLJ shall act as
an independent contractor, and any duties of DLJ arising out of its engagement
hereunder shall be owed solely to the Company.
This Agreement may be terminated by either the Company or DLJ at any
time upon receipt of written notice to that effect by the other party. Upon any
termination or expiration of this Agreement, DLJ will be entitled to prompt
payment of all fees accrued prior to such termination or expiration and
reimbursement of all out-of-pocket expenses as described above; provided
however, if the Company shall terminate this agreement within 12 months
commencing upon your acceptance of this Agreement and a Transaction shall be
consummated within such 12 month period, DLJ shall be entitled to the fee set
forth in paragraph four above. The indemnity and other provisions contained in
Schedule I will also remain operative and in full force and effect regardless of
any termination or expiration of this Agreement.
It is understood that if the Company completes an acquisition
transaction involving the Target in lieu of any Transaction, during
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the term of this Agreement, DLJ and the Company will in good faith mutually
agree upon acceptable compensation for DLJ taking into account, among other
things, the results obtained and the custom and practice among investment
bankers of international standing acting in similar transactions.
The Company further agrees that it will not enter into any transaction
unless, prior to or simultaneously with such transaction referred to in either
of the two preceding paragraphs, adequate provision is made with respect to the
payment of compensation to DLJ as contemplated by such paragraphs.
This Agreement shall be binding upon and inure to the benefit of the
Company, DLJ, each Indemnified Person (as defined in Schedule I) and their
respective successors and assigns.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
The Company irrevocably and unconditionally submits to the exclusive
jurisdiction of any State or Federal court sitting in New York City over any
suit, action or proceeding arising out of or relating to this Agreement
(including Schedule I). The Company hereby agrees that service of any process,
summons, notice or document by U.S. registered mail addressed to the Company
shall be effective service or process for any action, suit or proceeding brought
in any such court. The Company irrevocably and unconditionally waives any
objection to the laying of venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or proceeding brought
in such a court has been brought in an inconvenient forum. The Company agrees
that a final judgment in any such suit, action or proceeding brought in any such
court shall be conclusive and binding upon the Company and may be enforced in
any other courts to whose jurisdiction the Company is or may be subject, by suit
upon such judgment.
If any term, provision ,covenant or restriction contained in this
Agreement, including Schedule I, is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
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After reviewing this Agreement, please confirm that the foregoing is in
accordance with your understanding by signing and returning to me the duplicate
of this Agreement attached hereto, whereupon it shall be our binding Agreement.
Very truly yours,
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By:
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Accepted and Agreed
this ____ day of January, 1998
WHX CORPORATION
By:
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