<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1997
REGISTRATION NO. 333-18191
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
HUBBELL INCORPORATED
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CONNECTICUT 3640 06-0397030
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization Classification Code Number) Identification Number)
</TABLE>
584 DERBY MILFORD ROAD
ORANGE, CONNECTICUT 06477-4024
(203) 799-4100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------------
RICHARD W. DAVIES, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
HUBBELL INCORPORATED
584 DERBY MILFORD ROAD
ORANGE, CONNECTICUT 06477-4024
(203) 799-4100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------------
COPIES TO:
<TABLE>
<S> <C>
JOEL S. HOFFMAN, ESQ. EDMUND M. REMONDINO, ESQ.
SIMPSON THACHER & BARTLETT FINN DIXON & HERLING LLP
425 LEXINGTON AVENUE ONE LANDMARK SQUARE
NEW YORK, NEW YORK 10017 STAMFORD, CONNECTICUT 06901
</TABLE>
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as practicable after this Registration Statement is declared effective and upon
consummation of the transactions described in the enclosed Prospectus/Proxy
Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
FARGO MFG. COMPANY, INC.
130 SALT POINT ROAD
P.O. BOX 2900
POUGHKEEPSIE, NEW YORK 12603-1016
(914) 471-0600
January , 1997
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders
(the "Special Meeting") of Fargo Mfg. Company, Inc. ("Fargo"), which will be
held on February 14, 1997, at 9:00 a.m., local time, at the offices of Fargo.
At the Special Meeting, holders of shares of the Common Stock, no par
value, of Fargo ("Fargo Common Stock"), will be asked to consider and vote upon
a proposal to approve and adopt an Agreement and Plan of Merger, dated as of
November 13, 1996, as amended by Amendment No. 1 thereto dated as of January 8,
1997 (the "Merger Agreement"), among Hubbell Incorporated ("Hubbell"), FMC
Acquisition Corporation, a direct, wholly owned subsidiary of Hubbell ("Merger
Sub"), and Fargo, with respect to the merger of Merger Sub with and into Fargo
as provided for in the Merger Agreement (the "Merger"), with Fargo surviving as
a direct, wholly owned subsidiary of Hubbell. Pursuant to the Merger Agreement,
each outstanding share of Fargo Common Stock (other than shares owned by
Hubbell, Fargo treasury stock and shares held by Fargo shareholders who have
properly exercised their appraisal rights under Sections 623 and 910 of the New
York Business Corporation Law (such shares, "Dissenting Shares")), will be
converted into the right to receive that number of shares of Class B Common
Stock, par value $0.01 per share, of Hubbell ("Class B Common Stock"),
determined by dividing (x) the quotient obtained by dividing (A) $45 million
plus or minus the amount, if any, by which the estimated net worth of Fargo at
the time of the Special Meeting (the "Estimated Net Worth Amount") differs from
$9,834,900 (the "Net Worth Target") (subject to certain adjustments) by (B) the
average closing price per share of Class B Common Stock as reported on the New
York Stock Exchange Composite Tape for a consecutive fifteen-day trading period
ending three business days prior to the Special Meeting (the "Average Price") by
(y) the total number of shares of Fargo Common Stock issued and outstanding
immediately prior to the Effective Time (as defined in the Merger Agreement) of
the Merger (excluding all shares of Fargo Common Stock held in the Fargo
treasury or owned by Hubbell) (subject to certain adjustments).
If the Average Price is less than $34, the Average Price will be deemed to
be $34 and Fargo will have the right to terminate the Merger Agreement unless
Hubbell elects to retain the actual Average Price for purposes of the
calculation described above. If the Average Price is greater than $43, the
Average Price will be the actual Average Price and Fargo will have the right to
terminate the Merger Agreement unless Hubbell elects that the Average Price will
be deemed to be $43 for purposes of the above calculation. Fargo shareholders
will receive cash (a) in lieu of any fractional shares which would otherwise be
issued in the Merger and (b) to the extent that the net worth of Fargo,
calculated and agreed upon by the parties as set forth in Section 2.2 of the
Merger Agreement, as of the close of business on the date of Closing (the "Final
Closing Net Worth Amount") is greater than the Estimated Net Worth Amount.
The Merger Agreement provides that ten percent (10%) of the number of whole
shares of Class B Common Stock to be issued pursuant to the Merger to each
holder of Fargo Common Stock will be deposited by Hubbell into an escrow account
(the "Escrow Account") for an amount of time equal to the lesser of eighteen
months from the closing date or the date of the completion of the first full
audit cycle for the year commencing on January 1, 1997 during which Fargo has
been consolidated with Hubbell and its subsidiaries, provided, however, that the
Escrow Account will not terminate if there are any outstanding claims against
the Escrow Account. The shares deposited in the Escrow Account ("Escrow Shares")
will be used (i) to reimburse Hubbell to the extent the Final Closing Net Worth
Amount is less than the Estimated Net Worth Amount and (ii) to satisfy any
indemnification obligations of the shareholders of Fargo to Hubbell pursuant to
Section 7 of the Merger Agreement. The shares deposited in the Escrow Account
will be subject to an escrow
<PAGE> 3
agreement (the "Escrow Agreement"), to be dated as of February 10, 1997, among
Hubbell, Fargo, Jack F. Myers, in his capacity as shareholder representative,
and The Chase Manhattan Bank, as escrow agent (the "Escrow Agent"). Dividends
distributed on Escrow Shares will be paid to the Escrow Agent for distribution
to the former holders of Fargo Common Stock. Escrow Shares not applied as noted
above will be distributed to the former holders of Fargo Common Stock in
accordance with the Escrow Agreement. For a more detailed description of the
Escrow Agreement and the indemnification obligations, see the section in the
accompanying Prospectus/Proxy Statement entitled "THE MERGER -- Indemnification"
and "-- Escrow Account/Escrow Agreement."
You should read carefully the accompanying Notice of Special Meeting of
Shareholders and the Prospectus/Proxy Statement for details of the Merger and
additional related information. A conformed copy of the Merger Agreement is
attached as Exhibit A to the Prospectus/Proxy Statement.
THE BOARD OF DIRECTORS OF FARGO HAS, BY UNANIMOUS VOTE, APPROVED AND
ADOPTED THE MERGER AGREEMENT, DETERMINED THAT THE MERGER AGREEMENT AND THE
MERGER ARE IN THE BEST INTERESTS OF FARGO AND IN THE BEST INTERESTS AND FAIR TO
THE SHAREHOLDERS OF FARGO, AND RECOMMENDS THAT THE SHAREHOLDERS OF FARGO VOTE
FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.
The Board of Directors has fixed the close of business on January 7, 1997
as the record date for the determination of shareholders entitled to vote at the
Special Meeting. A list of shareholders entitled to vote at the Special Meeting
will be available for examination by any shareholder, for any purpose relevant
to the meeting, on and after January 10, 1997, during ordinary business hours at
Fargo's offices located at the address set forth above. The affirmative vote of
holders of two-thirds of the outstanding shares of Fargo Common Stock is
necessary to approve and adopt the Merger Agreement.
I look forward to meeting with those shareholders who are able to be
present at the Special Meeting; however, whether or not you plan to attend the
Special Meeting, please complete, sign and date the enclosed proxy card and
return it in the enclosed postage-paid envelope. If you attend the Special
Meeting, you may vote in person if you wish, even though you previously have
returned your proxy card. A failure to vote will have the same effect as a vote
against the Merger. You are urged, therefore, to sign, date, and return the
enclosed proxy card promptly.
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD. IF THE
MERGER AGREEMENT IS APPROVED BY THE FARGO SHAREHOLDERS AND THE MERGER IS
CONSUMMATED, YOU WILL RECEIVE A TRANSMITTAL FORM AND INSTRUCTIONS FOR THE
SURRENDER AND EXCHANGE OF YOUR SHARES.
Thank you for your cooperation.
Sincerely,
C.B. Schmidt
Chairman of the Board
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
<PAGE> 4
FARGO MFG. COMPANY, INC.
130 SALT POINT ROAD
P.O. BOX 2900
POUGHKEEPSIE, NEW YORK 12603-1016
(914) 471-0600
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 14, 1997
------------------------
TO THE SHAREHOLDERS OF FARGO MFG. COMPANY, INC.:
Notice is hereby given that a special meeting (the "Special Meeting") of
the shareholders of Fargo Mfg. Company, Inc., a New York corporation ("Fargo"),
will be held on February 14, 1997, at 9:00 a.m., local time, at the offices of
Fargo, to consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of November 13, 1996, as amended by Amendment No. 1
thereto dated as of January 8, 1997 (the "Merger Agreement"), among Hubbell
Incorporated, a Connecticut corporation ("Hubbell"), FMC Acquisition
Corporation, a New York corporation and a direct, wholly owned subsidiary of
Hubbell ("Merger Sub"), and Fargo, with respect to the merger of Merger Sub with
and into Fargo upon the terms and subject to the conditions thereof (the
"Merger"). Pursuant to the Merger Agreement, Fargo will become a direct, wholly
owned subsidiary of Hubbell. THE MERGER IS MORE COMPLETELY DESCRIBED IN THE
ACCOMPANYING PROSPECTUS/PROXY STATEMENT, AND A COPY OF THE MERGER AGREEMENT IS
ATTACHED AS EXHIBIT A THERETO.
Only holders of record of shares of Fargo Common Stock at the close of
business on January 7, 1997, the record date for the Special Meeting, are
entitled to notice of, and to vote at, the Special Meeting and any adjournments
or postponements thereof. A list of shareholders entitled to vote at the Special
Meeting will be available for examination by any shareholder, for any purpose
relevant to the meeting, on and after January 10, 1997, during ordinary business
hours at Fargo's offices located at the address set forth above.
Under the New York Business Corporation Law (the "NYBCL"), shareholders of
Fargo have the right to dissent from the Merger and demand appraisal rights for
their shares of Fargo Common Stock, provided that the Merger is consummated and
such shareholders comply with the requirements of Sections 623 and 910 of the
NYBCL, the full text of which provisions is set forth as Exhibit C to the
accompanying Prospectus/ Proxy Statement. See "THE MERGER -- Dissenting Shares"
in the Prospectus/Proxy Statement for a description of the rights of dissenting
shareholders and a discussion of the procedures which must be followed by
dissenting shareholders of Fargo to obtain appraisal of their shares of Fargo
Common Stock.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. YOUR PROXY MAY BE
REVOKED AT ANY TIME BEFORE IT IS VOTED BY SIGNING AND RETURNING A LATER DATED
PROXY WITH RESPECT TO THE SAME SHARES, BY FILING WITH THE SECRETARY OF FARGO A
WRITTEN REVOCATION BEARING A LATER DATE OR BY ATTENDING AND VOTING AT THE
SPECIAL MEETING.
By Order of the Board of Directors
--------------------------------------
Keryl M. Briggs
Secretary
Poughkeepsie, New York
January , 1997
<PAGE> 5
HUBBELL INCORPORATED
PROSPECTUS
------------------------
FARGO MFG. COMPANY, INC.
PROXY STATEMENT
This Prospectus/Proxy Statement (the "Prospectus/Proxy Statement") serves
as a Prospectus of Hubbell Incorporated ("Hubbell") under the Securities Act of
1933, as amended (the "Securities Act") relating to the shares of Class B Common
Stock issuable in connection with the Merger. The Class B Common Stock is listed
on the New York Stock Exchange ("NYSE") under the symbol "HUBB". On January ,
1997, the last sale price of Class B Common Stock as reported on the New York
Stock Exchange Composite Tape (the "NYSE Tape") was $ . For a
description of the Class B Common Stock, see "DESCRIPTION OF CAPITAL STOCK OF
HUBBELL" and "COMPARISON OF RIGHTS OF HOLDERS OF FARGO COMMON STOCK AND HUBBELL
CLASS B COMMON STOCK."
This Prospectus/Proxy Statement is being furnished to the shareholders of
Fargo Mfg. Company, Inc., a New York corporation ("Fargo") (such shareholders
hereinafter sometimes referred to as the "Shareholders"), in connection with the
solicitation of proxies by the Board of Directors of Fargo (the "Fargo Board")
for use at the special meeting of the Shareholders to be held on February 14,
1997, at 9:00 a.m., local time, at the offices of Fargo, including any
adjournments or postponements thereof (the "Special Meeting").
At the Special Meeting, the holders of shares of the Common Stock, no par
value, of Fargo ("Fargo Common Stock") will consider and vote upon the approval
and adoption of the Agreement and Plan of Merger, dated as of November 13, 1996,
as amended by Amendment No. 1 thereto dated as of January 8, 1997 (the "Merger
Agreement"), among Hubbell Incorporated ("Hubbell"), FMC Acquisition
Corporation, a direct, wholly owned subsidiary of Hubbell ("Merger Sub"), and
Fargo, with respect to the merger of Merger Sub with and into Fargo upon the
terms and subject to the conditions thereof (the "Merger"). Pursuant to the
Merger Agreement, Fargo will become a direct, wholly owned subsidiary of
Hubbell. Pursuant to the Merger Agreement and an Escrow Agreement (the "Escrow
Agreement"), to be dated as of February 10, 1997, among Hubbell, Fargo, Jack F.
Myers, as shareholder representative (the "Shareholder Representative"), and The
Chase Manhattan Bank, as escrow agent (the "Escrow Agent"), ten percent (10%) of
the number of whole shares of Class B Common Stock, par value $0.01 per share,
of Hubbell ("Class B Common Stock") to be issued pursuant to the Merger to each
holder of Fargo Common Stock will be deposited by Hubbell into an escrow account
(the "Escrow Account") maintained with the Escrow Agent to be used (i) to
reimburse Hubbell to the extent the Final Closing Net Worth Amount is less than
the Estimated Net Worth Amount (as such terms are hereinafter defined) and (ii)
to satisfy any indemnification obligations of the Shareholders to Hubbell
pursuant to Section 7 of the Merger Agreement.
The Fargo Board has, by unanimous vote, approved and adopted the Merger
Agreement, determined that the Merger Agreement and the Merger are in the best
interests of Fargo and in the best interests of and fair to the Shareholders,
and recommends that the Shareholders vote FOR the approval and adoption of the
Merger Agreement and the Merger.
This Prospectus/Proxy Statement and the accompanying form of proxy are
first being mailed to the Shareholders on or about January , 1997.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS/PROXY STATEMENT IS JANUARY , 1997.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
AVAILABLE INFORMATION.................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE............................ 2
FORWARD LOOKING STATEMENTS............. 3
SUMMARY................................ 4
THE SPECIAL MEETING.................. 4
Date, Time and Place; Matters to be
Considered........................ 4
Record Date; Shares Entitled to Vote;
Votes Required.................... 4
Proxies; Proxy Solicitation.......... 4
THE COMPANIES........................ 5
Hubbell Incorporated................. 5
FMC Acquisition Corporation.......... 5
Fargo Mfg. Company, Inc.............. 5
THE MERGER........................... 5
General.............................. 5
Background of the Merger............. 5
Recommendation of the Fargo Board and
Reasons for the Merger............ 6
Structure of the Merger.............. 6
Closing; Effective Time.............. 6
Certificate of Incorporation; Bylaws;
Officers and Directors............ 7
Merger Consideration................. 7
Determination of Closing Net Worth
Amount............................ 8
Fractional Shares.................... 9
Affiliated Shares.................... 9
Dissenting Shares.................... 9
Exchange Agent; Exchange Procedures;
Distributions with Respect to
Unexchanged Shares; No Further
Ownership Rights in Fargo Common
Stock; No Fractional Shares....... 10
Escrow Account/Escrow Agreement...... 10
Representations and Warranties....... 10
Indemnification...................... 11
Certain Fees and Expenses............ 11
Termination.......................... 12
Conditions to the Consummation of the
Merger............................ 13
Regulatory Approvals Required........ 13
Interests of Certain Persons in the
Merger............................ 13
Certain Federal Income Tax
Consequences...................... 13
Anticipated Accounting Treatment..... 13
Resale of Hubbell Common Stock....... 13
Stock Exchange Listing............... 14
Comparison of Rights................. 14
SELECTED HISTORICAL FINANCIAL
INFORMATION OF HUBBELL
INCORPORATED...................... 15
SELECTED HISTORICAL FINANCIAL
INFORMATION OF FARGO MFG. COMPANY,
INC. ............................. 16
COMPARATIVE PER SHARE DATA........... 17
COMPARATIVE STOCK PRICES............. 18
THE SPECIAL MEETING.................... 19
Date, Time and Place................. 19
Matters To Be Considered............. 19
Record Date; Shares Entitled to Vote;
Votes Required.................... 19
Proxies; Proxy Solicitation.......... 20
THE COMPANIES.......................... 21
Hubbell Incorporated................. 21
FMC Acquisition Corporation.......... 21
Fargo Mfg. Company, Inc.............. 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF FARGO MFG. COMPANY,
INC. ................................ 23
Results of Operations................ 23
Liquidity............................ 25
THE MERGER............................. 25
General.............................. 25
Background of the Merger............. 25
Recommendation of the Fargo Board and
Reasons for the Merger............ 27
Structure of the Merger.............. 29
Effects of the Merger................ 29
Closing; Effective Time.............. 29
Certificate of Incorporation; Bylaws;
Officers and Directors............ 29
Merger Consideration................. 29
Determination of Closing Net Worth
Amount............................ 30
Fractional Shares.................... 32
Affiliated Shares.................... 32
Dissenting Shares.................... 32
Exchange Agent; Exchange Procedures;
Distributions with Respect to
Unexchanged Shares; No Further
Ownership Rights in Fargo Common
Stock; No Fractional Shares....... 32
Escrow Account/Escrow Agreement...... 33
Representations and Warranties....... 34
</TABLE>
i
<PAGE> 7
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Indemnification.. 36
Business of
Fargo
Pending the
Merger..... 37
Certain
Additional
Agreements.. 38
No
Solicitation.. 39
Certain Fees
and
Expenses... 39
Termination... 40
Amendment and
Waiver..... 41
Conditions to
the
Consummation
of the
Merger..... 41
Expenses...... 43
Interests of
Certain
Persons in
the
Merger..... 43
Certain
Federal
Income Tax
Consequences.. 43
Anticipated
Accounting
Treatment... 45
Regulatory
Approvals
Required... 45
Resale of
Hubbell
Common
Stock...... 45
Stock Exchange
Listing.... 45
DESCRIPTION OF
CAPITAL STOCK
OF HUBBELL.... 45
Dividend
Rights..... 46
Voting
Rights..... 46
Liquidation
Rights..... 46
Preemptive
Rights..... 46
Transfer Agent
and
Registrar.. 46
Preferred
Stock...... 46
The Hubbell
Rights
Agreement... 47
DESCRIPTION OF
CAPITAL STOCK
OF FARGO...... 49
Dividend
Rights..... 49
Voting
Rights..... 49
Liquidation
Rights..... 49
Preemptive
Rights..... 49
Transfer Agent
and
Registrar.. 50
COMPARISON OF
RIGHTS OF
HOLDERS OF
FARGO COMMON
STOCK AND
HUBBELL CLASS
B COMMON
STOCK......... 50
General....... 50
Voting
Rights..... 50
Business
Combination
Statutes... 52
"Anti-
Greenmail".. 52
Special
Meetings... 52
Quorum
Requirements.. 53
Shareholders'
Action
Without a
Meeting.... 53
Preemptive
Rights..... 53
Dividends..... 54
</TABLE>
ii
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Stock
Repurchases.. 54
Issuance of
Rights or
Options to
Purchase
Shares to
Directors,
Officers
and
Employees... 54
Loans to
Directors... 54
Classification
of the Board
of
Directors..... 54
Duties of
Directors... 55
Interested
Director
Transactions.. 55
Limitations on
Directors'
Liability... 55
Indemnification
of
Directors
and
Officers... 56
Removal of
Directors... 57
Newly Created
Directorships
and
Vacancies... 57
Dissenters'
Rights of
Appraisal... 57
Listing....... 57
APPRAISAL RIGHTS
OF DISSENTING
FARGO
SHAREHOLDERS.. 58
SECURITY
OWNERSHIP OF
CERTAIN
BENEFICIAL
OWNERS,
DIRECTORS AND
EXECUTIVE
OFFICERS...... 62
EXPERTS......... 62
LEGAL
OPINIONS...... 63
OTHER
INFORMATION
INCORPORATION
OF CERTAIN
DOCUMENTS BY
REFERENCE..... 63
FINANCIAL
STATEMENTS
FARGO MFG.
COMPANY, INC.
INDEX TO
CONSOLIDATED
FINANCIAL
STATEMENTS.... F-1
Independent
Auditor's
Report..... F-2
CONSOLIDATED
BALANCE
SHEETS..... F-3
CONSOLIDATED
STATEMENTS
OF
STOCKHOLDERS'
EQUITY..... F-5
CONSOLIDATED
STATEMENTS
OF
INCOME..... F-6
CONSOLIDATED
STATEMENTS
OF CASH
FLOWS...... F-7
NOTES TO
FINANCIAL
STATEMENTS.. F-8
EXHIBIT A Merger
Agreement.....
EXHIBIT B Escrow
Agreement.....
EXHIBIT C NYBCL
Sections 623
and 910.......
</TABLE>
iii
<PAGE> 8
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS/PROXY STATEMENT,
IN CONNECTION WITH THE MERGER AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HUBBELL OR
FARGO. THIS PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY
SECURITIES IN ANY JURISDICTION IN WHICH SUCH SOLICITATION OR OFFERING MAY NOT
LAWFULLY BE MADE.
------------------------
NEITHER THE DELIVERY OF THIS PROSPECTUS/PROXY STATEMENT NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER WILL IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF HUBBELL OR FARGO
SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Hubbell is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance with the
Exchange Act, Hubbell files proxy statements, reports and other information with
the Securities and Exchange Commission (the "SEC"). This Registration Statement,
as well as such proxy statements, reports, exhibits and other information filed
by Hubbell with the SEC can be inspected and copied at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, DC 20549, and at the following Regional Offices of the SEC: Chicago
Regional Office (Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661) and New York Regional Office (Seven World Trade Center, 13th
Floor, New York, New York 10048) and may be obtained through the SEC Internet
address at http://www.sec.gov. Copies of such material concerning Hubbell can be
obtained by mail from the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Washington, DC 20549, at prescribed rates. In addition, such material
concerning Hubbell can be inspected at the offices of the NYSE, 20 Broad Street,
New York, New York 10005.
Fargo is not subject to the informational requirements of the Exchange Act
and financial and other information about Fargo and its subsidiaries is not
publicly available other than as set forth in this Prospectus/Proxy Statement.
Hubbell has filed a Registration Statement on Form S-4 (the "Registration
Statement," which term will encompass all amendments, exhibits, annexes and
schedules thereto) with the SEC under the Securities Act and the rules and
regulations promulgated thereunder with respect to the Class B Common Stock
being offered hereby. This Prospectus/Proxy Statement does not contain all the
information set forth in the Registration Statement and the exhibits thereto,
certain portions of which have been omitted as permitted by the rules and
regulations of the SEC. Copies of the Registration Statement (including such
omitted portions) are available from the SEC upon payment of prescribed rates.
For further information, reference is made to the Registration Statement and the
exhibits filed therewith. Statements contained in this Prospectus/Proxy
Statement or in any document incorporated by reference in this Prospectus/Proxy
Statement relating to the contents of any contract or other document referred to
herein or therein are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following Hubbell documents are incorporated by reference in this
Prospectus/Proxy Statement: (i) Hubbell's Annual Report on Form 10-K for the
year ended December 31, 1995; (ii) Hubbell's Quarterly Reports on Form 10-Q for
the quarterly periods ended March 31, 1996, June 30, 1996 and September 30,
2
<PAGE> 9
1996; and (iii) the descriptions of the Class A Common Stock, par value $0.01
per share of Hubbell ("Class A Common Stock"), Class B Common Stock, the rights
to purchase Class A Common Stock ("Class A Rights") and the rights to purchase
Class B Common Stock ("Class B Rights," and together with Class A Rights, the
"Rights") set forth in Hubbell's Registration Statements filed pursuant to
Section 12 of the Exchange Act, and any amendment or report filed for the
purpose of updating any such description.
All documents and reports filed by Hubbell pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus/Proxy Statement and prior to the date of the Special Meeting will be
deemed to be incorporated by reference into this Prospectus/Proxy Statement from
the dates of filing of such documents or reports. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus/Proxy Statement will be deemed to be modified or superseded for
purposes of this Prospectus/Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded will not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus/Proxy Statement.
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
THEREIN BY REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING
ANY BENEFICIAL OWNER OF STOCK OF HUBBELL OR FARGO, TO WHOM THIS PROSPECTUS/PROXY
STATEMENT IS DELIVERED, ON WRITTEN OR ORAL REQUEST, TO HUBBELL INCORPORATED, 584
DERBY MILFORD ROAD, ORANGE, CONNECTICUT 06477-4024 (TELEPHONE NUMBER (203)
799-4100, ATTENTION: OFFICE OF THE SECRETARY). IN ORDER TO ENSURE DELIVERY OF
THE DOCUMENTS PRIOR TO THE SPECIAL MEETING, REQUESTS SHOULD BE RECEIVED BY
FEBRUARY 7, 1997.
All information contained or incorporated by reference in this
Prospectus/Proxy Statement relating to Hubbell or Merger Sub has been supplied
by Hubbell, and all such information relating to Fargo has been supplied by
Fargo.
FORWARD LOOKING STATEMENTS
This Prospectus/Proxy Statement includes or incorporates by reference
"forward-looking statements" within the meaning of various provisions of the
Securities Act and the Exchange Act. All statements, other than statements of
historical facts, included or incorporated by reference in this Prospectus/Proxy
Statement that address activities, events or developments that Hubbell expects
or anticipates will or may occur in the future, including such things as future
capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strengths, goals,
expansion and growth of Hubbell's and its subsidiaries' business and operations,
plans, references to future success and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by Hubbell in light of its experience and its perception of historical trends,
current conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
and developments will conform with Hubbell's expectations and predictions is
subject to a number of risks and uncertainties; general economic, market or
business conditions; the opportunities (or lack thereof) that may be presented
to and pursued by Hubbell and its subsidiaries; changes in laws or regulations;
and other factors, many of which are beyond the control of Hubbell and its
subsidiaries. Consequently, all of the forward-looking statements made or
incorporated by reference in this Prospectus/Proxy Statement are qualified by
these cautionary statements and there can be no assurance that the actual
results or developments anticipated by Hubbell will be realized or, even if
substantially realized, that they will have the expected consequences to or
effects on Hubbell and its subsidiaries or their business or operations.
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus/Proxy Statement. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained or
incorporated by reference in this Prospectus/Proxy Statement, in the attached
Exhibits and in the documents incorporated herein by reference. The Shareholders
are urged to read carefully this Prospectus/Proxy Statement and the attached
Exhibits in their entirety.
THE SPECIAL MEETING
DATE, TIME AND PLACE; MATTERS TO BE CONSIDERED
The Special Meeting will be held at 9:00 a.m., local time, on February 14,
1997, at the offices of Fargo. At the Special Meeting, holders of Fargo Common
Stock will be asked to consider and vote upon the approval and adoption of the
Merger Agreement, a copy of which is attached as Exhibit A to this
Prospectus/Proxy Statement, pursuant to which Merger Sub will be merged with and
into Fargo. Fargo will be the surviving corporation in the Merger (the
"Surviving Corporation") and will become a direct, wholly owned subsidiary of
Hubbell.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTES REQUIRED
The affirmative vote of the holders of two-thirds of the outstanding shares
of Fargo Common Stock entitled to vote at the Special Meeting is required for
the approval and adoption of the Merger Agreement. Only holders of record of
Fargo Common Stock at the close of business on January 7, 1997 (the "Record
Date"), will be entitled to notice of, and to vote at, the Special Meeting. The
presence in person or by proxy of the holders of a majority of the shares of
Fargo Common Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Special Meeting. As of the Record Date, there
were 235,702 shares of Fargo Common Stock outstanding, of which 71,318 shares
(approximately 30.3% of the outstanding shares of Fargo Common Stock) were
beneficially owned by directors and executive officers of Fargo. See "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS". All
such directors and executive officers of Fargo have indicated to Fargo that it
is intended that all such shares will be voted in favor of approval and adoption
of the Merger Agreement.
The approval of the shareholders of Hubbell is not required to effect the
Merger.
PROXIES; PROXY SOLICITATION
Shares of Fargo Common Stock represented by properly executed, unrevoked
proxies received at or prior to the Special Meeting will be voted at the Special
Meeting in accordance with the instructions contained therein. Shares of Fargo
Common Stock represented by properly executed, unrevoked proxies for which no
instruction is given will be voted FOR approval of the Merger Agreement. The
Shareholders are requested to complete, sign, date and return promptly the
enclosed proxy card in the postage-paid envelope provided for this purpose to
ensure that their shares are voted. A Fargo shareholder may revoke a proxy by
submitting a later dated proxy with respect to the same shares at any time prior
to the vote on approval and adoption of the Merger Agreement by delivering
written notice of revocation to the Secretary of Fargo at 130 Salt Point Road,
Box 2900, Poughkeepsie, New York 12603-1016 at any time prior to such vote or by
attending the Special Meeting and voting in person. Mere attendance at the
Special Meeting will not in and of itself revoke a proxy.
The persons named as proxies by a Fargo shareholder may propose and vote
for one or more adjournments of the Special Meeting to permit further
solicitations of proxies in favor of any proposal. If the Special Meeting is
postponed or adjourned for any reason, when the Special Meeting is convened or
reconvened, all proxies will be voted in the same manner as such proxies would
have been voted at the original convening of the meeting (except for any proxies
which have theretofore effectively been revoked or withdrawn), notwithstanding
that they may have been effectively voted on the same or any other matter at a
previous meeting.
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In addition to solicitation by mail, directors, officers and employees of
Fargo may solicit proxies by telephone, telegram or otherwise. Such directors,
officers and employees of Fargo will not be additionally compensated for such
solicitation but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Any questions or requests for assistance regarding proxies
and related materials may be directed to Ms. Keryl Briggs by telephone at (914)
471-0600. Fargo will bear the cost of the Special Meeting and of soliciting
proxies therefor.
