UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
Proxy Statement Pursuant to Section 14(a) of the Securities
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WHX CORPORATION
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED MARCH 7, 2007
WHX CORPORATION
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2007
To the Stockholders of WHX Corporation:
The annual meeting of stockholders of WHX Corporation, a Delaware
corporation (the "COMPANY"), will be held on Wednesday, May 16, 2007, at
[_________________], local time, at [__] for the following purposes:
1. To elect eight directors to our Board of Directors, each to serve until
the annual meeting of stockholders in fiscal year 2008 and until their
respective successors have been duly elected and qualified;
2. To consider and vote upon a proposal to amend the Company's amended and
restated certificate of incorporation to increase the Company's authorized
capital stock from 45,000,000 shares, consisting of 40,000,000 shares of common
stock, par value $0.01 per share ("COMMON STOCK") and 5,000,000 shares of
preferred stock, par value $0.01 per share ("PREFERRED STOCK"), to a total of
[__] shares, consisting of [__] shares of Common Stock and 5,000,000 shares of
Preferred Stock;
3. To consider and vote upon a proposal to approve the Company's 2007
Incentive Stock Plan;
4. To ratify the appointment of Grant Thornton LLP as our independent
accountants for the fiscal year ending December 31, 2007; and
5. To transact any other matters that properly come before the meeting and
any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 5, 2007 as
the record date for the determination of stockholders entitled to notice of and
to vote at the annual meeting or any adjournment or postponement thereof. Only
holders of record shares of Common Stock of the Company at the close of business
on the record date are entitled to notice of and to vote at the meeting.
Your vote is very important. All stockholders are cordially invited to
attend the meeting. We urge you, whether or not you plan to attend the meeting,
to submit your proxy by completing, signing, dating and mailing the enclosed
proxy or voting instruction card in the postage-paid envelope provided. If a
stockholder who has submitted a proxy attends the meeting in person, such
stockholder may revoke the proxy and vote in person on all matters submitted at
the meeting.
The notice and proxy statement are first being mailed to our
stockholders on or about [__________], 2007.
Please follow the voting instructions on the enclosed proxy card.
By Order of the Board of Directors,
-----------------------------------
Ellen T. Harmon
Secretary
[__________], 2007
TABLE OF CONTENTS
GENERAL......................................................................1
PROPOSAL NO. 1. ELECTION OF DIRECTORS........................................4
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS.............11
PROPOSAL NO. 2. AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED CAPITAL STOCK.......................22
PROPOSAL NO. 3. APPROVAL OF THE COMPANY'S 2007 INCENTIVE STOCK PLAN.........23
PROPOSAL NO. 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS..............................................................28
STOCKHOLDER PROPOSALS AND OTHER MATTERS.....................................32
i
WHX CORPORATION
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2007
GENERAL
This proxy statement contains information related to the annual meeting of
stockholders (the "MEETING") of WHX Corporation ("WHX" or the "COMPANY") to be
held on Wednesday, May 16, 2007, beginning at [_________________], local time,
at [__], and at any postponements or adjournments thereof.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Meeting, holders of WHX common stock, $0.01 par value ("COMMON
STOCK") will hear an update on the Company's operations, have a chance to meet
some of its directors and executives and will act on the following matters:
1. To elect eight directors to our Board of Directors, each to serve
until the annual meeting of stockholders in fiscal year 2008 and until his
successor has been duly elected and qualified;
2. To consider and vote upon a proposal to amend the Company's amended
and restated certificate of incorporation to increase the Company's authorized
capital stock from 45,000,000 shares, consisting of 40,000,000 shares of Common
Stock and 5,000,000 shares of preferred stock, par value $0.01 per share
("PREFERRED STOCK"), to a total of [__] shares, consisting of [__] shares of
Common Stock and 5,000,000 shares of Preferred Stock;
3. To consider and vote upon a proposal to approve the Company's 2007
Incentive Stock Plan;
4. To ratify the appointment of Grant Thornton LLP as our independent
accountants for the fiscal year ending December 31, 2007; and
5. To transact any other matters that properly come before the Meeting
and any adjournment or postponement thereof.
WHO MAY VOTE
Our only outstanding voting securities are our shares of Common Stock.
Only holders of record of shares of Common Stock at the close of business on
April 5, 2007, the record date of the Meeting, are entitled to notice of and to
vote at the Meeting. On the record date of the Meeting, there were 10,000,498
shares of Common Stock outstanding and entitled to vote at the Meeting. A
majority of such shares, present in person or represented by proxy, is necessary
to constitute a quorum. Each share of Common Stock is entitled to one vote.
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ATTENDING IN PERSON
Only holders of Common Stock, their proxy holders and our invited guests
may attend the Meeting. If you wish to attend the Meeting in person but you hold
your shares through someone else, such as a stockbroker, you must bring proof of
your ownership and identification with a photo at the Meeting. For example, you
may bring an account statement showing that you beneficially owned WHX shares as
of April 5, 2007 as acceptable proof of ownership.
INSTRUCTIONS FOR HOLDERS OF COMMON STOCK
HOW TO VOTE
You may vote in person at the Meeting or by proxy. We recommend that you
vote by proxy even if you plan to attend the Meeting. You can always change your
vote at the Meeting. Proxy cards must be received by us before voting begins at
the Meeting.
HOW PROXIES WORK
Our Board is asking for your proxy. Giving us your proxy means you
authorize us to vote your shares at the Meeting in the manner you direct. You
may vote for all, some or none of our director nominees. You may also vote for
or against the other proposals or abstain from voting.
Proxies submitted by mail will be voted by the individuals named on the
proxy card in the manner you indicate. If you give us your proxy but do not
specify how you want your shares voted, they will be voted in accordance with
the Board's recommendations.
You may receive more than one proxy or voting card depending on how you
hold your shares. If you hold shares through someone else, such as a
stockbroker, you may get materials from them asking how you want to vote. The
latest proxy we receive from you will determine how we will vote your shares.
REVOKING A PROXY
There are three ways to revoke your proxy. First, you may submit a new
proxy with a later date up until the existing proxy is voted. Second, you may
vote in person at the Meeting. Finally, you may write to the Company's corporate
secretary at 555 Theodore Fremd Avenue, Rye, New York 10580 that you are
revoking your proxy.
QUORUM
In order to act on the proposals described herein, we must have a quorum
of shares of Common Stock. This means that at least a majority of the
outstanding shares of Common Stock eligible to vote must be represented at the
Meeting, either by proxy or in person. Shares that the Company owns are not
voted and do not count for this purpose.
VOTES NEEDED
For Proposal No. 1, the director nominees receiving a plurality of the
votes cast during the Meeting will be elected to fill the seats of our Board of
Directors. Approval of Proposal No. 2, the proposal to amend the Company's
amended and restated certificate of incorporation to increase authorized capital
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stock, requires the affirmative vote of a majority of the shares outstanding
entitled to vote thereon. Approval of each of Proposals Nos. 3 and 4, the
respective proposals to approve the Company's 2007 Incentive Stock Plan and to
ratify the appointment of Grant Thornton LLP as the Company's independent
accountants, requires the affirmative vote of a majority of the shares present
and entitled to vote thereon.
Broker "non-votes" and the shares of Common Stock as to which a
stockholder abstains are included for purposes of determining whether a quorum
of shares of Common Stock is present at a meeting. A broker "non-vote" occurs
when a nominee holding shares of Common Stock for the beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner. For all matters to be voted upon, an abstention or broker
"non-vote" will not be considered a vote cast. Neither broker "non-votes" nor
abstentions are included in the tabulation of the voting results on Proposal No.
1, the election of directors, which requires the approval of a plurality of the
votes cast and, therefore, they do not have the effect of votes in opposition in
such tabulation. For purposes of the vote on Proposal Nos. 2, abstentions and
broker "non-votes," if any, will have the same effect as votes against the
proposal. For purposes of the votes on Proposal Nos. 3 and 4, which require the
approval of the majority of the votes cast, abstentions and broker "non-votes"
will not be included in the tabulation of the voting results and, therefore,
they will not have the effect of votes in opposition in such tabulations.
NO RIGHT OF APPRAISAL
Neither Delaware law, WHX's amended and restated certificate of
incorporation nor WHX's bylaws provides for appraisal or other similar rights
for dissenting stockholders in connection with any of the proposals.
Accordingly, WHX's stockholders will have no right to dissent and obtain payment
for their shares.
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PROPOSAL NO. 1.
ELECTION OF DIRECTORS
Our Board has a single class of director, with each director serving a
one-year term. Directors elected at the Meeting will serve until the 2008 Annual
Meeting of Stockholders and until their respective successors are duly elected
and qualified.
INFORMATION WITH RESPECT TO NOMINEES AND DIRECTORS
Set forth below are the names and ages of the nominees for directors and
their principal occupations at present and for the past five years. There are,
to the knowledge of the Company, no agreements or understandings by which these
individuals were so selected. No family relationships exist between any
directors or executive officers, as such term is defined in Item 402 of
Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"). The Board has adopted independence standards for directors
that conform to the standards required by the Nasdaq Stock Market ("NASDAQ") for
listed companies. Based on the Company's director independence standards, the
Board has affirmatively determined that Louis Klein, Jr. and Garen W. Smith are
independent.
All Offices With the Director
Name Age Company Since
- ---------------------- --- --------------------- -----
Warren G. Lichtenstein 41 Chairman of the Board 2005
Jack L. Howard 45 Director 2005
Glen M. Kassan 63 Vice Chairman and Chief 2005
Executive Officer
Louis Klein, Jr.* 71 Director 2002
Daniel P. Murphy, Jr. 45 Director 2005
John J. Quicke 57 Director and Vice 2005
President
Joshua E. Schechter 33 Director 2005
Garen W. Smith* 64 Director 2002
- ----------------
*Member of the Compensation Committee and the Audit Committee
BUSINESS BACKGROUND
The following is a summary of the business background and experience of
each of the persons named above:
WARREN G. LICHTENSTEIN. Chairman of the Board of Directors. Warren G.
Lichtenstein has served as Chairman of the Board of WHX since July 2005. He has
been the Chairman of the Board, Secretary and the Managing Member of Steel
Partners, L.L.C. ("PARTNERS LLC"), the general partner of Steel Partners II,
L.P. ("STEEL PARTNERS II"), a private investment partnership, since January 1,
1996 and the President, Chief Executive Officer and a director of Steel
Partners, Ltd. ("SPL"), a management and advisory company that provides
management services to Steel Partners II and its affiliates, since June 1999. He
is also a co-founder of Steel Partners Japan Strategic Fund and Steel Partners
China Access Fund I LP. Mr. Lichtenstein has been a director (currently Chairman
of the Board) of United Industrial Corporation ("UNITED INDUSTRIAL"), a company
principally focused on the design, production and support of defense systems and
a manufacturer of combustion equipment for biomass and refuse fuels, since May
2001. Mr. Lichtenstein has been a director (currently Chairman of the Board) of
SL Industries, Inc. ("SL INDUSTRIES"), a designer and manufacturer of power
electronics, power motion equipment, power protection equipment, and
teleprotection and specialized communication equipment, since January 2002 and
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served as Chief Executive Officer from February 2002 to August 2005. Mr.
Lichtenstein has been a director of KT&G Corporation, South Korea's largest
tobacco company, since March 2006. Mr. Lichtenstein was a director of Layne
Christensen Company ("LAYNE CHRISTENSEN"), a provider of products and services
for the water, mineral, construction and energy markets, from January 2004 to
October 2006. Mr. Lichtenstein served as a director of WebFinancial Corporation
("WEBFINANCIAL"), a consumer and commercial lender, from 1996 to June 2005, as
Chairman and Chief Executive Officer from December 1997 to June 2005 and as
President from December 1997 to December 2003.
JACK L. HOWARD. Director. Jack L. Howard has been a director of WHX since
July 2005. He has been a registered principal of Mutual Securities, Inc., a
registered broker-dealer, since 1989. He has served as Vice Chairman of SPL
since December 2003. Mr. Howard has served as Chairman of the Board of
WebFinancial since June 2005, as a director of WebFinancial since 1996, and as
its Vice President since 1997. From 1997 to May 2000, he also served as
Secretary, Treasurer and Chief Financial Officer of WebFinancial. He has served
as Chairman of the Board and Chief Executive Officer of Gateway Industries,
Inc., a provider of database development and web site design and development
services, since February 2004, as Vice President of Gateway since December 2001
and as a director of Gateway since 1994. He has been a director of CoSine
Communications, Inc., a global telecommunications equipment supplier, since July
2005. He has been a director of BNS Holding, Inc., a holding company that owns
the majority of Collins Industries, Inc., a manufacturer of school buses,
ambulances and terminal trucks, since June 2004. Mr. Howard presently serves as
a director of NOVT Corporation ("NOVT"), a former developer of advanced medical
treatments for coronary and vascular disease.
GLEN M. KASSAN. Vice Chairman of the Board of Directors and Chief
Executive Officer. Glen M. Kassan has served as Vice Chairman of the Board of
Directors and Chief Executive Officer of WHX since July 2005. He has been an
Operating Partner of SPL since August 1999 and an Operating Partner of its
predecessor from October 1999 to May 2001. He has served as the Vice President,
Chief Financial Officer and Secretary of WebFinancial since June 2000. He has
served as a director of SL Industries since January 2002, its Vice Chairman
since August 2005 and served as its President from February 2002 to August 2005.
He has served as a director of United Industrial since October 2002.
LOUIS KLEIN, JR. Director. Louis Klein, Jr. has served as a director of
WHX since 2002. He has been trustee of Manville Personal Injury Settlement Trust
since 1991, trustee of WT Mutual Fund and WT Investment Trust I (Wilmington
Trust) since 1998 and trustee of the CRM Mutual Fund since 2005. He has also
been a director of Bulwark Corporation since 1998, a private company engaged in
real estate investment.
DANIEL P. MURPHY, JR. Director. President of Handy & Harman ("H&H"), a
subsidiary of WHX. Daniel P. Murphy, Jr. has served as a director of WHX since
July 2005. He has been President of H&H since February 2003 and was Vice
President of Handy & Harman Engineered Materials Group from January 2002 through
February 2003. He was also President of OMG, Inc., a subsidiary of H&H, from
February 1994 through December 2001.