THE SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
THE COMPANIES
HUBBELL INCORPORATED
Hubbell was founded as a proprietorship in 1888 and was incorporated in
Connecticut in 1905. Hubbell manufactures and sells high quality electrical and
electronic products for a broad range of commercial, industrial,
telecommunications and utility applications and has expanded its operations into
other areas of the electrical industry and related fields. Hubbell's principal
executive offices are located at 584 Derby Milford Road, Orange, Connecticut
06477-4024, and its telephone number is (203) 799-4100.
FMC ACQUISITION CORPORATION
Merger Sub is a corporation recently organized by Hubbell for the purpose
of effecting the Merger. It has no material assets and has not engaged in any
activities except in connection with the Merger Agreement and the transactions
contemplated thereby. The principal executive offices of Merger Sub are located
at 584 Derby Milford Road, Orange Connecticut 06477-4024, and its telephone
number is (203) 799-4100.
FARGO MFG. COMPANY, INC.
Fargo was founded in 1914 and incorporated in its present form in 1946.
Fargo is a manufacturer of niche distribution and transmission product lines,
principally for the utility industry. Fargo presently derives approximately 90%
of its sales from distribution products, including electrical connectors, line
splices, dead ends, hot line taps, formed wire products and wildlife protectors,
and various associated products. Fargo is a privately-owned company and there is
no established public trading market for its capital stock, consisting solely of
Fargo Common Stock. Fargo's principal executive offices are located at 130 Salt
Point Road, Poughkeepsie, New York 12603-1016, and its telephone number is (914)
471-0600.
THE MERGER
GENERAL
The Boards of Directors of Hubbell, Merger Sub and Fargo have approved the
Merger Agreement, which provides for the Merger of Merger Sub with and into
Fargo at the Effective Time (as hereinafter defined), with Fargo as the
Surviving Corporation.
BACKGROUND OF THE MERGER
In July 1995, Scott R. Wheaton, then Fargo's President and Chief Executive
Officer, Chairman of the Board and representative of the Wheaton family
interests (the "Wheaton Interests"), such Wheaton Interests holding, in the
aggregate, approximately 17.5% of the outstanding Fargo Common Stock, died
unexpectedly. Richard C. Raible, previously Fargo's Vice President --
Manufacturing and a director, was elected by the Board as President and Chief
Executive Officer, and C. B. Schmidt, a director and lead representative of the
Schmidt family interests (the "Schmidt Interests", and together with the Wheaton
Interests, the "Interests"), such Schmidt Interests holding, in the aggregate,
approximately 17% of the outstanding Fargo Common Stock, was elected as Chairman
of the Board.
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Following Mr. Wheaton's death, representatives of the Interests expressed
to Mr. Raible and the other members of the Fargo Board their desire to have
their respective holdings of Fargo Common Stock liquidated at a fair market
value, and requested that efforts be made to establish such a value. Various
alternatives were explored by the Fargo Board, including the possible use of a
qualified employee stock ownership plan (an "ESOP") as an internal solution for
liquidating the Interests. After rejecting the ESOP alternative as inadequate
given that the per share price feasibly attainable would have been too low, and
after several other large Shareholders, which Shareholders, together with the
Interests, represented a substantial majority of the outstanding Fargo Common
Stock, expressed their desire to explore the external value which might be
attained for the Shareholders through the sale of Fargo to a third party, the
Fargo Board established a committee (the "Alliance Review Committee"), which
considered and then presented to the Fargo Board a statement of alliance
considerations (the "Alliance Considerations") that enumerated criteria and
procedures for evaluating the potential sale of Fargo. Among other things, the
Alliance Considerations set forth as the general objective the maximization of
net proceeds to the Shareholders. After reviewing and approving the Alliance
Considerations, the Fargo Board engaged Robert M. Haas Associates, Inc. ("RMHA")
to provide investment banking advisory services for the liquidation of
Shareholder interests in a satisfactory manner. Under RMHA's direction, a formal
bidding process ensued, which included, among other things, the distribution to
potential transaction partners of information regarding Fargo's financial
performance and condition, the submission by parties of expressions of interest,
and the invitation of the five highest initial proposals in terms of
consideration to participate in the final phase of the bidding process. That
final phase included the submission by each candidate of its "final and best
offer," culminating in the Alliance Review Committee's selection of Hubbell as
the entity with which Fargo should merge. See "THE MERGER -- Background of the
Merger". On August 2, 1996, Fargo and Hubbell entered into a letter of intent
setting forth in general terms the basis upon which Hubbell proposed to acquire
all of the outstanding Fargo Common Stock. The Merger Agreement was signed on
November 13, 1996, following extensive negotiations concerning the detailed
terms and conditions of the Merger. See "THE MERGER -- Structure of the Merger".
RECOMMENDATION OF THE FARGO BOARD AND REASONS FOR THE MERGER
THE FARGO BOARD HAS, BY UNANIMOUS VOTE, APPROVED AND ADOPTED THE MERGER
AGREEMENT, DETERMINED THAT THE MERGER AGREEMENT AND MERGER ARE IN THE BEST
INTERESTS OF FARGO AND IN THE BEST INTERESTS OF AND FAIR TO THE SHAREHOLDERS,
AND RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT. In reaching its decision to adopt the Merger Agreement and
recommend the Merger, the Fargo Board considered a number of factors. See "THE
MERGER -- Background of the Merger" and "-- Recommendation of the Fargo Board
and Reasons for the Merger".
STRUCTURE OF THE MERGER
Upon the terms and subject to the conditions of the Merger Agreement, at
the Effective Time, in accordance with the New York Business Corporation Law
(the "NYBCL"), Merger Sub will be merged with and into Fargo, with Fargo
continuing as the Surviving Corporation under the name "Fargo Mfg. Company,
Inc." as a direct, wholly owned subsidiary of Hubbell.
CLOSING; EFFECTIVE TIME
Unless the Merger Agreement has been terminated and the transactions
contemplated therein have been abandoned, and subject to certain conditions
described under "THE MERGER -- Conditions to the Consummation of the Merger"
below, the closing (the "Closing") of the Merger will take place on the second
business day following the satisfaction or waiver, if applicable, of such
conditions (or as soon as practicable thereafter), or as otherwise mutually
agreed by the parties to the Merger Agreement (the "Closing Date"). Immediately
following the Closing and on the Closing Date, the parties to the Merger
Agreement will cause the Merger to be consummated by filing a certificate of
merger as required by the NYBCL (the time of such filing being the "Effective
Time").
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CERTIFICATE OF INCORPORATION; BYLAWS; OFFICERS AND DIRECTORS
At the Effective Time, the certificate of incorporation and bylaws of
Merger Sub will be the certificate of incorporation and bylaws, respectively, of
the Surviving Corporation. The directors of Merger Sub immediately prior to the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of Merger Sub immediately prior to the Effective Time will be the
initial officers of the Surviving Corporation, in each case to serve thereafter
until their successors are elected and qualified.
MERGER CONSIDERATION
At the Effective Time, each issued and outstanding share of Fargo Common
Stock (other than shares owned by Hubbell, Fargo treasury stock and shares held
by the Shareholders who have properly exercised their appraisal rights under
Sections 623 and 910 of the NYBCL (such shares, "Dissenting Shares")), will be
converted into the right to receive that number of shares or fraction thereof of
Class B Common Stock determined by dividing (x) the quotient obtained by
dividing (A) $45 million plus or minus the amount, if any, by which the total
assets less total liabilities of Fargo as determined in accordance with
generally accepted accounted principles ("GAAP") consistently applied (the "Net
Worth Amount") calculated by Fargo as of the last day of the completed calendar
month which immediately precedes the Special Meeting and derived from the
Initial Balance Sheet (as hereinafter defined) (the "Estimated Net Worth
Amount") differs from $9,834,900 (the "Net Worth Target") (subject to certain
adjustments) by (B) an amount equal to the average closing price per share of
Class B Common Stock (the "Average Price") as reported on the NYSE Tape for a
consecutive fifteen-day trading period ending three business days prior to the
Special Meeting (the "Pricing Period") by (y) the total number of shares of
Fargo Common Stock issued and outstanding immediately prior to the Effective
Time (excluding all shares of Fargo Common Stock held in the Fargo treasury)
(the "Outstanding Fargo Shares") (the number of shares or fraction thereof of
Class B Common Stock so determined being hereinafter referred to as the "Merger
Consideration"). Shareholders will also be entitled to receive (x) the amount of
cash, if any, required to be deposited by Hubbell or Merger Sub with ChaseMellon
Shareholder Services, L.L.C. (the "Exchange Agent") pursuant to Section
2.2(v)(B) of the Merger Agreement divided by (y) the total number of Outstanding
Fargo Shares. See "THE MERGER -- Merger Consideration".
If the Average Price is less than $34, the Average Price will be deemed to
be $34 and Fargo will have the right to terminate the Merger Agreement unless
Hubbell elects to retain the actual Average Price for purposes of the
calculation described above. If the Average Price is greater than $43, the
Average Price will be the actual Average Price and Fargo will have the right to
terminate the Merger Agreement unless Hubbell elects that the Average Price will
be deemed to be $43 for purposes of the above calculation. Fargo may elect not
to terminate the Merger Agreement even if (i) the Average Price is less than $34
and Hubbell fails to elect to retain the actual Average Price for purposes of
the calculation described above or (ii) the Average Price is greater than $43
and Hubbell fails to elect that the Average Price be deemed to be $43 for the
purposes of the above calculation. In determining whether to elect to terminate
the Merger Agreement under these circumstances, the Fargo Board will take into
account, consistent with its fiduciary duties, all relevant facts and
circumstances existing at the time, including, without limitation, its view as
to whether Hubbell is prepared to increase the Merger Consideration, the market
for stocks in Hubbell's and Fargo's industries, the relative value of Class B
Common Stock in the market, and the advice of its financial advisors and legal
counsel. By approving and adopting the Merger Agreement, the Shareholders would
be permitting the Fargo Board to determine, in the exercise of its fiduciary
duties, to proceed with the Merger even though (i) the Average Price was less
than $34 and Hubbell failed to elect to retain the actual Average Price or (ii)
the Average Price was greater than $43 and Hubbell failed to elect that the
Average Price be deemed to be $43. In determining whether to elect (i) to retain
the actual Average Price when the Average Price is less than $34 or (ii) that
the Average Price will be deemed to be $43 when the actual Average Price is
greater than $43, Hubbell will take into account all relevant facts and
circumstances existing at the time, including, without limitation, its view as
to whether Fargo is willing to accept the Merger with Class B Common Stock
valued at a lower price with respect to clause (i) and at a higher price with
respect to clause (ii) and, in each case, the value of the Merger to Hubbell.
See "THE MERGER -- Merger Consideration". The Shareholders will
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receive cash (a) in lieu of any fractional shares which would otherwise be
issued in the Merger and (b) to the extent that the Final Closing Net Worth
Amount (as hereinafter defined) is greater than the Estimated Net Worth Amount.
See "THE MERGER -- Fractional Shares" and "-- Determination of Closing Net Worth
Amount".
DETERMINATION OF CLOSING NET WORTH AMOUNT
Preparation of Initial Balance Sheet. The Merger Agreement provides that
at least three (3) business days prior to the date of the Special Meeting, Fargo
will cause to be prepared and delivered to Hubbell an unaudited balance sheet of
Fargo (the "Initial Balance Sheet"), certified by Fargo's Chief Financial
Officer, and a calculation of the Estimated Net Worth Amount derived from the
Initial Balance Sheet, which will reflect a liability for the documented
out-of-pocket fees and expenses of Fargo (whether or not incurred prior to the
date of the Merger Agreement) payable by Fargo to outside legal counsel, to RMHA
and to any outside accountants or actuaries, in each case arising out of,
relating to or incidental to the discussion, evaluation, negotiation,
documentation and Closing or potential Closing and all transactions contemplated
by the Merger Agreement ("Shareholder Expenses"), will include an accrual for
the maximum amount of any and all fees and expenses payable, whether at Closing
or at any time prior or subsequent thereto, to RMHA, and is required to be
prepared in accordance with the books and records of Fargo and will comply with
GAAP applied on a consistent basis. During the preparation of the Initial
Balance Sheet, Fargo will provide Hubbell and Hubbell's authorized
representatives during normal business hours with reasonable access to the
books, records, facilities and employees of Fargo, and cooperate fully with
Hubbell and Hubbell's authorized representatives.
Preparation of Closing Balance Sheet. Within 120 days after the Effective
Time, Hubbell will cause to be prepared and delivered to the Shareholder
Representative an unaudited preliminary closing balance sheet of Fargo as of the
close of business on the Closing Date (the "Preliminary Closing Balance Sheet"),
which Preliminary Closing Balance Sheet will be non-binding on the parties and
will be for illustrative purposes only. Within fourteen (14) months after the
Effective Time, Hubbell will cause to be prepared and delivered to the
Shareholder Representative an unaudited balance sheet of Fargo as of the close
of business on the Closing Date (the "Closing Balance Sheet") and a calculation
of the Net Worth Amount as of such date (the "Closing Net Worth Amount") derived
from the Closing Balance Sheet. If the Closing Net Worth Amount set forth in the
Closing Balance Sheet is greater than or less than the Estimated Net Worth
Amount by an amount equal to or less than $20,000, then certain provisions of
the Merger Agreement will not apply and Hubbell and the Shareholder
Representative (on behalf of the Shareholders) will mutually agree upon the
Final Closing Net Worth Amount (the "Final Closing Net Worth Amount"), which
determination will be final and binding on the parties thereto, absent fraud or
manifest error; provided, however, if Hubbell and the Shareholder Representative
are unable to mutually agree upon the Final Closing Net Worth Amount, the Final
Closing Net Worth Amount will be the average of the Closing Net Worth Amount set
forth in the Closing Balance Sheet and the Estimated Net Worth Amount.
If the Closing Net Worth Amount set forth in the Closing Balance Sheet is
greater than or less than the Estimated Net Worth Amount by an amount greater
than $20,000, the Shareholder Representative, on behalf of the Shareholders,
will have a period of thirty (30) days after delivery of the Closing Balance
Sheet to present in writing to Hubbell any objections the Shareholder
Representative may have to any of the matters set forth therein which relate to
the calculation of the Closing Net Worth Amount. If no objections are raised
within such 30-day period, the Closing Balance Sheet and the calculation of the
Closing Net Worth Amount will be final (a "Final Closing Net Worth Amount") and
binding on the parties hereto, absent fraud or manifest error.
In addition, the Merger Agreement provides that in the event that the
Shareholder Representative raises any objections within the aforesaid 30-day
period, the Shareholder Representative and Hubbell, together with their
respective independent certified public accountants, will attempt promptly to
resolve the matter or matters in dispute and, if resolved, such accounting firms
will send a joint notice to the Shareholder Representative and Hubbell stating
the manner in which the dispute was resolved, and a confirmation of the original
Closing Net Worth Amount or a revised Closing Net Worth Amount (each, a "Final
Closing Net
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Worth Amount") based upon such resolution, whereupon the Final Closing Net Worth
Amount will be final and binding on the parties hereto, absent fraud or manifest
error.
The Merger Agreement provides that if such dispute cannot be resolved by
the Shareholder Representative and Hubbell nor by the aforesaid accounting firms
within sixty (60) days after the delivery of the Closing Balance Sheet, then the
specific matters in dispute will be submitted to a firm of independent certified
public accountants mutually acceptable to the Shareholder Representative and
Hubbell (the "Final Arbiter"), which firm will make a final and binding
determination as to such matter or matters within forty-five (45) days of its
appointment. The Final Arbiter will send its written determination to the
Shareholder Representative and Hubbell, together with a confirmation of the
Final Closing Net Worth Amount based upon such determination, whereupon the
Final Closing Net Worth Amount will be binding on the parties thereto, absent
fraud or manifest error.
After the Effective Time, any adjustment that must be made to the Merger
Consideration as a result of (A) the Estimated Net Worth Amount being greater
than the Final Closing Net Worth Amount will be made out of shares of Class B
Common Stock on deposit in the Escrow Account subject to certain procedures set
forth in the Merger Agreement and (B) the Estimated Net Worth Amount being less
than the Final Closing Net Worth Amount, will be made by the deposit by Hubbell
or Merger Sub with the Exchange Agent of an amount in cash equal to the
difference between such amounts, such cash to be paid to the Shareholders
pursuant to the procedures set forth in the Merger Agreement, subject to certain
reductions as set forth in the Merger Agreement.
FRACTIONAL SHARES
No fractional shares of Class B Common Stock will be issued in the Merger.
The Shareholders will not be entitled to receive fractional shares of Class B
Common Stock, but will instead be entitled to receive a cash payment in lieu of
any fraction of a share of Class B Common Stock, such cash payment to be equal
to the fraction of a share of Class B Common Stock, if any, so determined as
described under "THE MERGER-- Merger Consideration", multiplied by the Average
Price.
AFFILIATED SHARES
Each share of Fargo Common Stock which is issued and outstanding
immediately prior to the Effective Time and owned by Hubbell or any direct or
indirect subsidiary of Hubbell, or by Fargo or any of its subsidiaries, will be
canceled and retired and no payment will be made with respect thereto.
DISSENTING SHARES
Under the NYBCL, the Shareholders have the right to dissent from the Merger
and demand appraisal rights for their shares of Fargo Common Stock, provided
that the Merger is consummated and such Shareholders comply with the
requirements of Sections 623 and 910 of the NYBCL.
The Merger Agreement provides that Dissenting Shares will not be converted
into the right to receive the Merger Consideration at or after the Effective
Time unless and until the holder of such Dissenting Shares withdraws his or her
demand for such appraisal with the consent of Fargo, if required, or becomes
ineligible for such appraisal. Pursuant to the Merger Agreement, each holder of
Dissenting Shares will have only such rights and remedies as are granted to such
holder under Sections 623 and 910 of the NYBCL and Dissenting Shares will not,
after the Effective Time, be entitled to vote for any purpose or be entitled to
the payment of dividends or other distributions (except dividends or other
distributions payable to the Shareholders of record prior to the Effective
Time).
For a description of appraisal rights available to the Shareholders, see
"APPRAISAL RIGHTS OF DISSENTING FARGO SHAREHOLDERS" and the applicable
provisions of the NYBCL which are annexed as Exhibit C to this Prospectus/Proxy
Statement.
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EXCHANGE AGENT; EXCHANGE PROCEDURES; DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES; NO FURTHER OWNERSHIP RIGHTS IN FARGO COMMON STOCK; NO FRACTIONAL SHARES
Exchange Agent. The Merger Agreement provides that as soon as practicable
after the Effective Time, the Exchange Agent will be authorized, pursuant to an
agreement satisfactory to Hubbell and Fargo, to act as the Exchange Agent in
effecting the exchange for the applicable Merger Consideration of certificates
(the "Certificates") that, prior to the Effective Time, represented shares of
Fargo Common Stock entitled to conversion into Class B Common Stock pursuant to
the Merger Agreement. At or before the Effective Time, Hubbell will irrevocably
instruct the registrar and transfer agent for the Class B Common Stock to
countersign and deliver to the Exchange Agent such shares of Class B Common
Stock as and when required to deliver the Merger Consideration (less such shares
of Class B Common Stock as will constitute Escrow Shares as described under "THE
MERGER -- Escrow Account/Escrow Agreement" below).
Exchange Procedures. Upon the surrender of each Certificate, the Exchange
Agent will, as promptly as practicable, distribute to the holder of such
Certificate the Merger Consideration multiplied by the number of shares of Fargo
Common Stock formerly represented by such Certificate (including cash due in
lieu of fractional shares), less such Shareholder's pro rata contribution to the
Escrow Account as described under "THE MERGER -- Escrow Account/Escrow
Agreement", in exchange therefor and in accordance with any applicable
instructions from the holder thereof, and such Certificate will forthwith be
canceled.
THE SHAREHOLDERS SHOULD NOT FORWARD FARGO STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. THE SHAREHOLDERS
SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.
ESCROW ACCOUNT/ESCROW AGREEMENT
The Merger Agreement provides that at Closing, Hubbell will deposit 10% of
the number of whole shares of Class B Common Stock to be issued pursuant to the
Merger to each holder of Fargo Common Stock (after rounding down to the nearest
share in the case of fractional shares) (the "Escrow Shares") into the Escrow
Account. Such Escrow Shares will be held for, and dividends distributed on such
Escrow Shares will be paid to the Escrow Agent for distribution to, the
Shareholders as specified in the Escrow Agreement. The Escrow Account will be
used solely at the option of Hubbell to (i) reimburse Hubbell to the extent that
the Estimated Net Worth Amount used in determining the Merger Consideration
exceeds the Final Closing Net Worth Amount and (ii) satisfy any indemnification
obligations to Hubbell set forth in Section 7 of the Merger Agreement. See "THE
MERGER -- Indemnification" and "-- Representations and Warranties". Any Escrow
Shares remaining in the Escrow Account after the earlier of (i) eighteen (18)
months from the Closing Date or (ii) at the completion of the first full audit
cycle for the year commencing on January 1, 1997 during which Fargo has been
consolidated with Hubbell and its Subsidiaries (each, a "Termination Date"),
will be distributed to the Shareholders based on the Shareholders' relative
holdings of Fargo Common Stock initially deposited in the Escrow Account,
provided, however, that if the procedure set forth in Section 2.2 of the Merger
Agreement for determining the Final Closing Net Worth Amount is still continuing
or if there are any outstanding or unsatisfied claims against the Escrow Account
on or prior to the Termination Date, the Escrow Agreement will continue in
effect until the resolution of all such claims, as more fully described under
"THE MERGER -- Escrow Account/Escrow Agreement". All Escrow Shares distributed
from the Escrow Account will be deemed to be distributed pro rata by the
Shareholders in accordance with each Shareholder's percentage interest in the
Escrow Account.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement includes representations and warranties of Fargo,
Hubbell and Merger Sub. The representations and warranties of Fargo contained in
the Merger Agreement or in any certificate or agreement delivered pursuant to
the Merger Agreement will survive the Closing and will continue in effect from
the Closing Date to the earlier of (i) eighteen months following the Closing
Date or (ii) at the completion of the first full audit cycle for the year
commencing on January 1, 1997 during which Fargo has been consolidated
10
<PAGE> 17
with Hubbell and its Subsidiaries, notwithstanding any investigation or access
to information by or on behalf of any party. See "THE MERGER -- Representations
and Warranties".
INDEMNIFICATION
Pursuant to the Merger Agreement, the Shareholders will severally, to the
extent of their respective percentage interests in the Escrow Account, and in
accordance with the procedures set forth in the Escrow Agreement, be responsible
for, will pay or cause to be paid, and will indemnify and hold harmless Hubbell,
its subsidiaries and affiliates (including the Surviving Corporation), and their
respective employees, representatives, officers, directors, and agents
(collectively, the "Indemnified Parties") from and against any losses, claims,
liabilities (whether or not arising out of third-party claims), damages,
expenses (including reasonable expenses of investigation and reasonable
attorneys' fees and expenses) or obligations (collectively, "Losses") in any way
related to, attributed to, resulting from, caused by, based upon or arising out
of (i) any inaccuracy of, misrepresentation relating to, breach of, or failure
to fulfill any covenant, agreement, representation or warranty contained in the
Merger Agreement or in any certificate or agreement delivered or entered into
pursuant to the Merger Agreement on the part of Fargo or any subsidiary of Fargo
or (ii) with respect to each Plan specified on Schedule 4.15(A) to the Merger
Agreement, the alteration, termination or modification of such Plan or any
failure by Fargo to establish and administer such Plan in compliance with any
applicable provisions of ERISA, the Code and other applicable laws, rules and
regulations. See "THE MERGER -- Escrow Account/Escrow Agreement",
"-- Representations and Warranties" and "-- Indemnification".
The Escrow Account will be the exclusive means of payment of the
indemnification obligations of the Shareholders arising under Section 7 of the
Merger Agreement and any indemnification payment will be made in accordance with
the terms of the Escrow Agreement. Any dispute with respect to an
indemnification claim made by Hubbell will be handled as provided for in Section
4 of the Escrow Agreement. See "THE MERGER -- Escrow Account/Escrow Agreement".
No indemnification amount will be payable unless and until the aggregate
indemnification liability of the Shareholders under the Merger Agreement or
under the Escrow Agreement exceeds $130,000, and after exceeding such amount,
such indemnification liability will not include such $130,000.
The rights of Hubbell and the other Indemnified Parties set forth in the
Merger Agreement are the exclusive remedy and in lieu of any and all other
rights and remedies with respect to Losses arising out of matters specified in
the Merger Agreement (other than an action for fraud).
CERTAIN FEES AND EXPENSES
The Merger Agreement requires, in the event that the Fargo Board (i)
withdraws or modifies or publicly proposes or announces its intention to
withdraw or modify, in a manner adverse to Hubbell, the approval or
recommendation by the Fargo Board of the Merger Agreement or the Merger
(including by refraining from recommending approval of the Merger in this
Prospectus/Proxy Statement), (ii) approves or recommends any tender offer
(including a self tender offer), exchange offer, merger, consolidation, sale of
a substantial amount of assets, sale of securities, acquisition of beneficial
ownership of (or options or rights to purchase or the right to vote) securities
of any class or series of debt or equity securities of Fargo, liquidation,
dissolution or similar transactions involving Fargo, any of its subsidiaries or
any division of Fargo or a subsidiary (such proposals, announcements or
transactions, "Acquisition Proposals") or (iii) approves Fargo's entering into
any Acquisition Proposal, or, in the event (x) the Shareholders in a vote at the
Special Meeting fail to approve the transactions contemplated by the Merger
Agreement and there exists an Acquisition Proposal or (y) the Merger Agreement
is terminated (other than by Fargo as described in clauses (ii), (iv)(b) or
(iv)(c) of the first paragraph of "THE MERGER -- Termination") prior to the
Special Meeting taking place, and before such vote or termination Fargo received
or became aware of an Acquisition Proposal, or in the event the Alternative
Transaction Fee plus the Transaction Expenses (each as defined below) otherwise
become due and payable (as described under "THE MERGER -- No Solicitation"),
then in each such case unless at the time of such action or event Fargo is
entitled to terminate the Merger Agreement pursuant to clause (ii)(a) or (iv)(b)
of the first paragraph of "THE MERGER -- Termination" or Hubbell or Merger Sub
is otherwise in
11
<PAGE> 18
material breach of any material representation, warranty, covenant or agreement
under the Merger Agreement, prior to or concurrently with the taking of any such
action by the Fargo Board or within three business days of the occurrence of any
such event that does not involve actions by the Fargo Board, Fargo will pay to
Hubbell in immediately available funds $2,250,000 (the "Alternative Transaction
Fee"), plus all of the Transaction Expenses (not to exceed $750,000).
"Transaction Expenses" means, with respect to any party, the documented
out-of-pocket expenses of such party (whether or not incurred prior to the date
of the Merger Agreement) arising out of, relating to or incidental to the
discussion, evaluation, negotiation, documentation and closing or potential
closing of the Merger and all other transactions contemplated by the Merger
Agreement.
The Merger Agreement also provides that in the event the Shareholders in a
vote at the Special Meeting do not approve the transactions contemplated by the
Merger Agreement and there does not exist an Acquisition Proposal, Fargo will
pay to Hubbell in immediately available funds all of its Transaction Expenses,
as more fully described under "THE MERGER -- Certain Fees and Expenses".
TERMINATION
The Merger Agreement may be terminated, by written notice given promptly to
the other parties thereto, at any time prior to the Effective Time, whether
prior to or after approval of the Merger Agreement by the Shareholders: (i) by
mutual written consent of the Boards of Directors of Hubbell and Fargo; (ii) by
either Hubbell or Fargo if (a) a court of competent jurisdiction or any
governmental, regulatory or administrative agency or commission has issued an
order, decree or ruling or taken any other action, in each case permanently
enjoining or otherwise prohibiting the transactions contemplated by the Merger
Agreement and such order, decree, ruling or other action has become final and
nonappealable or (b) the Effective Time has not occurred on or before March 15,
1997, unless the absence of such occurrence is due to the failure to perform in
all material respects the material obligations under the Merger Agreement
required to be performed at or prior to the Effective Time (I) in the case of
Hubbell, by Merger Sub or Hubbell (or their subsidiaries or affiliates) or (II)
in the case of Fargo, by Fargo; (iii) by Hubbell, if (a) at the Special Meeting,
the holders of two-thirds of the Outstanding Fargo Shares do not approve the
Merger Agreement and the Merger; (b) Fargo has (I) withdrawn, modified or
amended in any material respect its approval or recommendation of the Merger
Agreement, the Merger or the transactions contemplated by the Merger Agreement,
(II) failed to include such recommendation in this Prospectus/Proxy Statement,
or (III) taken any public position inconsistent with such recommendation,
including, without limitation, having failed (without the consent of Hubbell) to
after a reasonable period of time reject or disapprove any Acquisition Proposal
other than the Merger (or after a reasonable period of time recommend to the
Shareholders such rejection or disapproval); (c) in the event of a material
breach by Fargo of any representation, warranty or agreement contained in the
Merger Agreement which has not been cured or is not curable by the earlier of
the Closing Date or the thirtieth day after written notice of such breach was
given to Fargo; or (d) if the Alternative Transaction Fee plus the Transaction
Expenses have become payable as described under "THE MERGER -- Certain Fees and
Expenses"; or (iv) by Fargo, if (a) Fargo executes or has executed a definitive
agreement for an Acquisition Proposal which the Fargo Board determines, in the
exercise of its fiduciary duties under applicable law as advised by outside
counsel, contains terms that are more favorable to Fargo's security holders,
taken as a whole, than the transactions contemplated by the Merger Agreement and
the Alternative Transaction Fee plus all of the Transaction Expenses have been
paid or are paid concurrently therewith; (b) in the event of a material breach
by Hubbell or Merger Sub of any representation, warranty or agreement contained
in the Merger Agreement which has not been cured or is not curable by the
earlier of the Closing Date or the thirtieth day after written notice of such
breach was given to Hubbell; (c) if (I) the Average Price is less than $34 and
Hubbell does not elect to have the Average Price be the actual Average Price
rather than the deemed Average Price or (II) the Average Price is greater than
$43 and Hubbell fails to elect to have the Average Price deemed to be $43 (see
"THE MERGER -- Merger Consideration"); or (d) if the Transaction Expenses have
become payable due to the fact that the Shareholders have not approved the
Merger Agreement and the Merger at the Special Meeting (despite the absence of
an Acquisition Proposal) and the Transaction Expenses have been paid in full.
See "THE MERGER -- Termination".
12
<PAGE> 19
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The obligations of Hubbell, Merger Sub and Fargo to consummate the Merger
are subject to the satisfaction or waiver of various conditions, including
without limitation, the approval of Shareholders and of third parties required
for the consummation of the Merger, the expiration or termination of any waiting
period applicable to the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the absence of any law
that has been enacted, entered, issued, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger, and the SEC's declaration of effectiveness of the Registration Statement
of which this Prospectus/Proxy Statement forms a part. See "THE
MERGER -- Conditions to the Consummation of the Merger".
REGULATORY APPROVALS REQUIRED
The consummation of the Merger is subject to the expiration or termination
of the relevant waiting period under the HSR Act. On December 18, 1996, the
waiting period under the HSR Act expired. See "THE MERGER -- Regulatory
Approvals Required".
INTERESTS OF CERTAIN PERSONS IN THE MERGER
As of the Record Date, directors and executive officers of Fargo
beneficially owned 71,318 shares of Fargo Common Stock (or 30.3%). Shares of
Fargo Common Stock held by executive officers and directors of Fargo will be
converted into the right to receive the same consideration as shares of Fargo
Common Stock held by other Shareholders. In the Merger Agreement, Hubbell and
Merger Sub have agreed that the rights of present and former officers and
directors of Fargo to indemnification under provisions set forth in the
certificate of incorporation of Fargo will be maintained for at least six years
after the Effective Time. See "THE MERGER -- Interests of Certain Persons in the
Merger".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Simpson Thacher & Bartlett ("ST&B"), counsel to Hubbell expects to deliver
to Fargo an opinion that for United States federal income tax purposes (under
current law and assuming that (i) the Merger takes place as described in the
Merger Agreement, (ii) certain factual matters with respect to Hubbell, Merger
Sub, Fargo and certain shareholders of Fargo, respectively, described in certain
representation letters addressed to such counsel, are true and correct as of the
Effective Time and (iii) the amount of cash to be paid by Hubbell or Merger Sub
pursuant to the Merger Agreement does not exceed ten percent of the aggregate
consideration to be paid by Hubbell or Merger Sub to Shareholders pursuant to
the Merger Agreement), the Merger will be treated as a reorganization within the
meaning of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code"). SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER. See "THE MERGER -- Certain
Federal Income Tax Consequences".
ANTICIPATED ACCOUNTING TREATMENT
Hubbell intends to treat the Merger as a "purchase" for accounting and
financial reporting purposes. See "THE MERGER -- Anticipated Accounting
Treatment".
RESALE OF HUBBELL COMMON STOCK
The Class B Common Stock to be issued pursuant to the Merger will be freely
transferable under the Securities Act except for shares issued to any Fargo
shareholder who may be deemed to be an affiliate of Fargo (an "Affiliate"), for
purposes of Rule 145 under the Securities Act. Fargo will use its best efforts
to cause each such Affiliate to enter into an agreement with Hubbell providing
that such Affiliate will not transfer any Class B Common Stock received in the
Merger except (i) pursuant to an effective registration statement under the
Securities Act, (ii) in conformity with the volume and other limitations of Rule
144 (to the extent incorporated in Rule 145), each promulgated under the
Securities Act, or (iii) in a transaction which, in the opinion of independent
counsel reasonably satisfactory to Hubbell, or as described in a "no-
13
<PAGE> 20
action" or interpretive letter from the staff of the SEC, is not required to be
registered under the Securities Act.
STOCK EXCHANGE LISTING
The shares of Class B Common Stock to be issued pursuant to the Merger
Agreement are listed on the NYSE.
COMPARISON OF RIGHTS
The Shareholders should also consider that the rights of holders of Hubbell
Common Stock differ in a number of respects from the rights of holders of Fargo
Common Stock. See "COMPARISON OF RIGHTS OF HOLDERS OF FARGO COMMON STOCK AND
HUBBELL CLASS B COMMON STOCK".
14
<PAGE> 21
SELECTED HISTORICAL FINANCIAL INFORMATION OF HUBBELL INCORPORATED
The following table sets forth selected consolidated historical financial
data for Hubbell and has been derived from and should be read in conjunction
with the audited consolidated financial statements of Hubbell for each of the
five years ended December 31, 1995 and the unaudited interim consolidated
financial statements of Hubbell for the nine months ended September 30, 1996 and
1995, including the respective notes thereto. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." In the opinion of management,
all adjustments, consisting of normal recurring accruals, considered necessary
for a fair presentation have been included in the unaudited interim data.
Interim results for the nine months ended September 30, 1996 are not necessarily
indicative of results which may be expected for future periods, including the
year ending December 31, 1996. Pro forma financial statements of Hubbell
reflecting the effect of the Merger are not presented and prior year financial
statements of Hubbell will not be restated due to the immateriality of the
Merger to Hubbell's financial results.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net Sales........................... $ 966,297 $ 860,408 $1,143,126 $1,013,700 $832,423 $786,078 $756,126
Gross profit........................ 288,992 250,878 339,948 305,020 262,931 257,800 247,640
Restructuring charge................ -- -- -- -- (50,000)(1) -- --
Operating income.................... 145,399 122,110 164,960 140,583 70,241 117,926 118,501
Income before cumulative effect of
change in accounting principles... 104,394 90,186 121,934 106,533 66,306(1) 94,090 90,597
Cumulative effect of change in
accounting principles............. -- -- -- -- -- (16,506)(2) --
Net Income.......................... 104,394 90,186 121,934 106,533 66,306(1) 77,584 90,597
Earnings Per Share(3):
Income before cumulative effect of
change in accounting
principles...................... 1.55 1.35 1.83 1.60 1.00 1.42 1.37
Cumulative effect of change in
accounting principles............. -- -- -- -- -- (0.25)(2) --
Net Income...................... 1.55 1.35 1.83 1.60 1.00 1.17 1.37
Cash dividends declared per common
share(3).......................... .76 .68 .92 .81 .78 .76 .70
FINANCIAL POSITION, AT END OF
PERIOD:
Working capital..................... 332,829 194,412 305,168 112,833 131,875 129,401 232,939
Current ratio....................... 2.3 to 1 1.7 to 1 2.6 to 1 1.3 to 1 1.6 to 1 1.6 to 1 3.1 to 1
Total assets........................ 1,155,656 1,048,136 1,057,245 1,041,569 874,298 806,688 685,341
Long-term debt...................... 99,442 2,700 102,096 2,700 2,700 2,700 8,100
Common shareholders' equity:
Total............................. 720,176 651,744 667,338 608,996 557,660 541,327 518,906
Per share......................... 10.73 9.78 10.00 9.24 8.50 8.27 7.94
</TABLE>
- ---------------
(1) In the fourth quarter of 1993, Hubbell recorded a restructuring charge for
consolidation of manufacturing and distribution operations and other
productivity programs which reduced net income by $31,000,000, $0.46 per
share. Excluding the restructuring charge, net earnings from operations
would have been $97,306,000, $1.46 per share.
(2) In 1992, Hubbell adopted Statement of Financial Accounting Standards (FAS)
No. 106 Employers' Accounting for Postretirement Benefits Other Than
Pensions, No. 109 -- Accounting for Income Taxes and No. 112 -- Employers'
Accounting for Postemployment Benefits. As part of adopting the new
accounting standards as of January 1, 1992, a one-time non-cash charge of
$16,506,000 net of tax or $0.25 per share was recorded.
(3) Share data have been restated for the 2-for-1 stock split in the form of a
100% stock dividend paid on August 9, 1996.
15
<PAGE> 22
SELECTED HISTORICAL FINANCIAL INFORMATION
OF FARGO MFG. COMPANY, INC.
The following table sets forth selected consolidated historical financial
data for Fargo and has been derived from and should be read in conjunction with
the audited consolidated financial statements of Fargo for each of the five
years ended December 31, 1995 and the unaudited interim consolidated financial
statements of Fargo for the nine months ended September 30, 1996 and 1995,
including the respective notes thereto. Copies of the financial statements
referred to will be provided to any Shareholder, without cost, upon request. In
the opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been included in the
unaudited interim data. Interim results for the nine months ended September 30,
1996 are not necessarily indicative of results which may be expected for future
periods, including the year ending December 31, 1996.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Net sales.......................... $23,055 $19,396 $26,765 $26,133 $24,622 $24,615 $23,629
Gross profit....................... 7,410 5,327 7,791 6,292 6,453 6,807 6,083
Operating income................... 3,089 1,538 2,637 1,230 1,500 1,958 1,382
Net income......................... 1,978 960 1,830 1,304 939 1,330 795
Dividends declared................. 311 255 347 317 289 259 245
Net income per common share(1)..... 8.39 4.32 8.11 5.97 4.42 6.48 3.91
Dividends per common share(1)...... 1.32 1.15 1.54 1.45 1.36 1.26 1.21
BALANCE SHEET DATA
Total assets....................... 19,201 15,534 16,610 13,558 11,835 11,169 11,195
Long-term obligations
Long-term debt(2).................. 84 142 97 125 0 0 1,575
Deferred compensation............ 508 534 510 498 526 475 439
</TABLE>
- ---------------
(1) The per share information for the years 1993, 1992, and 1991 has been
adjusted to reflect the two-for-one stock split in the form of a 100% stock
dividend payable to holders of Fargo Common Stock on March 30, 1993.
(2) Long-term debt includes the long-term portion of capital lease obligations.
16
<PAGE> 23
COMPARATIVE PER SHARE DATA
The following table sets forth for Hubbell Common Stock (Class A and Class
B) and Fargo Common Stock certain historical, pro forma and pro forma equivalent
per share financial information for the nine months ended September 30, 1996 and
for the year ended December 31, 1995. The information presented herein should be
read in conjunction with the financial statements and other financial
information of Hubbell contained or incorporated by reference in this
Prospectus/Proxy Statement and the financial statements and other financial
information of Fargo, including the notes thereto, appearing elsewhere in this
Prospectus/Proxy Statement. See "AVAILABLE INFORMATION" and "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE." The pro forma information is presented as if
the Merger had taken place at the beginning of the periods presented. Equivalent
pro forma dividends per share, income per share and book value per share
presented for the Fargo Common Stock assume (i) exchange ratios of Class B
Common Stock for Fargo Common Stock based upon the average closing price per
share of the Class B Common Stock on the NYSE Tape for the fifteen-day trading
period ending December 6, 1996 and (ii) that the Estimated Net Worth Amount and
the Final Closing Net Worth Amount each equals the Net Worth Target. (At
September 30, 1996 Fargo's net worth exceeded the Net Worth Target by over $5
million. To the extent the Estimated Net Worth Amount exceeds the Net Worth
Target, the exchange ratio and pro forma equivalent numbers for Fargo would
increase.) THIS EXCHANGE RATIO IS ASSUMED FOR THE PURPOSES OF THESE CALCULATIONS
ONLY. THE ACTUAL NUMBER OF SHARES OF CLASS B COMMON STOCK TO BE RECEIVED FOR
EACH SHARE OF FARGO COMMON STOCK WILL BE BASED ON A COMPARISON OF THE AVERAGE
PRICE AS REPORTED ON THE NYSE TAPE FOR THE PRICING PERIOD AND THE ESTIMATED NET
WORTH AMOUNT AND THE NET WORTH TARGET.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
HUBBELL COMMON STOCK(1):
Income Per Common Share
Historical............................................... $ 1.55 $ 1.83
Pro Forma, Combined...................................... 1.55 1.81
Cash Dividends Declared Per Common Share:
Historical............................................... 0.76 0.92
Pro Forma, Combined(2)................................... 0.76 0.92
Book Value Per Common Share At Period End:
Historical............................................... 10.73 10.00
Pro Forma, Combined...................................... 11.22 10.51
FARGO COMMON STOCK:
Income Per Common Share:
Historical............................................... 8.39 8.11
Pro Forma Equivalent(3).................................. 7.00 8.18
Cash Dividends Declared Per Common Share:
Historical............................................... 1.32 1.54
Pro Forma Equivalent(3).................................. 3.43 4.15
Book Value Per Share at Period End:
Historical............................................... 64.57 57.51
Pro Forma Equivalent(3).................................. 50.64 47.42
</TABLE>
- ---------------
(1) Figures have been adjusted to reflect the 2-for-1 stock split in the form of
a 100% stock dividend paid on August 9, 1996.
(2) The Hubbell pro forma dividends represent historical dividends per share.
(3) The Fargo pro forma equivalent per share amounts are calculated by
multiplying the pro forma combined per share amounts by the exchange ratio
of 4.5136 calculated using the assumptions described above.
17
<PAGE> 24
COMPARATIVE STOCK PRICES
Hubbell Class B Common Stock is listed on the NYSE under the trading symbol
"HUBB". There is no established public trading market for the Fargo Common
Stock. The following table sets forth, for the periods indicated, the high and
low closing prices per share of Class B Common Stock as reported on the NYSE
Tape.
<TABLE>
<CAPTION>
CLASS B
COMMON
STOCK(*)
----------
HIGH LOW
---- ---
<S> <C> <C>
CALENDAR QUARTER
1994
First Quarter.................................................. 29 1/2 25 1/2
Second Quarter................................................. 30 25 1/8
Third Quarter.................................................. 27 1/2 25 1/2
Fourth Quarter................................................. 27 5/8 25
1995
First Quarter.................................................. 27 25 1/4
Second Quarter................................................. 29 26 1/2
Third Quarter.................................................. 30 28 1/4
Fourth Quarter................................................. 33 29 1/8
1996
First Quarter.................................................. 35 1/8 31 3/4
Second Quarter................................................. 36 31 3/4
Third Quarter.................................................. 37 7/8 33 1/4
Fourth Quarter................................................. 43 3/4 36 3/8
1997
First Quarter (through January , 1997).......................
</TABLE>
- ---------------
(*) All figures have been adjusted to reflect the 2-for-1 stock split in the
form of a 100% stock dividend paid on August 9, 1996.
On November 12, 1996, the last trading day before the execution of the
Merger Agreement, the closing sale price of Class B Common Stock as reported on
the NYSE Tape was $42 3/8 per share.
On January , 1997, the last full trading day for which information was
available at the time of the printing of this Prospectus/Proxy Statement, the
closing sale price of Class B Common Stock as reported on the NYSE Tape was
$ per share.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT INFORMATION FOR THE MARKET PRICES
OF CLASS B COMMON STOCK.
No assurance can be given as to the market price of Class B Common Stock at
or after the Effective Time.
18
<PAGE> 25
THE SPECIAL MEETING
DATE, TIME AND PLACE
This Prospectus/Proxy Statement is being furnished to the Shareholders in
connection with the solicitation by the Fargo Board of proxies for use at the
Special Meeting to be held on February 14, 1997, at 9:00 a.m., local time, at
the offices of Fargo.
MATTERS TO BE CONSIDERED
At the Special Meeting, holders of Fargo Common Stock will be asked to
consider and vote upon a proposal to approve and adopt the Merger Agreement. The
Merger Agreement provides that, upon the terms and subject to the conditions
thereof, Merger Sub will be merged with and into Fargo and Fargo will become a
direct, wholly owned subsidiary of Hubbell.
THE FARGO BOARD, BY UNANIMOUS VOTE, HAS APPROVED AND ADOPTED THE MERGER
AGREEMENT, DETERMINED THAT THE MERGER AGREEMENT AND THE MERGER ARE IN THE BEST
INTERESTS OF FARGO AND IN THE BEST INTERESTS OF AND FAIR TO THE SHAREHOLDERS,
AND RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT. SEE "THE MERGER -- BACKGROUND OF THE MERGER" AND
"-- RECOMMENDATION OF THE FARGO BOARD AND REASONS FOR THE MERGER".
The Board of Directors of Hubbell (the "Hubbell Board") has approved the
Merger Agreement and the transfer of shares of Class B Common Stock in the
Merger, and the Board of Directors of Merger Sub, and Hubbell, as the sole
shareholder of Merger Sub, have respectively adopted and approved the Merger
Agreement. Approval of the Merger Agreement and the Merger by Hubbell's
shareholders is not required to effect the Merger.
The Shareholders have the right to dissent from the Merger Agreement and,
subject to certain conditions provided under the NYBCL, to receive payment for
the fair value of their shares of Fargo Common Stock. See "THE
MERGER -- Dissenting Shares" and Exhibit C to this Prospectus/Proxy Statement.
RECORD DATE; SHARES ENTITLED TO VOTE; VOTES REQUIRED
The close of business on January 7, 1997, has been fixed as the Record Date
for determining the holders of Fargo Common Stock who are entitled to notice of
and to vote at the Special Meeting. As of the Record Date, there were 235,702
shares of Fargo Common Stock outstanding and entitled to vote. The holders of
record on the Record Date of Fargo Common Stock are entitled to one vote per
share of Fargo Common Stock on each matter submitted to a vote at the Special
Meeting. The presence in person or by proxy of the holders of a majority of the
shares of Fargo Common Stock entitled to vote is necessary to constitute a
quorum for the transaction of business at the Special Meeting. The affirmative
vote of holders of two-thirds of the outstanding shares of Fargo Common Stock is
required for approval and adoption of the Merger Agreement. Shares of Fargo
Common Stock represented at the Special Meeting by a properly executed,
unrevoked proxy received at or prior to the Special Meeting will be treated as
present at the Special Meeting for purposes of determining a quorum, without
regard to whether the proxy is marked as casting a vote or abstaining.
As of the Record Date, 71,318 shares (approximately 30.3% of the
outstanding shares of Fargo Common Stock) were beneficially owned by directors
and executive officers of the Company. See "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS". All of such directors and
executive officers of the Company have indicated to Fargo that it is intended
that all such shares will be voted in favor of approval and adoption of the
Merger Agreement. As of the Record Date, none of Hubbell or Hubbell's directors
or executive officers beneficially owned any shares of Fargo Common Stock.
Abstentions will be treated as not meeting the requisite vote. In light of
the treatment of abstentions and the fact that the affirmative vote required to
approve and adopt the Merger Agreement is two-thirds of the total number of
outstanding shares of Fargo Common Stock on the Record Date, abstentions (as
well as any
19
<PAGE> 26
other failure to vote shares of Fargo Common Stock) will have the same effect as
votes against approval of the Merger Agreement.
PROXIES; PROXY SOLICITATION
Shares of Fargo Common Stock represented by properly executed, unrevoked
proxies received at or prior to the Special Meeting will be voted at the Special
Meeting in accordance with the instructions contained therein. Shares of Fargo
Common Stock represented by properly executed, unrevoked proxies for which no
instruction is given will be voted FOR approval of the Merger Agreement. The
Shareholders are requested to complete, sign, date and return promptly the
enclosed proxy card in the postage-paid envelope provided for this purpose to
ensure that their shares are voted. A Fargo shareholder may revoke a proxy by
submitting a later dated proxy with respect to the same shares at any time prior
to the vote on the approval of the Merger Agreement, by delivering written
notice of revocation to the Secretary of Fargo at 130 Salt Point Road, Box 2900,
Poughkeepsie, New York 12603-1016 at any time prior to such vote or by attending
the Special Meeting and voting in person. Mere attendance at the Special Meeting
will not in and of itself revoke a proxy.
The persons named as proxies by a Fargo shareholder may propose and vote
for one or more adjournments of the Special Meeting to permit further
solicitations of proxies in favor of any proposal. If the Special Meeting is
postponed or adjourned for any reason, when the Special Meeting is convened or
reconvened, all proxies will be voted in the same manner as such proxies would
have been voted at the original convening of the meeting (except for any proxies
which have theretofore effectively been revoked or withdrawn), notwithstanding
that they may have been effectively voted on the same or any other matter at a
previous meeting.
In addition to solicitation by mail, directors, officers and employees of
Fargo may solicit proxies by telephone, telegram or otherwise. Such directors,
officers and employees of Fargo will not be additionally compensated for such
solicitation but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Any questions or requests for assistance regarding proxies
and related materials may be directed to Ms. Keryl Briggs by telephone at (914)
471-0600. Fargo will bear the cost of the Special Meeting and of soliciting
proxies therefor.
THE SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
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THE COMPANIES
HUBBELL INCORPORATED
Hubbell was founded as a proprietorship in 1888, and was incorporated in
Connecticut in 1905. Hubbell manufactures and sells high quality electrical and
electronic products for a broad range of commercial, industrial,
telecommunications and utility applications and has expanded its operations into
other areas of the electrical industry and related fields. Hubbell's products
are now manufactured or assembled by twenty-one divisions and subsidiaries at
thirty-two locations in the United States, Canada, Puerto Rico, Mexico, the
United Kingdom and Singapore. Hubbell also participates in joint ventures with
partners in Brazil, Germany and Taiwan, and maintains sales offices in Malaysia,
Hong Kong, South Korea and the Middle East.
Hubbell is primarily engaged in the engineering, manufacture and sale of
electrical and electronic products. These products can be divided into three
general segments: products primarily used in low-voltage applications, products
primarily used in high-voltage applications and products that either are not
directly related to the electrical business, or if related, cannot be clearly
classified on a voltage application basis. Hubbell defines "low-voltage" as
being 600 volts and less and "high-voltage" as greater than 600 volts.
Over the years, Hubbell has acquired a number of businesses, including more
recently Anderson Electrical Connectors and Gleason Reel Corp.
The principal executive offices of Hubbell are located at 584 Derby Milford
Road, Orange, Connecticut 06477-4024, and its telephone number is (203)
799-4100.
FMC ACQUISITION CORPORATION
Merger Sub is a corporation recently organized by Hubbell for the purpose
of effecting the Merger. It has no material assets and has not engaged in any
activities except in connection with the Merger Agreement and the transactions
contemplated thereby. The principal executive offices of Merger Sub are located
at 584 Derby Milford Road, Orange, Connecticut 06477-4024, and its telephone
number is (203) 799-4100.
FARGO MFG. COMPANY, INC.
Fargo was founded in 1914 and incorporated in its present form in 1946.
Fargo is a manufacturer of niche distribution and transmission product lines,
principally for the utility industry. Fargo presently derives approximately 90%
of its sales from distribution products, including electrical connectors, line
splices, dead ends, hot line taps, formed wire products and wildlife protectors,
and various associated products. Approximately 6% of revenues consist of
transmission products, including splices, sleeves, connectors and dead ends, as
well as spacers and dampers, with the balance of sales consisting of original
equipment and resale products, including substation fittings for cable, tube and
bus as well as underground enclosures, wrenches, hydraulic pumps and presses,
and coatings. Approximately 23% of Fargo's 1995 sales were derived from products
which are sole-sourced, with approximately 70% of the remaining revenues being
generated from products which occupy prominent market positions. Management
estimates that Fargo's Stock Keeping Units ("SKU") base approximates 3,500
products. Fargo maintains an active new product development, extension and
enhancement program. Fargo's products are designed to offer cost-efficient
installation, optimal functionality and strength, and superior life cycle
performance.
Fargo sells its products in all fifty states as well as in approximately 50
countries through an extensive network of domestic and foreign distributors and
a direct sales force. Domestic and foreign sales accounted, respectively, for
approximately 88% and 12% of 1995 revenues, with Canada accounting for the
largest portion of international sales, followed by the Caribbean, Mexico, Latin
America, parts of South America and Asia. Fargo has conducted extensive
marketing initiatives in foreign markets and believes that such markets offer
significant potential for sales growth.
Fargo's customer base includes each of the approximately 132 investor-owned
utilities in the United States, Canada and Mexico as well as an estimated 470
assorted Rural Utility Systems, public utility districts, municipal utilities
and other parties. Fargo is not subject to material account concentration, with
three
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accounts (two being distributors) each generating approximately 5% of Fargo's
total revenues in 1995. Fargo's 22 largest accounts represented approximately
50% of 1995 sales volume. Fargo's business is not subject to significant
seasonal or other cyclical fluctuations as a result of its primary involvement
in the utility repair, upgrade and rebuild market, rather than the new
construction market.
Fargo's operations are conducted in its company-owned 103,000 square-foot
facility situated on an 18-acre site in Poughkeepsie, New York. Fargo has taken
various actions to streamline its operations and reduce costs, including the
implementation of a state-of-the-art integrated information system (an MRP II
system), on-line since 1994, and standard cost accounting in 1996. Fargo
believes that its personnel are a key strength, with a well-rounded management
team overseeing a highly motivated work force of approximately 210 full-time
employees.
Fargo is a privately-owned company and there is no established public
trading market for its capital stock, consisting solely of Fargo Common Stock.
As of December 13, 1996, there were 218 holders of record of Fargo Common
Stock. Shares of Fargo Common Stock held by beneficial owners of more than five
percent of Fargo Common Stock as well as shares held by executive officers and
directors will be converted into the right to receive the same consideration as
shares of Fargo Common Stock held by other Shareholders.
For 1996, Fargo declared and paid cash dividends in an aggregate amount of
$1.76 per share (of which dividends in the amount of $0.44 per share were paid
in respect of each quarter). In 1995, Fargo declared and paid cash dividends in
the amount of $1.52 per share (of which $0.37 per share was paid in the first
and second quarters and $0.39 per share was paid in the third and fourth
quarters). Cash dividends in the amount of $1.44 per share were declared and
paid in 1994, of which $0.35 per share was paid in each of the first and second
quarters of 1994 and $0.37 per share was paid in the third and fourth quarters
of 1994. Other than the Merger Agreement, which prohibits the Company from
declaring, paying or setting aside for payment any dividend without the consent
of Hubbell prior to the closing of the Merger (except for the dividend paid with
respect to the fourth quarter of 1996), there are no restrictions that currently
materially limit Fargo's ability to pay dividends.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF FARGO MFG. COMPANY, INC.
The following discussion should be read in conjunction with Fargo's
consolidated historical financial statements and the related notes thereto
included elsewhere in this Prospectus/Proxy Statement.
RESULTS OF OPERATIONS
Comparison of Nine Months Ended September 30, 1996 to Nine Months Ended
September 30, 1995
Net Income. Net income increased to $1,977,689 for the nine months ended
September 30, 1996, compared to $960,210 for the nine months ended September 30,
1995, an increase of $1,017,479, or 106%. This increase was primarily due to an
increase in net sales, offset by increases in research and development expense,
selling and distribution expense and general and administrative expense.
Revenues. Net sales increased to $23,054,785 for the nine months ended
September 30, 1996, compared to $19,395,638 for the nine months ended September
30, 1995, an increase of $3,659,147, or 18.9%. Such net sales for the nine
months ended September 30, 1996 represent record sales for Fargo. While Fargo
had been anticipating higher sales generally for 1996, actual sales growth has
been higher than expected due in part to Hurricane Fran which accounted for over
$1,000,000 in storm-related orders. The majority of the sales growth, however,
is due to expanded customer alliances and penetration of international markets,
which Fargo believes is attributable, in substantial part, to its continuing
efforts to position itself as a premier supplier of niche distribution and
transmission products in its markets.
Gross Profit. Gross margins increased to 32% for the nine months ended
September 30, 1996 as compared to 27.5% for the nine months ended September 30,
1995. This increase was attributable to two factors: the ability of Fargo to
increase product prices due to an increased emphasis on quality control and
customer service, and the decrease in manufacturing costs resulting from the use
of more advanced manufacturing and cost accounting systems implemented in 1995.
Research and Development Expense. Research and development expense, which
consists primarily of salaries and other personnel-related expenses, was
$653,118 for the nine months ended September 30, 1996 as compared to $550,065
for the same period in 1995, an increase of $103,053, or 18.7%. This increase
was due in part to an increased accrual of bonuses under the performance based
incentive compensation program for the first nine months of 1996. The increase
in research and development expenses in 1996 was also partly due to the transfer
of an employee (previously in Fargo's manufacturing department) to the research
and development department. However, management expects that total research and
development expense for 1996 will remain in the range of 2% to 3% of total
sales.
Selling and Distribution Expense. Selling and distribution expense
consists primarily of sales and marketing promotions, distribution costs,
personnel and related overhead costs and customer support costs. Selling and
distribution expense increased $115,114, or 5.8%, to $2,091,383 for the nine
month period ended September 30, 1996, as compared to $1,976,269 for the same
period in 1995. This increase was primarily due to higher commissions resulting
from higher sales as well as the accrual of bonuses under the performance based
incentive compensation program. However, as a percentage of sales, selling and
distribution expense remained in the 9-10% range.
General and Administrative Expense. For the period ended September 30,
1996, general and administrative expense increased by $313,293, or 24.8%, to
$1,575,859, as compared to $1,262,566 for the period ended September 30, 1995.
Much of this increase was due to the accrual of bonuses under the performance
based incentive compensation program. However, as a percentage of sales, general
and administrative expenses remained stable at around 6.5%.
Comparison of Year Ended December 31, 1995 to Year Ended December 31, 1994
Net Income. Net income increased to $1,830,085 for 1995 from $1,303,989 in
1994, an increase of $526,096 or 40.3%. This increase was primarily due to an
increase in net sales and a decrease in selling and
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distribution expense, offset by increases in research and development expense
and general and administrative expense.
Revenues. Net sales increased to $26,764,805 for the year ended December
31, 1995, as compared to $26,132,915 for the year ended December 31, 1994, an
increase of $631,890. As sales volume was up only slightly in 1995 from 1994,
this increase was primarily due to pricing increases instituted in 1994.