JOHN J. QUICKE. Director and Vice President. John J. Quicke has served as
a director of WHX since July 2005 and as a Vice President since October 2005. He
has served as an Operating Partner of SPL since September 2005. Mr. Quicke has
served as Chairman of the Board of NOVT since April 2006 and served as President
and Chief Executive Officer of NOVT from April 2006 to November 2006. Mr. Quicke
currently serves as a director of Layne Christensen and Angelica Corporation, a
provider of healthcare linen management services. He served as a director,
President and Chief Operating Officer of Sequa Corporation ("Sequa"), a
diversified industrial company, from 1993 to March 2004, and Vice Chairman and
Executive Officer of Sequa from March 2004 to March 2005. As Vice Chairman and
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Executive Officer of Sequa, Mr. Quicke was responsible for the Automotive, Metal
Coating, Specialty Chemicals, Industrial Machinery and Other Product operating
segments of the company. From March 2005 to August 2005, Mr. Quicke occasionally
served as a consultant to Steel Partners II and explored other business
opportunities.
JOSHUA E. SCHECHTER. Director. Joshua E. Schechter has served as a
director of WHX since July 2005. He has been an Investment Professional with SPL
since June 2001. He was an Associate in the Corporate Finance Group of Imperial
Capital LLC ("Imperial Capital"), a boutique investment bank, from 2000 to 2001
and an Analyst with Imperial Capital from 1998 to 2000. Mr. Schechter currently
serves as a director of Jackson Products, Inc.
GAREN W. SMITH. Director. Garen W. Smith has served as a director of
WHX since 2002. He was Chairman of the Board of H&H from 2003 through
September 2005. Mr. Smith was Vice President, Secretary and Treasurer of
Abundance Corp., a consulting company that provides services to the Company,
from 2002 to February 2005. In addition, he was President and Chief
Executive Officer of Unimast Incorporated from 1991 to 2002.
BOARD COMMITTEES AND MEETINGS
The Board met on two occasions during the year ended December 31, 2006 and
acted by written consent on two occasions. Each of the directors attended at
least 75% of the aggregate of (i) the total number of meetings of the Board,
with the exception of Warren G. Lichtenstein and Joshua E. Schechter who each
attended one out of the two meetings held by the Board; and (ii) the total
number of meetings held by all committees of the Board on which he served. There
are two principal committees of the Board: the Audit Committee and the
Compensation Committee.
Each director is expected to make reasonable efforts to attend Board
meetings, meetings of committees of which such director is a member and the
Annual Meeting of Stockholders.
NOMINATING PROCESS
We do not currently have a standing nominating committee. Each member of
the Board of Directors, however, participates in the consideration of director
nominees. The Board of Directors believes that a standing nominating committee
is unnecessary since it can adequately perform the functions of a nominating
committee.
The Board of Directors identifies director candidates through
recommendations made by Board members, management, stockholders and others. At a
minimum, a nominee to the Board of Directors should have significant management
or leadership experience which is relevant to the Company's business, as well as
personal and professional integrity. Recommendations are developed based on the
nominee's knowledge and experience in a variety of fields, as well as research
conducted by the Company's staff and outside consultants at the Board's
direction.
Any stockholder recommendation should be directed to Ellen T. Harmon,
Secretary, WHX Corporation, 555 Theodore Fremd Avenue, Rye, New York 10580, and
should include the candidate's name, business contact information, detailed
biographical data, relevant qualifications for Board membership, information
regarding any relationships between the candidate and the Company within the
last three years and a written indication by the recommended candidate of
his/her willingness to serve. Stockholder recommendations must also comply with
the notice provisions contained in the Company's bylaws in order to be
considered (current copies of the Company's bylaws are available at no charge in
the Company's public filings with the SEC or from the Secretary of the Company).
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In determining whether to nominate a candidate, whether from an internally
generated or stockholder recommendation, the Board will consider the current
composition and capabilities of serving Board members, as well as additional
capabilities considered necessary or desirable in light of existing and future
Company needs. The Board also exercises its independent business judgment and
discretion in evaluating the suitability of any recommended candidate for
nomination.
AUDIT COMMITTEE
The Company has a separately standing audit committee (the "AUDIT
COMMITTEE") established in accordance with Section 3(a) (58) (A) of the
Securities Exchange Act of 1934. The Audit Committee has a charter, a current
copy of which is available on the Company's website, www.whxcorp.com. The
members of the Audit Committee are Louis Klein Jr. and Garen W. Smith. Each of
Messrs. Klein and Smith are non-employee members of the Board. After reviewing
the qualifications of the current members of the Audit Committee, and any
relationships they may have with the Company that might affect their
independence from the Company, the Board has determined that (1) all current
Audit Committee members are "independent" as that concept is defined in Section
10A of the Exchange Act, (2) all current Audit Committee members are financially
literate, and (3) Mr. Klein qualifies as an "audit committee financial expert"
under the applicable rules promulgated pursuant to the Exchange Act. The Audit
Committee met six times and did not take action by unanimous written consent
during the fiscal year ended December 31, 2006.
COMPENSATION COMMITTEE
The Company has a separately standing compensation committee (the
"COMPENSATION COMMITTEE"). The Compensation Committee has a charter, a current
copy of which is available on the Company's website, www.whxcorp.com. The
members of the Compensation Committee are Louis Klein, Jr. and Garen W. Smith.
Each of Messrs. Klein and Smith are non-employee members of the Board. The
Compensation Committee reviews compensation arrangements and personnel matters.
The Compensation Committee charter provides that the Compensation Committee may
delegate certain duties to a consultant and/or advisor. The Company does not
currently, however, engage any consultant or advisor related to executive and/or
director compensation. The Compensation Committee met three times, and did not
take action by unanimous written consent, during the fiscal year ended December
31, 2006.
CODE OF CONDUCT AND ETHICS
The Company has adopted a code of conduct and ethics (the "CODE OF CONDUCT
AND ETHICS") that applies to all of its directors, officers and employees. The
Code of Conduct and Ethics is reasonably designed to deter wrongdoing and to
promote (i) honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships, (ii) full, fair, accurate, timely and understandable disclosure
in reports and documents filed with, or submitted to, the Securities and
Exchange Commission (the "SEC") and in other public communications made by the
Company, (iii) compliance with applicable governmental laws, rules and
regulations, (iv) the prompt internal reporting of violations of the Code of
Conduct and Ethics to appropriate persons identified in the Code of Conduct and
Ethics, and (v) accountability for adherence to the Code of Conduct and Ethics.
The Code of Conduct and Ethics has been filed as an exhibit to the Company's
annual report on Form 10-K for the fiscal year ended December 31, 2003 and is
available on the Company's website at www.whxcorp.com. The Code of Conduct and
Ethics may also be requested in print, without charge, by writing to: Ellen T.
Harmon, Secretary, WHX Corporation, 555 Theodore Fremd Avenue, Rye, New York
10580. Amendments to the Code of Conduct and Ethics and any grant of a waiver
from a provision of the Code of Conduct and Ethics requiring disclosure under
applicable SEC rules will be disclosed on the Company's website at
www.whxcorp.com.
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PROCEDURES FOR CONTACTING DIRECTORS
The Company has adopted a procedure by which stockholders may send
communications, as defined within Item 7(h) of Schedule 14A under the Exchange
Act, to one or more directors by writing to such director(s) or to the entire
Board, care of Ellen T. Harmon, Secretary, WHX Corporation, 555 Theodore Fremd
Avenue, Rye, New York 10580. Any such communications will be promptly
distributed by the Secretary to such individual director(s) or to all directors
if addressed to the entire Board.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of its equity
securities, to file reports of ownership and changes in ownership (typically,
Forms 3, 4 and/or 5) of such equity securities with the SEC and Nasdaq. Such
entities are also required by SEC regulations to furnish the Company with copies
of all such Section 16(a) reports.
Based solely on a review of Forms 3 and 4 and amendments thereto furnished
to the Company and written representations that no Form 5 or amendments thereto
were required, the Company believes that during the fiscal year ended December
31, 2006, its directors and officers, and greater than 10% beneficial owners,
have complied with all Section 16(a) filing requirements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership of shares of our Common
Stock as of April 5, 2007, held by:
o Each person who beneficially owns 5% or more of the shares of Common
Stock then outstanding;
o Each of our directors;
o Each of our named executive officers;
o All of our directors and executive officers as a group.
The information in this table reflects "beneficial ownership" as defined
in Rule 13d-3 of the Exchange Act. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to options, if any, held by that person that were
exercisable on April 5, 2007 or would be exercisable within 60 days following
April 5, 2007 are considered outstanding. Such shares, however, are not
considered outstanding for the purpose of computing the percentage ownership of
any other person. To our knowledge and unless otherwise indicated, each
stockholder has sole voting power and investment power over the shares listed as
beneficially owned by such stockholder, subject to community property laws where
applicable. Percentage ownership is based on 10,000,498 shares of Common Stock
outstanding as of April 5, 2007. Unless otherwise listed in the table below, the
address of each such beneficial owner is c/o WHX Corporation, 555 Theodore Fremd
Avenue, Rye, New York 10580.
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Shares
Beneficially Percentage
Name and Address of Beneficial Owner Owned(1) of Class(1)
- ------------------------------------------------- ----------- ------------
Steel Partners II, L.P. (1)..................... [5,029,793] [50.3%]
590 Madison Avenue
New York, New York 10022
Praesidium Investment Management Company, LLC (2) [726,541] [7.27%]
747 Third Avenue
New York, New York 10017
Wynnefield Capital Management, LLC (3)........... [647,595] [6.50%]
450 Seventh Avenue, Suite 509
New York, NY 10123
GAMCO Investors, Inc. (4)........................ [620,270] [6.20%]
One Corporate Center
Rye, New York 10580-1435
Warren G. Lichtenstein (1)....................... [5,029,793] [50.3%]
Ellen T. Harmon.................................. 0 0
Jack L. Howard.................................. 0 0
Robert K. Hynes................................. 0 0
Glen M. Kassan.................................. 0 0
Louis Klein, Jr.................................. [2,000] *
James McCabe..................................... 0 0
Daniel P. Murphy, Jr............................. 0 0
John J. Quicke................................... 0 0
Joshua E. Schechter.............................. 0 0
Garen W. Smith (5).............................. [285] *
All Directors and Executive Officers as a Group
(11 persons)..................................... [5,032,078] [50.3%]
- ---------------
* less than 1%
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(1) Based upon Amendment No. 2 to Schedule 13D it filed on October 31, 2005,
Steel Partners II beneficially owns 5,029,793 shares of Common Stock.
Partners L.L.C., as the general partner of Steel Partners II, may be
deemed to beneficially own the shares of Common Stock owned by Steel
Partners II. Mr. Lichtenstein, as the sole executive officer and managing
member of Partners L.L.C., may be deemed to beneficially own the shares of
Common Stock owned by Steel Partners II. Mr. Lichtenstein has sole voting
and dispositive power with respect to the 5,029,793 shares of Common Stock
owned by Steel Partners II by virtue of his authority to vote and dispose
of such shares. Mr. Lichtenstein disclaims beneficial ownership of the
shares of Common Stock owned by Steel Partners II except to the extent of
his pecuniary interest therein.
(2) Based on a Schedule 13G it filed on November 15, 2005, Praesidium
Investment Management Company, LLC beneficially owns 726,541 shares of
Common Stock.
(3) Based on a Schedule 13G it filed on February 15, 2007, a group including
Wynnefield Capital Management, LLC beneficially owns 647,595 shares of
Common Stock.
(4) Based on a Schedule 13D/A it filed on November 3, 2006, GAMCO Investors,
Inc. beneficially owns 620,270 shares of Common Stock.
(5) Includes 138 shares of Common Stock issuable upon his exercise of a
warrant within 60 days hereof.
INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS
As at March 1, 2007, the executive officers of the Company are as follows:
All Offices With the Officer
Name Age Company Since
- --------------------- --- ------------------------- -------
Glen M. Kassan 63 Vice Chairman of the 2005
Board and Chief Executive
Officer
Robert K. Hynes 52 Vice President and Chief 2005
Financial Officer
James McCabe 43 Senior Vice President 2007
Daniel P. Murphy, Jr. 45 Director and President of 2003
Handy & Harman
John J. Quicke 57 Director and Vice 2005
President
Ellen T. Harmon 52 Vice President, General 2006
Counsel and Secretary
GLEN M. KASSAN. See "Information with Respect to Nominees and Directors."
ROBERT K. HYNES. Vice President and Chief Financial Officer. Robert K.
Hynes has been the Vice President and Chief Financial Officer of the Company
since January 2003 and was Vice-President--Finance from June 2001 through
January 2003. Mr. Hynes has been Vice-President of H&H since March 2000.
10
JAMES MCCABE. Senior Vice President. James McCabe has been Senior Vice President
of each of the Company and H&H since March 1, 2007. As Mr. McCabe's employment
did not commence until March 1, 2007, Mr. McCabe is not a named executive
officer of the Company for the fiscal year ended December 31, 2006. From 2004 to
2006, Mr. McCabe served as Vice President of Finance and Treasurer of American
Water, NE Region, a division of RWE which is a public utility based in Essen,
Germany. Previously, he served as President of Teleflex Aerospace from 2002 to
2003, which manufactures and services turbine components and aircraft cargo
systems. Mr. McCabe previously served as Chief Operating Officer of Sermatech
International, a surface-engineering/specialty coatings business, from 2000 to
2001, and as its President from 2001 to 2002.
DANIEL P. MURPHY, JR. See "Information with Respect to Nominees and
Directors."
JOHN J. QUICKE. See "Information with Respect to Nominees and Directors."