Gross Profit. Gross margins increased to 29.1% of sales for the year ended
December 31, 1995, as compared to 24.1% of sales for the year ended December 31,
1994. One of the reasons for this increase was that Fargo was able to increase
prices beginning in 1994 to reflect increased raw material costs, which it had
not been able to do earlier due to the fact it had multi-year contracts and
price increases could not be made until such contracts expired. In addition, in
1995 Fargo implemented an advanced manufacturing resource and standard cost
accounting computer system which was instrumental with respect to a decline of
manufacturing overhead of $573,323.
Research and Development Expense. Research and development expense
increased slightly in 1995 as compared to 1994 to $751,621 from $714,436
primarily due to higher accrued incentive compensation in 1995 as compared to
1994. However, these expenses remained at just under 2% of sales.
Selling and Distribution Expense. Selling and distribution expense
decreased $264,507, or 9.2%, to $2,611,874 in 1995, as compared to $2,876,381 in
1994. This decrease resulted from the restructuring of Fargo's sales and
marketing department which began in 1994 and was completed in 1995, which
resulted in the closure of Fargo's satellite domestic area and Canadian sales
offices. Fargo also centralized its account service operations into a Customer
Satisfaction department to ensure timely and effective responses to customer
inquiries. These changes resulted in headcount reduction while leading to
increased efficiencies and cost savings.
General and Administrative Expense. General and administrative expense
increased $332,038 to $1,788,407 in 1995 from $1,456,369 in 1994, an increase of
22.8%. This increase was largely due to additional payroll costs related to the
management transition which resulted from the death of the former president and
chief executive officer of Fargo as well as to increased payments under the
performance based incentive compensation program.
Comparison of Year Ended December 31, 1994 to Year Ended December 31, 1993
Net Income. Net income increased to $1,303,989 in 1994 as compared to
$938,593 in 1993, an increase of $365,396, or 38.9%. This increase was primarily
due to an increase in net sales, a decrease in general and administrative
expense and the receipt of a settlement payment relating to a securities
arbitration, offset by increases in research and development expense and selling
and distribution expense.
Revenues. Net sales increased to $26,132,915 for the year ended December
31, 1994, as compared to net sales of $24,621,714 for the year ended December
31, 1993. Such increase was primarily the result of storm-related sales and the
implementation of price increases in 1994.
Miscellaneous Income. In 1994 Fargo received miscellaneous income in the
amount of $542,000. The majority of such income was related to a one-time
settlement payment in connection with an arbitration settled in Fargo's favor
regarding purchases by a broker for Fargo's account.
Gross Profit. Gross margins decreased slightly to 24.1% of sales in 1994
from 26.2% of sales in 1993. This decrease was attributable to the increased
cost of raw materials during 1994 due to high volatility in the copper and
aluminum markets. Since a significant portion of Fargo's business is tied to
multi-year contracts, pricing increases could not be implemented until existing
commitments had expired. Although such pricing increases were implemented in
1994, the impact of such increases was not largely felt until 1995.
Research and Development Expense. Research and development expense
increased in 1994, as compared to 1993, to $714,436 from $649,798 primarily due
to payments for professional services rendered by third party consultants.
However, these expenses remained at just under 2% of sales.
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Selling and Distribution Expense. Selling and distribution expense
increased slightly in 1994, to $2,876,381 from $2,772,054 in 1993, an increase
of 3.7%. This small increase was primarily due to increased expenses relating to
advertising and trade shows.
General and Administrative Expense. General and administrative expense
decreased $74,245 to $1,456,369 in 1994 from $1,530,614 in 1993, a decrease of
4.9%.
LIQUIDITY
The strong sales growth experienced during the first nine months of 1996
has resulted in strong net earnings. Fargo generated cash flows from operations
of $3,619,790 in the nine months ended September 30, 1996, which represents a
43% increase from $2,527,353 in the same period in 1995. Fargo's cash position,
including investments in U.S. Treasury Bills, stood at approximately $7,600,000
as of September 30, 1996 as compared to approximately $4,900,000 at September
30, 1995. Furthermore, Fargo carries no interest-bearing debt other than capital
lease obligations and has available two separate, unsecured lines of credit
totaling $6,500,000. No advances were outstanding under either line of credit as
of September 30, 1996. Management believes that Fargo's strong liquidity
position will be sufficient to fund anticipated future growth and capital
expenditures. Anticipated capital expenditures consist primarily of acquisitions
of machinery and equipment used in manufacturing operations.
Fargo's cash and cash equivalents, including investments in U.S. Treasury
Bills, was $4,895,372, $2,727,781 and $1,770,563 at December 31, 1995, 1994 and
1993, respectively. Current ratios of 5.8, 7.1 and 7.5 and quick ratios of 4.2,
4.5 and 4.1 at December 31, 1995, 1994 and 1993, respectively, reflect the
strong liquidity position of Fargo. Working capital was $10,341,093, $8,580,940
and $7,324,524 at December 31, 1995, 1994 and 1993, respectively. Furthermore,
no advances were outstanding under either line of credit as of December 31,
1995, 1994 or 1993. Fargo generated cash flow from operations of $3,114,871,
$1,830,044 and $2,272,252 during the years ended December 31, 1995, 1994 and
1993, respectively. During 1995, Fargo continued to develop its new formed wire
product line. This development accounted for the significant increase in
purchases of equipment in 1995 compared to 1994 and 1993. Fargo's financing
activities consist largely of purchases and sales of treasury stock and payment
of dividends. During 1993, Fargo paid $400,000 to retire the remaining balance
on a debenture note originally issued to fund the repurchase of a deceased
shareholder's common stock.
THE MERGER
GENERAL
The Boards of Directors of Hubbell, Merger Sub and Fargo have approved the
Merger Agreement, which provides for the Merger of Merger Sub with and into
Fargo at the Effective Time, with Fargo as the Surviving Corporation. This
section of the Prospectus/Proxy Statement describes certain aspects of the
proposed Merger, including the principal terms of the Merger Agreement and the
Escrow Agreement. A copy of the Merger Agreement is attached to this
Prospectus/Proxy Statement as Exhibit A and is incorporated herein by reference
and a copy of the Escrow Agreement is attached to this Prospectus/Proxy
Statement as Exhibit B and is incorporated herein by reference. The description
set forth below of the terms of the Merger Agreement and the Escrow Agreement is
qualified in its entirety by reference thereto. All of the Shareholders are
urged to read the Merger Agreement and the Escrow Agreement in their entireties.
BACKGROUND OF THE MERGER
In July 1995, Scott R. Wheaton, then Fargo's President and Chief Executive
Officer, Chairman of the Board and representative of the Wheaton Interests, such
Wheaton Interests holding, in the aggregate, approximately 17.5% of the
outstanding Fargo Common Stock, died unexpectedly. Richard C. Raible, previously
Fargo's Vice President-Manufacturing and a director, was elected by the Board as
President and Chief Executive Officer, and C. B. Schmidt, a director and lead
representative of the Schmidt Interests, such
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interests holding, in the aggregate, approximately 17% of the outstanding Fargo
Common Stock, was elected as Chairman of the Board.
Following Mr. Wheaton's death, representatives of the Interests expressed
to Mr. Raible and the other members of the Fargo Board their desire to have
their respective holdings of Fargo Common Stock liquidated at a fair market
value, and requested that efforts be made to establish such a value. In this
connection, it was made clear by such representatives that book value was not
considered an acceptable determinant of value.
In the fall of 1995, the Fargo Board focused on the possible use of an ESOP
as an internal solution for liquidating the Interests. Finn Dixon & Herling LLP
("FD&H") was retained to provide legal advice and Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") was retained to provide financial advice,
with respect to the potential implementation of an ESOP. Merrill Lynch's
services included a written analysis of a variety of long-range corporate
ownership scenarios, concluding that 100% of Fargo's "freely-traded equity on a
minority interest basis" had a value of $15,900,000, or approximately 1.18 times
Fargo's then estimated 1995 year-end book value per share, based on various
assumptions and a combination of market and income approaches. That report
indicated that the "minority interest premise" did not reflect the value of a
fractional majority interest in the equity of Fargo or reflect the value of the
entire business enterprise.
At and prior to the January 1996 meeting of the Fargo Board, the Fargo
Board realized that the per share price which feasibly could be paid in
liquidation of the Interests through the use of an ESOP would not be adequate.
At this meeting, Jack F. Myers, a director and Vice President, Sales and
Marketing, speaking on behalf of several other large Shareholders, which
Shareholders, together with the Interests, represented a substantial majority of
the outstanding Fargo Common Stock, expressed their desire to explore the
external value which might be attained for the Shareholders through the sale of
Fargo to a third party. Upon further discussion, the Fargo Board established the
Alliance Review Committee to spearhead efforts to achieve a consensus with
respect to the criteria and procedures for evaluating the potential sale of
Fargo. Jack Conklin, Vice-Chairman of the Board, was appointed to chair such
committee and Mr. Raible and Mr. Myers were appointed as additional members.
At its February 1996 meeting, the Alliance Review Committee presented a
statement of Alliance Considerations to the Fargo Board. Set forth as the
"general objective" was the maximization of net proceeds to the Shareholders.
Additional Alliance Considerations included (i) the preference for a stock swap
with a NYSE company, (ii) the preference for tax-deferred treatment, (iii) the
desire for a strategic partner capable of strengthening Fargo, (iv) the desire
for a transaction which would give present management a fair opportunity to
perform and (v) the desire to keep the business in Poughkeepsie, New York. The
Alliance Considerations stated that there would be no mandates or preconditions
communicated to prospective offerees. They also stated that the negotiating team
would have flexibility to balance the price of any offer with non-monetary
intangibles. At the February meeting, the Fargo Board authorized the Alliance
Review Committee to explore the potential liquidation of shareholder interests
through a merger or other fundamental transaction, giving full consideration to
the Alliance Considerations when evaluating potential acquirors, and engaging
such professional assistance as it considered necessary in connection therewith.
FD&H's selection as legal counsel was reviewed and confirmed.
In March 1996, following an extensive interview process, RMHA was engaged
by Fargo to act as its exclusive agent to provide investment banking advisory
services in relation to the evaluation, structuring and negotiation of a
potential transaction providing for the liquidation of shareholder interests in
a satisfactory manner. RMHA specializes in mergers and acquisitions of middle
market companies.
Under RMHA's direction, a formal bidding process ensued in the following
manner:
- A list of 39 potential transaction partners was assembled. On or about
May 20, 1996, a "blind profile" containing information about Fargo,
including its financial performance and condition, was distributed by
RMHA to parties on such list which had not already expressed an interest
in Fargo specifically and which required preliminary information with
which to assess their potential interest in a transaction. Expressions of
interest led to the distribution of comprehensive information to a total
of 25 parties. Of
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such parties, 18 (including those companies which previously expressed an
interest in acquiring Fargo) were recognized as strategic parties which
were conducting business in Fargo's general market. The seven other
parties were substantial, financially-oriented firms, presumably
considering an acquisition of Fargo for investment purposes.
- On or about June 24, 1996, in accordance with set procedures conveyed by
RMHA, 16 parties submitted expressions of interest incorporating various
terms, including the proposed purchase price, the form of consideration
to be paid and the structure of the transaction. Based upon a review of
these submissions, those parties which submitted the five highest initial
proposals in terms of the consideration to be derived by the Shareholders
(the fifth such offer being materially superior to the next highest offer
in financial terms) were invited to participate in the final phase of the
bidding process.
- The final phase consisted of separately scheduled visits, conducted
during the week of July 8 through July 12, 1996, which included plant
tours and lengthy meetings with Fargo's management, the Alliance Review
Committee and RMHA. At the end of each such visit, the candidate was
requested to submit what would be considered its "best and final offer."
- At the July 19, 1996 meeting of the Fargo Board, the Alliance Review
Committee presented a detailed discussion concerning the remaining
candidates, including both financial considerations and the intangible
factors set out in the Alliance Considerations. On July 26, 1996,
following additional discussions and consultations with members of the
Fargo Board and with RMHA, FD&H and D'Arcangelo and Co., Fargo's
independent accountants, the Alliance Review Committee selected Hubbell
as the entity with which Fargo should merge. Hubbell's offer was the
highest from the standpoint of aggregate consideration to be paid, and
included a willingness to structure the transaction as a tax-free
exchange of stock. Shortly after the selection of Hubbell, which
concluded the bidding process, one of the finalists indicated that it was
prepared to raise the price it was willing to pay to an amount which
would have equaled the aggregate consideration offered by Hubbell, but
such an offer was less favorable to Fargo because the proposed
transaction would not have been structured as a tax-free exchange of
stock.
On August 2, 1996, Fargo and Hubbell entered into a letter of intent
setting forth in general terms the basis upon which Hubbell proposed to acquire
all of the outstanding shares of Fargo Common Stock. The Merger Agreement was
signed on November 13, 1996, following extensive negotiations concerning the
detailed terms and conditions upon which the Merger would take place.
RECOMMENDATION OF THE FARGO BOARD AND REASONS FOR THE MERGER
The Fargo Board, at a special meeting held on September 20, 1996, approved
the Merger Agreement and the Merger by unanimous vote of all directors. Certain
modifications to the Merger Agreement were unanimously approved and adopted at a
meeting of the Fargo Board held on September 25, 1996. Minor amendments were
made to the Merger Agreement in the form of Amendment No. 1 thereto dated as of
January 8, 1997. THE FARGO BOARD HAS DETERMINED THAT THE MERGER AGREEMENT AND
THE MERGER ARE IN THE BEST INTERESTS OF FARGO AND IN THE BEST INTERESTS OF AND
FAIR TO THE SHAREHOLDERS AND RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE MERGER AGREEMENT.
The decision of the Fargo Board to approve and recommend the Merger
Agreement was the product of the Fargo Board's lengthy evaluation process
described above under "THE MERGER -- Background of the Merger". This process
involved the implementation of a controlled auction process by RMHA to generate
the highest, bona fide, third-party acquisition proposals for Fargo and review
of such third-party proposals by the Fargo Board with the assistance of its
legal and financial advisors. See "THE MERGER -- Background of the Merger". The
following discussion of factors considered and given weight by the Fargo Board
is not intended to be exhaustive. In view of the variety of factors considered
in connection with its evaluation of the Merger, the Fargo Board did not find it
practicable to and did not quantify or otherwise assign relative weights to the
specific factors considered in reaching its determination. In addition,
individual members of the Fargo Board may have given different weights to
different factors.
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In determining to approve and recommend the Merger Agreement, the Fargo
Board considered a number of factors, including the following: (i) that
Hubbell's offer constituted the most favorable offer, in terms of the aggregate
purchase price and the type of consideration to be paid to the Shareholders,
after the completion of what the Fargo Board believes to have been a
well-conducted and thorough bidding process, offering the Shareholders a
substantial premium over the approximately $58.75 book value per share of Fargo
Common Stock as of December 31, 1995 (see "THE MERGER -- Background of the
Merger"); (ii) the recommendation of management that the Merger Agreement be
approved, based in part on its favorable view of the prospects of a strategic
combination of Fargo with Hubbell and that the receipt of Class B Common Stock
would provide the Shareholders with a continuing interest in the potential
benefits of such combination following the Merger; (iii) the presentations of
RMHA at the special meetings of the Fargo Board held on September 20, 1996 and
September 25, 1996 (see "THE MERGER -- Background of the Merger"); (iv) the
Fargo Board's belief, based on the fact that the execution of the Merger
Agreement followed the solicitation of offers for an acquisition of Fargo in a
controlled auction process, that any potential alternative transactions that
might be reasonably available to Fargo were unlikely to provide values to the
Shareholders superior to the Merger; (v) information with respect to the
financial condition, results of operations, business and prospects of Fargo,
including the prospects of Fargo if it were to remain independent, and current
industry, economic and market conditions; (vi) the financial and other terms and
conditions of the Merger Agreement, including (a) the fact that the Merger
Agreement does not include a financing condition to the obligations of Hubbell
and Merger Sub to consummate the Merger, (b) the holdback for potential
post-closing claims of Hubbell in the form of the Escrow Account of 10% of the
Merger Consideration, with procedures for holding, and thereafter distributing,
such Escrow Shares (to the extent unaffected by claims) to the Shareholders, and
with dividends paid in respect of Escrow Shares, while so held, being payable to
the former Shareholders on a pro rata basis, (c) the condition that the Merger
will be a tax-free reorganization for federal income tax purposes to the
Shareholders, subject to the satisfaction by Fargo of certain requirements which
are expected to be met, and (d) the conversion of outstanding Fargo Common
Stock, an illiquid security, into a liquid security traded on the NYSE; (vii)
that the Merger Agreement permits Fargo to terminate the Merger Agreement or
take certain other actions relating to an unsolicited Acquisition Proposal if
the Fargo Board, in the exercise of its fiduciary duties under applicable law as
advised by outside counsel, determines that such Acquisition Proposal contains
terms that are more favorable to Fargo's security holders, taken as a whole,
than the transactions contemplated by the Merger Agreement, executes a
definitive agreement for such Acquisition Proposal and pays Hubbell the
Alternative Transaction Fee and Transaction Expenses (see "THE MERGER -- No
Solicitation", "-- Certain Fees and Expenses" and "-- Termination"); (viii) the
terms of the Escrow Agreement (see "THE MERGER -- Escrow Account/Escrow
Agreement" and Exhibit B); (ix) the market prices at which the Class B Common
Stock have traded during 1996, and the earnings and dividends per share
attributable thereto; (x) the Fargo Board's belief that the Shareholders are
receiving fair and even treatment, with no pre-conditions having been
established in the bidding process, or having been negotiated with Hubbell in
advance of the approval and signing of the Merger Agreement, with respect to the
continued employment of any member of Fargo's management following the Closing
or with respect to any other special arrangements benefitting management which
might, if proposed, have adversely affected the purchase price Hubbell or
another prospective acquiror would have been willing to pay to acquire Fargo;
(xi) the belief that an alliance with Hubbell could strengthen Fargo's position
in the marketplace, providing Fargo with additional distribution channels and
financial resources to support its growth at a time when changes in the
industry, including the combination of utilities through merger and other types
of business arrangements, are making strategic alliances more desirable; and
(xii) the recognition that neither the status quo, nor the use of internal
resources to fund a partial liquidation of shareholder interests, would be
acceptable to a substantial majority of the Shareholders, and the belief that
Fargo's recent financial performance, together with prevailing market
conditions, positioned it to attract (and did attract) a high level of interest,
especially from strategic parties within the industry.
Having considered the foregoing, the Fargo Board, based upon the cumulative
business experience of its members, their knowledge of the business, operations,
properties, assets and earnings of Fargo, and its consideration of Fargo's
long-term prospects, as well as the thoroughness and results of the bidding
process, concluded that the terms of the Merger are fair to the Shareholders.
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Consistent with the Alliance Considerations, the Fargo Board viewed
maximizing value to the Shareholders as its paramount objective. Accordingly,
factors relating to the amount and type of consideration to be paid to the
Shareholders were considered most critical. Factors relating to the ability of
the alliance partner to strengthen Fargo for the future were also deemed
important. As noted above, Hubbell's offer was considered the best offer in
terms of maximizing value to the Shareholders, and was also viewed favorably
with respect to the other Alliance Considerations when compared to any of the
other four finalists.
STRUCTURE OF THE MERGER
Upon the terms and subject to the conditions of the Merger Agreement, at
the Effective Time, in accordance with the NYBCL, Merger Sub will be merged with
and into Fargo, with Fargo continuing as the Surviving Corporation under the
name "Fargo Mfg. Company, Inc.", a direct, wholly owned subsidiary of Hubbell.
At the election of Hubbell, any direct wholly owned subsidiary of Hubbell that
is a New York corporation may be substituted for Merger Sub as a constituent
corporation in the Merger, provided that no such substitution will be effective
until such subsidiary becomes a party to the Merger Agreement, in which case
such entity will be deemed to be Merger Sub for all purposes under the Merger
Agreement.
EFFECTS OF THE MERGER
The Merger will have the effects provided by the NYBCL, including, but not
limited to, Article 9 of the NYBCL, relating to, among other things, the
transfer of assets and liabilities upon a merger and dissenters' rights.
CLOSING; EFFECTIVE TIME
Unless the Merger Agreement has been terminated and the transactions
contemplated therein have been abandoned as described under "THE
MERGER -- Termination" below, and subject to conditions described under "THE
MERGER -- Conditions to the Consummation of the Merger" below, the Closing will
take place on the second business day following the satisfaction or waiver, if
applicable, of such conditions (or as soon as practicable thereafter), or at
such other place, time and date as the parties to the Merger Agreement may
mutually agree. Immediately following the Closing and on the Closing Date, the
parties to the Merger Agreement will cause the Merger to be consummated by
filing with the Department of State of the State of New York a certificate of
merger in such form as required by, and executed in accordance with, the
relevant provisions of the NYBCL at the Effective Time.
CERTIFICATE OF INCORPORATION; BYLAWS; OFFICERS AND DIRECTORS
At the Effective Time, the certificate of incorporation and bylaws of
Merger Sub will be the certificate of incorporation and bylaws, respectively, of
the Surviving Corporation. The directors of Merger Sub immediately prior to the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of Merger Sub immediately prior to the Effective Time will be the
initial officers of the Surviving Corporation, in each case to serve thereafter
until their successors are elected and qualified.
MERGER CONSIDERATION
At the Effective Time, by virtue of the Merger, each share of Fargo Common
Stock issued and outstanding immediately prior to the Effective Time (other than
shares owned by Hubbell, Fargo and their subsidiaries and Dissenting Shares),
will be converted into the right to receive that number of shares or fraction
thereof of Class B Common Stock determined by dividing (x) the quotient obtained
by dividing (A) $45 million plus the amount, if any, by which the Estimated Net
Worth Amount (such Net Worth Amount, determined as described below under "THE
MERGER -- Determination of Closing Net Worth Amount") exceeds the Net Worth
Target (or less the amount, if any, by which the Net Worth Target exceeds the
Estimated Net Worth Amount) (subject to adjustment, if any, after the Closing as
set forth in Section 2.2(v)(A) of the Merger Agreement) by (B) the Average Price
for the Pricing Period by (y) the total number of Outstanding Fargo Shares.
Shareholders will also be entitled to receive (x) the amount of cash, if
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any, required to be deposited by Hubbell or Merger Sub with the Exchange Agent
as described under "THE MERGER -- Determination of Closing Net Worth Amount"
below (pursuant to Section 2.2(v)(B) of the Merger Agreement) divided by (y) the
total number of Outstanding Fargo Shares (excluding any shares of Fargo Common
Stock owned by Hubbell). Any fraction of a share of Class B Common Stock
determined as noted above will be limited to the fourth decimal place with such
fourth decimal place being rounded up if the fifth decimal place is a 5 or
greater.
If the Average Price is less than $34, the Average Price will be deemed to
be $34 and Fargo will have the right to terminate the Merger Agreement unless
Hubbell elects to retain the actual Average Price for purposes of the
calculation described above. If the Average Price is greater than $43, the
Average Price will be the actual Average Price and Fargo will have the right to
terminate the Merger Agreement unless Hubbell elects that the Average Price will
be deemed to be $43 for purposes of the above calculation. Fargo may elect not
to terminate the Merger Agreement even if (i) the Average Price is less than $34
and Hubbell fails to elect to retain the actual Average Price for purposes of
the calculation described above or (ii) the Average Price is greater than $43
and Hubbell fails to elect that the Average Price be deemed to be $43 for the
purposes of the above calculation. In determining whether to elect to terminate
the Merger Agreement under these circumstances, the Fargo Board will take into
account, consistent with its fiduciary duties, all relevant facts and
circumstances existing at the time, including, without limitation, its view as
to whether Hubbell is prepared to increase the Merger Consideration, the market
for stocks in Hubbell's and Fargo's industries, the relative value of Class B
Common Stock in the market, and the advice of its financial advisors and legal
counsel. By approving and adopting the Merger Agreement, the Shareholders would
be permitting the Fargo Board to determine, in the exercise of its fiduciary
duties, to proceed with the Merger even though (i) the Average Price was less
than $34 and Hubbell failed to elect to retain the actual Average Price or (ii)
the Average Price was greater than $43 and Hubbell failed to elect that the
Average Price be deemed to be $43. In determining whether to elect (i) to retain
the actual Average Price when the Average Price is less than $34 or (ii) that
the Average Price will be deemed to be $43 when the actual Average Price is
greater than $43, Hubbell will take into account all relevant facts and
circumstances existing at the time, including, without limitation, its view as
to whether Fargo is willing to accept the Merger with Class B Common Stock
valued at a lower price with respect to clause (i) and at a higher price with
respect to clause (ii) and, in each case, the value of the Merger to Hubbell.
DETERMINATION OF CLOSING NET WORTH AMOUNT
Preparation of Initial Balance Sheet. The Merger Agreement provides that
at least three (3) business days prior to the date of the Special Meeting, Fargo
will cause to be prepared and delivered to Hubbell the Initial Balance Sheet,
certified by Fargo's Chief Financial Officer, and a calculation of the Estimated
Net Worth Amount derived from the Initial Balance Sheet. The Initial Balance
Sheet is required to reflect a liability for Shareholder Expenses, an accrual
for the maximum amount of any and all fees and expenses payable, whether at
Closing or at any time prior or subsequent thereto, to RMHA, and to be prepared
in accordance with the books and records of Fargo and to comply with GAAP
applied on a consistent basis. During the preparation of the Initial Balance
Sheet, Fargo will provide Hubbell and Hubbell's authorized representatives
during normal business hours with reasonable access to the books, records,
facilities and employees of Fargo, and cooperate fully with Hubbell and
Hubbell's authorized representatives.
Preparation of Closing Balance Sheet. The Merger Agreement provides that
within 120 days after the Effective Time, Hubbell will cause to be prepared and
delivered to the Shareholder Representative the Preliminary Closing Balance
Sheet, which Preliminary Closing Balance Sheet will be non-binding upon the
parties and will be for illustrative purposes only. Within fourteen (14) months
after the Effective Time, Hubbell will cause to be prepared and delivered to the
Shareholder Representative the Closing Balance Sheet and a calculation of the
Closing Net Worth Amount derived from the Closing Balance Sheet. The Closing
Balance Sheet will be prepared in accordance with the books and records of Fargo
and is required to comply with GAAP applied on a consistent basis. The Merger
Agreement specifies that if the Closing Net Worth Amount set forth on the
Closing Balance Sheet is greater than or less than the Estimated Net Worth
Amount by an amount equal to or less than $20,000, then certain provisions of
the Merger Agreement will not apply
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and Hubbell and the Shareholder Representative (on behalf of the Shareholders)
will mutually agree upon the Final Closing Net Worth Amount, which determination
will be final and binding on the parties hereto, absent fraud or manifest error;
provided, however, if Hubbell and the Shareholder Representative are unable to
mutually agree upon the Final Closing Net Worth Amount, the Final Closing Net
Worth Amount will be the average of the Closing Net Worth Amount set forth in
the Closing Balance Sheet and the Estimated Net Worth Amount.
However, in the event that the Closing Net Worth Amount set forth in the
Closing Balance Sheet is greater than or less than the Estimated Net Worth
Amount by an amount greater than $20,000, the Shareholder Representative, on
behalf of the Shareholders, will have a period of thirty (30) days after
delivery of the Closing Balance Sheet to present in writing to Hubbell any
objections the Shareholder Representative may have to any of the matters set
forth therein which relate to the calculation of the Closing Net Worth Amount,
which objections will be set forth in reasonable detail. If no objections are
raised within such 30-day period, the Closing Balance Sheet and the calculation
of the Closing Net Worth Amount will be final (a "Final Closing Net Worth
Amount") and binding on the parties, absent fraud or manifest error. During such
30-day period, Hubbell will cause the Shareholder Representative and his
authorized representatives to be provided during normal business hours with
reasonable access to the facilities, employees, books and records of the
Surviving Corporation which are relevant to the Closing Balance Sheet, and
Hubbell will cooperate fully with the Shareholder Representative and his
representatives.
In addition, the Merger Agreement provides that in the event that the
Shareholder Representative raises any objections within the aforesaid 30-day
period, the Shareholder Representative and Hubbell, together with their
respective independent certified public accountants, will attempt promptly to
resolve the matter or matters in dispute and, if resolved, such accounting firms
will send a joint notice to the Shareholder Representative and Hubbell stating
the manner in which the dispute was resolved, and a confirmation of the original
Closing Net Worth Amount or a revised Closing Net Worth Amount (each, a "Final
Closing Net Worth Amount") based upon such resolution, whereupon the Final
Closing Net Worth Amount will be final and binding on the parties thereto,
absent fraud or manifest error.
If such dispute cannot be resolved by the Shareholder Representative and
Hubbell nor by the aforesaid accounting firms within sixty (60) days after the
delivery of the Closing Balance Sheet, then the specific matters in dispute will
be submitted to the Final Arbiter, which firm will make a final and binding
determination as to such matter or matters within forty-five (45) days of its
appointment. The Final Arbiter will send its written determination to the
Shareholder Representative and Hubbell, together with a confirmation of the
Final Closing Net Worth Amount based upon such determination, whereupon the
Final Closing Net Worth Amount will be binding on the parties, absent fraud or
manifest error.
The parties to the Merger Agreement have agreed to cooperate with each
other and each other's authorized representatives and with the Final Arbiter in
order that any and all matters in dispute will be resolved as soon as
practicable and that determination of the Final Closing Net Worth Amount will be
made.
After the Effective Time, any adjustment that must be made to the Merger
Consideration as a result of (A) the Estimated Net Worth Amount being greater
than the Final Closing Net Worth Amount will be made out of shares of Class B
Common Stock on deposit in the Escrow Account subject to certain procedures set
forth in the Escrow Agreement and (B) the Estimated Net Worth Amount being less
than the Final Closing Net Worth Amount, will be made by the deposit of an
amount in cash equal to the difference between such amounts by Hubbell or Merger
Sub with the Exchange Agent not more than three business days after the final
determination that the adjustment set forth in the relevant section of the
Merger Agreement is required, such cash to be paid to the Shareholders pursuant
to the procedures set forth in the Merger Agreement; provided, that the amount
of cash required to be thus deposited with the Exchange Agent by Hubbell or
Merger Sub will be reduced by the excess of (i) the sum of (x) the amount of
cash required to be paid by Hubbell or Merger Sub to Dissenting Shares and (y)
the amount of cash required to be paid by Hubbell or Merger Sub pursuant to
Sections 2.2(v)(B) and 3.1(f) of the Merger Agreement (without giving effect to
this proviso) over (ii) ten percent (10%) of the aggregate consideration to be
paid by Hubbell or Merger Sub to the
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Shareholders pursuant to the Merger Agreement; provided, further, that in no
event will the amount of cash to be deposited pursuant to such procedures be
reduced below zero by the preceding proviso.
FRACTIONAL SHARES
No fractional shares of Class B Common Stock will be issued in the Merger.
The Shareholders will not be entitled to receive fractional shares of Class B
Common Stock, but will instead be entitled to receive a cash payment in lieu of
any fraction of a share of Class B Common Stock, such cash payment to be equal
to the fraction of a share of Class B Common Stock, if any, so determined as
described under "THE MERGER -- Merger Consideration" above, multiplied by the
Average Price.
AFFILIATED SHARES
Each share of Fargo Common Stock which is issued and outstanding
immediately prior to the Effective Time and owned by Hubbell or any direct or
indirect subsidiary of Hubbell, or by Fargo or any of its subsidiaries, will be
canceled and retired and no payment will be made with respect thereto.
DISSENTING SHARES
The Merger Agreement provides that Dissenting Shares will not be converted
into the right to receive the appropriate Merger Consideration at or after the
Effective Time unless and until the holder of such Dissenting Shares withdraws
his or her demand for such appraisal with the consent of Fargo, if required, or
becomes ineligible for such appraisal. If a holder of Dissenting Shares
withdraws his or her demand for such appraisal with the consent of Fargo, if
required, or becomes ineligible for such appraisal (through failure to perfect
or otherwise), then, as of the later of the Effective Time or the occurrence of
such event, such holder's Dissenting Shares will be automatically converted into
and represent the right to receive the appropriate Merger Consideration as
described above. The Merger Agreement also requires Fargo to give Hubbell (i)
prompt notice of any demands for appraisal, withdrawals of demands for appraisal
and any other instrument served pursuant to Section 623 of the NYBCL received by
Fargo and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Section 623 of the NYBCL. In addition,
the Merger Agreement provides that Fargo will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with the prior
written consent of Hubbell, settle or offer to settle any such demands. Pursuant
to the Merger Agreement, each holder of Dissenting Shares will have only such
rights and remedies as are granted to such holder under Sections 623 and 910 of
the NYBCL and Dissenting Shares will not, after the Effective Time, be entitled
to vote for any purpose or be entitled to the payment of dividends or other
distributions (except dividends or other distributions payable to the
Shareholders of record prior to the Effective Time).
For a description of appraisal rights available to the Shareholders, see
"APPRAISAL RIGHTS OF DISSENTING FARGO SHAREHOLDERS" and the applicable
provisions of the NYBCL which are annexed as Exhibit C to this Prospectus/Proxy
Statement.
EXCHANGE AGENT; EXCHANGE PROCEDURES; DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED
SHARES; NO FURTHER OWNERSHIP RIGHTS IN FARGO COMMON STOCK; NO FRACTIONAL SHARES
Exchange Agent. The Merger Agreement provides that as soon as practicable
after the Effective Time, the Exchange Agent will be authorized, pursuant to an
agreement satisfactory to Hubbell and Fargo, to act as the Exchange Agent in
effecting the exchange pursuant to the Merger Agreement of the applicable Merger
Consideration for the Certificates that, prior to the Effective Time,
represented shares of Fargo Common Stock entitled to conversion into Class B
Common Stock. At or before the Effective Time, Hubbell will irrevocably instruct
the registrar and transfer agent for the Class B Common Stock to countersign and
deliver to the Exchange Agent such shares of Class B Common Stock as and when
required to deliver the Merger Consideration (less such shares of Class B Common
Stock as will constitute Escrow Shares as described under "THE MERGER -- Escrow
Account/Escrow Agreement"). Hubbell agrees, at all times from and
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after the Effective Time, to reserve from shares held in treasury a sufficient
number of shares of Class B Common Stock to provide for all transfers pursuant
to the Merger Agreement.
Exchange Procedures. Upon the surrender of each Certificate, the Exchange
Agent will, as promptly as practicable, distribute to the holder of such
Certificate the applicable Merger Consideration multiplied by the number of
shares of Fargo Common Stock formerly represented by such Certificate (including
cash due in lieu of fractional shares), less such Shareholder's pro rata
contribution to the Escrow Account as described under "THE MERGER -- Escrow
Account/Escrow Agreement" below, in exchange therefor and, in accordance with
any applicable instructions from the holder thereof (subject to satisfaction of
the conditions described below with respect to delivery of Merger Consideration
to a person other than the person in whose name the Certificate is registered),
and such Certificate will forthwith be canceled. If the Merger Consideration (or
any portion thereof) is to be delivered to any person other than the person in
whose name the Certificate surrendered in exchange therefor is registered, it
will be a condition to such exchange that the Certificate so surrendered be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such exchange will pay to the Exchange Agent any transfer or
other taxes required by reason of the payment of the Merger Consideration to a
person other than the registered holder of the Certificate surrendered, or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not applicable. Notwithstanding the foregoing, neither the Exchange Agent
nor any party to the Merger Agreement will be liable to a holder of Fargo Common
Stock for any Merger Consideration delivered to a public official to the extent
required by applicable abandoned property, escheat and similar laws. The
Exchange Agent will be authorized to distribute Merger Consideration (including
cash due upon sale of fractional shares) for any Certificate which has been
lost, stolen or destroyed upon receipt of satisfactory evidence of the ownership
of the Fargo Common Stock formerly represented thereby and after receipt of
appropriate indemnification. Without limiting the foregoing, the agreement with
the Exchange Agent will specifically provide that the execution and delivery by
a Shareholder of record to the Exchange Agent of an "Affidavit of Loss and
Indemnity" in substantially the form of Exhibit C to the Merger Agreement (which
is attached as part of Exhibit A hereto), along with an insurance policy
providing coverage reasonably satisfactory to Hubbell for any loss, damage or
expense that Hubbell, the Surviving Corporation, the Exchange Agent or their
respective successors or assigns may sustain arising from the issuance of the
Merger Consideration in respect of such lost, stolen or destroyed certificates,
will constitute satisfactory evidence and appropriate indemnification for such
purpose.
THE SHAREHOLDERS SHOULD NOT FORWARD FARGO STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. THE SHAREHOLDERS
SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
Interest; Distributions with Respect to Unexchanged Shares. No interest
will be paid or accrue on the Merger Consideration or on dividends or other
payments paid by Hubbell thereon and no dividends or other payment payable after
the Effective Time with respect to the Class B Common Stock will be paid to the
holder of any unsurrendered Certificate formerly representing Fargo Common Stock
until the holder thereof surrenders such Certificate.
No Further Ownership Rights in Fargo Common Stock. Until so surrendered
and exchanged, each Certificate (other than Certificates representing Dissenting
Shares or shares held by Hubbell or any direct or indirect subsidiary of
Hubbell, or by Fargo or any of its subsidiaries) will represent solely the right
to receive the applicable Merger Consideration.
ESCROW ACCOUNT/ESCROW AGREEMENT
The following is a brief summary of the Escrow Account and the Escrow
Agreement and is qualified in its entirety by reference to the Escrow Agreement
to be executed by Fargo and Hubbell in connection with the Merger Agreement, a
form of which is attached as Exhibit B to this Prospectus/Proxy Statement.
The Merger Agreement provides that, subject to the fractional share
provisions described above, at the Closing Hubbell will deposit the Escrow
Shares into the Escrow Account maintained with the Escrow Agent. Such Escrow
Shares will be held for, and dividends distributed on such Escrow Shares will be
paid to the Escrow Agent for distribution to, the Shareholders as specified in
the Escrow Agreement. The Merger
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Agreement provides that the Escrow Account will be used solely at the option of
Hubbell to (i) reimburse Hubbell to the extent that the Estimated Net Worth
Amount used in determining the Merger Consideration exceeds the Final Closing
Net Worth Amount and (ii) satisfy any indemnification obligations to Hubbell set
forth in Section 7 of the Merger Agreement and described under "THE
MERGER -- Indemnification" below. Any Escrow Shares remaining in the Escrow
Account after the earlier of (i) eighteen (18) months from the Closing Date or
(ii) at the completion of the first full audit cycle for the year commencing on
January 1, 1997 during which Fargo has been consolidated with Hubbell and its
Subsidiaries, will be distributed to the Shareholders based on such
Shareholders' relative holdings of Fargo Common Stock initially deposited in the
Escrow Account, provided, however, that if the procedure set forth in Section
2.2 of the Merger Agreement for determining the Final Closing Net Worth Amount
is still continuing or if there are any outstanding or unsatisfied claims
against the Escrow Account as to which the Escrow Agent has received notice
pursuant to Section 4 of the Merger Agreement on or prior to the Termination
Date, the Escrow Agreement will continue in effect until the resolution of all
such claims and a number of Escrow Shares equal in value (valued on the Average
Price) to satisfy any unpaid judgments and settlements and any outstanding or
unsatisfied claims against the Escrow Account will be retained in the Escrow
Account until such judgments, settlements and claims have been satisfied and
discharged, and any unused amount remaining after such satisfaction and
discharge will be promptly paid to the Shareholders. All Escrow Shares
distributed from the Escrow Account will be deemed to be distributed pro rata by
the Shareholders in accordance with each such Shareholder's percentage interest
in the Escrow Account, as set forth on Schedule A to the Escrow Agreement, as
executed.
After the Effective Time, any adjustment that must be made to the Merger
Consideration as a result of (A) the Estimated Net Worth Amount being greater
than the Final Closing Net Worth Amount will be made out of Escrow Shares
subject to the procedures thereof and (B) the Estimated Net Worth Amount being
less than the Final Closing Net Worth Amount, will be made by the deposit of an
amount in cash equal to the difference between such amounts by Hubbell or Merger
Sub with the Exchange Agent not more than three business days after the final
determination that such an adjustment is required, such cash to be paid to the
Shareholders pursuant to the procedures set forth in Section 3.2 of the Merger
Agreement; provided, that the amount of cash required to be deposited with the
Exchange Agent by Hubbell or Merger Sub pursuant to such procedures will be
reduced by the excess of (i) the sum of the amount of cash required to be paid
by Hubbell or Merger Sub to Dissenting Shares and pursuant to Sections 2.2(v)(B)
and 3.1(f) of the Merger Agreement (without giving effect to this proviso) over
(ii) ten percent (10%) of the aggregate consideration to be paid by Hubbell or
Merger Sub to the Shareholders pursuant to the Merger Agreement; provided,
further, that in no event will the amount of cash to be deposited pursuant to
Section 2.2(v)(B) of the Merger Agreement be reduced below zero by the preceding
proviso.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement includes representations and warranties of Fargo and
of Hubbell and Merger Sub. The representations and warranties described below
are subject to various materiality and knowledge qualifiers and to a disclosure
schedule for exceptions to the representations and warranties. The
representations and warranties of Fargo contained in the Merger Agreement or in
any certificate or agreement delivered pursuant to the Merger Agreement will
survive the Closing and will continue in effect from the Closing Date to the
earlier of the date (i) eighteen (18) months following the Closing Date or (ii)
at the completion of the first full audit cycle for the year commencing on
January 1, 1997 during which Fargo has been consolidated with Hubbell and its
Subsidiaries, notwithstanding any investigation or access to information by or
on behalf of any party.
The Merger Agreement includes representations and warranties by Fargo as
to, among other things, (i) organization, existence, standing and corporate
power of Fargo; (ii) the authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters, and the absence of
the need for governmental, regulatory or third-party authorizations, orders,
consents, approvals, filings or registrations with respect to the execution and
delivery of the Merger Agreement and any transaction contemplated by the Merger
Agreement (except for certain filings specified in the Merger Agreement); (iii)
compliance with laws,
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rules, regulations, orders or decrees applicable to the businesses or properties
of Fargo and its subsidiary Fargo International Sales Corp. ("FISC") and the
Merger Agreement's and the Merger's noncontravention of (a) the organizational
documents of Fargo or FISC, (b) any law, rule, regulation, judgment, decree or
order to which Fargo or FISC is subject, (c) any agreement, indenture or other
instrument to which Fargo or FISC is a party or to which their respective
properties are subject (except in an immaterial way); (iv) the capitalization of
Fargo; (v) the organization, existence and standing of FISC and the ownership of
the capital stock of each of Fargo's subsidiaries by Fargo or by Fargo Mfg.
Company (Canada) Ltd. in the case of Fargo Mfg. Company (Quebec) Ltd.; (vi) the
preparation of certain consolidated financial statements of Fargo and its
subsidiaries in accordance with GAAP and the fair presentation of the
consolidated financial position of Fargo and its subsidiaries by such financial
statements (as of the dates or periods indicated); (vii) the absence of any
undisclosed liabilities required to be disclosed by GAAP (other than liabilities
reserved against or incurred in the ordinary course of business since September
30, 1996); (viii) compliance as to form and the accuracy of information supplied
by Fargo contained in this Prospectus/Proxy Statement and the Registration
Statement of which this Prospectus/Proxy Statement forms a part; (ix) the
absence of certain changes or events since December 31, 1995; (x) good and
marketable title to Fargo's and FISC's tangible personal properties free and
clear of all liens (other than certain permitted liens) and the validity and
good standing of, and absence of default under, leases of material tangible
personal property which Fargo or FISC leases as lessor or lessee; (xi) certain
real property matters affecting Fargo and FISC; (xii) absence of real property
leases where Fargo or FISC is lessee; (xiii) the validity and binding nature of
the material contracts of Fargo and FISC and the absence of any breach or
default with respect thereto; (xiv) certain environmental matters, including
material compliance with laws, holding of environmental permits, absence of
certain hazardous materials, and absence of any consent decrees or similar
matters with respect to environmental matters; (xv) certain employee benefit
matters relating to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); (xvi) the absence of unfair labor practices, labor strikes,
other labor controversies, and compliance with labor laws, including the Worker
Adjustment and Retraining Notification Act of 1988 and collective bargaining
notification and bargaining obligations; (xvii) absence of material litigation
affecting Fargo, FISC or the transactions contemplated by the Merger Agreement
and absence of any order, judgment, injunction or decree against Fargo or FISC;
(xviii) certain tax matters, including filing of tax returns and payment of
taxes; (xix) certain intellectual property matters, including the absence of any
alteration or impairment of intellectual property due to the Merger and the
absence of any infringement, misappropriation or misuse of any third party
intellectual property rights by Fargo or FISC and the absence of any licenses by
or to Fargo or FISC of intellectual property; (xx) the holding of all required
permits by Fargo and FISC to operate their businesses; (xxi) the holding of
customary insurance policies by Fargo and FISC; (xxii) the maintenance of
materially complete and correct books and records of Fargo and FISC; (xxiii)
certain matters with respect to accounts receivable and accounts payable of
Fargo and FISC; (xxiv) the condition of the assets and properties owned,
operated or leased by Fargo and FISC; (xxv) certain matters with respect to the
inventory and return policy of Fargo and FISC; (xxvi) with certain exceptions
set forth in the Merger Agreement, the absence of transactions between Fargo and
FISC on the one hand and any affiliate, officer, director, employee, proprietor,
partner, shareholder or "associate" (as defined under Rule 405 of the Securities
Act); (xxvii) the absence of any Fargo obligation to pay brokerage, finder's,
financial advisory or other fees or commissions in connection with the Merger
Agreement or the Merger, except to RMHA; (xxviii) the approval and
recommendation of the Merger Agreement and the Merger by the Fargo Board; and
(xxix) the required vote of the Shareholders to approve the Merger Agreement and
the Merger.
The Merger Agreement also includes representations and warranties by
Hubbell and Merger Sub as to, among other things, (i) organization, existence,
standing and corporate power of Hubbell and Merger Sub; (ii) the authorization,
execution, delivery, performance and enforceability of the Merger Agreement and
related matters; (iii) the absence of the need for governmental, regulatory or
third-party authorizations, orders, consents, approvals, filings or
registrations with respect to the execution and delivery by Hubbell and Merger
Sub of the Merger Agreement and the consummation by Hubbell or Merger Sub of any
transaction contemplated by the Merger Agreement (except for certain filings
specified in the Merger Agreement); (iv) compliance as to form and the accuracy
of information contained in the Registration Statement of which this
Prospectus/Proxy Statement forms a part; (v) the fact that all shares of Class B
Common Stock to be
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transferred in accordance with the Merger Agreement have been duly authorized
and, when transferred as contemplated by the Merger Agreement, will be fully
paid and nonassessable, registered under the Securities Act and the Exchange
Act, registered or exempt from registration under applicable state securities
laws, listed on the NYSE and freely transferable (except to the extent transfers
by "affiliates" of Fargo are restricted under Rule 145 of the Securities Act);
(vi) timely filing, compliance as to form and accuracy of information in
documents and reports filed with the SEC since January 1, 1993; (vii) the
capitalization of Hubbell; (viii) the absence of any Hubbell or Merger Sub
obligation to pay brokerage, finder's, financial advisory or other fees or
commissions in connection with the Merger Agreement or the Merger; and (ix) that
Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated by the Merger Agreement and that all of the outstanding capital
stock of Merger Sub is owned by Hubbell.
INDEMNIFICATION
Pursuant to the Merger Agreement, the Shareholders will severally, to the
extent of their respective percentage interests in the Escrow Account described
above, and in accordance with the procedures set forth in the Escrow Agreement
described above, be responsible for, pay or cause to be paid, and indemnify and
hold harmless Hubbell, its subsidiaries and affiliates (including the Surviving
Corporation), and their respective employees, representatives, officers,
directors, and agents from and against any Losses in any way related to,
attributed to, resulting from, caused by, based upon or arising (i) out of any
inaccuracy of, misrepresentation relating to, breach of, or failure to fulfill
any representation, warranty, covenant or agreement contained in the Merger
Agreement or in any certificate or agreement delivered or entered into pursuant
to the Merger Agreement on the part of Fargo or any subsidiary of Fargo or (ii)
with respect to each Plan specified on Schedule 4.15(A) to the Merger Agreement,
the alteration, termination or modification of such Plan or any failure by Fargo
to (x) establish and administer such Plan in compliance with any applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations
or (y) make any required filings with respect thereto, including but not limited
to, the filing of a Form 5500.
The Merger Agreement further provides that the Escrow Account will be the
exclusive means of payment of the indemnification obligations of the
Shareholders described above. Any indemnification payment will be made in
accordance with the terms of the Escrow Agreement described above. See "THE
MERGER -- Escrow Account/Escrow Agreement" above. As provided in Section 4 of
the Escrow Agreement, Hubbell will give the Shareholder Representative written
notice of any claim for indemnification or payment pursuant to Section 7 of the
Merger Agreement, which notice will include a calculation of the amount of the
requested indemnity or other payment and will furnish to the Shareholder
Representative copies of all books, records and other information reasonably
requested by the Shareholder Representative to the extent necessary to
substantiate such claim and verify the amount thereof. Any dispute with respect
to an indemnification claim made by Hubbell will be handled as provided for in
Section 4 of the Escrow Agreement. For purposes of the Merger Agreement and the
Escrow Agreement, the Shareholder Representative will mean Jack F. Myers, or
such replacement or successor as will be designated by Shareholders owning an
aggregate of two-thirds or more of Fargo Common Stock.
The Merger Agreement further provides that no indemnification amount will
be payable as described above unless and until the aggregate indemnification
liability of the Shareholders under the Merger Agreement or under the Escrow
Agreement exceeds $130,000, and after exceeding such amount, such
indemnification liability will not include such $130,000. All Escrow Shares
distributed from the Escrow Account will be deemed distributed pro rata by the
Shareholders in accordance with each such Shareholder's respective percentage
interest in the Escrow Account.
The rights of Hubbell, Merger Sub and the other Indemnified Parties set
forth in the Merger Agreement are the exclusive remedy and in lieu of any and
all other rights and remedies with respect to Losses arising out of the matters
specified in the Merger Agreement (other than an action for fraud), and such
Losses will be satisfied solely from the Escrow Account in accordance with the
provisions of the Merger Agreement and the provisions of the Escrow Agreement,
and Hubbell and Merger Sub agree that none of the Indemnified Parties will have
any recourse for the payment of any Losses of any kind whatsoever arising under
Section 7.2 of the Merger Agreement against the past, present or future
Shareholders, directors, officers and employees of Fargo,
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nor will any of such persons be personally liable for any such Losses (other
than an action for fraud), it being expressly understood that the sole remedy of
the Indemnified Parties will be against the Escrow Account in accordance with
the Escrow Agreement.
BUSINESS OF FARGO PENDING THE MERGER
Fargo has agreed that, except as contemplated by the Merger Agreement, from
the date of execution of the Merger Agreement to the Effective Time, Fargo and
its subsidiaries will conduct their respective operations only in, and not take
any action except in, the ordinary course of business consistent with past
practice, and will use all reasonable efforts (without any obligation to pay
additional consideration) to preserve intact their business organization,
assets, prospects and advantageous business relationships, to keep available the
services of their key officers and key employees and to maintain satisfactory
relationships with licensors, licensees, suppliers, contractors, distributors,
customers, business partners and others having business relationships with Fargo
and its subsidiaries.
Without limiting the generality of the foregoing, Fargo also agreed that
prior to the Effective Time (and except as set forth on a schedule to the Merger
Agreement or contemplated by the terms of the Merger Agreement), neither Fargo
nor its subsidiaries will, without the prior written consent of Hubbell: (i)
split, combine or reclassify any shares of such entity's capital stock, declare,
pay or set aside for payment any dividend or other distribution in respect of
its capital stock or redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or other securities; (ii) authorize
for issuance, issue, sell, pledge, dispose of or encumber, deliver or agree or
commit to issue, sell, pledge or deliver (whether through dividend or the
issuance or granting of any options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class of Fargo or any of its
subsidiaries or any securities convertible into or exercisable or exchangeable
for shares of stock of any class of Fargo or any of its subsidiaries; (iii)
other than purchase or sale orders in the ordinary course of business,
voluntarily incur any material liability or obligation (absolute, accrued,
contingent or otherwise) or issue any debt securities, or incur other
indebtedness for borrowed money, or assume, guarantee, endorse or otherwise as
an accommodation become responsible for, the obligations of any other individual
or entity, or change any assumption underlying, or methods of calculating, any
bad debt, contingency or other reserve; (iv) notwithstanding anything to the
contrary contained therein, including but not limited to subsection (v) therein,
(a) enter into any employment or similar agreement or arrangement with any
person, except for agreements or arrangements (exclusive of employment
agreements) entered into in the ordinary course of business consistent with past
practice or (b) amend any such agreement or arrangement except in the ordinary
course of business consistent with past practice; (v) subject to subsection (iv)
therein, take any of the following actions except in the ordinary course of
business consistent with past practice or as required by existing agreement or
law: (a) grant, or become obligated to grant, any increase in the compensation
of officers or employees; (b) adopt, institute or amend any plan, agreement,
contract, program, policy or other employee benefit arrangement; or (c) take any
action with respect to the grant of any severance or termination pay or with
respect to any increase of benefits payable under its severance or termination
pay policies in effect on the date of the Merger Agreement; (vi) acquire (by
merger, consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or make any
material investment either by purchase of stock or securities, contributions to
capital, property transfer, or purchase of any material amount of properties or
assets of any other individual or entity; (vii) except as required by the
consummation of the Merger, pay, discharge or satisfy any claims or liabilities,
or settle any litigation other than the payment, discharge or satisfaction of
claims or liabilities in the ordinary course of business consistent with past
practice; (viii) amend the restated certificate of incorporation or by-laws of
Fargo or the certificate of incorporation or by-laws (or comparable documents)
of any subsidiary; (ix) authorize or make any capital expenditures (including by
lease) which in the aggregate are more than the sum of $20,000 (excluding
certain scheduled capital expenditures); (x) sell or dispose of, mortgage,
encumber or grant an option for any assets or properties, other than sales of
inventory in the ordinary course of business; (xi) waive, release, grant or
transfer any rights of value (other than in the ordinary course of business), or
modify or change in any material respect any existing license, lease, or
contract; (xii) except to the extent any such policy is replaced with comparable
coverage, allow or permit any insurance policy naming Fargo as a beneficiary or
a loss payable payee to be canceled or terminated;
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(xiii) make any changes in Fargo's accounting methods, principles or practices
except as may be required by GAAP; (xiv) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of Fargo or any of its subsidiaries, except as
contemplated by the Merger Agreement; (xv) take any action, except in the
ordinary course of business consistent with past practices, which would result
in the acceleration of collection of any accounts receivable or delay the
payment of any accounts payable; or (xvi) agree, in writing or otherwise, to
take any of the foregoing actions or any action which would make any
representation or warranty of Fargo and its subsidiaries in Section 4 of the
Merger Agreement untrue or incorrect.
CERTAIN ADDITIONAL AGREEMENTS
The Merger Agreement contains additional covenants relating to, among other
things: (i) the provision by Fargo to Hubbell and its authorized
representatives, between the date of the Merger Agreement and the Effective
Time, of (a) reasonable access to all personnel, plants, offices, warehouses and
other facilities and to all books and records of Fargo and its subsidiaries, (b)
access for reasonable inspections by Hubbell and (c) access to financial and
operating data and other reasonably requested information on Fargo and its
subsidiaries; (ii) the continued effectiveness of the confidentiality agreement,
dated as of March 26, 1996, between Fargo and Hubbell, until the Effective Time
and the coverage of the information supplied pursuant to clause (i) above by
such agreement; (iii) the use of reasonable efforts, by each of the parties to
the Merger Agreement, to consummate the transactions contemplated by the Merger
Agreement (including in connection with filings required under the Securities
Act and the HSR Act); (iv) the provision by each party to the Merger Agreement
between the date of the Merger Agreement and the Effective Time to the other
parties of supplemental information regarding any matter arising after the date
of the Merger Agreement that would have been required to be disclosed to such
other parties or would have been a breach of a representation or warranty or
covenant if existing, occurring or known at the date of the Merger Agreement;
(v) the prompt preparation and filing by Hubbell of the Registration Statement
of which this Prospectus/Proxy Statement forms a part (and the cooperation of
Fargo in the preparation of such Registration Statement), the use of all
reasonable efforts by Hubbell to have such Registration Statement declared
effective, the taking of actions by Hubbell reasonably required under state blue
sky or securities laws, the inclusion in the Prospectus/Proxy Statement of the
recommendation of the Fargo Board as described in Section 3.3 of the Merger
Agreement, and an agreement by Hubbell and Fargo to correct promptly (and in no
event later than the date of the Special Meeting) any materially inaccurate
information contained in such Registration Statement; (vi) the prompt
preparation and filing by Fargo, Hubbell and Merger Sub of any other filings
required under the Securities Act or any other federal or state securities laws
relating to the Merger; (vii) the sharing of information among the parties with
respect to the comments of the SEC or any other governmental official with
respect to the Registration Statement and any filings described under clause
(vi) above and with respect to the status of the Registration Statement, and an
agreement to use all reasonable efforts to respond to the comments of such
governmental officials and cause the Prospectus/Proxy Statement to be mailed to
the Shareholders at the earliest practicable time; (vii) Fargo's agreement to,
as promptly as practicable, take all action reasonably necessary to convene the
Special Meeting for the purpose of considering and voting upon the Merger;
(viii) Fargo's agreement not to, without Hubbell's prior consent, terminate,
alter or waive any rights under any agreement governing (a) the conduct of
another party with respect to purchases of shares or the making of proposals for
a business combination with Fargo or (b) the right of another party to use non-
publicly available information relating to Fargo and Fargo's agreement to use
all reasonable efforts to enforce the terms of such agreements; (ix) the
agreement of the parties to the Merger Agreement not to, and to not permit their
affiliates to, take any action which would disqualify the Merger as a tax-free
reorganization within the meaning of Section 368(a)(2)(E) of the Code; (x)
Fargo's agreement not to settle, without the prior consent of Hubbell, any claim
brought by any present, former or purported holder of any securities of Fargo in
connection with the Merger prior to the Effective Time; (xi) Hubbell's and
Fargo's agreement to, on or before the Effective Time, establish the Escrow
Account and use their best efforts to cause the Escrow Agent to execute the
Escrow Agreement; (xii) Fargo's agreement to deliver a letter to Hubbell prior
to the Closing Date identifying all persons who are, at the time of the Special
Meeting, "affiliates" for purposes of Rule 145 under the Securities Act, and to
use its best efforts to cause each such person to deliver affiliate agreements
to
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Hubbell on or prior to the Closing Date which acknowledge certain transfer
restrictions on the Class B Common Stock received by such affiliates; (xiii)
Fargo's agreement to pay all Shareholder Expenses prior to the Closing; (xiv)
Hubbell's and Merger Sub's agreement that, within certain limitations, accruals
under Fargo's key management bonus pool with respect to fiscal 1996 will
constitute obligations of the Surviving Corporation to the extent of such
accruals; (xv) Hubbell's and Fargo's agreement that the certificate of
incorporation of the Surviving Corporation will contain provisions for the
indemnification of directors and officers of Fargo no less favorable than the
provisions set forth in the certificate of incorporation of Fargo and that such
provisions will remain in effect for at least six (6) years following the
Effective Time; (xvi) Hubbell's and Merger Sub's agreement to use their
reasonable best efforts to maintain in effect for one (1) year following the
Effective Time Fargo's current policies of directors' and officers' liability
insurance to the extent that it provides coverage for events occurring prior to
the Effective Time, if, or the extent that, the annual premium therefore would
not be in excess of $6,000; (xvii) Fargo's agreement to take all appropriate
actions to terminate the payment benefit with respect to each Plan specified in
Schedule 4.15(A) to the Merger Agreement by January 1, 1998; (xviii) Hubbell's,
Merger Sub's, Fargo's and the Fargo Shareholders' agreement to deliver certain
tax representation letters and to permit ST&B to rely upon such letters for
purposes of rendering the tax opinion related to the Merger; (xix) Fargo's
agreement that, prior to the Effective Time, it will not, without the prior
written consent of Hubbell (and subject to certain exceptions), initiate any
communications or enter into or make any agreement, understanding or commitment,
orally or in writing, with any environmental authorities concerning any matter
relating to Fargo's compliance with or liability under any environmental law;
and (xx) Hubbell's, Merger Sub's and Fargo's agreement to consult and cooperate
with each other prior to issuing, or permitting any of their subsidiaries,
directors, officers, employees, agents, representatives or advisors to issue,
any press release or public statement with respect to the Merger Agreement or
the Merger.