ELLEN T. HARMON. Vice President, General Counsel and Secretary. Ellen T. Harmon
has been Vice President, General Counsel and Secretary of each of the Company
and H&H since February 2006. She was Senior Vice President, General Counsel and
Secretary of The Robert Allen Group, Inc., an international designer and
distributor of home furnishings and fabrics to the interior design trade,
furniture manufacturers, and the contract and hospitality markets, from January
2004 through January 2006. She was Vice President, General Counsel and Secretary
of Metallurg, Inc., an international producer and supplier of high-quality
specialty metals, alloys and metallic chemicals utilized in the production of
high-performance aluminum and titanium alloys, specialty steel, superalloys and
certain non-metallic materials for various applications in the aerospace, power
supply, automotive, petrochemical processing and telecommunications industries,
from 1999 through 2002.
EXECUTIVE COMPENSATION AND COMPENSATION DISCUSSION AND ANALYSIS
OVERVIEW
This compensation discussion and analysis describes the material elements
of compensation awarded to, earned by or paid to each of our executive officers
who served as named executive officers during the fiscal year ended December 31,
2006. This compensation discussion focuses on the information contained in the
following tables and related footnotes and narrative for primarily the last
completed fiscal year, but we also describe compensation actions taken before or
after the last completed fiscal year to the extent that it enhances the
understanding of our executive compensation disclosure. The Compensation
Committee currently oversees the design and administration of our executive
compensation program.
Our current executive compensation program includes the following
principal components: (i) base salary, (ii) discretionary annual cash
performance-based incentives, (iii) severance payments, and (iv) perquisites and
other compensation. In addition, it is contemplated that from 2007 and onwards
our executive compensation program will include stock option grants and other
equity incentives.
EXECUTIVE COMPENSATION OBJECTIVES
The objectives of our executive compensation program are to:
o Attract, motivate and retain talented and experienced executive
officers;
o Ensure officer compensation is aligned with our corporate strategies,
business objectives and the long-term interests of our stockholders;
and
11
o Reward our executive officers with incentives so we can retain them and
provide stability for the Company as we grow.
To achieve these objectives, our overall compensation program aims to pay
our named executive officers competitively, consistent with our success and
their contribution to that success. To accomplish this we provide compensation
in the form of cash. Stockholder approval of the Company's 2007 Incentive Stock
Plan is being sought pursuant to this proxy statement, which if approved, would
permit us to offer options and other equity incentives in the future. Although
our Compensation Committee has not adopted any formal guidelines for allocating
total compensation between cash and equity, and in 2006 the issuance of equity
was not available, the Compensation Committee considers the practices of
comparable companies, while also considering the balance between providing
short-term incentives and long-term parallel investment with stockholders to
align the interests of management with stockholders.
DETERMINATION OF COMPENSATION AWARDS
Our Compensation Committee is provided with the primary authority to
determine the compensation awards available to our executive officers. To aid
the Compensation Committee in making its determination, our Chief Executive
Officer provides recommendations annually to the Compensation Committee
regarding the compensation of all executive officers, excluding himself.
The Compensation Committee has the sole authority to determine our Chief
Executive Officer's compensation. The performance of our Chief Executive Officer
is reviewed annually by the Compensation Committee.
COMPENSATION BENCHMARKING AND PEER GROUP
We have engaged a compensation consultant to review our policies and
procedures with respect to executive compensation, and the Compensation
Committee has considered its findings in setting compensation levels. Our
Compensation Committee also informally considers competitive market practices by
reviewing publicly available information relating to compensation of executive
officers at other comparable companies.
ELEMENTS OF COMPENSATION
The principal elements of our executive compensation are:
o base salary;
o discretionary annual cash performance-based incentives;
o long-term incentive plan awards;
o severance benefits; and
o perquisites and other compensation.
BASE SALARIES
Base salary is used to recognize the experience, skills, knowledge and
responsibilities required of all our employees, including our named executive
officers. All of our named executive officers, other than our Chief Executive
Officer, are subject to employment agreements, and accordingly each of their
12
compensation has been determined as set forth in their respective agreement.
When establishing base salaries for 2006, subject to the provisions of each
person's employment agreement, the Compensation Committee and management
considered a number of factors, including the seniority of the individual, the
functional role of the position, the level of the individual's responsibility,
the ability to replace the individual, the base salary of the individual at
their prior employment and the number of well qualified candidates to assume the
individual's role. Generally, we believe that executive base salaries should be
targeted near the median of the range of salaries for executives in similar
positions at comparable companies.
DISCRETIONARY ANNUAL CASH PERFORMANCE-BASED INCENTIVES
Our Compensation Committee approves the annual cash incentive award for
our Chief Executive Officer and each other named executive officer. Our
Compensation Committee's determination, other than with respect to the Chief
Executive Officer, is generally based upon our Chief Executive Officer's
recommendations. Our Compensation Committee has not yet determined cash bonus
levels for our named executive officers for 2006.
Our Compensation Committee has adopted a Short-Term Incentive Plan
("STIP") with two components, a return on invested capital ("ROIC") based
component and a component based on the achievement of pre-determined individual
objectives. Based on the determination of the objectives under the two
components, the maximum percentage of base salary that may be earned by the
named executive officers is 100%. STIP bonuses earned will be paid annually. No
STIP bonus will be paid if either component is below a predetermined threshold.
In addition, our Compensation Committee has the authority to award
discretionary annual bonuses to our executive officers in the form of cash. The
annual bonuses, if any, are intended to compensate officers for individual
performance, for our overall financial performance and for achieving important
milestones.
LONG-TERM INCENTIVE PLAN AWARDS
In 2006, WHX did not have a long-term incentive plan.
For our named executive officers, our stock option program is based on
grants that will be individually negotiated in connection with employment
agreements and other grants to our executives. Stock options provide a
relatively straightforward incentive for our executives and result in less
immediate dilution of existing stockholders' interests.
No stock option grants were made to any of the named executive officers
during the fiscal year ended December 31, 2006. No options were held by the
named executive officers as of December 31, 2006. Stockholder approval of the
Company's 2007 Incentive Stock Plan is being sought pursuant to this proxy
statement so that the Company may begin to issue stock options to its directors,
officers, employees, consultants and advisors in the future. It is contemplated
that, if approved, the following grants of options will be made to our named
executive officers: Robert K. Hynes, options to acquire 25,000 shares of the
Company; Daniel P. Murphy, Jr., options to acquire 100,000 shares of the
Company; and Ellen T. Harmon, options to acquire 25,000 shares of the Company.
The proposed stock option grants described above are required in the
Acknowledgement and Release Agreements entered into with Messrs. Murphy and
Hynes (as described below) and in the employment agreement entered into by and
among the Company, H&H and Ms. Harmon. In each case, the options were required
to be granted by a certain date (December 31, 2006 in the case of Mr. Murphy,
13
June 30, 2006 in the case of Mr. Hynes, and September 30, 2006 in the case of
Ms. Harmon), or "phantom" options were to have been issued. To date, no such
"phantom" options have been issued.
SEVERANCE AND CHANGE IN CONTROL BENEFITS
We provide the opportunity for certain of our named executive officers to
be protected under the severance and change in control provisions contained in
their employment agreements. We provide this opportunity to attract and retain
an appropriate caliber of talent for the position. Our severance and change in
control provisions for our named executive officers are summarized below in
"Potential Payments upon Termination or Change-in-Control." We believe that
these severance and change in control benefits are an essential element of our
executive compensation and assist us in recruiting and retaining talented
executives.
PERQUISITES AND OTHER COMPENSATION
We provide the opportunity for our named executive officers and other
executives to receive certain perquisites and general health and welfare
benefits. For the last completed fiscal year, we provided the following personal
benefits and perquisites to certain of our named executives officers: health
insurance, automobile allowance or company car, life and disability insurance,
401(k) plan, golf club membership, financial, estate and tax planning, and
various other matters.
OTHER PAYMENTS
Pursuant to Acknowledgement and Release Agreements, dated November 10,
2005, each of Messrs. Murphy and Hynes agreed to remain with the Company in the
period after the Company's emergence from bankruptcy in July 2005. Each of
Messrs. Murphy and Hynes agreed to remain an employee of the Company through at
least March 31, 2006 in consideration for (i) a cash bonus of $250,000 paid on
March 31, 2006 to Mr. Murphy, and $250,000 to Mr. Hynes, payable in
installments, the last of which vest upon filing of the Company's 2004 Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q for 2005, (ii) an
increase in the life insurance levels provided in the H&H Post-Retirement Life
Insurance Program and (iii) the grant to Messrs. Murphy and Hynes of 100,000
options and 25,000 options, respectively, to purchase Common Stock upon our
adoption of a stock option plan. As previously stated, these options were
required to be granted by certain dates that have passed or "phantom" options
were to have been issued. To date, no such "phantom" options have been issued.
In addition, each of Messrs Murphy and Hynes provided a release to the Company.
These payments were attributed to Messrs. Murphy's and Hynes' compensation in
2005.
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, paid to or
earned by the following type of executive officers for the fiscal year ended
December 31, 2006: (i) individuals who served as, or acted in the capacity of,
the Company's principal executive officer for the fiscal year ended December 31,
2006; (ii) individuals who served as, or acted in the capacity of, the Company's
principal financial officer for the fiscal year ended December 31, 2006; (iii)
the Company's three most highly compensated executive officers, other than the
chief executive and chief financial officer, who were serving as executive
officers at the end of the fiscal year ended December 31, 2006 (of which there
were only two); and (iv) up to two additional individuals for whom disclosure
would have been provided but for the fact that the individual was not serving as
an executive officer of the Company at the end of the fiscal year ended December
31, 2006 (of which there were none). We refer to these individuals collectively
as our named executive officers.
14
Changes in
Pension Value
and
Non-qualified
Deferred
Compensation All Other Total
Name and Principal Salary Earnings Compensation Compensation
Position Year ($) ($) ($) ($)
- ------------------ ------ -------- ------------ ------------ -------------
(a) (b) (c) (h) (i) (j)
Glen M. Kassan 2006 600,000 -- 5,544 605,544
Chief Executive
Officer
Robert K. Hynes 2006 256,538 23,294(1) 12,916(2) 296,043
Vice President and
Chief Financial
Officer
Daniel P. Murphy, Jr 2006 450,000 3,394(1) 32,555(3) 485,949
President of H&H
Ellen T. Harmon 2006 235,000 -- 8,876 243,876
Vice President,
General Counsel and
Secretary
(1) Represents the aggregate change in the actuarial present value of the
accumulated benefit under all defined benefit and actuarial plans
(including supplemental plans) for the prior completed fiscal year.
(2) Includes payments for supplemental healthcare, life insurance, car
allowance and 401(k) matching payments.
(3) Includes payments for reimbursement of financial services, supplemental
healthcare, life insurance, car allowance, club dues and 401(k)
matching payments.
GRANTS OF PLAN-BASED AWARDS
We made no grants of plan-based awards to any of our named executive
officers in 2006.
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE
The compensation paid to the named executive officers includes salary and
non-equity incentive compensation. In addition, each named executive officer is
eligible to receive contributions to his or her 401(k) plan under our matching
contribution program.
In 2006, salaries and bonuses accounted for approximately 99% of total
compensation for our principal executive officer and 91% on average for our
other named executive officers.
GLEN M. KASSAN. Glen M. Kassan was appointed Chief Executive Officer on
October 7, 2005. In 2006, our Compensation Committee approved a salary of
$600,000 per annum for Mr. Kassan effective January 1, 2006. There is no
employment agreement between the Company and Mr. Kassan regarding Mr. Kassan's
employment with the Company.
EMPLOYMENT AGREEMENTS
ROBERT K. HYNES. Mr. Hynes is party to an employment agreement with
WHX and H&H dated March 4, 2005 and whose initial term ended on June 30, 2005
and which by the terms of the employment agreement will automatically extend
for successive one-year terms unless earlier terminated pursuant to its
terms. Mr. Hynes' employment agreement provides for an annual base salary of
no less than $250,000 and an annual bonus to be awarded at the Company's sole
discretion.
15
In addition, Mr. Hynes, pursuant to his employment agreement, is entitled
to receive health insurance coverage (if and to the extent provided to all other
employees of the Company), four weeks paid vacation, a Company car and
reimbursement for annual financial, estate and tax planning and preparation
expense up to a maximum of 3% of his annual base salary in effect on January 1
of each tax year.
DANIEL P. MURPHY, JR. Mr. Murphy is party to a two-year employment
agreement with H&H dated February 11, 2004, whose initial term ended on February
11, 2006 and which by the terms of the employment agreement will automatically
extend for successive one-year terms unless earlier terminated pursuant to its
terms. Mr. Murphy's employment agreement provides for an annual salary of no
less than $350,000 and an annual bonus to be awarded at H&H's sole discretion,
as ratified by WHX's Board.
In addition, Mr. Murphy, pursuant to his employment agreement, is entitled
to receive health insurance coverage (if and to the extent provided to all other
employees of H&H), four weeks paid vacation, a Company car or car allowance not
to exceed $1,000 per month, annual dues at a golf club of his selection which is
reasonably acceptable to the Company, non-exclusive use of a two-bedroom
apartment in the Rye, New York area and a reasonable relocation allowance, as
determined by H&H.
HYNES AND MURPHY ACKNOWLEDGEMENT AND RELEASE AGREEMENTS. In November 2005,
each of Messrs. Murphy and Hynes entered into an Acknowledgement and Release
Agreement with the Company pursuant to which each such executive agreed to
remain with the Company in the period after the Company's emergence from
bankruptcy in July 2005. Each of Messrs. Murphy and Hynes agreed to remain an
employee of the Company through at least March 31, 2006 in consideration for (i)
a cash bonus of $250,000 paid on March 31, 2006 to Mr. Murphy, and $250,000 to
Mr. Hynes, payable in installments, the last of which vest upon filing of the
Company's 2004 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for
2005, (ii) an increase in the life insurance levels provided in the H&H
Post-Retirement Life Insurance Program, and (iii) the grant to Messrs. Murphy
and Hynes of 100,000 options and 25,000 options, respectively, to purchase
Common Stock upon our adoption of a stock option plan. In addition, each
Acknowledgement and Release Agreement provided a release to the Company by such
executive. The proposed stock options described above which were required in the
Acknowledgement and Release Agreements entered into with Messrs. Murphy and
Hynes were required, in each case, to be granted by a certain date (December 31,
2006 in the case of Mr. Murphy and June 30, 2006 in the case of Mr. Hynes), or
"phantom" options were to have been issued. No such "phantom" options have been
issued.