NO SOLICITATION
The Merger Agreement provides that neither Fargo nor any of its
subsidiaries will, and Fargo will use all reasonable efforts to cause each of
its officers, directors, employees, affiliates, representatives, agents and
advisors not to, directly or indirectly, encourage, solicit, initiate, engage or
participate in any discussions or negotiations with, or provide any information
to, any corporation, partnership, person or other entity or group other than
Parent or an affiliate of Parent (a "Third Party") concerning (or concerning the
business of Fargo or any subsidiary of Fargo in connection with) any Acquisition
Proposals. Notwithstanding the foregoing, in the event a Third Party expresses
in writing a bona fide intention to make an offer to Fargo to effect a
transaction that is more favorable to Fargo's security holders, taken as a
whole, than the transactions contemplated by the Merger Agreement, the Merger
Agreement allows Fargo to furnish information provided to Hubbell concerning
Fargo's business, properties or assets to such Third Party or to conduct
negotiations with such Third Party if (i) the failure to provide such
information or conduct negotiations would cause the members of the Fargo Board
to breach their fiduciary duties to Fargo's security holders as advised by
outside counsel to Fargo and (ii) such Third Party has entered into an
appropriate confidentiality agreement with Fargo. The Merger Agreement requires
Fargo to promptly inform Hubbell of any inquiry, offer or proposal (including
the terms thereof and the identity of the Third Party making such inquiry, offer
or proposal) that Fargo may receive in respect of an Acquisition Proposal after
the date of the Merger Agreement and furnish to Hubbell a copy of any such
written inquiry, offer or proposal. Fargo may take any of the foregoing actions
pursuant to the second preceding sentence if such action constitutes a
withdrawal or modification of the Fargo Board's recommendation to approve the
Merger Agreement, in a manner adverse to Hubbell or Merger Sub, only if Fargo
pays to Hubbell, prior to or concurrently with the taking of such action, the
Alternative Transaction Fee plus the Transaction Expenses (not to exceed
$750,000). See "THE MERGER -- Certain Fees and Expenses."
CERTAIN FEES AND EXPENSES
The Merger Agreement requires, in the event that the Fargo Board (i)
withdraws or modifies or publicly proposes or announces its intention to
withdraw or modify, in a manner adverse to Hubbell, the approval or
recommendation by the Fargo Board of the Merger Agreement or the Merger
(including by refraining from
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recommending approval of the Merger in this Prospectus/Proxy Statement), (ii)
approves or recommends any Acquisition Proposal or (iii) approves Fargo's
entering into any Acquisition Proposal (including, without limitation, the
commencement of a self tender or exchange offer), or, in the event (x) the
Shareholders in a vote at the Special Meeting fail to approve the transactions
contemplated by the Merger Agreement and there exists an Acquisition Proposal or
(y) the Merger Agreement is terminated (other than by Fargo as described in
clauses (ii), (iv)(b) or (iv)(c) of the first paragraph of "THE
MERGER -- Termination" below), prior to the Special Meeting taking place and
before such vote or termination Fargo received or became aware of an Acquisition
Proposal or in the event the Alternative Transaction Fee plus Transaction
Expenses otherwise become due and payable as described under "THE MERGER -- No
Solicitation" above, then in each such case unless at the time of such action or
event Fargo is entitled to terminate the Merger Agreement pursuant to clause
(ii)(a) or (iv)(b) of the first paragraph of "THE MERGER -- Termination" below,
or Hubbell or Merger Sub is otherwise in material breach of any material
representation, warranty, covenant or agreement under the Merger Agreement,
prior to or concurrently with the taking of any such action by the Fargo Board
or within three business days of the occurrence of any such event that does not
involve actions by the Fargo Board, Fargo will pay to Hubbell in immediately
available funds, the Alternative Transaction Fee, plus all of the Transaction
Expenses (not to exceed $750,000), to an account which Hubbell designates prior
to the time such payment is due.
The Merger Agreement also provides that in the event the Shareholders in a
vote at the Special Meeting do not approve the transactions contemplated by the
Merger Agreement and an Acquisition Proposal does not exist, Fargo will pay to
Hubbell in immediately available funds all of its Transaction Expenses, to an
account which Hubbell designates prior to the time such payment is due;
provided, that Fargo will not be obligated to pay to Hubbell the Transaction
Expenses as described in this paragraph in the event that after the end of the
Pricing Period and prior to the vote of the Shareholders at the Special Meeting,
there has occurred a material adverse change in or effect on the business,
operations, properties, assets, liabilities, condition (financial or otherwise),
results of operations or prospects of Hubbell and its subsidiaries taken as a
whole.
The Merger Agreement provides that any act or omission referred to under
"THE MERGER -- No Solicitation" above or this "THE MERGER -- Certain Fees and
Expenses" section, which results in Fargo being obligated to pay the Alternative
Transaction Fee and/or the Transaction Expenses will not constitute a breach of
the Merger Agreement by Fargo if, prior to or concurrently with such action,
Fargo pays the Alternative Transaction Fee and all of the Transaction Expenses
or all of the Transaction Expenses, as the case may be, as described therein.
TERMINATION
The Merger Agreement may be terminated, by written notice given promptly to
the other parties thereto, at any time prior to the Effective Time, whether
prior to or after approval of the Merger Agreement by the Shareholders: (i) by
mutual written consent of the Boards of Directors of Hubbell and Fargo; (ii) by
either Hubbell or Fargo if (a) a court of competent jurisdiction or any
governmental, regulatory or administrative agency or commission has issued an
order, decree or ruling or taken any other action, in each case permanently
enjoining or otherwise prohibiting the transactions contemplated by the Merger
Agreement and such order, decree, ruling or other action has become final and
nonappealable or (b) the Effective Time has not occurred on or before March 15,
1997, unless the absence of such occurrence is due to the failure to perform in
all material respects the material obligations under the Merger Agreement
required to be performed at or prior to the Effective Time (I) in the case of
Hubbell, by Merger Sub or Hubbell (or their subsidiaries or affiliates) or (II)
in the case of Fargo, by Fargo; (iii) by Hubbell, if (a) at the Special Meeting,
the holders of two-thirds of the outstanding shares of Fargo Common Stock do not
approve the Merger Agreement and the Merger; (b) Fargo has (I) withdrawn,
modified or amended in any material respect its approval or recommendation of
the Merger Agreement, the Merger or the transactions contemplated by the Merger
Agreement, (II) failed to include such recommendation in this Prospectus/Proxy
Statement, or (III) taken any public position inconsistent with such
recommendation, including, without limitation, having failed (without the
consent of Hubbell) to after a reasonable period of time reject or disapprove
any Acquisition Proposal other than the Merger (or after a reasonable period of
time recommend
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to the Shareholders such rejection or disapproval); (c) in the event of a
material breach by Fargo of any representation, warranty or agreement contained
in the Merger Agreement which has not been cured or is not curable by the
earlier of the Closing Date or the thirtieth day after written notice of such
breach was given to Fargo; or (d) if the Alternative Transaction Fee plus the
Transaction Expenses have become payable as described under "THE
MERGER -- Certain Fees and Expenses"; or (iv) by Fargo, if (a) Fargo executes or
has executed a definitive agreement for an Acquisition Proposal which the Fargo
Board determines, in the exercise of its fiduciary duties under applicable law
as advised by outside counsel, contains terms that are more favorable to Fargo's
security holders, taken as a whole, than the transactions contemplated by the
Merger Agreement and the Alternative Transaction Fee plus all of the Transaction
Expenses have been paid or are paid concurrently therewith; (b) in the event of
a material breach by Hubbell or Merger Sub of any representation, warranty or
agreement contained in the Merger Agreement which has not been cured or is not
curable by the earlier of the Closing Date or the thirtieth day after written
notice of such breach was given to Hubbell; (c) if (I) the Average Price is less
than $34 and Hubbell does not elect that the Average Price will be the actual
Average Price or (II) the Average Price is greater than $43 and Hubbell fails to
elect to have the Average Price deemed to be $43 (see "THE MERGER -- Merger
Consideration"); or (d) if the Transaction Expenses have become payable due to
the fact that the Shareholders do not approve the Merger Agreement and the
Merger at the Special Meeting (despite the absence of an Acquisition Proposal)
and the Transaction Expenses have been paid in full.
In the event of termination of the Merger Agreement by either Fargo or
Hubbell, the Merger Agreement will become void, without liability on the part of
Hubbell, Merger Sub or Fargo other than under certain specified provisions of
the Merger Agreement related to public statements, general expenses and the fees
and expenses described under "THE MERGER -- Certain Fees and Expenses", except
that (i) no party will be relieved of any liability for damages actually
incurred as a result of any breach of the Merger Agreement (whether willful or
not), (ii) the confidentiality agreement, dated as of March 26, 1996, between
Hubbell and Fargo will continue in full force and effect and (iii) the parties
agree that payment in full of the Alternative Transaction Fee and/or Transaction
Expenses, as the case may be, to Hubbell, in the event such amounts become
payable as described under "THE MERGER -- Certain Fees and Expenses", will
constitute Hubbell's and Merger Sub's exclusive remedy with respect to asserted
damages based on lost profits or gain or otherwise relating to their
expectations as to what would have happened if the Merger had been consummated.
AMENDMENT AND WAIVER
The Merger Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties thereto, and after adoption of the
Merger Agreement and the Merger by the Shareholders, no amendment may be made
which reduces the consideration to be provided by Hubbell for each share of
Fargo Common Stock or which changes the form thereof without the further
approval of the Shareholders affected thereby. At any time prior to the
Effective Time, whether before or after the Special Meeting, any party to the
Merger Agreement may (i) extend the time for the performance of any of the
obligations or other acts of any other party to the Merger Agreement or (ii)
waive compliance with any of the agreements of any other party or with any
conditions to its own obligations. Any agreement on the part of a party to the
Merger Agreement to any such extension or waiver will be valid only if set forth
in an instrument in writing signed on behalf of such party by a duly authorized
officer.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Conditions to Each Party's Obligation to Effect the Merger. The respective
obligations of each party to the Merger Agreement to consummate the Merger are
subject to the following conditions: (i) the Merger Agreement will have been
approved and adopted by the holders of two-thirds of the outstanding Fargo
Shares of Fargo Common Stock; (ii) any waiting period (and any extension
thereof) applicable to the Merger under the HSR Act will have expired or been
terminated; (iii) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction will have been enacted, entered, issued,
promulgated or enforced by any court or governmental authority which prohibits
or restricts the consummation of the Merger or any other material transaction
contemplated by the Merger Agreement; (iv) all approvals of third parties
required for
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the consummation of the Merger will have been obtained and such approvals will
be effective and will not have been suspended, revoked or stayed by action of
any governmental authority; and (v) the Registration Statement of which this
Prospectus/Proxy Statement forms a part will have been declared effective by the
SEC and will not be subject to a stop order or any threatened stop order.
Conditions to the Obligations of Hubbell and Merger Sub. The obligations
of Hubbell and Merger Sub to effect the Merger are further subject to the
fulfillment at or prior to the Effective Time of the following conditions, any
one or more of which may be waived by Hubbell and Merger Sub: (i) Fargo will
have performed and complied in all material respects with the agreements and
obligations contained in the Merger Agreement required to be performed and
complied with by it at or prior to the Effective Time; (ii) the representations
and warranties of Fargo contained in the Merger Agreement will be true and
correct in all material respects as of the date of the Merger Agreement and as
of the Effective Time (except to the extent that any representation and warranty
is made as of a specified date, in which case such representation and warranty
will be true and correct in all material respects as of such date); (iii) there
will not have occurred after the date of the Merger Agreement any event
resulting in any materially adverse change in or effect on the business,
operations, properties, assets, liabilities, condition (financial or otherwise),
results of operations or prospects of Fargo and its subsidiaries taken as a
whole; (iv) Fargo will have furnished such certificates of its officers to
evidence compliance with the conditions described in this paragraph as may be
reasonably requested by Hubbell and Merger Sub; (v) Fargo will have delivered to
Hubbell an opinion, dated the Closing Date, satisfactory to counsel for Hubbell,
of FD&H, counsel to Fargo, with respect to (a) the due incorporation, valid
existence and good standing of Fargo, (b) Fargo's authority to execute and
deliver the Merger Agreement and consummate the Merger, along with the
enforceability of the Merger Agreement, and (c) the absence of facts known to
such counsel which would give such counsel reason to believe that this
Prospectus/Proxy Statement (except as to the financial data contained herein,
and except as to information concerning Hubbell or Merger Sub, as to which such
counsel does not express any belief) contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements made herein, in the light of the circumstances under which they were
made, not misleading; and (vi) the receipt of affiliate letters from each
affiliate of Fargo.
Conditions to the Obligation of Fargo. The obligation of Fargo to effect
the Merger is further subject to the fulfillment at or prior to the Effective
Time of the following conditions, any one or more of which may be waived by
Fargo: (i) Merger Sub and Hubbell will have performed and complied in all
material respects with the agreements and obligations contained in the Merger
Agreement required to be performed and complied with by them at or prior to the
Effective Time; (ii) the representations and warranties of Merger Sub and
Hubbell contained in the Merger Agreement will be true and correct in all
material respects as of the date of the Merger Agreement and as of the Effective
Time (except to the extent that any representation and warranty is made as of a
specified date, in which case such representation and warranty will be true and
correct in all material respects as of such date); (iii) Merger Sub and Hubbell
will have furnished such certificates of their officers to evidence compliance
with the conditions described in this paragraph as may be reasonably requested
by Fargo; (iv) Hubbell will have delivered to Fargo an opinion, dated the
Closing Date, satisfactory to counsel for Fargo, of Richard W. Davies, General
Counsel of Hubbell, or ST&B, counsel to Hubbell, with respect to (a) the due
incorporation, valid existence and good standing of Hubbell, (b) Merger Sub's
and Hubbell's authority to execute and deliver the Merger Agreement and
consummate the Merger, along with the enforceability of the Merger Agreement,
(c) that upon the filing of a certificate of merger with the Department of State
of the State of New York, the Merger will be effective in accordance with the
Merger Agreement and the NYBCL; (d) that the shares of Class B Common Stock
which will be transferred in accordance with the Merger Agreement have been duly
authorized and validly issued, have been listed on the NYSE and, when
transferred to the Shareholders, will be fully paid and nonassessable; and (e)
subject to the receipt of certain representation letters and limitations on the
cash paid by Hubbell or Merger Sub in the Merger, that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a)(2)(E) of the Code; and (v) following a vote of the
Shareholders approving the Merger at the Special Meeting and prior to the
Effective Time, there will not have occurred a material adverse change in or
effect on the business, operations, properties, assets, liabilities, condition
(financial or otherwise), results of operations or prospects of Hubbell and its
subsidiaries taken as a whole.
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EXPENSES
The Merger Agreement provides that (except under the circumstances
described under "THE MERGER -- Certain Fees and Expenses" above and under any
agreement entered into pursuant to the Merger Agreement (See "THE
MERGER -- Escrow Account/Escrow Agreement" above.), Hubbell, Merger Sub and
Fargo each will pay its own fees and expenses incident to the negotiation,
preparation and execution of the Merger Agreement and the consummation of the
transactions contemplated thereby, including attorneys', accountants' and other
advisors' fees and the fees and expenses of any broker, finder or agent retained
by such party in connection with the transactions contemplated by the Merger
Agreement. Notwithstanding the foregoing, Fargo will bear the cost of the
Special Meeting and of soliciting proxies therefor.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. Shares of Fargo Common Stock held by certain executive officers
and directors of Fargo will receive the same consideration as shares of Fargo
Common Stock held by other Shareholders.
Indemnification; D&O Insurance. The Merger Agreement provides that the
certificate of incorporation of the Surviving Corporation will contain
provisions for the indemnification of directors and officers of Fargo no less
favorable than the provisions set forth in the certificate of incorporation of
Fargo and Hubbell and Merger Sub covenant and agree that such provisions will
remain in effect for at least six (6) years following the Effective Time. In
addition, the Merger Agreement requires Hubbell and the Surviving Corporation to
use their reasonable best efforts to maintain in effect for one (1) year
following the Effective Time Fargo's current policies of directors' and
officers' liability insurance to the extent that they provide coverage for
events occurring prior to the Effective Time, if, or the extent that, the annual
premium therefore would not be in excess of $6,000. See "THE MERGER -- Certain
Additional Agreements".
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the principal federal United States
income tax consequences of the Merger to holders of Fargo Common Stock (who hold
such stock as a capital asset) and does not purport to be a complete analysis or
listing of all potential tax effects relevant to a decision whether to vote in
favor of approval of the Merger. The discussion does not reflect the individual
tax position of any holder of Fargo Common Stock and does not address the tax
consequences that may be relevant to holders of Fargo Common Stock with special
tax status, including but not limited to financial institutions, dealers in
securities, holders that are not citizens or residents of the United States,
tax-exempt entities and holders that acquired Fargo Common Stock as
compensation. Moreover, the discussion does not address any consequences arising
under the laws of any state, locality or foreign jurisdiction. Finally, the tax
consequences to the Shareholders exercising their rights to appraisal under the
NYBCL are not discussed. The discussion is based on the Code, Treasury
Regulations thereunder and administrative rulings and court decisions as of the
date hereof. All of the foregoing are subject to change and any such change
could affect the continuing validity of this discussion. HOLDERS OF FARGO COMMON
STOCK ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE TAX
CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE EFFECTS OF FEDERAL, STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS.
At the time of Closing, ST&B, counsel to Hubbell, will deliver to Fargo its
opinion to the effect that the Merger will be treated for United States federal
income tax purposes as a reorganization within the meaning of Section
368(a)(2)(E) of the Code. Such opinion will assume (i) that the Merger will take
place as described in the Merger Agreement, (ii) that certain factual matters
with respect to Hubbell, Merger Sub, Fargo and certain shareholders of Fargo,
respectively, described in certain representation letters addressed to such
counsel, will be true and correct as of the Effective Time and (iii) that the
amount of cash to be paid by Hubbell or Merger Sub pursuant to the Merger
Agreement will not exceed ten percent of the aggregate consideration to be paid
by Hubbell or Merger Sub to the Shareholders pursuant to the Merger Agreement.
If any of the assumptions are inaccurate, the opinion of ST&B could be adversely
affected. Neither Hubbell nor Fargo has requested or will request an advance
ruling from the Internal Revenue Service (the "IRS") as to
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the tax consequences of the Merger. The following discussion is based on the
opinion of ST&B to be delivered to Fargo which is subject to the qualifications
and limitations stated above and in such opinion.
Tax Treatment of Holders of Fargo Common Stock. Exchanges of Fargo Common
Stock pursuant to the Merger will generally have the United States federal
income tax consequences described below. As discussed below, the United States
federal income tax consequences of such exchanges will depend on whether cash is
paid to a holder as a result of the Estimated Net Worth Amount being less than
the Final Closing Net Worth Amount (a "Cash Adjustment"). In considering the
following discussion, a holder should be aware that (under Section 318 of the
Code) the holder may be considered to own, after the Merger, Class B Common
Stock owned (and in some cases constructively owned) by certain related
individuals and entities and Class B Common Stock which the holder (or such
individuals and entities) has the right to acquire upon the exercise of options.
Exchange of Fargo Common Stock With No Cash Adjustment. Provided there is
no Cash Adjustment and except as provided below in the discussion entitled "Cash
Received in Lieu of Fractional Shares of Class B Common Stock", a holder of
Fargo Common Stock who participates in the Merger will exchange all of his Fargo
Common Stock solely for Class B Common Stock and will not recognize gain or loss
on the exchange. The aggregate tax basis of the Class B Common Stock received
will be equal to the aggregate tax basis of the Fargo Common Stock exchanged,
and the holding period of the Class B Common Stock received will include the
holding period of the Fargo Common Stock exchanged.
Exchange of Fargo Common Stock With a Cash Adjustment. If there is a Cash
Adjustment, a holder of Fargo Common Stock who participates in the Merger will
exchange his Fargo Common Stock for Class B Common Stock and cash received
pursuant to the Cash Adjustment. Such holder will not recognize any loss but
will realize gain measured by the excess, if any, of (i) the sum of the amount
of cash and the fair market value of the Class B Common Stock received in the
Merger over (ii) such holder's tax basis in the Fargo Common Stock. However, any
such gain will be recognized (and thus subject to tax) only to the extent of the
cash received. Such recognized gain will constitute long- or short-term capital
gain (depending on whether the holder held the Fargo Common Stock for more than
one year) or, as discussed below, a dividend. Such holder's adjusted basis for
the Class B Common Stock received generally will be the same as the adjusted
basis of the Fargo Common Stock surrendered, decreased by the amount of cash
received and increased by the amount of gain or dividend income recognized. The
holding period of the Class B Common Stock received will include the period
during which the Fargo Common Stock surrendered was held.
In general, the determination of whether a holder who exchanges Fargo
Common Stock for cash and Class B Common Stock recognizes capital gain or
dividend income is made by reference to the rules of Sections 356(a)(2) and 302
of the Code. Under Section 356(a)(2), each holder of Fargo Common Stock will be
treated for tax purposes as if such holder had received only Class B Common
Stock in the Merger, and immediately thereafter Hubbell had redeemed appropriate
portions of such Class B Common Stock in exchange for the cash actually
distributed to such holder in the Merger. Under Section 302, all of the cash
representing gain recognized by a holder on the exchange will be taxed as
capital gain if the deemed redemption from such holder (i) is a "substantially
disproportionate redemption" of stock with respect to such holder or (ii) is
"not essentially equivalent to a dividend" (taking into account, in either case,
the constructive ownership rules described above and all other actual and deemed
redemptions from such holder and other holders of Class B Common Stock
undertaken as part of the plan of reorganization).
The deemed redemption of a holder's Class B Common Stock will be a
"substantially disproportionate redemption" if, as a result of the deemed
redemption, there is a greater than 20% reduction in (1) the percentage of all
then outstanding shares of Class B Common Stock then owned by the holder and (2)
the percentage of the voting power of all then-outstanding Class B Common Stock
represented by all Class B Common Stock then owned by the holder.
The deemed redemption of a holder's Class B Common Stock will be "not
essentially equivalent to a dividend" if the holder experiences a "meaningful
reduction" in his proportionate equity interest in Hubbell by reason of the
deemed redemption. In general, there are no fixed rules for determining when a
"meaningful reduction" has occurred. However, based upon a published ruling of
the IRS, the receipt of cash in the Merger
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would not be characterized as a dividend if the holder's percentage stock
ownership interest in Hubbell or Fargo prior to the Merger is minimal, the
holder exercises no control over the affairs of Hubbell or Fargo, and the
holder's percentage equity interest in Hubbell is reduced in the deemed
redemption to any extent.
If neither of the redemption tests described above is satisfied, a holder
will be treated as having received a dividend equal to the amount of such
holder's recognized gain (as described above), assuming that such holder's
ratable share of the accumulated earnings and profits of Fargo (or possibly the
total earnings and profits of Fargo and Hubbell) equals or exceeds such
recognized gain.
Cash Received in Lieu of Fractional Shares of Class B Common Stock. No
fractional shares of Class B Common Stock will be issued in the Merger. A holder
who receives cash in lieu of a fractional share of Class B Common Stock will be
treated as having received such fractional share of Class B Common Stock and
having sold it to Hubbell. The holder generally will recognize capital gain or
loss equal to the difference between the basis for the fractional share of Class
B Common Stock and the cash received in the deemed sale to Hubbell of such
share.
ANTICIPATED ACCOUNTING TREATMENT
Hubbell intends to treat the Merger as a "purchase" for accounting and
financial reporting purposes.
REGULATORY APPROVALS REQUIRED
Under the HSR Act and the regulations promulgated thereunder by the Federal
Trade Commission (the "FTC"), certain acquisition transactions may not be
consummated unless notice has been given and certain information has been
furnished to the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") and the FTC and specified waiting period requirements
have been satisfied. Such requirements have been satisfied.
RESALE OF HUBBELL COMMON STOCK
The Class B Common Stock to be issued pursuant to the Merger will be freely
transferable under the Securities Act except for shares issued to any Fargo
shareholder who may be deemed to be an affiliate of Fargo (an "Affiliate") for
purposes of Rule 145 under the Securities Act. Fargo will use its best efforts
to cause each such Affiliate to enter into an agreement with Hubbell providing
that such Affiliate will not transfer any shares of Class B Common Stock
received in the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and other
limitations of Rule 144 (to the extent incorporated in Rule 145), each
promulgated under the Securities Act, or (iii) in a transaction which, in the
opinion of independent counsel reasonably satisfactory to Hubbell, or as
described in a "no-action" or interpretive letter from the staff of the SEC, is
not required to be registered under the Act.
STOCK EXCHANGE LISTING
The shares of Class B Common Stock to be issued pursuant to the Merger
Agreement have been listed on the NYSE.
DESCRIPTION OF CAPITAL STOCK OF HUBBELL
The following statements are brief summaries of certain provisions relating
to Hubbell's capital stock and are qualified in their entirety by reference to
the provisions of Hubbell's Restated Certificate of Incorporation (the "Hubbell
Charter"), and By-Laws (the "Hubbell By-Laws"), which are incorporated herein by
reference as exhibits to the Registration Statement of which this
Prospectus/Proxy Statement is a part.
Hubbell is authorized to issue 205,891,097 shares of capital stock
including (i) 5,891,097 shares of Preferred Stock without par value, of which no
shares are outstanding, (ii) 50,000,000 shares of Class A Common Stock (together
with the Class B Common Stock, "Hubbell Common Stock"), of which 11,447,000
shares were outstanding as of November 4, 1996 and (iii) 150,000,000 shares of
Class B Common Stock, of which 54,541,000 shares were outstanding as of November
4, 1996.
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DIVIDEND RIGHTS
Subject to the terms of any contractual restriction on the declaration or
payment of dividends, holders of Hubbell Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors of Hubbell, out of
funds legally available therefor. Holders of Class A Common Stock and Class B
Common Stock have identical rights to dividends, except that stock dividends may
be declared and paid on shares of Class A Common Stock consisting in whole or in
part of shares of Class B Common Stock.
VOTING RIGHTS
Except as may otherwise be provided by law, the holders of record of Class
A Common Stock and Class B Common Stock vote as a single class. Each share of
Class A Common Stock is entitled to 20 votes and each share of Class B Common
Stock is entitled to one vote upon all matters brought before any meeting of the
shareholders of the corporation. Any corporate action to be taken by a vote of
the shareholders of Hubbell shall be authorized by the affirmative vote of a
majority of the voting power of the shares of stock, represented at a meeting of
shareholders duly held and at which a quorum is present, which are entitled to
vote on any subject matter to be voted on at the meeting.
Under Connecticut law, directors are elected by a plurality of the votes
cast by the shares entitled to vote in the election at a meeting where a quorum
is present. The Hubbell By-Laws provide that directors are to be elected at the
annual meeting of shareholders.
LIQUIDATION RIGHTS
Upon any liquidation of Hubbell, the holders of the Class A Common Stock
and Class B Common Stock are entitled to share ratably in the distribution of
all assets of the corporation.
PREEMPTIVE RIGHTS
Holders of Hubbell Common Stock have no preemptive rights to subscribe to
or purchase any new or additional or increased shares of stock issued by Hubbell
of any class or any scrip, rights, warrants, bonds or other obligations,
security or evidence of indebtedness, whether or not convertible into or
exchangeable for, nor do such holders claim rights to purchase or otherwise
acquire, shares of stock of the corporation of any class.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C. serves as transfer agent and
registrar for Hubbell Common Stock. ChaseMellon Shareholder Services, L.L.C. is
located at 450 West 33rd Street, New York, New York 10001.
PREFERRED STOCK
The Hubbell Charter authorizes the Hubbell Board to issue Preferred Stock
in series. Each series is to be of equal rank and identical except to the extent
expressly determined by the Hubbell Board. The Hubbell Board is authorized to
determine the number of shares of each series, the dividend rate, whether
dividends should be cumulative, voting rights, liquidation rights, the
redemption price or prices, if any, and the terms and conditions of the
redemption, any sinking fund provisions for the redemption or purchase of shares
of the series, whether or not the shares are to be convertible into shares of
common stock, and the terms and conditions on which the shares are convertible
into Class A Common Stock or Class B Common Stock, or both. All shares of
Preferred Stock constitute one and the same class, and are of equal rank,
regardless of series, in respect of the payment of dividends and distributions
in liquidation. No such shares of Preferred Stock were issued and outstanding as
of the date hereof.
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THE HUBBELL RIGHTS AGREEMENT
This summary description of the Rights summarizes the material terms of the
Rights but does not purport to be complete and is qualified in its entirety by
reference to the Hubbell Rights Agreement, which is incorporated by reference as
an exhibit to the Registration Statement of which this Prospectus/Proxy
Statement is a part.
Hubbell has adopted a Hubbell shareholders' rights plan which is intended
to protect shareholders in the event of unsolicited offers or attempts to
acquire Hubbell, including offers that do not treat all shareholders equally,
acquisitions in the open market of shares constituting control without offering
fair value to all shareholders and other coercive or unfair takeover tactics
that could impair the Hubbell Board's ability to represent shareholders'
interests fully.
The description and terms of the Rights are set forth in a Rights
Agreement, dated as of December 13, 1988, as the same may be amended from time
to time (the "Rights Agreement"), between Hubbell and ChaseMellon Shareholder
Services, L.L.C., as successor Rights Agent which is herein incorporated by
reference as an exhibit to the Registration Statement of which this
Prospectus/Proxy Statement is a part.