ELLEN T. HARMON. On February 6, 2006, Ellen T. Harmon became Vice
President, Secretary and General Counsel of the Company pursuant to a one-year
employment agreement dated February 6, 2006, whose initial term expired on
February 6, 2007 and which by the terms of the employment agreement was
automatically extended on February 6, 2007 until February 6, 2008, and
thereafter will automatically be further extended for successive one-year
periods unless earlier terminated pursuant to its terms. Ms. Harmon's employment
agreement provides for an annual base salary of $260,000, 25,000 options to
purchase Common Stock upon adoption of a stock option plan, and an annual bonus
to be awarded at the Company's sole discretion. The proposed stock option grants
described above were required to be granted by September 30, 2006, or "phantom"
options were to have been issued. No such "phantom" options have been issued.
In addition, pursuant to Ms. Harmon's employment agreement, she is
entitled to four weeks paid vacation, health insurance coverage (if and to the
extent provided to all other employees of the Company), a car allowance of up to
$600 per month, and life insurance, disability insurance and 401(k) benefits, if
and to the extent provided to executives of either WHX or H&H.
16
JAMES MCCABE. On February 1, 2007, James McCabe entered into a one-year
employment agreement with each of the Company and H&H effective on March 1,
2007, and which by the terms of the employment agreement, will automatically
extend for successive one-year periods unless earlier terminated pursuant to its
terms. The employment agreement provides for an annual salary of no less than
$300,000 and an annual bonus to be awarded at the Company's sole discretion,
provided that McCabe's bonus for 2007 will not be less than $100,000 as long as
his employment has not been terminated for cause and as long as he has not
voluntarily terminated his employment prior to April 1, 2008. In addition, the
employment agreement provides for the grant of 50,000 options to purchase
Company Common Stock upon the Company's adoption of a stock option plan and
registration of underlying shares by September 30, 2007, or alternatively 50,000
"phantom" options in lieu of such options if such a plan has not been adopted by
such date.
In addition, pursuant to Mr. McCabe's employment agreement, he is entitled
to four weeks paid vacation, health insurance coverage (if and to the extent
provided to all other employees of the Company), a temporary living allowance of
$3,400 per month through February 2009, a car allowance of $600 per month, and
life insurance, disability insurance and 401(k) benefits, if and to the extent
provided to executives of either WHX or H&H.
As Mr. McCabe's employment did not commence until March 1, 2007, Mr.
McCabe is not a named executive officer of the Company for the fiscal year ended
December 31, 2006.
See "Potential Payments upon Termination or Change-in-Control" for further
discussion on termination, retirement and change-in-control provisions of the
employment agreements.
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
ROBERT K. HYNES. In the event that either of the following occurs: (i) the
Company terminates Mr. Hynes' employment, other than with cause and other than
due to his death or disability, or (ii) Mr. Hynes elects termination following a
reduction in his annual base salary, a relocation of the Company's headquarters
more than 50 miles from New York, New York, or a failure by the Company to
obtain a satisfactory agreement from a successor to assume the employment
agreement, and the Company fails to cure such events within 30 days after
receipt of written notice from Mr. Hynes, he or his personal representative or
estate, as applicable, will receive a payment of one-year's base salary at the
highest rate in effect for the twelve preceding months plus any bonus plan
compensation that has been accrued and he will also be entitled to receive the
other benefits to which he is entitled for a period of twelve months following
such termination or until such time he becomes eligible to receive comparable
benefits from a subsequent employer, if earlier.
In the event that the Company terminates Mr. Hynes' employment for conduct
that is materially injurious to the Company, for any act that constitutes fraud,
misappropriation, embezzlement or a felony, or Mr. Hynes' material breach of his
employment agreement, Mr. Hynes will receive his base salary through the date of
termination and the Company will have no further obligation to Mr. Hynes.
DANIEL P. MURPHY, JR. In the event that either of the following occurs,
Mr. Murphy will receive a payment of two years' base salary at the base salary
in effect at the time of termination: (i) Mr. Murphy's employment agreement is
terminated by H&H other than with cause and other than due to Mr. Murphy's death
or disability, or (ii) Mr. Murphy elects termination following a material
diminution in his position or a relocation of H&H's headquarters more than 50
miles from Rye, New York and Agawam, Massachusetts and H&H fails to cure such
diminution or relocation within ten days of receipt of written notice of
termination from Mr. Murphy. In the event that Mr. Murphy's employment is
terminated due to his death or disability or with cause, which includes conduct
that is materially injurious to H&H, any act that constitutes fraud,
misappropriation, embezzlement or a felony, or Mr. Murphy's material breach of
his employment agreement, H&H will have no further obligation to Mr. Murphy.
17
Following a change in control of H&H, Mr. Murphy will be entitled to
terminate his employment and receive a payment of two years' base salary at the
base salary in effect at the time of termination. In the event of a change of
control, H&H has ten days from the receipt of any notice of termination from Mr.
Murphy to request Mr. Murphy to continue his employment at his then present base
salary on a pro rata basis for 60 days from such request.
ELLEN T. HARMON. In the event that either of the following occurs, Ms.
Harmon will receive a payment of one year's base salary at the base salary in
effect at the time of termination together with monthly COBRA payments of any
health-related benefits (medical, dental, and vision) as are then in effect for
a period of twelve months following such termination or until such time as she
becomes eligible to receive comparable benefits from a subsequent employer, if
earlier, any bonus payments which she may be then entitled to, and a car
allowance for a one year period after termination: (i) Ms. Harmon's employment
agreement is terminated by the Company other than with cause or other than due
to Ms. Harmon's death or disability, or (ii) Ms. Harmon elects termination
following a material diminution in her position or a relocation of the Company's
headquarters more than 50 miles from Rye, New York and the Company fails to cure
such diminution or relocation within ten days of receipt of written notice of
termination from Ms. Harmon.
In the event that Ms. Harmon's employment is terminated due to death or
disability or with cause, which includes conduct that is materially injurious to
the Company, any act that constitutes fraud, misappropriation, embezzlement or a
felony or sexual or other harassment of any employee of either WHX or H&H, the
willful or continued failure by Ms. Harmon to substantially perform her duties,
or Ms. Harmon's material violation or breach of her employment agreement, she
will be entitled to receive the aggregate of any due but unpaid compensation
through the date of termination. In the event that Ms. Harmon's employment is
terminated due to her death or due to her disability, her estate will be paid
all life insurance proceeds to which it is entitled and she will be paid any
disability insurance proceeds to which she is entitled, respectively.
JAMES MCCABE. In the event that either of the following occurs, Mr. McCabe
will receive a payment of one year's base salary at the base salary in effect at
the time of termination, monthly COBRA payments of any health-related benefits
(medical, dental, and vision) as are then in effect for a period of twelve
months following such termination or until such time as he becomes eligible to
receive coverage from a subsequent employer, if earlier, and a car (not living)
allowance for a one year period after termination: (i) Mr. McCabe's employment
agreement is terminated by the Company other than with cause or other than due
to Mr. McCabe's death or disability, or (ii) Mr. McCabe elects termination
following a material diminution in his position or a relocation of the Company's
headquarters and the Company fails to cure such diminution or relocation within
ten days of receipt of written notice of termination from Mr. McCabe.
In the event that Mr. McCabe's employment is terminated due to death or
disability or with cause, which includes conduct that is materially injurious to
the Company, any act that constitutes fraud, misappropriation, embezzlement or a
felony or sexual or other harassment of any employee of either WHX or H&H, the
willful or continued failure by Mr. McCabe to substantially perform his duties,
or Mr. McCabe's material violation or breach of his employment agreement, he
will be entitled to receive the aggregate of any due but unpaid compensation
through the date of termination. In the event that Mr. McCabe is terminated due
to his death or due to his disability, his estate will be paid all life
insurance proceeds to which it is entitled and he will be paid any disability
insurance proceeds to which he is entitled, respectively.
18
PENSION BENEFITS
The following table summarizes the pension benefits held by our named
executive officers in 2006.
Number of
Years Present Value
Credited of Accumulated Payments During Last
Name Plan Name Service Benefit Fiscal Year
- -------------------------------------- ------------ --------- -------------- --------------------
(a) (b) (c) (d) (e)
Glen M. Kassan -- -- -- --
Chief Executive Officer
Robert K. Hynes WHX Pension
Vice President and Chief Financial Plan 16.417 $352,673 $ 0
Officer H&H SERP 16.417 $ 93,852 $ 0
Daniel P. Murphy, Jr. WHX Pension 4.0 $ 86,967 $ 0
President of H&H Plan
H&H SERP 4.0 $ 65,805 $ 0
Ellen T. Harmon WHX Pension
Vice President, General Counsel and Plan -- -- --
Secretary H&H SERP -- -- --
The WHX Pension Plan (the "Plan"), a defined benefit plan, provides
benefits to certain current and former employees of the Company and its current
and former subsidiaries, H&H and Wheeling-Pittsburgh Steel Corporation.
In 2005, the Plan was amended to freeze benefit accruals for all hourly
non-bargained and salaried H&H plan participants and to close the Plan to future
entrants. The only participants who continue to receive benefit accruals are
approximately 260 active employees who are covered by collective bargaining
agreements.
The Plan provides for annual benefits following normal retirement at
various normal retirement ages, under a variety of benefit formulas depending on
the covered group. The bargained participants earn benefits under a service
multiplier arrangement that varies based on collective bargaining agreements.
For all other participants, the frozen benefits are based on either multiplier
arrangements for hourly-paid participants or a percentage of final average
earnings formula for salaried participants.
The Plan provides benefits to two of the named executive officers, Messrs.
Hynes and Murphy. For purposes of H&H salaried participants, such as Messrs.
Hynes and Murphy, "compensation" includes base salary earned prior to December
31, 2005. The Plan does not include any amount payable as a bonus, commission,
overtime premium, shift differential, reward, prize or any type of compensation
other than regular fixed salary or wage. The annual limit on compensation has
been adjusted in accordance with the Internal Revenue Code of 1986, as amended
(the "Code") Section 401(a)(17)(B) which allowed for maximum compensation of
$210,000 in plan year 2005, earnings in years thereafter are not included in the
calculation of benefits under the Plan. Prior to January 1, 2006, certain H&H
executives, including Messrs. Hynes and Murphy, earned benefits under the Handy
& Harman Supplemental Executive Retirement Plan (the "SERP"). The SERP restored
benefits lost due to the 401(a)(17) compensation limit and included into the
definition of compensation, 25% of annual Management Incentive Plan awards.
19
The Plan provides for early retirement under a variety of eligibility
rules pertinent to each covered group. Early retirement benefits are the
retirement income that would be applicable at normal retirement, reduced either
by a fixed factor per month or on an actuarial equivalence basis, depending on
the covered group. Mr. Hynes is the only named executive officer meeting the
requirements needed to take early retirement, without reduction per the
applicable schedule of the Plan. The normal form of payment under the Plan also
varies, but is a straight life annuity for most participants and a ten-year
certain and life annuity for others. The Wheeling-Pittsburgh Steel Corporation
bargained participants earn a straight life annuity under a 414(k) arrangement
and have the option to take up to $10,000 of their defined contribution plan
assets as a lump sum.
The foregoing table shows years of credited service, present value of
accumulated benefit payable by the Company, and payments made by the Company
during the last fiscal year for each named executive officer. The valuation
method and material assumptions applied in quantifying the present value of
accumulated benefit are set forth in Note ___ to the Company's Consolidated
Financial Statements contained in its Form 10-K for the year ended December 31,
2006.
DIRECTOR COMPENSATION
The following table summarizes compensation that our directors earned
during 2006 for services as members of our Board of Directors.
Fees Earned or Paid in Cash Total
Name ($) ($)
- ---------------------- --------------------------- ----------
(a) (b) (h)
Warren G. Lichtenstein -- --
Jack L. Howard -- --
Glen M. Kassan -- --
Louis Klein, Jr. 30,800 30,800
Daniel P. Murphy, Jr. -- --
Joshua E. Schechter -- --
Garen W. Smith 25,500 25,500(1)
John J. Quicke --
1 Mr. Smith and his wife receive medical benefits pursuant to an agreement
entered into as of June 19, 2002 by and between the Company, Unimast
Incorporated ("Unimast") and Mr. Smith in connection with the sale by the
Company of Unimast, its wholly-owned subsidiary, and the termination of
Mr. Smith's employment as President and Chief Executive Officer of
Unimast.
Effective January 10, 2007, our Board of Directors adopted the following
compensation schedule for non-affiliated directors:
Annual Retainer for Directors: $25,000
Board Meeting Fee: $ 1,500
Annual Retainer for Committee Chair (other than Audit
Committee Chair): $ 5,000
Committee Meeting Fee (other than for Audit Committee): $ 1,000
Special Committee Fee: $10,000
Annual Retainer for Audit Committee Members: $ 5,000
Annual Retainer for Audit Committee Chair: $10,000
20
DEFERRED COMPENSATION AGREEMENTS
Except as described with respect to the employment agreements of Messrs.
Hynes and Murphy or Ms. Harmon, no plan or arrangement exists which results in
compensation to a named executive officer in excess of $100,000 upon such
officer's future termination of employment or upon a change-of-control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of our Board's Compensation Committee has served as one of our
officers or employees at any time. None of our executive officers serves as a
member of the compensation committee of any other company that has an executive
officer serving as a member of our Board of Directors. None of our executive
officers serves as a member of the board of directors of any other company that
has an executive officer serving as a member of our Board's Compensation
Committee.
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
Our amended and restated bylaws and our amended and restated certificate
of incorporation provide for indemnification of our directors and officers to
the fullest extent permitted by Delaware law. In addition, by the terms of the
employment agreement with Mr. Hynes, we have agreed to provide for
indemnification to Mr. Hynes to the fullest extent permitted by Delaware law and
our governing documents in respect of any amounts he may become obligated to pay
while acting in his capacity as an officer or director of WHX and its
affiliates.
DIRECTORS' AND OFFICERS' INSURANCE
We currently maintain a directors' and officers' liability insurance
policy that provides our directors and officers with liability coverage relating
to certain potential liabilities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Warren G. Lichtenstein, Chairman of the Board of the Company, is also the
sole executive officer and managing member of Partners LLC, the general partner
of Steel Partners II. Mr. Lichtenstein is also the President, Chief Executive
Officer and a Director of SPL, a management and advisory company that provides
management services to Steel Partners II and its affiliates. Steel Partners II
owns 5,029,793 shares of the Company's Common Stock. In addition, Glen M. Kassan
(Director and Chief Executive Officer of WHX), John J. Quicke (Director and Vice
President of WHX), Jack L. Howard (Director) and Joshua E. Schechter (Director)
are employees of SPL, an affiliate of Steel Partners II.
To our knowledge, there are no transactions involving the Company and any
related person, as that term is used in applicable SEC regulations, in the
fiscal year ended December 31, 2006 which are required to be disclosed in this
proxy statement which are not disclosed. Our Board of Directors is charged with
monitoring and reviewing issues involving potential conflicts of interest, and
reviewing and approving all related party transactions.
COMPENSATION COMMITTEE REPORT
We have reviewed and discussed with management certain Executive
Compensation and Compensation Discussion and Analysis provisions to be included
in the Company's 2007 Stockholder Meeting Schedule 14A Proxy Statement, filed
pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended
("PROXY"). Based on the reviews and discussions referred to above, we recommend
to the Board of Directors that the Executive Compensation and Compensation
Discussion and Analysis provisions referred to above be included in the
Company's Proxy.
21
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Louis Klein, Jr.
Garen W. Smith
VOTE REQUIRED
The affirmative vote of stockholders holding a plurality of the votes
is required to approve Proposal No. 1.
BOARD RECOMMENDATION
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES TO
THE BOARD OF DIRECTORS SET FORTH IN THIS PROPOSAL NO. 1.
PROPOSAL NO. 2.
AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED CAPITAL STOCK
On ________________, 2007, our Board of Directors unanimously adopted a
resolution declaring it advisable to amend the Fourth Article of our amended and
restated certificate of incorporation to increase the number of shares of
capital stock that we have authority to issue from 45,000,000 shares, consisting
of 40,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock, to
a total of [__] shares, consisting of [__] shares of Common Stock and 5,000,000
shares of Preferred Stock.
If our stockholders approve this amendment, we will amend and restate the
portions of the Fourth Article of our amended and restated certificate of
incorporation necessary to make the changes described above. Following such
approval, the amendment will become effective on the date it is filed with the
Secretary of State of the State of Delaware. The amendment to the Fourth Article
of our amended and restated certificate of incorporation is attached to this
proxy statement as EXHIBIT A.
PURPOSE OF THE AMENDMENT
The Company continually evaluates strategic opportunities, whether through
acquisition, divestiture or other combinations. In order to maximize its
flexibility in evaluating potential opportunities, the Company believes it to be
advisable to increase its authorized capital so that if it seeks to raise
capital through the issuance of equity or otherwise issue shares, including in a
rights offering, that it has the ability to do so. Accordingly, our Board of
Directors has recommended that stockholders approve an increase in the Company's
authorized capital.
POSSIBLE EFFECTS OF THE AMENDMENT
Upon issuance, the additional shares of authorized Common Stock would have
rights identical to the currently outstanding shares of Common Stock. Adoption
of the amendment to the amended and restated certificate of incorporation would
not have any immediate dilutive effect on the proportionate voting power or
other rights of existing stockholders.
22
To the extent that the additional authorized shares of capital stock are
issued in the future, they may decrease existing stockholders' percentage equity
ownership and, depending on the price at which they are issued, could be
dilutive to the voting rights of existing stockholders and have a negative
effect on the market price of the Common Stock. Current stockholders have no
preemptive or similar right, which means that current stockholders do not have a
prior right to purchase any new issue of capital stock in order to maintain
their proportionate ownership thereof.
The Company could also use the additional shares of capital stock for
potential strategic transactions including, among other things, acquisitions,
spin-offs, strategic partnerships, joint ventures, restructurings, divestitures,
business combinations and investments, although the Company has no present plans
to do so. The Company cannot provide assurances that any such transactions will
be consummated on favorable terms or at all, that they will enhance stockholder
value or that they will not adversely affect the Company's business or the
trading price of the Common Stock. Any such transactions may require the Company
to incur non-recurring or other charges and may pose significant integration
challenges and/or management and business disruptions, any of which could
materially and adversely affect the Company's business and financial results.
VOTE REQUIRED
The affirmative vote of stockholders holding not less than a majority of
our issued and outstanding shares of Common Stock entitled to vote thereon is
required to approve Proposal No. 2.
BOARD RECOMMENDATION
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE AN
AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
OUR AUTHORIZED CAPITAL STOCK FROM 45,000,000 SHARES, CONSISTING OF 40,000,000
SHARES OF COMMON STOCK AND 5,000,000 SHARES OF PREFERRED STOCK TO [__] SHARES,
CONSISTING OF [__] SHARES OF COMMON STOCK AND 5,000,000 SHARES OF PREFERRED
STOCK.
PROPOSAL NO. 3.
APPROVAL OF THE COMPANY'S 2007 INCENTIVE STOCK PLAN
On February 28, 2007, our Board of Directors unanimously adopted a
resolution declaring it advisable to approve the adoption of the Company's 2007
Incentive Stock Plan (the "2007 PLAN"), which contains 800,000 shares of the
Company's Common Stock available for grant thereunder. The 2007 Plan is intended
as an incentive to retain and to attract new directors, officers, consultants,
advisors and employees, as well as to encourage a sense of proprietorship and
stimulate the active interest of such persons in the development and financial
success of the Company and its subsidiaries. A copy of the 2007 Plan is attached
hereto as EXHIBIT B. As of the date of this Proxy Statement, no options to
purchase shares of Common Stock or other rights have been granted to any person
under the 2007 Plan.
The benefits and amounts to be derived under the 2007 Plan are not
determinable.
DESCRIPTION OF THE 2007 PLAN
The following is a brief summary of certain provisions of the 2007 Plan,
which summary is qualified in its entirety by the actual text of the 2007 Plan
attached hereto as EXHIBIT B.
23
THE PURPOSE OF THE 2007 PLAN.
The purpose of the 2007 Plan is to provide additional incentive to the
directors, officers, consultants, advisors and employees of the Company who are
primarily responsible for the management and growth of the Company.
The Company intends that the 2007 Plan meet the requirements of Rule 16b-3
("RULE 16B-3") promulgated under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the 2007 Plan will be exempt from the operation of
Section 16(b) of the Exchange Act. Further, the 2007 Plan is intended to satisfy
the performance-based compensation exception to the limitation on the Company's
tax deductions imposed by Section 162(m) of the Code with respect to those
options for which qualification for such exception is intended.
ADMINISTRATION OF THE 2007 PLAN.
The 2007 Plan is to be administered by a committee consisting of two or
more directors appointed by the Company's Board of Directors (the "Committee").
The Committee will be comprised solely of "non-employee directors" within the
meaning of Rule 16b-3 and, "outside directors" within the meaning of Section
162(m) of the Code, which individuals will serve at the pleasure of the Board of
Directors. In the event that for any reason the Committee is unable to act or if
the Committee at the time of any grant, award or other acquisition under the
2007 Plan does not consist of two or more "non-employee directors," or if there
is no such Committee, then the 2007 Plan will be administered by the Board of
Directors, provided that grants to the Company's Chief Executive Officer or to
any of the Company's other four most highly compensated officers that are
intended to qualify as performance-based compensation under Section 162(m) of
the Code may only be granted by the Committee so comprised of outside directors.
Subject to the other provisions of the 2007 Plan, the Committee will have
the authority, in its discretion: (i) to designate recipients of options
("OPTIONS"), stock appreciation rights ("STOCK APPRECIATION RIGHTS"), restricted
stock ("RESTRICTED STOCK") and other equity incentives or stock or stock based
awards ("EQUITY INCENTIVES"), all of which are referred to collectively as
"RIGHTS"; (ii) to determine the terms and conditions of each Right granted
(which need not be identical); (iii) to interpret the 2007 Plan and all Rights
granted thereunder; and (iv) to make all other determinations necessary or
advisable for the administration of the 2007 Plan.
ELIGIBILITY.
The persons eligible for participation in the 2007 Plan as recipients of
Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives
include directors, officers and employees of, and consultants and advisors to,
the Company or any subsidiary; provided that incentive stock options may only be
granted to employees of the Company and the subsidiaries. Approximately 1,600
individuals are currently eligible to participate in the 2007 Plan. In selecting
participants, and determining the number of shares covered by each Right, the
Committee may consider any factors that it deems relevant.
SHARES SUBJECT TO THE 2007 PLAN.
Subject to the conditions outlined below, the total number of shares of
Common Stock which may be issued pursuant to Rights granted under the 2007 Plan
may not exceed 800,000 shares.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or similar type of corporate
restructuring affecting the shares of Common Stock, the Committee will make an
24
appropriate and equitable adjustment in the number and kind of shares reserved
for issuance under the 2007 Plan and in the number and exercise price of shares
subject to outstanding Options granted under the 2007 Plan, to the end that
after such event each optionee's proportionate interest will be maintained as
immediately before the occurrence of such event. The Committee will, to the
extent feasible, make such other adjustments as may be required under the tax
laws so that any incentive stock options previously granted will not be deemed
modified within the meaning of Section 424(h) of the Code. Appropriate
adjustments will also be made in the case of outstanding Stock Appreciation
Rights and Restricted Stock granted under the 2007 Plan.
OPTIONS.
An option granted under the 2007 Plan is designated at the time of grant
as either an incentive stock option (an "ISO") or as a non-qualified stock
option (a "NQSO"). Upon the grant of an Option to purchase shares of Common
Stock, the Committee will fix the number of shares of the Company's Common Stock
that the optionee may purchase upon exercise of such Option and the price at
which the shares may be purchased. The purchase price of each share of the
Company's Common Stock purchasable under an Option will be determined by the
Committee at the time of grant, but may not be less than 100% of the fair market
value of such share of Common Stock on the date the Option is granted; PROVIDED,
HOWEVER, that with respect to an optionee who, at the time an ISO is granted,
owns more than 10% of the total combined voting power of all classes of stock of
the Company or of any subsidiary, the purchase price per share under an ISO must
be at least 110% of the fair market value per share of the Company's Common
Stock on the date of grant.
STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights will be exercisable at such time or times and
subject to such terms and conditions as determined by the Committee. Unless
otherwise provided, Stock Appreciation Rights will become immediately
exercisable and remain exercisable until expiration, cancellation or termination
of the award. Such rights may be exercised in whole or in part by giving written
notice to the Company.
RESTRICTED STOCK.
Restricted Stock may be granted under the 2007 Plan aside from, or in
association with, any other award and will be subject to certain conditions and
contain such additional terms and conditions, not inconsistent with the terms of
the 2007 Plan, as the Committee deems desirable. A grantee will have no rights
to an award of Restricted Stock unless and until such grantee accepts the award
within the period prescribed by the Committee and, if the Committee deems
desirable, makes payment to the Company in cash, or by check or such other
instrument as may be acceptable to the Committee. Shares of Restricted Stock are
forfeitable until the terms of the Restricted Stock grant have been satisfied.
OTHER EQUITY INCENTIVES OR STOCK BASED AWARDS.
Subject to the provisions of the 2007 Plan, the Committee may grant Equity
Incentives (including the grant of unrestricted shares) to such key persons, in
such amounts and subject to such terms and conditions, as the Committee in its
discretion determines. Such awards may entail the transfer of actual shares of
the Company's Common Stock to 2007 Plan participants, or payment in cash or
otherwise of amounts based on the value of shares of the Company's Common Stock.
25
TERM OF THE RIGHTS.
The Committee, in its sole discretion, will fix the term of each Right,
provided that the maximum term of an Option will be ten years. ISOs granted to a
10% stockholder will expire not more than five years after the date of grant.
The 2007 Plan provides for the earlier expiration of Rights in the event of
certain terminations of employment of the holder.
RESTRICTIONS ON TRANSFERABILITY.
Options and Stock Appreciation Rights granted hereunder are not
transferable and may be exercised solely by the optionee or grantee during his
lifetime or after his death by the person or persons entitled thereto under his
will or the laws of descent and distribution. The Committee, in its sole
discretion, may permit a transfer of a NQSO to (i) a trust for the benefit of
the optionee or (ii) a member of the optionee's immediate family (or a trust for
his or her benefit). Any attempt to transfer, assign, pledge or otherwise
dispose of, or to subject to execution, attachment or similar process, any
Option or Stock Appreciation Right contrary to the provisions hereof will be
void and ineffective and will give no right to the purported transferee. Shares
of Restricted Stock are not transferable until the date on which the Committee
has specified such restrictions have lapsed.
TERMINATION OF THE 2007 PLAN.
No Right may be granted pursuant to the 2007 Plan following February 27,
2017.
AMENDMENTS TO THE 2007 PLAN.
The Board of Directors may at any time amend, suspend or terminate the
2007 Plan, except that no amendment may be made that would impair the rights of
any optionee or grantee under any Right previously granted without the
optionee's or grantee's consent, and except that no amendment may be made which,
without the approval of the Company stockholders would (i) materially increase
the number of shares that may be issued under the 2007 Plan except as permitted
under the 2007 Plan; (ii) materially increase the benefits accruing to the
optionees or grantees under the 2007 Plan; (iii) materially modify the
requirements as to eligibility for participation in the 2007 Plan; (iv) decrease
the exercise price of an ISO to less than 100% of the fair market value on the
date of grant thereof or the exercise price of a NQSO to less than 100% of the
fair market value on the date of grant thereof; or (v) extend the term of any
Option beyond that permitted in the 2007 Plan.