Pursuant to Hubbell's shareholders' rights plan, on December 23, 1988,
Hubbell distributed one Class A Right for each outstanding share of Class A
Common Stock of Hubbell and one Class B Right for each outstanding share of
Class B Common Stock of Hubbell. The number of Rights per share was subsequently
adjusted pursuant to antidilution provisions in the Rights Agreement, and is
subject to further adjustment. As of November 4, 1996 each share of Class A
Common Stock had associated with it .411351 Class A Rights and each share of
Class B Common Stock had associated with it .411351 Class B Rights. The Rights
will expire at the close of business on December 31, 1998, unless earlier
redeemed by Hubbell as described below.
The Rights Agreement also provides for the issuance of Rights with respect
to new shares of Class A Common Stock and Class B Common Stock which may become
outstanding (whether originally issued or delivered from Hubbell's treasury).
Once exercisable, each Class A Right and Class B Right would, as of the
Record Date, entitle its registered holder to purchase one share of Hubbell's
Class A Common Stock or Class B Common Stock, as the case may be (the
"Conversion Rate"), in each case at a price of $120.00 per share (the "Purchase
Price"), subject to adjustment to prevent dilution.
The Rights are not exercisable until the earlier to occur of (i) ten days
following the first date of a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 20% or more of the outstanding Class A Common Stock of Hubbell, or
(ii) such later date as may be determined by action of the Hubbell Board which
is not later than the nineteenth business day after the commencement of a tender
offer or exchange offer the consummation of which would result in the ownership
of 30% or more of the outstanding Class A Common Stock. The Rights will be
represented by and transferred with, and only with, the Hubbell Common Stock.
The Rights Agreement provides that neither the trust established under a
Trust Indenture dated September 2, 1957 made by Louie E. Roche (the "Roche
Trust") nor the trust established under a Trust Indenture dated August 23, 1957
made by Harvey Hubbell (the "Hubbell Trust" and either individually as the
"Trust") will be deemed an Acquiring Person so long as such Trust (i) will not
have engaged in any of the self-dealing transactions referenced below at a time
when it beneficially owned 20% or more of the outstanding Class A Common Stock
and (ii) will not have made an acquisition of shares of Class A Common Stock
that would increase the percentage of Class A Common Stock beneficially owned by
it to 25% or more nor, at a time when it beneficially owns 25% or more of the
outstanding Class A Common Stock, have made an acquisition of additional shares
of Class A Common Stock that would increase the percentage of outstanding Class
A Common Stock beneficially owned by it, in each case, other than from the other
Trust or pursuant to a Permitted Tender Offer (as defined below).
The Purchase Price payable, and the number of shares of Hubbell Common
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution
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(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of the Hubbell Common Stock, (ii) upon the grant to holders of
Hubbell Common Stock of certain rights or warrants to subscribe for Hubbell
Common Stock or convertible securities at less than the current market price of
the Hubbell Common Stock or (iii) upon the distribution to holders of the
Hubbell Common Stock of evidences of indebtedness or assets (excluding regular
cash dividends and dividends payable in Hubbell Common Stock) or of subscription
rights or warrants (other than those referred to above).
In the event that, after the Stock Acquisition Date (as defined therein),
Hubbell were to be acquired in a merger or other business combination (in which
any shares of Hubbell's Common Stock are changed into or exchanged for other
securities or assets) or more than 50% of the assets or earning power of Hubbell
and its subsidiaries (taken as a whole) were to be sold or transferred in one or
a series of related transactions, the Rights Agreement provides that each holder
of record of an outstanding Right will from and after such date have the right
to receive, upon payment of the Purchase Price, the number of shares of common
stock of the acquiring company having a market value at the time of such
transaction equal to two times the Purchase Price.
In the event that a person (a) makes an acquisition of shares of Class A
Common Stock that would increase the percentage of outstanding Class A Common
Stock beneficially owned by such person to 25% or more, or (b) beneficially
owning in excess of 25% of such Class A Common Stock, makes an acquisition of
additional shares of Class A Common Stock that would increase the percentage of
outstanding Class A Common Stock beneficially owned by such Person, then, unless
any such acquisition was made by the Roche Trust or the Hubbell Trust from the
other such Trust or was made pursuant to an all-cash tender offer for all
outstanding shares of both Class A Common Stock and Class B Common Stock at the
same price per share for each class and which is accepted by holders of at least
two-thirds of each class of Hubbell Common Stock owned by persons other than the
person making the tender offer and its affiliates (a "Permitted Tender Offer"),
then each holder of a Right, other than such Person, will have the right to
receive, upon payment of the Purchase Price, a number of shares of Class A
Common Stock or Class B Common Stock, as the case may be, having a market value
equal to twice the Purchase Price.
In addition, in the event that any Acquiring Person or any of its
affiliates or associates engages in one or more of certain "self-dealing"
transactions as described in the Rights Agreement, each holder of a Right (other
than the Acquiring Person) will have the right to receive, upon payment of the
Purchase Price, a number of shares of Class A Common Stock or Class B Common
Stock, as the case way be, having a market value equal to twice the Purchase
Price. This same right will also be available to each holder of record of a
Right, other than the Acquiring Person, if, while there is an Acquiring Person,
there occurs any reclassification of securities, any recapitalization of
Hubbell, or any merger or consolidation or other transaction involving Hubbell
or any of its subsidiaries which has the effect of increasing by more than 1%
the proportionate ownership interest of Hubbell or any of its subsidiaries which
is owned or controlled by the Acquiring Person. To the extent that insufficient
shares of Hubbell Common Stock are available for the exercise in full of the
Rights, holders of Rights will receive upon exercise shares of Hubbell Common
Stock to the extent available and then cash, property or other securities of
Hubbell (provided that shares of Class A Common Stock may not be substituted for
shares of Class B Common Stock), in proportions determined by Hubbell, so that
the aggregate value received is equal to twice the Purchase Price.
Rights are not exercisable following the occurrence of the events described
in the previous paragraph until the expiration of the period during which the
Rights may be redeemed as described below. Notwithstanding the foregoing,
following the occurrence of the events described in the previous paragraph,
Rights that are (or, under certain circumstances, Rights that were) beneficially
owned by an Acquiring Person will be null and void.
At any time until ten days following the Stock Acquisition Date (subject to
extension by the Hubbell Board), the Hubbell Board may cause Hubbell to redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), subject to adjustment; provided that after a Stock
Acquisition Date, a redemption of the Rights requires the approval of a majority
of the Hubbell Board, including a majority of the Continuing Directors (as
defined below). Immediately upon the action of the Hubbell Board
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authorizing redemption of the Rights, the right to exercise the Rights will
terminate, and the holders of Rights will be entitled to receive only the
Redemption Price without any interest thereon.
A "Continuing Director" is any member of the Hubbell Board other than an
Acquiring Person or his affiliates or associates, who (i) was a member of the
Hubbell Board immediately prior to the time that any person or group became an
Acquiring Person, or (ii) becomes a member of the Hubbell Board subsequent to
the time that any person or group becomes an Acquiring Person, if such person is
recommended or nominated for election to the Hubbell Board by a majority of the
Continuing Directors then on the Hubbell Board.
For as long as the Rights are then redeemable, Hubbell may, except with
respect to the redemption price or date of expiration of the Rights, amend the
Rights in any manner, including an amendment to extend the time period in which
the Rights may be redeemed. At any time when the Rights are not then redeemable,
Hubbell may amend the Rights in any manner that does not affect adversely the
interests of holders of the Rights as such; provided that from and after a Stock
Acquisition Date, the Rights may be amended only by a majority of the Hubbell
Board, including a majority of the Continuing Directors.
Until a Right is exercised, the holder, as such, has no rights as a
shareholder of Hubbell, including, without limitation, the right to vote or to
receive dividends.
DESCRIPTION OF CAPITAL STOCK OF FARGO
The following statements are brief summaries of certain provisions relating
to Fargo's capital stock and are qualified in their entirety by reference to the
provisions of Fargo's Restated Certificate of Incorporation (the "Fargo
Charter"), and By-Laws (the "Fargo By-Laws"), which are filed as exhibits to the
Registration Statement of which this Prospectus/Proxy Statement is a part.
Fargo is authorized to issue 360,000 shares of common stock, without par
value, all of the same class, of which 235,702 shares were issued and
outstanding as of the Record Date.
DIVIDEND RIGHTS
Subject to the terms of any contractual restriction on the declaration or
payment of dividends, holders of Fargo Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors of Fargo, out of
funds legally available therefor.
VOTING RIGHTS
Each Shareholder of record having the right to vote is entitled to have one
vote upon all matters brought before any meeting of the Shareholders. Except as
otherwise provided by law, any corporate action to be taken by a vote of the
Shareholders, other than the election of directors, is authorized by a majority
of the votes cast at a meeting by the Shareholders present in person or by proxy
and entitled to vote thereon.
Directors are elected based upon a plurality of the votes cast at the
annual meeting of Shareholders.
LIQUIDATION RIGHTS
No mention is made of liquidation rights in the Fargo Charter or By-Laws.
PREEMPTIVE RIGHTS
No mention is made of preemptive rights in the Fargo Charter. The NYBCL,
however, provides for preemptive rights of shareholders but not, unless
otherwise provided in the certificate of incorporation, when shares or other
securities offered for sale or subjected to rights or options to purchase are to
be issued by the board to effect a merger or consolidation or offered or
subjected to rights or options for consideration other than cash.
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TRANSFER AGENT AND REGISTRAR
Fargo acts as its own transfer agent and registrar.
COMPARISON OF RIGHTS OF HOLDERS OF
FARGO COMMON STOCK AND HUBBELL CLASS B COMMON STOCK
The following comparison of the rights of holders of Fargo Common Stock and
Class B Common Stock is presented on the basis of the NYBCL and the Connecticut
Business Corporation Act ("CBCA") and the existing Fargo Charter and By-Laws and
the Hubbell Charter and By-Laws.
GENERAL
Fargo is a New York corporation subject to the provisions of the NYBCL;
Hubbell is a Connecticut corporation subject to the provisions of the
Connecticut Business Corporation Act ("CBCA"), which became effective on January
1, 1997 and replaced the Connecticut Stock Corporation Act ("CSCA"). As
indicated in certain instances below, pursuant to the CBCA, corporations such as
Hubbell which were incorporated prior to January 1, 1997 will, in certain
respects and subject to affirmative action by such corporations to the contrary,
be treated in the same manner as they had formerly been treated under the CSCA
and, accordingly, differently from Connecticut corporations incorporated after
the effective date of the CBCA.
Shareholders of Fargo, whose rights are presently governed by the Fargo
Charter, the Fargo By-Laws and the NYBCL, will, as a result of the Merger,
become holders of Class B Common Stock (unless they have perfected dissenters'
rights with respect to their shares as described under "APPRAISAL RIGHTS OF
DISSENTING FARGO SHAREHOLDERS"). The rights of such former Shareholders will
thereafter be governed by the Hubbell Charter, the Hubbell By-Laws and the laws
of Connecticut.
The following summary, which does not purport to be a complete statement of
the differences between the rights of the shareholders of Hubbell and the
Shareholders, sets forth certain differences between the Hubbell Charter and the
Fargo Charter, the Hubbell By-Laws and the Fargo By-Laws and Connecticut and New
York law. The identification of specific differences is not meant to indicate
that other differences do not exist. This summary is qualified in its entirety
by reference to the full text of each of such documents and the applicable state
statutes. For information as to how material concerning Hubbell may be obtained,
see "AVAILABLE INFORMATION".
VOTING RIGHTS
Generally. The NYBCL and the CBCA provide that every shareholder is
entitled to one vote for each share of capital stock held by such shareholder
unless otherwise specified in the certificate of incorporation. These statutes
also provide that the holders of outstanding shares of any class of stock will,
regardless of any limitations or restrictions in the certificate of
incorporation, be entitled to vote as a class upon any proposed amendment to the
certificate of incorporation which would have certain specified effects on their
rights.
The Hubbell Charter provides that each shareholder of record of Class A
Common Stock is entitled to 20 votes per share and each holder of Class B Common
Stock is entitled to one vote per share, upon all matters brought before any
meeting of the shareholders of Hubbell. See "DESCRIPTION OF CAPITAL STOCK OF
HUBBELL -- Voting Rights". Each Shareholder of record of Fargo shares is
entitled to one vote per share upon all matters brought before any meeting of
the Shareholders. See "DESCRIPTION OF CAPITAL STOCK OF FARGO -- Voting Rights".
Election of Directors. The Fargo By-Laws provide that the number of
directors will be not less than four, nor greater than nineteen directors. The
number of directors of Fargo is currently fixed at 10. Directors are elected at
the annual meeting of Shareholders by a plurality of the votes cast. Each
director holds office until the next annual meeting of the Shareholders and
until his or her successor has been duly elected and qualified.
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The Hubbell By-Laws provide that the number of directors will be not less
than 3 and not more than 11. Within this range, the number of directors may be
increased by the concurring vote of a majority of the directors constituting the
full Hubbell Board immediately prior to such vote. The number of directors of
Hubbell is presently fixed at 9. Directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present. The Hubbell By-Laws provide that the election of directors
will take place at the annual meeting of shareholders.
Approval of Certain Transactions. Except as may otherwise be provided by
law or by the Fargo Charter, Shareholders of record are entitled to one vote for
every share of stock, and any corporate action to be taken by a vote of the
Shareholders shall be authorized by a majority of the votes cast at a meeting of
the Shareholders present in person or by proxy and entitled to vote thereon.
Fargo requires the affirmative vote of two-thirds of all outstanding shares
entitled to vote thereon to effect a merger, a consolidation and a share
exchange as well as to effect the sale, lease or disposition of all or
substantially all of Fargo's assets. The holders of shares of a class or series
are entitled to vote as a class if the proposed transaction contains any
provision which, if contained in an amendment to the certificate of
incorporation, would entitle the holder of shares of such class or series to
vote as a class thereon; in such a case, in addition to the required two-thirds
vote of all outstanding shares, the merger must be authorized by a vote of the
holders of a majority of all outstanding shares of each such class or series. No
vote of the Shareholders is required where Fargo owns at least 90% of the
outstanding shares of each class of another corporation and merges such
corporation into itself.
Except as may otherwise be provided by law, the holders of record of Class
A and Class B Common Stock vote as a single class, and the holder of record of
each issued and outstanding share of Class A Common Stock is entitled to have
twenty (20) votes per share and the holder of record of each issued and
outstanding Class B Common Stock is entitled to have one (1) vote per share,
upon all matters brought before any meeting of the shareholders. Except as may
otherwise be provided by law, any corporate action to be taken by a vote of the
shareholders of Hubbell shall be authorized by the affirmative vote of a
majority of the voting power of the shares of stock voted at a meeting of
shareholders duly held and at which a quorum is present.
A plan of merger or share exchange must be authorized by a recommendation
by the Hubbell Board, unless the Hubbell Board determines that because of
conflicts of interest or other special circumstances it should make no
recommendation, followed by, in most circumstances, the approval of two-thirds
of the outstanding shares of each class, whether or not otherwise entitled to
vote. Each class is entitled to vote separately. If Hubbell is to be the
surviving corporation in a merger, as a general matter shareholders are not
required to be given a vote on the plan of merger unless the shares to be issued
in the merger represent 20% or more of the issued and outstanding shares of
Hubbell.
Amendment to Charter or By-Laws. An amendment to the Fargo Charter may be
authorized by the vote of the Fargo Board, followed by the vote of the holders
of a majority of all outstanding shares entitled to vote thereon at a meeting of
Shareholders. If any class or series is entitled under the NYBCL to vote as a
class with respect to an amendment, the amendment must be authorized by the vote
of the holders of a majority of all outstanding shares of such class or series.
Fargo By-Laws may be adopted, amended or repealed by vote of the
Shareholders entitled to vote in the election of any directors. Fargo By-Laws
may also be adopted, amended or repealed by the Fargo Board, by a vote of not
less than a majority of the entire Fargo Board. However, any By-Law adopted by
the Fargo Board may be amended or repealed by the Shareholders entitled to vote
thereon, as described above. If the Fargo Board adopts, amends or repeals any
By-Law regulating an impending election of directors, the By-Law so adopted,
amended or repealed must be set forth in the notice of the next meeting of the
Shareholders, together with a concise statement of the changes made.
An amendment to the Hubbell Charter must be authorized by a recommendation
by the Hubbell Board, unless the Hubbell Board determines that because of
conflicts of interest or other special circumstances it should make no
recommendation, followed by, in most circumstances, the approval by (i) a
majority of the votes entitled to be cast on the amendment by any voting group
with respect to which the amendment would create dissenters' rights, and (ii) a
majority of the votes cast by every other voting group entitled to vote on the
amendment. An amendment to the Hubbell Charter that adds, changes or deletes a
greater quorum or voting
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requirement must meet the same quorum requirement and be adopted by the same
vote and voting groups required to take action under the quorum and voting
requirements then in effect or proposed to be adopted, whichever is greater.
The Hubbell By-Laws may be amended by the affirmative vote of the holders
of a majority of the voting power of shares entitled to vote thereon. By-Laws
amended or adopted by the shareholders are subject to amendment or repeal by the
Hubbell Board, unless such By-Laws are declared by the shareholders as not
subject to amendment or repeal by the Hubbell Board. The Hubbell By-Laws may be
amended by the Hubbell Board by an affirmative vote of directors holding a
majority of the directorships.
BUSINESS COMBINATION STATUTES
The CBCA generally prohibits Hubbell, as a resident domestic corporation,
from engaging in certain business combinations (as defined by the statute to
include certain mergers and consolidations, dispositions of assets and issuances
of securities, as well as certain other transactions) with an interested
shareholder (as defined by the statute generally to include holders of 10% or
more of the outstanding stock of the corporation) for a period of five years
following the date that such shareholder became an interested shareholder,
unless the business combination or the purchase of stock is approved by the
Hubbell Board and by a majority of the non-employee directors of which there
must be at least two, prior to the date such shareholder became an interested
shareholder or unless the interested shareholder was an interested shareholder
on February 1, 1988, unless subsequent to June 7, 1988, such interested
shareholder increased its proportionate share of the voting power of the
outstanding voting stock of Hubbell (excluding any increase approved by the
Hubbell Board before such increase occurs). The CBCA also generally requires
business combinations with an interested shareholder to be approved by the board
of directors and by the affirmative vote of at least (1) the holders of eighty
per cent of the voting power of the outstanding shares of voting stock and (2)
the holders of two-thirds of such voting power excluding the voting stock held
by the interested shareholder, unless the consideration to be received by the
shareholders of the corporation meets certain price and other requirements set
forth in the statute or unless the board of directors of the corporation has by
resolution determined to exempt business combinations with such interested
shareholder prior to the time that such shareholder became an interested
shareholder.
"ANTI-GREENMAIL"
The NYBCL provides that no domestic corporation may purchase more than 10%
of its stock from a shareholder who has held the shares for less than two years
at any price which is higher than the market price unless such transaction is
approved by both the corporation's board of directors and a majority of the
shares entitled to vote or the corporation offers to purchase shares from all
the holders on the same terms.
SPECIAL MEETINGS
Special meetings of the Shareholders may be called at any time for any
purpose by a majority of the Fargo Board. Special meetings will also be called
by the chairman upon the written request of 15% of the outstanding shares of the
Fargo Common Stock.
Under New York law, if there is a failure to elect a sufficient number of
directors to conduct the business of the corporation for a period of one month
after the date fixed by or under the bylaws for the annual meeting of
shareholders or for a period of 13 months after the last annual meeting, the
board of directors is required to call a special meeting for the election of
directors. If the board fails to do so within 14 days of the expiration of such
period or if it is so called but such directors are not elected within two
months, holders of 10% of the shares entitled to vote in an election of
directors may demand the call of a special meeting for an election of directors.
At any such special meeting called on demand of shareholders, notwithstanding
other quorum requirements set forth in the NYBCL, the shareholders attending, in
person or by proxy, and entitled to vote in an election of directors will
constitute a quorum for the purpose of electing directors, but not for the
transaction of any other business.
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Special meetings of the shareholders of Hubbell may be called by the
Chairman of the Board or the Hubbell Board. Upon the written request of the
holders of 10% or more of the votes entitled to vote at the meeting, the
Chairman of the Board must call a special shareholders' meeting for the purposes
specified in the request. If the Chairman fails to call such a special meeting
within fifteen days after receipt of the request to call such a special meeting,
the requesting shareholders may call the meeting themselves. Shareholders of
Hubbell may obtain a court order calling for a special meeting if one is not
timely held after proper demand.
Under both New York and Connecticut law, only business related to the
purpose or purposes stated in the notice to shareholders may be transacted at a
special meeting.
QUORUM REQUIREMENTS
The NYBCL provides that the holders of a majority of the shares entitled to
vote thereat shall constitute a quorum at a meeting of shareholders, provided
that when a specified item of business is required to be voted on by a class or
series, voting as a class, the holders of a majority of the shares of such class
or series shall constitute a quorum for the transaction of such specified item
of business. The NYBCL further provides that when a quorum is once present to
organize a meeting, it is not broken by the subsequent withdrawal of any
shareholders, and that the shareholders present may adjourn the meeting despite
the absence of a quorum.
While the NYBCL provides for the certificate of incorporation or by-laws to
modify quorum requirements, the Fargo Charter is silent on the issue of quorums,
and the Fargo By-Laws provide that, except as otherwise provided by law, at all
meetings of Shareholders the holders of a majority of the shares of Fargo
entitled to vote thereat must be present in person or by proxy in order to
constitute a quorum for the transaction of business.
The CBCA mandates that a quorum consist of a majority of the votes entitled
to be voted on the matter. The Hubbell By-Laws provide that no action required
by law, the Hubbell Charter or the Hubbell By-Laws to be authorized or taken by
the holders of a designated proportion of the voting power of shares or of the
shares of any particular class or of each class, may be authorized or taken by a
lesser proportion. The holders of a majority of the voting power of the shares
entitled to vote represented at any such meeting may adjourn the meeting from
time to time, without notice other than announcement at the meeting, and any
business may be transacted at such adjourned meeting which might have been
transacted at the meeting as originally notified. The shareholders present at a
duly-held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
SHAREHOLDERS' ACTION WITHOUT A MEETING
Any action which may be taken by vote of the Shareholders may be taken
without a meeting on written consent, setting forth the action so taken, signed
in person or by proxy, by the holders of all outstanding shares entitled to vote
thereon.
Any action which may be taken at a meeting of Hubbell shareholders may be
taken without a meeting by unanimous written consent.
PREEMPTIVE RIGHTS
Subject to certain exceptions, the NYBCL provides that the holders of
voting shares of any class have certain preemptive rights.
Hubbell shareholders have no preemptive or other rights to subscribe to or
purchase any new shares of stock of Hubbell.
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DIVIDENDS
Fargo may declare and pay dividends on its outstanding shares except when
the corporation is insolvent or would thereby be made insolvent, or when the
declaration, payment or distribution would be contrary to any restrictions
contained in the certificate of incorporation. In general, dividends may be
declared or paid out of earned surplus only. When any dividend is paid or any
other distribution is made, in whole or in part, from sources other than earned
surplus, it must be accompanied by a written notice disclosing the amounts by
which such dividend or distribution affects stated capital, capital surplus and
earned surplus, or, if such amounts are not yet determinable, disclosing the
approximate effect of such dividend on stated capital, capital surplus and
earned surplus and stating that such amounts are not yet determinable.
Hubbell may make a distribution to shareholders with respect to their
shareholdings unless, after giving effect to such distribution, (i) Hubbell
would not be able to pay its debts as they become due in the usual course of
business or (ii) Hubbell's total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if Hubbell were to be
dissolved at the time of distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
See generally, "DESCRIPTION OF CAPITAL STOCK OF HUBBELL -- Dividend
Rights"and "DESCRIPTION OF CAPITAL STOCK OF FARGO -- Dividend Rights".
STOCK REPURCHASES
Fargo may, subject to restrictions imposed by law, repurchase or redeem its
shares out of capital surplus except when Fargo is insolvent or would thereby be
made insolvent. Fargo may repurchase its shares out of stated capital (while
meeting the foregoing requirement) if the purchase is made for the purpose of
(i) eliminating fractions of shares, (ii) collecting or compromising
indebtedness of Fargo or (iii) paying Shareholders the fair value of their
shares in connection with the exercise of statutory appraisal rights.
Fargo may purchase its own shares provided it does not use its funds or
property for such purchases when doing so would cause any impairment of its
capital, except as otherwise permitted by law. Such reacquired shares may not be
voted by Fargo either directly or indirectly.
Hubbell may acquire its own shares and shares so acquired automatically
become authorized but unissued shares.
ISSUANCE OF RIGHTS OR OPTIONS TO PURCHASE SHARES TO DIRECTORS, OFFICERS AND
EMPLOYEES
The issuance to officers, directors or employees of rights or options to
purchase shares of Fargo must be authorized by a majority of all outstanding
shares entitled to vote thereon, or authorized by and consistent with a plan
adopted by such vote of shareholders. In the absence of preemptive rights, such
authorization is not required in New York for the issuance of rights or options
in substitution for or upon the assumption of rights or options of a corporation
with which the issuing corporation is merging or consolidating.
Hubbell does not require shareholder approval for the issuance to officers,
directors or employees of rights or options to purchase shares.
LOANS TO DIRECTORS
Fargo may not make loans to directors except where authorized by a vote of
the shareholders (where the shares of the interested director are not entitled
to vote). The CBCA does not specifically prohibit the making of a loan to a
director or officer.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Both Fargo and Hubbell may divide their boards of directors into classes
with staggered terms of offices. Neither the Fargo Charter nor the Fargo By-Laws
nor the Hubbell Charter nor the Hubbell By-Laws provide for a classified board.
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DUTIES OF DIRECTORS
Fargo's directors may consider constituencies other than the holders of
Fargo's capital stock and may consider both the long-term and short-term
interests of Fargo and such constituencies when taking any action, including
action taken in connection with a change or potential change in the control of
Fargo. Directors may consider the effect that Fargo's actions may have in the
short-term and the long-term upon (i) potential growth, development,
productivity and profitability of Fargo; (ii) current employees; (iii) retired
employees and other beneficiaries receiving or entitled to receive retirement,
welfare or similar benefits from Fargo; (iv) Fargo's customers and creditors and
(v) the ability of Fargo to provide continuously goods, services, employment
opportunities and employment benefits and make other contributions to the
communities in which it does business.
When considering a merger, consolidation, business combination or the sale
of all or substantially all of Hubbell's assets, in addition to the director's
duty to act in good faith and with the care an ordinarily prudent person in a
like position would exercise under similar circumstances, a director of Hubbell
must consider, in determining what he or she reasonably believes to be in the
best interests of Hubbell, (i) the long-term as well as the short-term interests
of Hubbell, (ii) the interests of the shareholders, long-term as well as
short-term, (iii) the interests of Hubbell's employees, customers, creditors and
suppliers, (iv) community and societal considerations including those of any
community in which any office or other facility is located and (v) any other
factors which he or she reasonably considers appropriate in determining the best
interests of Hubbell.
INTERESTED DIRECTOR TRANSACTIONS
No transaction between Fargo and one or more of its directors or an entity
in which one or more of its directors are directors or officers or have a
financial interest will be void or voidable solely for that reason. In addition,
no such transaction will be void or voidable solely because the director is
present at or votes at the meeting of the board of directors or committee which
authorizes the transaction. In order to avoid such a transaction being void or
voidable, it must, after disclosure of material facts (unless such facts were
known), (i) be approved by the disinterested directors or a committee of
disinterested directors by a vote sufficient for such purpose without counting
the vote of any interested director (or, if the vote of disinterested directors
is insufficient to constitute an act of the board under New York law, by the
unanimous vote of the disinterested directors) or (ii) be approved by a vote of
the shareholders. Alternatively, the transaction will not be void or voidable if
it is shown to have been fair to the corporation at the time it was approved by
the board of directors, a committee thereof or the shareholders.
No transaction effected or proposed to be effected by Hubbell, its
subsidiary or any other entity in which the corporation has a controlling
interest may be enjoined, set aside, or give rise to an award of damages or
other sanctions because a director of Hubbell, or any person with whom or which
he has a personal, economic or other association, has an interest in the
transaction which is not a director's conflicting interest transaction as
defined in the CBCA. A director's conflicting interest transaction will not be
so enjoined, set aside, or give rise to damages if: (i) the transaction received
the affirmative vote of a majority, but no fewer than two, of the disinterested
directors on the board of directors or on a duly empowered committee of the
board who voted on the transaction after adequate disclosure to them; (ii) the
transaction received a majority of the votes entitled to be cast by the holders
of all shares not beneficially owned by the director with the conflict and/or by
any persons related to the director; or (iii) the transaction, judged according
to the circumstances at the time of the commitment, is established to have been
fair to Hubbell.
LIMITATIONS ON DIRECTORS' LIABILITY
Fargo may limit or eliminate a director's personal liability to the
corporation or the holders of its capital stock for breach of duty. This
limitation is generally unavailable for acts or omissions by a director which
were (i) in bad faith, (ii) involved intentional misconduct or a knowing
violation of law or (iii) involved a financial profit or other advantage to
which such director was not legally entitled. The NYBCL also prohibits
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limitations on director liability for acts or omissions which resulted in a
violation of a statute prohibiting certain dividend declarations, certain
payments to shareholders after dissolution and particular types of loans.
The Fargo Charter provides for limitations on directors' liability to the
full extent permitted by New York law.