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE OPTIONS
Options that are granted under the 2007 Plan and that are intended to
qualify as ISOs must comply with the requirements of Section 422 of the Code. An
option holder is not taxed upon the grant or exercise of an ISO; however, the
difference between the fair market value of the shares on the exercise date will
be an item of adjustment for purposes of the alternative minimum tax. If an
option holder holds the shares acquired upon the exercise of an ISO for at least
two years following the date of the grant of the option and at least one year
following the exercise of the option, the option holder's gain, if any, upon a
subsequent disposition of such shares will be treated as long-term capital gain
for federal income tax purposes. The measure of the gain is the difference
between the proceeds received on disposition and the option holder's basis in
the shares (which generally would equal the exercise price). If the option
holder disposes of shares acquired pursuant to exercise of an ISO before
satisfying the one-and-two year holding periods described above, the option
holder may recognize both ordinary income and capital gain in the year of
26
disposition. The amount of the ordinary income will be the lesser of (i) the
amount realized on disposition less the option holder's adjusted basis in the
shares (generally the option exercise price); or (ii) the difference between the
fair market value of the shares on the exercise date and the option price. The
balance of the consideration received on such disposition will be long-term
capital gain if the shares had been held for at least one year following
exercise of the ISO.
The Company is not entitled to an income tax deduction on the grant or the
exercise of an ISO or on the option holder's disposition of the shares after
satisfying the holding period requirement described above. If the holding
periods are not satisfied, the Company will generally be entitled to an income
tax deduction in the year the option holder disposes of the shares, in an amount
equal to the ordinary income recognized by the option holder.
NONQUALIFIED OPTIONS
In the case of a NQSO, an option holder is not taxed on the grant of such
option. Upon exercise, however, the participant recognizes ordinary income equal
to the difference between the option price and the fair market value of the
shares on the date of the exercise. The Company is generally entitled to an
income tax deduction in the year of exercise in the amount of the ordinary
income recognized by the option holder. Any gain on subsequent disposition of
the shares is long-term capital gain if the shares are held for at least one
year following the exercise. The Company does not receive an income tax
deduction for this gain.
RESTRICTED STOCK
A recipient of restricted stock will not have taxable income upon grant,
but will have ordinary income at the time of vesting equal to the fair market
value on the vesting date of the shares (or cash) received minus any amount paid
for the shares. A recipient of restricted stock may instead, however, elect to
be taxed at the time of grant.
STOCK OPTION APPRECIATION RIGHTS
No taxable income will be recognized by an option holder upon receipt of a
stock option appreciation right ("SAR") and the Company will not be entitled to
a tax deduction upon the grant of such right.
Upon the exercise of a SAR, the holder will include in taxable income, for
federal income tax purposes, the fair market value of the cash and other
property received with respect to the SAR and the Company will generally be
entitled to a corresponding tax deduction.
VOTE REQUIRED
The affirmative vote of stockholders holding not less than a majority of
the votes cast on the matter is required to approve Proposal No. 3.
BOARD RECOMMENDATION
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE COMPANY'S 2007 INCENTIVE STOCK PLAN.
27
PROPOSAL NO. 4.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
DISMISSAL OF PRICEWATERHOUSECOOPERS LLP
On January 17, 2007, the Company dismissed PricewaterhouseCoopers LLP
("PWC") as its independent registered public accounting firm, effective upon the
completion by PwC of its procedures regarding: (i) the Company's 2004 Annual
Report on Form 10-K; and (ii) the financial statements of the Company as of
March 31, 2005 and for the quarter then ended, the financial statements of the
Company as of June 30, 2005 and for the quarter and six-month periods then ended
and the financial statements of the Company as of September 30, 2005 and for the
quarter and nine-month periods then ended and the Forms 10-Q for 2005 in which
each of the above described financial statements will be included. The decision
to dismiss PwC was approved by the Company's Audit Committee.
The reports of PwC on the financial statements of the Company for the
fiscal years ended December 31, 2005 and 2004 did not contain any adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principle, except for an explanatory
paragraph disclosing substantial doubt about the Company's ability to continue
as a going concern.
The Company is currently late in filing its Form 10-K for the fiscal year
ended December 31, 2004, although it does anticipate filing such Form 10-K
shortly. The Company anticipates that PwC's report on the consolidated financial
statements as of and for the years ended December 31, 2004 and 2003 and for each
of the three years in the period ended December 31, 2004 will contain an
explanatory paragraph disclosing substantial doubt about the Company's ability
to continue as a going concern.
During the fiscal years ended December 31, 2005 and 2004 and through
January 17, 2007, there were no disagreements with PwC on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to the satisfaction of PwC, would have
caused them to make reference thereto in their reports on the financial
statements for such years.
During the fiscal years ended December 31, 2005 and 2004 and through
January 17, 2007, there were no "reportable events" as that term is described in
Item 304(a)(1)(v) of Regulation S-K, other than as reported in Item 9A of its
2005 Annual Report on Form 10-K. Such Item 9A disclosure indicated that there
are material weaknesses in internal controls for the fiscal years ended December
31, 2004 and 2005, which continued through January 2007. These material
weaknesses include not maintaining effective controls in the following areas:
(i) the accuracy, valuation and disclosure of our goodwill and intangible asset
accounts and the related impairment expense accounts; (ii) the accounting for
income taxes, including the completeness and accuracy of income taxes payable,
deferred income tax assets, liabilities and related valuation allowances and the
income tax provision; (iii) the completeness and accuracy of our environmental
remediation liability reserves; (iv) the valuation of long-lived assets for
impairment purposes; (v) the accounting for derivative instruments and hedging
activities related to precious metal inventory; and (vi) the preparation and
review of the consolidated statement of cash flows. Additionally, the following
material weaknesses in disclosure controls and procedures contributed to the
material weaknesses discussed above and were also disclosed in such Item 9A
section: (i) the inability to maintain a sufficient number of personnel with an
appropriate level of knowledge, experience and training in the application of
generally accepted accounting principles commensurate with the Company's global
financial reporting requirements and the complexity of the Company's operations
and transactions; (ii) the inability to maintain appropriately designed and
documented Company-wide policies and procedures; and (iii) the inability to
maintain an effective anti-fraud program designed to detect and prevent fraud,
including (a) an effective whistle-blower program and (b) an ongoing program to
manage identified fraud risks. Please see Item 9A of the Company's 2005 Annual
Report on Form 10-K for information related to management's remediation plans.
28
The Company has authorized PwC to respond fully to the inquiries of the
successor accountant concerning the subject matter of each of the material
weaknesses described above.
The Company's financial statements for the year ended December 31, 2003
have been restated to correct the accounting for goodwill impairment, certain
tax matters, and other corrections, including the accounting for derivative
instruments (specifically futures contracts on precious metals) and the related
impact on inventory, and the accounting for an executive life insurance program,
as well as the reporting of investment borrowings in the Company's 2003
statement of cash flows. The Audit Committee has discussed these matters with
PwC. The Company's financial statements for the year ended December 31, 2003
were restated in conjunction with the filing of the Company's 2005 Annual Report
on Form 10-K. The Company has authorized PwC to respond fully to all inquiries
from the successor accountant regarding these matters.
ENGAGEMENT OF GRANT THORNTON LLP
On January 22, 2007, the Company engaged Grant Thornton LLP ("GT") as the
Company's independent registered public accountant. The engagement of GT was
approved by the Audit Committee of the Company's Board of Directors.
During the years ended December 31, 2005 and 2004 and through January 22,
2007, the Company did not consult with GT with respect to either (i) the
application of accounting principles to a specified transaction, either
completed or proposed; (ii) the type of audit opinion that might be rendered on
the Company's financial statements; or (iii) any matter that was either the
subject of disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or
a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
The Company has provided PwC with a copy of the foregoing disclosure.
Attached hereto as EXHIBIT C is PwC's letter, dated March 7, 2007, in response
to the foregoing disclosure related to PwC.
REPRESENTATIVES AT THE MEETING
Representatives from GT will be present at the Meeting and they will have
the opportunity to make a statement if they desire to do so and they are
expected to be available to respond to appropriate questions. Representatives
from PwC will not be present at the Meeting.
AUDIT FEES
The aggregate fees billed by PwC for professional services rendered for
the audit of our annual financial statements set forth in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2005 and for the reviews of the
interim financial statements included in our Quarterly Reports on Form 10-Q for
that fiscal year were $1,749,529. The aggregate fees billed by GT for
professional services rendered for the audit of our annual financial statements
set forth in our Annual Report on Form 10-K for the fiscal year ended December
31, 2006 and for the reviews of the interim financial statements included in our
Quarterly Reports on Form 10-Q for that fiscal year were $[__].
AUDIT-RELATED FEES
[There were no fees billed by PwC or GT for audit-related services for the
fiscal years ended December 31, 2006 and December 31, 2005.]
29
TAX FEES
The aggregate fees billed by PwC for tax services for the fiscal year
ended December 31, 2005 were $58,608. The aggregate fees billed by GT for tax
services for the fiscal year ended December 31, 2006 were $[__]. [In both fiscal
years, these fees related to tax compliance, preparation of tax returns, tax
planning and tax assistance for international service employees.]
ALL OTHER FEES
The aggregate fees billed by PwC for bankruptcy case administration for
the fiscal year ended December 31, 2005 were $23,522.
[There were no fees for other professional services rendered during the
fiscal year ended December 31, 2006.]
The Audit Committee's policy is to pre-approve services to be performed by
the Company's independent public accountants in the categories of audit
services, audit-related services, tax services and other services. Additionally,
the Audit Committee will consider on a case-by-case basis and, if appropriate,
approve specific engagements that are not otherwise pre-approved. The Audit
Committee has approved all fees and advised us that it has determined that the
non-audit services rendered by GT during our most recent fiscal year are
compatible with maintaining the independence of such auditors.
AUDIT COMMITTEE REPORT
[The Audit Committee operates pursuant to a written charter adopted by the
Board of Directors.
The role of the Audit Committee is to assist the Board of Directors in its
oversight of our financial reporting process, as more fully described in this
proxy statement. As set forth in the charter, our management is responsible for
the preparation, presentation and integrity of our financial statements, our
accounting and financial reporting principles and internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Our independent auditors are responsible for
auditing our financial statements and expressing an opinion as to their
conformity with generally accepted accounting principles.
In the performance of its oversight function, the Audit Committee has
reviewed and discussed the audited financial statements with the management of
the Company and has discussed matters required to be discussed by Statement on
Auditing Standards No. 61 (Codification of Statements on Auditing Standards, AU
Section 380), as modified or supplemented, with Grant Thornton LLP ("GT"), the
Company's independent auditors for the fiscal year ended December 31, 2006. The
Audit Committee has received the written disclosures and the letter from GT, as
required by the Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as modified or supplemented, and has
discussed with GT the independence of GT. The Audit Committee also considered
whether GT's non-audit services, including tax planning and consulting, are
compatible with maintaining GT's independence.
Based upon the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Audit
Committee referred to above and in the Charter, the Audit Committee recommended
to the Board of Directors that the audited financial statements be included in
our Annual Report on Form 10-K for the year ended December 31, 2006, filed with
the SEC.]
SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Louis Klein, Jr.
Garen W. Smith
30
VOTE REQUIRED
The affirmative vote of stockholders holding not less than a majority of
the votes cast on the matter is required to approve Proposal No. 4.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.
31
STOCKHOLDER PROPOSALS AND OTHER MATTERS
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next annual meeting of stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than January 2, 2008. Stockholders wishing to nominate directors or
bring a proposal before the 2008 Annual Meeting of stockholders (but not include
it in the Company's proxy materials) must provide written notice of such
nomination or proposal to the attention of our Corporate Secretary, no later
than March 3, 2008.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies will be paid by us. In addition to
solicitation by mail, our directors, officers and employees may solicit proxies
from stockholders by telephone, facsimile, electronic mail or in person. We will
also make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send the proxy materials to beneficial owners. Upon request, we
will reimburse those brokerage houses and custodians for their reasonable
expenses in so doing.
OTHER MATTERS
So far as now known, there is no business other than that described above
to be presented for action by the stockholders at the Meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the Meeting or any adjournment thereof, in
accordance with the discretion of the persons named therein.
ANNUAL REPORT
The Company is concurrently sending all of its stockholders of record as
of April 5, 2007 a copy of its Annual Report on Form 10-K for the fiscal year
ended December 31, 2006. Such report contains the Company's certified
consolidated financial statements for the fiscal year ended December 31, 2006,
including those of the Company's subsidiaries.
WXH CORPORATION
---------------------------
Ellen T. Harmon
Secretary
32
EXHIBIT A
AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The proposal is to amend the Fourth Article of the amended and restated
certificate of incorporation of WHX Corporation to read as follows:
"FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is [__] shares, consisting of (i) 5,000,000 shares
of Preferred Stock, $0.01 par value per share (the "Preferred Stock"), and (ii)
[__] shares of Common Stock, $0.01 par value per share (the "Common Stock")."
A-1
EXHIBIT B
WHX CORPORATION
2007 INCENTIVE STOCK PLAN
1. PURPOSE OF THE PLAN.
This 2007 Incentive Stock Plan (the "Plan") is intended as an
incentive, to retain in the employ of and as directors, officers, consultants,
advisors and employees to WHX Corporation, a Delaware corporation (the
"Company") and any Subsidiary of the Company, within the meaning of Section
424(f) of the United States Internal Revenue Code of 1986, as amended (the
"Code"), persons of training, experience and ability, to attract new directors,
officers, consultants, advisors and employees whose services are considered
valuable, to encourage the sense of proprietorship and to stimulate the active
interest of such persons in the development and financial success of the Company
and its Subsidiaries.
Certain options granted pursuant to the Plan may constitute
incentive stock options within the meaning of Section 422 of the Code (the
"Incentive Options") while certain other options granted pursuant to the Plan
may be nonqualified stock options (the "Nonqualified Options"). Incentive
Options and Nonqualified Options are hereinafter referred to collectively as
"Options."
The Company intends that the Plan meet the requirements of Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. Further, the Plan may satisfy the performance-based
compensation exception to the limitation on the Company's tax deductions imposed
by Section 162(m) of the Code with respect to those Options for which
qualification for such exception is intended. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") shall appoint
and maintain as administrator of the Plan a Committee (the "Committee")
consisting of two or more directors who are "Non-Employee Directors" (as such
term is defined in Rule 16b-3) and "Outside Directors" (as such term is defined
in Section 162(m) of the Code), which shall serve at the pleasure of the Board.
The Committee, subject to Sections 3 and 5 hereof, shall have full power and
authority to designate recipients of Options, stock appreciation rights ("Stock
Appreciation Rights"), restricted stock ("Restricted Stock") and other equity
incentives or stock or stock based awards ("Equity Incentives") and to determine
the terms and conditions of respective Option, Stock Appreciation Rights,
Restricted Stock and Equity Incentives agreements (which need not be identical)
and to interpret the provisions and supervise the administration of the Plan.
The Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
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Nonqualified Options. To the extent any Option does not qualify as an Incentive
Option, it shall constitute a separate Nonqualified Option.
Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all Options, Stock Appreciation Rights, Restricted Stock and Equity
Incentives granted under the Plan, shall make such rules as it deems necessary
for the proper administration of the Plan, shall make all other determinations
necessary or advisable for the administration of the Plan and shall correct any
defects or supply any omission or reconcile any inconsistency in the Plan or in
any Options, Stock Appreciation Rights, Restricted Stock or Equity Incentives
granted under the Plan in the manner and to the extent that the Committee deems
desirable to carry into effect the Plan or any Options, Stock Appreciation
Rights, Restricted Stock or Equity Incentives. The act or determination of a
majority of the Committee shall be the act or determination of the Committee and
any decision reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority at a
meeting duly held. Subject to the provisions of the Plan, any action taken or
determination made by the Committee pursuant to this and the other Sections of
the Plan shall be conclusive on all parties.
In the event that for any reason the Committee is unable to act or
if the Committee at the time of any grant, award or other acquisition under the
Plan does not consist of two or more Non-Employee Directors, or if there shall
be no such Committee, then the Plan shall be administered by the Board, and
references herein to the Committee (except in the proviso to this sentence)
shall be deemed to be references to the Board, and any such grant, award or
other acquisition may be approved or ratified in any other manner contemplated
by subparagraph (d) of Rule 16b-3; PROVIDED, HOWEVER, that grants to the
Company's Chief Executive Officer or to any of the Company's other four most
highly compensated officers that are intended to qualify as performance-based
compensation under Section 162(m) of the Code may only be granted by the
Committee.
3. DESIGNATION OF OPTIONEES AND GRANTEES.
The persons eligible for participation in the Plan as recipients of
Options (the "Optionees"), Stock Appreciation Rights, Restricted Stock or Equity
Incentives (respectively, the "Grantees") shall include directors, officers and
employees of, and consultants and advisors to, the Company or any Subsidiary;
provided that Incentive Options may only be granted to employees of the Company
and the Subsidiaries. In selecting Optionees and Grantees, and in determining
the number of shares to be covered by each Option, Stock Appreciation Right,
Restricted Stock or Equity Incentive granted to Optionees or Grantees, the
Committee may consider any factors it deems relevant, including without
limitation, the office or position held by the Optionee or Grantee or the
Optionee or Grantee's relationship to the Company, the Optionee or Grantee's
degree of responsibility for and contribution to the growth and success of the
Company or any Subsidiary, the Optionee or Grantee's length of service,
promotions and potential. An Optionee or Grantee who has been granted an Option,
Stock Appreciation Right, Restricted Stock or Equity Incentive hereunder may be
granted an additional Option or Options, Stock Appreciation Right(s), Restricted
Stock or Equity Incentive(s) if the Committee shall so determine.
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4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 10 hereof, a total of
800,000 shares of the Company's Common Stock, $0.01 par value per share (the
"Stock"), shall be subject to the Plan. The maximum number of shares of Stock
that may be subject to Options and Stock Appreciation Rights granted under the
Plan to any individual in any calendar year shall not exceed 200,000 and the
method of counting such shares shall conform to any requirements applicable to
performance-based compensation under Section 162(m) of the Code, if
qualification as performance-based compensation under Section 162(m) of the Code
is intended. The shares of Stock subject to the Plan shall consist of unissued
shares, treasury shares or previously issued shares held by any Subsidiary of
the Company, and such amount of shares of Stock shall be and is hereby reserved
for such purpose. Any of such shares of Stock that may remain unsold and that
are not subject to outstanding Options at the termination of the Plan shall
cease to be reserved for the purposes of the Plan, but until termination of the
Plan the Company shall at all times reserve a sufficient number of shares of
Stock to meet the requirements of the Plan. Should any Option, Stock
Appreciation Right, Restricted Stock, or Equity Incentives expire or be canceled
prior to its exercise or vesting in full or should the number of shares of Stock
to be delivered upon the exercise or vesting in full of an Option, Stock
Appreciation Right, Restricted Stock, or Equity Incentives be reduced for any
reason, the shares of Stock theretofore subject to such Option, Stock
Appreciation Right, Restricted Stock, or Equity Incentives may be subject to
future Options under the Plan, except in the case of an Option or Stock
Appreciation Right where such reissuance is inconsistent with the provisions of
Section 162(m) of the Code where qualification as performance-based compensation
under Section 162(m) of the Code is intended.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) OPTION PRICE. The purchase price of each share of Stock
purchasable under an Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; PROVIDED,
HOWEVER, that with respect to an Optionee who, at the time an Incentive Option
is granted, owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
of any Subsidiary, the purchase price per share of Stock under an Incentive
Option shall be at least 110% of the Fair Market Value per share of Stock on the
date of grant. The exercise price for each Option shall be subject to adjustment
as provided in Section 10 below. "Fair Market Value" means the closing price of
publicly traded shares of Stock on the business day immediately prior to the
grant on the principal securities exchange on which shares of Stock are listed
(if the shares of Stock are so listed), or on the NASDAQ Stock Market (if the
shares of Stock are regularly quoted on the NASDAQ Stock Market), or, if not so
listed or regularly quoted, the mean between the closing bid and asked prices of
publicly traded shares of Stock in the over-the-counter market, or, if such bid
and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code. Anything in
this Section 5(a) to the contrary notwithstanding, in no event shall the
purchase price of a share of Stock be less than the minimum price permitted
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under the rules and policies of any national securities exchange on which the
shares of Stock are listed.
(b) OPTION TERM. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years after the date
such Option is granted and in the case of an Incentive Option granted to an
Optionee who, at the time such Incentive Option is granted, owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary, no
such Incentive Option shall be exercisable more than five years after the date
such Incentive Option is granted.
(c) EXERCISABILITY. Subject to Section 5(e) hereof, Options shall
be exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee.
Upon the occurrence of a "Change in Control" (as hereinafter
defined), the Committee may accelerate the vesting and exercisability of
outstanding Options, in whole or in part, as determined by the Committee in its
sole discretion. In its sole discretion, the Committee may also determine that,
upon the occurrence of a Change in Control, each outstanding Option shall
terminate within a specified number of days after notice to the Optionee
thereunder, and each such Optionee shall receive, with respect to each share of
Company Stock subject to such Option, an amount equal to the excess of the Fair
Market Value of such shares immediately prior to such Change in Control over the
exercise price per share of such Option; such amount shall be payable in cash,
in one or more kinds of property (including the property, if any, payable in the
transaction) or a combination thereof, as the Committee shall determine in its
sole discretion.
For purposes of the Plan, a Change in Control shall be deemed
to have occurred if:
(i) a tender offer (or series of related offers) shall be made
and consummated for the ownership of 50% or more of the outstanding
voting securities of the Company, unless as a result of such tender
offer more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate
by the stockholders of the Company (as of the time immediately prior
to the commencement of such offer), any employee benefit plan of the
Company or its Subsidiaries, and their affiliates;
(ii) the Company shall be merged or consolidated with another
corporation, unless as a result of such merger or consolidation more
than 50% of the outstanding voting securities of the surviving or
resulting corporation shall be owned in the aggregate by the
stockholders of the Company (as of the time immediately prior to
such transaction), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates;
(iii) the Company shall sell substantially all of its assets
to another corporation that is not wholly owned by the Company,
unless as a result of such sale more than 50% of such assets shall
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be owned in the aggregate by the stockholders of the Company (as of
the time immediately prior to such transaction), any employee
benefit plan of the Company or its Subsidiaries and their
affiliates; or
(iv) a Person (as defined below) shall acquire 50% or more of
the outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the stockholders of the Company (as of the time
immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates.
For purposes of this Section 5(c), ownership of voting
securities shall take into account and shall include ownership as determined by
applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof)
under the Exchange Act. In addition, for such purposes, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall not include (A) the
Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an
offering of such securities; or (D) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company.
(d) METHOD OF EXERCISE. Options to the extent then exercisable may
be exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, or by
check or such other instrument as may be acceptable to the Committee. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may be made at the election of the Optionee (i) in the form
of Stock owned by the Optionee (based on the Fair Market Value of the Stock on
the trading day before the Option is exercised) which is not the subject of any
pledge or security interest, (ii) in the form of shares of Stock withheld by the
Company from the shares of Stock otherwise to be received with such withheld
shares of Stock having a Fair Market Value on the date of exercise equal to the
exercise price of the Option, or (iii) by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any shares surrendered to the Company is at least equal to such
exercise price and except with respect to (ii) above, such method of payment
will not cause a disqualifying disposition of all or a portion of the Stock
received upon exercise of an Incentive Option. An Optionee shall have the right
to dividends and other rights of a stockholder with respect to shares of Stock
purchased upon exercise of an Option at such time as the Optionee (i) has given
written notice of exercise and has paid in full for such shares and (ii) has
satisfied such conditions that may be imposed by the Company with respect to the
withholding of taxes.
(e) LIMIT ON VALUE OF INCENTIVE OPTION. The aggregate Fair Market
Value, determined as of the date the Incentive Option is granted, of Stock for
which Incentive Options are exercisable for the first time by any Optionee
during any calendar year under the Plan (and/or any other stock option plans of
the Company or any Subsidiary) shall not exceed $100,000.
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(f) INCENTIVE OPTION SHARES. A grant of an Incentive Option under
this Plan shall provide that (a) the Optionee shall be required as a condition
of the exercise to furnish to the Company any payroll (employment) tax required
to be withheld, and (b) if the Optionee makes a disposition, within the meaning
of Section 424(c) of the Code and regulations promulgated thereunder, of any
share or shares of Stock issued to him upon exercise of an Incentive Option
granted under the Plan within the two-year period commencing on the day after
the date of the grant of such Incentive Option or within a one-year period
commencing on the day after the date of transfer of the share or shares to him
pursuant to the exercise of such Incentive Option, he shall, within 10 days
after such disposition, notify the Company thereof and immediately deliver to
the Company any amount of United States federal, state and local income tax
withholding required by law.
6. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights shall granted with an exercise price that
is not less than 100% of the Fair Market Value (as defined in Section 5(a)
herein) of a share of Common Stock on the date the Stock Appreciation Right is
granted and shall be exercisable at such time or times and subject to such other
terms and conditions as shall be determined by the Committee. Unless otherwise
provided, Stock Appreciation Rights shall become immediately exercisable and
shall remain exercisable until expiration, cancellation or termination of the
award. Such rights may be exercised in whole or in part by giving written notice
to the Company. Stock Appreciation Rights to the extent then exercisable may be
exercised for payment in cash, shares of Common Stock or a combination of both,
as the Committee shall deem desirable, equal to: (i) the excess of the Fair
Market Value as defined in Section 5(a) herein of a share of Common Stock on the
date of exercise over (ii) the exercise price of such Stock Appreciation Right.
7. TERMS AND CONDITIONS OF RESTRICTED STOCK.
Restricted Stock may be granted under this Plan aside from, or in
association with, any other award and shall be subject to the following
conditions and shall contain such additional terms and conditions (including
provisions relating to the acceleration of vesting of Restricted Stock upon a
Change of Control), not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
(a) GRANTEE RIGHTS. A Grantee shall have no rights to an award of
Restricted Stock unless and until Grantee accepts the award within the period
prescribed by the Committee and, if the Committee shall deem desirable, makes
payment to the Company in cash, or by check or such other instrument as may be
acceptable to the Committee. After acceptance and issuance of a certificate or
certificates, as provided for below, the Grantee shall have the rights of a
stockholder with respect to Restricted Stock subject to the non-transferability
and forfeiture restrictions described in section 7(d) below.
(b) ISSUANCE OF CERTIFICATES. The Company shall issue in the
Grantee's name a certificate or certificates for the shares of Common Stock
associated with the award promptly after the Grantee accepts such award.
(c) DELIVERY OF CERTIFICATES. Unless otherwise provided, any
certificate or certificates issued evidencing shares of Restricted Stock shall
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not be delivered to the Grantee until such shares are free of any restrictions
specified by the Committee at the time of grant.
(d) FORFEITABILITY, NON-TRANSFERABILITY OF RESTRICTED STOCK. Shares
of Restricted Stock are forfeitable until the terms of the Restricted Stock
grant have been satisfied. Shares of Restricted Stock are not transferable until
the date on which the Committee has specified such restrictions has lapsed.
Unless otherwise provided, distributions of additional shares or property in the
form of dividends or otherwise in respect of shares of Restricted Stock shall be
subject to the same restrictions as such shares of Restricted Stock.
(e) CHANGE OF CONTROL. Upon the occurrence of a Change in Control,
the Committee may accelerate the vesting of outstanding Restricted Stock, in
whole or in part, as determined by the Committee in its sole discretion.
8. OTHER EQUITY INCENTIVES OR STOCK BASED AWARDS.
The Committee may grant Equity Incentives (including the grant of
unrestricted shares) to such key persons, in such amounts and subject to such
terms and conditions, as the Committee shall in its discretion determine,
subject to the provisions of the Plan. Such awards may entail the transfer of
actual shares of Common Stock to Plan participants, or payment in cash or
otherwise of amounts based on the value of shares of Common Stock.
9. TERM OF PLAN.
No Option, Stock Appreciation Rights, Restricted Stock or Equity
Incentives shall be granted pursuant to the Plan on the date which is ten years
from the effective date of the Plan, but Options, Stock Appreciation Rights or
Equity Incentives theretofore granted may extend beyond that date.
10. CAPITAL CHANGE OF THE COMPANY.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or similar type of corporate restructuring
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event. The Committee shall, to the extent feasible, make such other
adjustments as may be required under the tax laws so that any Incentive Options
previously granted shall not be deemed modified within the meaning of Section
424(h) of the Code. Appropriate adjustments shall also be made in the case of
outstanding Stock Appreciation Rights and Restricted Stock granted under the
Plan.
11. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or the Company has determined that such registration is unnecessary, each person
exercising or receiving Options, Stock Appreciation Rights, Restricted Stock or
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Equity Incentives under the Plan may be required by the Company to give a
representation in writing that he is acquiring the securities (if issued) for
his own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.
12. TAXES.
(a) The Company may make such provisions as it may deem
appropriate, consistent with applicable law, in connection with any Options,
Stock Appreciation Rights, Restricted Stock or Equity Incentives granted under
the Plan with respect to the withholding of any taxes (including income or
employment taxes) or any other tax matters.
(b) If any Grantee, in connection with the acquisition of
Restricted Stock, makes the election permitted under section 83(b) of the Code
(that is, an election to include in gross income in the year of transfer the
amounts specified in section 83(b)), such Grantee shall notify the Company of
the election with the Internal Revenue Service pursuant to regulations issued
under the authority of Code section 83(b).
(c) If any Grantee shall make any disposition of shares of Stock
issued pursuant to the exercise of an Incentive Option under the circumstances
described in section 421(b) of the Code (relating to certain disqualifying
dispositions), such Grantee shall notify the Company of such disposition within
10 days hereof.
13. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on February 28, 2007; PROVIDED, HOWEVER,
that if, and only if, certain options are intended to qualify as Incentive Stock
Options, the Plan must subsequently be approved by majority vote of the
Company's stockholders no later than February 28, 2007, and further, that in the
event certain Option grants hereunder are intended to qualify as
performance-based compensation within the meaning of Section 162(m) of the Code,
the requirements as to shareholder approval set forth in Section 162(m) of the
Code are satisfied.
14. AMENDMENT AND TERMINATION, SECTION 409A OF THE CODE.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee or Grantee
under any Option, Stock Appreciation Right, Restricted Stock or Equity Incentive
theretofore granted without the Optionee or Grantee's consent, and except that
no amendment shall be made which, without the approval of the stockholders of
the Company would:
(a) materially increase the number of shares that may be issued
under the Plan, except as is provided in Section 10;
(b) materially increase the benefits accruing to the Optionees or
Grantees under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
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(d) decrease the exercise price of an Incentive Option to less
than 100% of the Fair Market Value per share of Stock on the date of grant
thereof or the exercise price of a Nonqualified Option to less than 100% of the
Fair Market Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in
Section 5(b).
(f) The Committee may amend the terms of any Option, Stock
Appreciation Right, Restricted Stock or Equity Incentive theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee or Grantee without the Optionee or Grantee's consent. The Committee
may also substitute new Options, Stock Appreciation Rights or Restricted Stock
for previously granted Options, Stock Appreciation Rights or Restricted Stock
including options granted under other plans applicable to the participant and
previously granted Options having higher option prices, upon such terms as the
Committee may deem appropriate.
It is the intention of the Board that the Plan comply strictly
with the provisions of Section 409A of the Code and Treasury Regulations and
other Internal Revenue Service guidance promulgated thereunder (the "Section
409A Rules) and the Committee shall exercise its discretion in granting Options,
Stock Appreciation Rights or Restricted Stock hereunder (and the terms of such
grants), accordingly. The Plan and any grant of an Option, Stock Appreciation
right or Restricted Stock hereunder may be amended from time to time (without,
in the case of an Award, the consent of the Participant) as may be necessary or
appropriate to comply with the Section 409A Rules.
15. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options, Stock Appreciation
Rights, Restricted Stock and Equity Incentives hereunder, and the obligation of
the Company to sell and deliver shares under such Options, Stock Appreciation
Rights, Restricted Stock and Equity Incentives shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies, national securities exchanges and interdealer quotation
systems as may be required.
16. GENERAL PROVISIONS.
(a) CERTIFICATES. All certificates for shares of Stock delivered
under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal or state
securities law, any stock exchange or interdealer quotation system upon which
the Stock is then listed or traded and the Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions.
(b) EMPLOYMENT MATTERS. The adoption of the Plan shall not confer
upon any Optionee or Grantee of the Company or any Subsidiary any right to
continued employment or, in the case of an Optionee or Grantee who is a
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director, continued service as a director, with the Company or a Subsidiary, as
the case may be, nor shall it interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of any of its employees, the
service of any of its directors or the retention of any of its consultants or
advisors at any time.
(c) LIMITATION OF LIABILITY. No member of the Board or the
Committee, or any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination
or interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) REGISTRATION OF STOCK. Notwithstanding any other provision in
the Plan, no Option may be exercised unless and until the Stock to be issued
upon the exercise thereof has been registered under the Securities Act and
applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration in the United States. The Company shall
not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder in order to permit the exercise of an Option and the issuance and sale
of the Stock subject to such Option, although the Company may in its sole
discretion register such Stock at such time as the Company shall determine. If
the Company chooses to comply with such an exemption from registration, the
Stock issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions with respect to such Stock to the Company's transfer agent.
(e) NON-TRANSFERABILITY. Options and Stock Appreciation Rights
granted hereunder are not transferable and may be exercised solely by the
Optionee or Grantee during his lifetime or after his death by the person or
persons entitled thereto under his will or the laws of descent and distribution.
The Committee, in its sole discretion, may permit a transfer of a Nonqualified
Option to (i) a trust for the benefit of the Optionee or (ii) a member of the
Optionee's immediate family (or a trust for his or her benefit). Any attempt to
transfer, assign, pledge or otherwise dispose of, or to subject to execution,
attachment or similar process, any Option or Stock Appreciation Right contrary
to the provisions hereof shall be void and ineffective and shall give no right
to the purported transferee.
(f) NO RIGHTS AS A STOCKHOLDER. No Optionee or Grantee (or other
person having the right to exercise such award) shall have any of the rights of
a stockholder of the Company with respect to shares subject to such award until
the issuance of a stock certificate to such person for such shares. Except as
otherwise provided herein, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued.
(g) TERMINATION BY DEATH. Unless otherwise determined by the
Committee, if any Optionee or Grantee's employment with or service to the
Company or any Subsidiary terminates by reason of death, the Option or Stock
B-10
Appreciation Right may thereafter be exercised, to the extent then exercisable
(or on such accelerated basis as the Committee shall determine at or after
grant), by the legal representative of the estate or by the legatee of the
Optionee or Grantee under the will of the Optionee or Grantee, for a period of
one year after the date of such death or until the expiration of the stated term
of such Option or Stock Appreciation Right as provided under the Plan, whichever
period is shorter.
(h) TERMINATION BY REASON OF DISABILITY. Unless otherwise
determined by the Committee, if any Optionee or Grantee's employment with or
service to the Company or any Subsidiary terminates by reason of total and
permanent disability, any Option or Stock Appreciation Right held by such
Optionee or Grantee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after 60 days after the date of such termination of employment or
service or the expiration of the stated term of such Option or Stock
Appreciation Right, whichever period is shorter; PROVIDED, HOWEVER, that, if the
Optionee or Grantee dies within such 60-day period, any unexercised Option or
Stock Appreciation Right held by such Optionee or Grantee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year after the date of such death or for the stated term of such
Option or Stock Appreciation Right, whichever period is shorter.
(i) TERMINATION BY REASON OF RETIREMENT. Unless otherwise
determined by the Committee, if any Optionee or Grantee's employment with or
service to the Company or any Subsidiary terminates by reason of Normal or Early
Retirement (as such terms are defined below), any Option or Stock Appreciation
Right held by such Optionee or Grantee may thereafter be exercised to the extent
it was exercisable at the time of such Retirement (or on such accelerated basis
as the Committee shall determine at or after grant), but may not be exercised
after 60 days after the date of such termination of employment or service or the
expiration of the stated term of such Option or Stock Appreciation Right,
whichever period is shorter; provided, however, that, if the Optionee or Grantee
dies within such 60-day period, any unexercised Option or Stock Appreciation
Right held by such Optionee or Grantee shall thereafter be exercisable, to the
extent to which it was exercisable at the time of death, for a period of one
year after the date of such death or for the stated term of such Option or Stock
Appreciation Right, whichever period is shorter.
For purposes of this paragraph (i), "Normal Retirement" shall
mean retirement from active employment with the Company or any Subsidiary on or
after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65, and "Early
Retirement" shall mean retirement from active employment with the Company or any
Subsidiary pursuant to the early retirement provisions of the applicable Company
or Subsidiary pension plan or if no such pension plan, age 55.
(j) OTHER TERMINATION. Unless otherwise determined by the
Committee, if any Optionee or Grantee's employment with or service to the
Company or any Subsidiary terminates for any reason other than death, Disability
or Normal or Early Retirement, the Option or Stock Appreciation Right shall
thereupon terminate, except that the portion of any Option or Stock Appreciation
Right that was exercisable on the date of such termination of employment or
service may be exercised for the lesser of 30 days after the date of termination
B-11
or the balance of such Option or Stock Appreciation Right's term if the Optionee
or Grantee's employment or service with the Company or any Subsidiary is
terminated by the Company or such Subsidiary without cause or for good reason by
the Optionee or Grantee (the determination as to whether termination was for
cause or for good reason to be made by the Committee). The transfer of an
Optionee or Grantee from the employ of or service to the Company to the employ
of or service to a Subsidiary, or vice versa, or from one Subsidiary to another,
shall not be deemed to constitute a termination of employment or service for
purposes of the Plan.
WHX CORPORATION
February 28, 2007
B-12
EXHIBIT C
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers Center
300 Madison Avenue
New York, NY 10017
Telephone (646) 471 3000
Facsimile (813) 286 6000
March 7, 2007
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We have read the statements made by WHX Corporation (copy attached) in the
section entitled "Proposal No. 4. Ratification of Appointment of Independent
Public Accountants", subsection entitled "Dismissal of PricewaterhouseCoopers
LLP", which we understand will be filed with the Securities and Exchange
Commission as part of the proxy statement of WHX Corporation dated March 7,
2007. We agree with the statements concerning our Firm in such proxy statement.
However, we have no basis on which to comment on the current status of material
weaknesses in (i) internal controls and (ii) disclosure controls and procedures
or any related remediation efforts.
Very truly yours,
/s/
PricewaterhouseCoopers LLP
C-1
PRELIMINARY COPY SUBJECT TO COMPLETION
DATED MARCH 7, 2007
ANNUAL MEETING OF STOCKHOLDERS OF
WHX CORPORATION
MAY 16, 2007
- ---------------------------------------------------------------------------------
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE PAID ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK.
- ---------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS: THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSAL NOS. 1, 2, 3 AND 4.
Warren G. Lichtenstein
Jack L. Howard IN THEIR DISCRETION, THE PROXIES ARE
Glen M. Kassan AUTHORIZED TO VOTE UPON SUCH OTHER
Louis Klein, Jr. MATTERS AS MAY PROPERLY COME BEFORE
Daniel P. Murphy, Jr. THE MEETING.
John J. Quicke
Joshua E. Schechter TO INCLUDE ANY COMMENTS, USE THE
Garen W. Smith COMMENTS BOX ON THE REVERSE SIDE OF
THIS CARD.
| | For the election as directors,
each to serve until the annual meeting
of stockholders in fiscal year 2008 and
until their respective successors have
been duly elected and qualified, all
nominees listed above (except as
stricken above) (TO WITHHOLD AUTHORITY
TO VOTE FOR ANY SPECIFIC NOMINEES,
CHECK THE FOREGOING BOX AND CLEARLY
STRIKE OUT OR LINE THROUGH WITH DARK
INK SUCH NOMINEE'S NAME IN THE LIST
ABOVE).
| | Withhold authority to vote for
all nominees listed above.
2. PROPOSAL TO AMEND WHX'S AMENDED
AND RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE WHX'S
AUTHORIZED CAPITAL STOCK FROM
45,000,000 SHARES, CONSISTING OF
40,000,000 SHARES OF COMMON STOCK, PAR
VALUE $0.01 PER SHARE, AND 5,000,000
SHARES OF PREFERRED STOCK, PAR VALUE
$0.01 PER SHARE, TO A TOTAL OF [__]
SHARES, CONSISTING OF [__] SHARES OF
COMMON STOCK AND 5,000,000 SHARES OF
PREFERRED STOCK.
FOR AGAINST ABSTAIN
| | | | | |
3. PROPOSAL TO APPROVE THE ADOPTION
OF WHX CORPORATION'S 2007 INCENTIVE
STOCK PLAN.
FOR AGAINST ABSTAIN
| | | | | |
4. RATIFICATION OF THE APPOINTMENT
OF GRANT THORNTON LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2007.
FOR AGAINST ABSTAIN
| | | | | |
5. TO TRANSACT ANY OTHER MATTERS
THAT PROPERLY COME BEFORE THE MEETING
AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
To change the address on your account, | |
please check the box at right and
indicate your new address in the
address space above. Please note that
changes to the registered name(s) on
the account may not be submitted via
this method.
Signature of Stockholder: Date:
Signature of Stockholder: Date:
Note: Please sign exactly as your name or names appear hereon. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership's name by authorized person.
PROXY
WHX CORPORATION
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, revoking any proxy heretofore given for the meeting of
the stockholders described below, hereby appoints Glen M. Kassan and Robert K.
Hynes, and each of them, proxies, with full powers of substitution, to represent
the undersigned at the annual meeting of stockholders of WHX Corporation to be
held on May 16, 2007, and at any adjournment or postponement thereof, and to
vote all shares that the undersigned would be entitled to vote if personally
present as follows:
The shares represented by this proxy will be voted as directed herein. IF THIS
PROXY IS DULY EXECUTED AND RETURNED, AND NO VOTING DIRECTIONS ARE GIVEN HEREIN,
SUCH SHARES WILL BE VOTED "FOR" APPROVAL OF PROPOSAL NOS. 1, 2, 3 and 4. The
undersigned hereby acknowledges receipt of notice of, and the proxy statement
for, the aforesaid annual meeting of stockholders.
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE)