Under the Hubbell Charter, the personal liability of a director to Hubbell
or its shareholders for monetary damages for breach of duty while acting in his
or her capacity as a director is limited to the amount of the compensation
received by the director for serving Hubbell during the year of the violation if
such breach did not (i) involve a knowing and culpable violation of law by the
director, (ii) enable the director or an associate, as defined in the CSCA, to
receive an improper personal economic gain, (iii) show a lack of good faith and
a conscious disregard for the duty of the director to Hubbell under
circumstances in which the director was aware that his or her conduct or
omission created an unjustifiable risk of serious injury to Hubbell, (iv)
constitute a sustained and unexcused pattern of inattention that amounted to an
abdication of the director's duty to Hubbell, or (v) create liability under
Section 33-321 of the CSCA. The Hubbell Charter provides that such limitation
will not limit or preclude the liability of a director for any act or omission
occurring prior to May 11, 1990.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Indemnification of directors and officers of Fargo may be provided to the
extent authorized by Fargo's certificate of incorporation or bylaws or by a vote
adopted by the Shareholders. However, the NYBCL does not permit indemnification
with respect to any matter as to which the director or officer has been
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the corporation.
No indemnification of directors in shareholder derivative suits may be made
in respect of (i) a threatened action, or a pending action which is settled or
otherwise disposed of, or (ii) any claim, issue or matter as to which the
director or officer has been adjudged to be liable to the corporation, unless
and only to the extent that the court in which the action was brought or, if no
action is brought, any court of competent jurisdiction, determines upon
application that, in view of the circumstances of the case, the director or
officer is fairly and reasonably entitled to indemnity for such portion of the
settlement amount and expenses as the court deems proper. The statutory
provisions for indemnification and advancement of expenses are not exclusive of
any other rights to which those seeking indemnification or advancement of
expenses may be entitled independently of the applicable statutory provision.
Under the Fargo Charter, Fargo agrees to indemnify and reimburse directors
of the corporation to the full extent permitted under New York law.
Under the CBCA, Hubbell must indemnify a director, officer, and any other
employee or agent of the corporation who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
is or was a director, officer or other employee or agent of the corporation
against reasonable expenses incurred by him in connection with the proceeding.
Additionally, Hubbell must indemnify the director, officer or other employee or
agent of the corporation, made party to a proceeding if (i) he conducted himself
in good faith and (ii) he reasonably believed (A) in the case of conduct in his
official capacity with the corporation, that his conduct was in its best
interests and (B) in all other cases, that his conduct was at least not opposed
to its best interests and (iii) in the case of any criminal proceeding, he had
no reasonable cause to believe his conduct was unlawful. The CBCA forbids
indemnification (i) in connection with a proceeding by or in the right of the
corporation in which the director, officer or other employee or agent was
adjudged liable to the corporation or (ii) in connection with any other
proceeding charging improper personal benefit to him, whether or not involving
action in his official capacity, in which he was adjudged liable on the basis
that personal benefit was improperly received by him. Indemnification under the
CBCA in connection with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the proceeding. The
indemnification requirements under the CBCA remain limited by the provision that
requires such indemnification be authorized in the
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specific case after a determination that indemnification is permissible in the
circumstances because the director, officer or other employee or agent has met
the standard of conduct set forth by the CBCA.
REMOVAL OF DIRECTORS
Any or all of the directors of Fargo may be removed for cause by a vote of
the Shareholders and that the certificate of incorporation or bylaws may provide
for removal without cause by vote of the Shareholders. The Fargo By-Laws contain
a provision permitting directors to be removed without cause by vote of the
Shareholders.
Shareholders of Hubbell may remove one or more directors with or without
cause, at a meeting called for the purpose of removing such director or
directors, provided that notice of the meeting states that the purpose of the
meeting is the removal of such director or directors. The CBCA also enables a
corporation or 10% of its shareholders to seek removal of a director through
court action in cases of fraud, dishonesty or gross abuse of power, if removal
is in the best interest of the corporation.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Newly created directorships and vacancies occurring for any reason other
than removal without cause, may be filled by vote of a majority of the Fargo
directors then in office. A director elected to fill a vacancy may hold office
until the next annual meeting of the shareholders and until his or her successor
has been elected and taken office.
Vacancies on the Hubbell Board, including a vacancy resulting from an
increase in the number of directors, may be filled for the unexpired term by
action of the sole remaining director, or by unanimous written consent of all
remaining directors without a meeting, or by a majority vote of the remaining
directors, at a special meeting called for such purpose or at any regular
meeting of the Hubbell Board, though such directors are less than a quorum and
though such majority is less than a quorum. Hubbell shareholders may elect a
director at any time to fill a vacancy which has not been filled by the
directors at a special meeting of the shareholders called for such purpose.
DISSENTERS' RIGHTS OF APPRAISAL
Dissenters' rights are granted to Shareholders (i.e., the right to cash
payment of the fair value of one's shares determined by judicial appraisal) in
the case of a merger or consolidation, a sale of all or substantially all of the
corporation's assets, and (in the case of a shareholder whose shares are
adversely affected thereby) on certain amendments to the certificate of
incorporation, as the case may be. The NYBCL, in determining the "fair value"
for payment of shares, mandates that the court consider the nature of the
transaction and its effect on the corporation and its shareholders, and the
concepts and methods of valuation then customary in the relevant financial and
securities markets. See "APPRAISAL RIGHTS OF DISSENTING FARGO SHAREHOLDERS."
The CBCA provides dissenters' rights to objecting shareholders (i) entitled
to vote on a merger or share exchange, (ii) in a short form merger, (iii) on the
sale or exchange of all or substantially all of the assets of a corporation
(except when done pursuant to court order or a liquidation plan resulting in
distributions to shareholders within one year), (iv) on an amendment to the
certificate of incorporation that materially and adversely affects rights in
respect of dissenters' shares or (v) in any corporate action taken pursuant to a
shareholder vote to the extent the certificate of incorporation, bylaws or a
directors' resolution provides that voting or non-voting shareholders are
entitled to dissent and obtain payment for their shares.
Under the CBCA, the dissenter's right of appraisal is the dissenter's
exclusive remedy.
LISTING
Fargo is a privately-owned company and there is no established public
trading market for its capital stock. Hubbell's Common Stock is listed on the
NYSE and its Common Stock Rights are also listed on the NYSE.
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APPRAISAL RIGHTS OF DISSENTING FARGO SHAREHOLDERS
Holders of shares of Fargo Common Stock (collectively, "Fargo Shares") are
entitled to appraisal rights under Sections 623 and 910 of the NYBCL. The
following summary of the applicable provisions of Sections 623 and 910 of the
NYBCL is not intended to be a complete statement of such provisions and is
qualified in its entirety by reference to the full text of Sections 623 and 910
of the NYBCL, copies of which are attached to this Prospectus/Proxy Statement as
Exhibit C. A person having a beneficial interest in Fargo Shares that are held
of record in the name of another person, such as a broker or nominee, must act
promptly to cause the record holder to follow the steps summarized below
properly and in a timely manner to perfect whatever appraisal rights the
beneficial owner may have.
THIS DISCUSSION AND EXHIBIT C SHOULD BE REVIEWED CAREFULLY BY ANY
SHAREHOLDER OF FARGO WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS OR WHO
WISHES TO PRESERVE THE RIGHT TO DO SO BECAUSE FAILURE TO STRICTLY COMPLY WITH
ANY OF THE PROCEDURAL REQUIREMENTS OF SECTION 623 MAY RESULT IN A TERMINATION OR
WAIVER OF APPRAISAL RIGHTS UNDER SECTION 623.
A holder of Fargo Shares as of the Record Date who elects to dissent from
the approval of the Merger Agreement and who has not voted in favor thereof is
entitled under the provisions of Sections 623 and 910 of the NYBCL, as an
alternative to receiving the Merger Consideration for such holder's Fargo
Shares, to a judicial determination of the fair value in cash of such holder's
Fargo Shares.
Any holder of Fargo Shares who elects to exercise such holder's dissenter's
rights with respect to the Merger Agreement must file a written objection to the
proposal to approve and adopt the Merger Agreement (the "Merger Proposal") with
Fargo before the Special Meeting, or at the Special Meeting but before the vote
on the Merger Proposal is taken, which objection includes (i) a notice of such
holder's election to dissent, (ii) such holder's name and residence address,
(iii) the number and classes of Fargo Shares as to which such holder dissents
and (iv) a demand for payment of the fair value of such holder's Fargo Shares.
Such objection is not required for any holder of Fargo Shares to whom Fargo did
not give notice of the Special Meeting. For purposes of perfecting dissenters'
rights pursuant to Section 623, the written objection of a holder of Fargo
Shares will be deemed filed with Fargo upon receipt of such objection by Fargo.
Neither voting against nor failure to vote for the Merger Agreement will
constitute the written objection required to be filed by an objecting
shareholder. Failure to vote against the Merger Agreement, however, will not
constitute a waiver of rights under Sections 623 and 910 of the NYBCL, provided
that a written objection has been properly filed. A Shareholder voting to
approve the Merger Proposal will be deemed to have waived such Shareholder's
dissenter's rights.
A Shareholder may not dissent as to less than all Fargo Shares held of
record that such holder beneficially owns. A nominee or fiduciary may not
dissent on behalf of any beneficial owner as to less than all the Fargo Shares
of such beneficial owner, as to which such nominee or fiduciary has a right to
dissent, held of record by such nominee or fiduciary. Furthermore, if the Fargo
Shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian, or custodian, the demand should be made in that capacity, and if the
Fargo Shares are owned of record by more than one person, as in a joint tenancy
or tenancy in common, the demand should be made by or for all owners of record.
An authorized agent, including one of two or more joint owners, may execute the
demand for appraisal for a holder of record; however, such agent must identify
the record owner or owners and expressly state, in such demand, that the agent
is acting as agent for the record owner or owners of such Fargo Shares.
A record holder, such as a broker or an agent, who holds Fargo Shares as a
nominee for beneficial owners, some of whom desire to demand appraisal, must
exercise appraisal rights on behalf of such beneficial owners who desire to
demand appraisal with respect to the Fargo Shares held for such beneficial
owners.
All notices of election to dissent should be addressed to Fargo at 130 Salt
Point Road, Poughkeepsie, New York 12603-1016; Attention: Secretary.
Within ten days after the date of the shareholders' vote approving the
Merger Proposal, Fargo, as the Surviving Corporation, will give written notice
of such approval by registered mail to each holder of Fargo
58
<PAGE> 65
Shares who timely filed a written objection to the Merger Proposal, or from whom
written objection was not required, and who did not vote in favor of the Merger
Proposal.
At the time of filing a notice of election to dissent or within one month
thereafter, a dissenting holder of Fargo Shares must submit the certificate or
certificates representing such holder's Fargo Shares to Fargo, for conspicuous
notation thereon of the election to dissent, after which such certificates will
be returned to such holder or other person who submitted them on behalf of the
holder. Any such holder who fails to submit such certificates for notation will,
at the election of Fargo or the Surviving Corporation, exercised by written
notice to such holder within 45 days from the date of filing of the notice to
dissent, lose such holder's dissenter's rights unless a court, for good cause
shown, otherwise directs.
Within 15 days after the expiration of the period within which holders of
Fargo Shares may file their notices of election to dissent, or within 15 days
after the Effective Time, whichever is later (but in no case later than 90 days
after the Shareholders' vote approving the Merger Proposal), Fargo or the
Surviving Corporation, as the case may be, is required to make a written offer
by registered mail to each Shareholder who has filed a notice of election to
dissent to pay for such holder's Fargo Shares at a specified price which Fargo
or the Surviving Corporation, as the case may be, considers to be their fair
value. Such offer will be accompanied by a statement setting forth the aggregate
number of Fargo Shares with respect to which notices of election to dissent from
approval and adoption of the Merger Agreement have been received and the
aggregate number of holders of such Fargo Shares. If the Merger has been
consummated at the time such offer is made, such offer will also be accompanied
by (i) advance payment to each dissenting holder who has submitted such holder's
certificates to Fargo for notation thereon of such holder's election to dissent
of an amount equal to 80% of the amount of such offer, or (ii) as to each
dissenting holder who has not yet submitted such certificates for such notation,
a statement that advance payment to such holder of an amount equal to 80% of the
amount of such offer will be made by the Surviving Corporation promptly upon
submission of such certificates. If the Merger has not been consummated at the
time of such offer, such advance payment or statement as to advance payment will
be sent to each holder entitled thereto forthwith upon consummation of the
Merger. Every advance payment or statement as to advance payment will include
advice to such holder that acceptance of such advance payment by a dissenting
holder will not constitute a waiver of such holder's dissenter's rights. If the
Merger has not been consummated by the expiration of the above-mentioned 90-day
period, Fargo's offer may be conditioned upon the consummation of the Merger. If
within 30 days after the making of a written offer by Fargo or the Surviving
Corporation, as the case may be, Fargo or the Surviving Corporation and any
dissenting holder agree upon the price to be paid for such shareholder's Fargo
Shares, payment therefor will be made within 60 days after the making of such
offer or the Effective Time, whichever is later, upon the surrender of the
certificates representing such Fargo Shares.
From and after the Effective Time, any payments with respect to any demands
for appraisal or in settlement of any such demands will be made by the Surviving
Corporation in all circumstances, but only to the extent not prohibited by
Section 623(j) of the NYBCL, which is described below. Hubbell has no obligation
to make such payments to the holders of Dissenting Shares.
If Fargo or the Surviving Corporation fails to make such an offer within
the 15-day period described in the preceding paragraph, or if it makes an offer
but Fargo or the Surviving Corporation and a dissenting holder do not agree
within 30 days of the making of the offer upon the price to be paid for such
holder's Fargo Shares, Fargo or the Surviving Corporation must, within twenty
days of such 15- or 30-day period, as the case may be, institute a special
proceeding in the New York Supreme Court, Dutchess County (the "Court"), to
determine the rights of dissenting holders and fix the fair value of their Fargo
Shares. It is the current intention of Fargo to institute any such proceeding
within the 20-day period; however, if Fargo does not institute such proceeding
within the 20-day period, any dissenting holder may, within 30 days after such
20-day period, institute a proceeding for the same purposes. If such proceeding
is not instituted within such 30-day period, dissenting holders who have not
agreed with Fargo as to the price to be paid for their Fargo Shares will lose
their dissenters' rights, unless the Court, for good cause shown, otherwise
directs.
All dissenting holders, other than those who will have agreed with Fargo or
the Surviving Corporation as to the price to be paid for their Fargo Shares,
will be made parties to such appraisal proceeding. The Court will
59
<PAGE> 66
determine whether each dissenting holder, as to whom Fargo or the Surviving
Corporation requests the Court to make such determination, is entitled to
receive payment for such holder's Fargo Shares. If Fargo or the Surviving
Corporation does not request any such determination or if the Court finds that
such dissenting shareholder is so entitled, the Court will then determine the
fair value of such holder's Fargo Shares as of the close of business on the day
prior to the date the Merger Agreement was approved by the Shareholders. In
fixing the fair value of the Fargo Shares, the Court will consider the nature of
the transaction giving rise to the holder's right to receive payment for such
holder's Fargo Shares under the NYBCL, the effects of such transaction on Fargo
and its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining the fair value of the shares of
a corporation engaging in a similar transaction under comparable circumstances,
and all other relevant factors. Within sixty days after the completion of any
such Court proceeding, Fargo or the Surviving Corporation will be required to
pay to each dissenting holder the amount found to be due, with interest thereon
at such rate as the Court finds to be equitable, from the date the Merger is
consummated to the date of the payment, upon surrender to Fargo or the Surviving
Corporation by such holder of the certificates representing such Fargo Shares.
If the Court finds that the refusal of any dissenting holder to accept the offer
of Fargo was arbitrary, vexatious, or otherwise not in good faith, no interest
will be allowed to such holder. From and after the Effective Time, any amount
found to be due to dissenting shareholders, and any interest allowed, will be
paid by the Surviving Corporation to the extent not prohibited by Section 623(j)
of the NYBCL.
The parties to such appraisal proceeding will bear their own costs and
expenses, including the fees and expenses of their counsel and any experts
employed by them, except that the Court, in its discretion, (i) may apportion
and assess all or any part of the costs, expenses, and fees incurred by
dissenting holders against Fargo or the Surviving Corporation if, among other
things, the Court finds that the fair value of the Fargo Shares materially
exceeds the offer by Fargo or the Surviving Corporation or (ii) may apportion
and assess all or any part of the costs, expenses, and fees incurred by Fargo or
the Surviving Corporation against all of the dissenting holders, including any
dissenting holders who have withdrawn their notices of election to dissent from
the Merger, who the Court finds were arbitrary, vexatious, or otherwise not
acting in good faith in refusing any offer of payment Fargo or the Surviving
Corporation may have made.
Any shareholder who has filed a notice of election to dissent will not,
after the Effective Time, have any of the rights of a shareholder with respect
to such holder's Fargo Shares, other than the right to be paid the fair value of
such Fargo Shares under the NYBCL and any other right provided under the NYBCL
for shareholders who have filed such a notice. Any notice of election to dissent
may be withdrawn by a dissenting shareholder at any time prior to such
shareholder's acceptance in writing of an offer made by Fargo or the Surviving
Corporation as described above, but in no case later than 60 days after the
Effective Time (or if Fargo or the Surviving Corporation fails to make a timely
offer to pay such shareholder the fair value of such holder's Fargo Shares as
described above, at any time within 60 days after any date such an offer is
made), or thereafter with the written consent of the Surviving Corporation. In
order to be effective, withdrawal of a notice of election to dissent must be
accompanied by the return to the Surviving Corporation of any advance payment to
the shareholder made by the Surviving Corporation, as described above. Any
dissenting shareholder who withdraws such holder's notice of election to dissent
or otherwise loses such holder's dissenter's rights will thereupon have the
right only to receive (i) the Merger Consideration and (ii) an amount equal to
the amount of cash, if any, required to be deposited by Hubbell or Merger Sub
with the Exchange Agent pursuant to Section 2.2(v)(B) of the Merger Agreement
divided by the total number of Outstanding Fargo Shares for each of such
holder's Fargo Shares.
Under Section 623(j) of the NYBCL, no payment of the fair value of their
Fargo Shares may be made to dissenting shareholders by the Surviving Corporation
if the Surviving Corporation were to be insolvent or if such payment would
render the Surviving Corporation insolvent. In that event, each dissenting
shareholder would be required to either (i) withdraw such holder's notice of
election to dissent or (ii) retain such holder's status as a claimant against
the Surviving Corporation. If a dissenting shareholder were to elect to remain a
claimant against the Surviving Corporation, such dissenting shareholder's rights
would be subordinated to the rights of the Surviving Corporation's creditors but
would be superior to those of non-dissenting shareholders, should the Surviving
Corporation be liquidated. If the Surviving Corporation were not liquidated, the
60
<PAGE> 67
dissenting shareholder would retain such holder's right to payment for such
holder's Fargo Shares, which obligation the Surviving Corporation would be
required to meet once it was no longer insolvent or if such payment would not
render the Surviving Corporation insolvent. If a dissenting shareholder fails to
exercise either such option within 30 days after the Surviving Corporation has
given such holder written notice that payment cannot be made because of the
restrictions of Section 623(j) of the NYBCL, the Surviving Corporation would be
required to exercise such option by written notice to such holder within 20 days
after the expiration of such period of 30 days. For purposes of NYBCL Section
623(j), an "insolvent corporation" is a corporation that is unable to pay its
debts as they come due in the usual course of its business.
If a court in a lawsuit by an unpaid creditor or representative of
creditors, such as a trustee in bankruptcy, were to find that, at the time the
Surviving Corporation makes any payment in respect of the fair value of any
Dissenting Shares (each, a "Transfer"), the Surviving Corporation (a) made the
Transfer with intent to hinder, delay or defraud creditors or (b) received less
than a reasonably equivalent value or fair consideration for the Transfer and
(i) was insolvent at the time of the Transfer, (ii) was rendered insolvent by
reason of the Transfer, (iii) was engaged or about to engage in a business or
transaction for which the assets remaining with the Surviving Corporation
constituted unreasonably small capital to carry on its business or (iv) intended
to incur, or believed that it would incur, debts beyond its ability to pay as
such debts matured, the court could find that the Transfer constituted a
"fraudulent conveyance" under applicable federal or state law. If the Transfer
were determined to be a fraudulent conveyance, there is a risk that holders of
Dissenting Shares, as recipients of the Transfers, would be ordered to turn over
to the Surviving Corporation, its creditors or its trustee in bankruptcy, all or
a portion of the payments in respect of Dissenting Shares. The measure of
insolvency for purposes of the foregoing will vary depending upon the law of the
jurisdiction which is being applied. Generally, however, the Surviving
Corporation would be considered insolvent if at the time of the Transfer in
question the fair value (or fair saleable value) of its assets was less than the
amount required to pay its total debts and liabilities (including contingent
liabilities) as they become absolute and matured, or if the sum of the Surviving
Corporation's debts (including any contingent liabilities) at the time of the
Transfer is greater than the fair value of all of the Surviving Corporation's
properties. The Transfers could be deemed to be a fraudulent conveyance even if
the Surviving Corporation is not deemed to be an "insolvent corporation" for
purposes of NYBCL Section 623.
61
<PAGE> 68
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information, to Fargo's knowledge, as of the
Record Date, regarding beneficial ownership of Fargo Common Stock by (i) each
person who beneficially owns more than 5% of the Fargo Common Stock, (ii) each
director and executive officer of Fargo and (iii) all directors and executive
officers of Fargo as a group. To Fargo's knowledge, each person holds sole
voting and/or investment power over the shares shown unless otherwise indicated.
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
NATURE OF OF CLASS
BENEFICIAL (* DESIGNATES LESS
NAME OF BENEFICIAL OWNER OWNERSHIP(1) THAN 1%)
------------------------------------------------------- ------------ ------------------
<S> <C> <C>
James and Mary Frances McDonald(2)..................... 14,155 6.0%
Mary Wheaton(3)........................................ 27,164 11.5%
Ingeborg Myers......................................... 19,668(4) 8.3%
C.B. Schmidt........................................... 32,000(5) 13.6%
John R. Conklin........................................ 4,320 1.8%
Richard C. Raible...................................... 3,225(6) 1.4%
Susan Gallagher........................................ 786 *
Jack F. Myers.......................................... 19,668(7) 8.3%
Ray Boedecker.......................................... 1,000 *
Santo Lagano........................................... 1,475(8) *
Stephanie B. Schmidt................................... 32,000(9) 13.6%
Roger Smith............................................ 20 *
Scott R. Wheaton, Jr. ................................. 8,824(10) 3.7%
All directors and executive officers as a group
(10 persons)......................................... 71,318 30.3%
</TABLE>
- ---------------
(1) Unless otherwise indicated, the listed shareholder has sole voting and
investment power.
(2) Mr. and Mrs. McDonald's address is P.O. Box 782, Yachats, Oregon 97498.
(3) Mrs. Wheaton's address is P.O. Box 378, Millbrook, New York 12545.
(4) Includes 9,793 shares owned by Ms. Myers' husband, Jack Myers. Mrs. Myers'
address is 16 Delano Drive, Rhinebeck, New York 12572.
(5) Includes 17,560 shares owned by Mr. Schmidt's wife, Stephanie Schmidt, and
2,000 shares owned by a trust of which Mrs. Schmidt is co-trustee.
(6) Includes 2,894 shares owned by Mr. Raible's wife.
(7) Includes 9,875 shares owned by Mr. Myers' wife.
(8) Includes 1,270 shares owned by Mr. Lagano's wife.
(9) Includes 12,440 shares owned by Ms. Schmidt's husband, C.B. Schmidt, and
2,000 shares owned by a trust of which Mrs. Schmidt is co-trustee.
(10) Includes an aggregate of 75 shares owned by three trusts, of which Mr.
Wheaton is the trustee, for Mr. Wheaton's children and 580 shares owned by
Mr. Wheaton's wife.
EXPERTS
The consolidated financial statements of Hubbell and subsidiaries
incorporated in this Prospectus/Proxy Statement by reference to Hubbell's Annual
Report on Form 10-K for the year ended December 31, 1995,
62
<PAGE> 69
have been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Fargo and subsidiaries as of
December 31, 1995, 1994, and 1993 and for the years then ended included in the
Prospectus/Proxy Statement have been so included in reliance on the report
(which contains an explanatory paragraph relating to restatement of the
consolidated financial statements as explained in Note 11) of D'Arcangelo & Co.,
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGAL OPINIONS
The legality of the shares of Class B Common Stock offered hereby will be
passed upon for Hubbell by Richard W. Davies, Esq. As of December 31, 1996, Mr.
Davies, Vice President, General Counsel and Secretary of Hubbell, owned 18,550
shares of Class A Common Stock and 19,300 shares of Class B Common Stock of
Hubbell and 17,000 shares of Class A Common Stock and 53,863 shares of Class B
Common Stock of Hubbell obtainable within sixty days of December 31, 1996 by the
exercise of stock options pursuant to Hubbell's 1973 Stock Option Plan for Key
Employees.
Certain federal income tax matters related to the Merger will be passed
upon for Hubbell and Fargo by ST&B (a partnership which includes professional
corporations), New York, New York. As of December 31, 1996, lawyers of ST&B who
have participated in the preparation of the Registration Statement of which this
Prospectus/Proxy Statement is a part, beneficially owned 2,493 shares of Class A
Common Stock and 455 shares of Class B Common Stock of Hubbell. In addition, a
member of ST&B serves as a director of Hubbell.
OTHER INFORMATION
All information contained or incorporated by reference in this
Prospectus/Proxy Statement concerning Hubbell and its subsidiaries has been
furnished by Hubbell. All information contained in this Prospectus/Proxy
Statement concerning Fargo and its subsidiaries has been furnished by Fargo. No
person has been authorized to give any information or to make any
representations other than those in this Prospectus/Proxy Statement, and, if
given, such information or representation must not be relied upon as having been
authorized. Neither the delivery of this Prospectus/Proxy Statement at any time,
nor any solicitation made hereunder, shall under any circumstances imply that
the information contained or incorporated by reference herein is correct as of
any time subsequent to the date of this Prospectus/Proxy Statement.
Fargo management does not know of any other matters that may properly be,
or which are likely to be, brought before the Special Meeting. However, if any
other matters are properly brought before the Special Meeting, the persons named
in the enclosed proxy or their substitutes will vote the proxies in accordance
with the recommendations of management.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following Hubbell documents are incorporated by reference in this
Prospectus/Proxy Statement: (i) Hubbell's Annual Report on Form 10-K for the
year ended December 31, 1995; (ii) Hubbell's Quarterly Reports on Form 10-Q for
the quarterly periods ended March 31, 1996, June 30, 1996 and September 30,
1996; and (iii) the descriptions of the Class A Common Stock, Class B Common
Stock, the Class A Rights and the Class B Rights set forth in Hubbell's
Registration Statements filed pursuant to Section 12 of the Exchange Act, and
any amendment or report filed for the purpose of updating any such description.
All documents and reports filed by Hubbell pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus/Proxy Statement and prior to the date of the Special Meeting will be
deemed to be incorporated by reference into this Prospectus/Proxy Statement from
the dates of filing of such documents or reports. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus/Proxy Statement will be deemed to be modified or superseded for
purposes of this Prospectus/Proxy Statement to the extent that a statement
contained herein or in any other
63
<PAGE> 70
subsequently filed document that also is or is deemed to be incorporated by
reference modifies or supersedes such statement. Any such statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus/Proxy Statement.
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
THEREIN BY REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING
ANY BENEFICIAL OWNER OF STOCK OF HUBBELL OR FARGO, TO WHOM THIS PROSPECTUS/PROXY
STATEMENT IS DELIVERED, ON WRITTEN OR ORAL REQUEST, TO HUBBELL INCORPORATED, 584
DERBY MILFORD ROAD, ORANGE, CONNECTICUT 06477-4024 (TELEPHONE NUMBER (203)
799-4100, ATTENTION: OFFICE OF THE SECRETARY). IN ORDER TO ENSURE DELIVERY OF
THE DOCUMENTS PRIOR TO THE SPECIAL MEETING, REQUESTS SHOULD BE RECEIVED BY
FEBRUARY 7, 1997.
All information contained or incorporated by reference in this
Prospectus/Proxy Statement relating to Hubbell or Merger Sub has been supplied
by Hubbell, and all such information relating to Fargo has been supplied by
Fargo.
64
<PAGE> 71
FINANCIAL STATEMENTS
FARGO MFG. COMPANY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditor's Report.......................................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Stockholders' Equity....................................... F-5
Consolidated Statements of Income..................................................... F-6
Consolidated Statements of Cash Flows................................................. F-7
Notes to Financial Statements......................................................... F-9
</TABLE>
F-1
<PAGE> 72
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Fargo Mfg. Company, Inc.
Poughkeepsie, New York
We have audited the accompanying consolidated balance sheets of Fargo Mfg.
Company, Inc. and Subsidiaries as of December 31, 1995, 1994 and 1993, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Fargo Mfg.
Company, Inc. and Subsidiaries as of December 31, 1995, 1994 and 1993, and the
results of their operations and their cash flows for each of the years then
ended in conformity with generally accepted accounting principles.
As discussed in Note 11 to the financial statements, certain errors
resulting in overstatement of previously reported net income and retained
earnings as of December 31, 1995, 1994 and 1993, were discovered by management
of the Company during the current year. Accordingly, the 1995, 1994 and 1993
financial statements have been restated to correct the errors.
D'Arcangelo & Co., LLP
February 2, 1996
(except for Note 11, as to which the date is November 1, 1996)
Poughkeepsie, New York
F-2
<PAGE> 73
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995, 1994, AND 1993
AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
------------- ------------- -------------
SEPT. 30, 1996
--------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents..................... $ 6,487 $ 3,605 $ 2,728 $ 1,771
U.S. Treasury Bills........................... 1,112 1,290 -- --
Accounts receivable
Trade....................................... 4,968 4,123 3,546 2,824
Other....................................... -- 14 16 16
Inventories................................... 2,565 3,323 3,554 3,817
Prepaid expenses.............................. 75 45 41 17
Income taxes receivable....................... -- 55 82 --
Deferred income tax asset..................... 10 20 12 4
------- ------- ------- -------
Total current assets........................ 15,217 12,475 9,979 8,449
------- ------- ------- -------
PROPERTY, PLANT AND EQUIPMENT
Land.......................................... 25 25 25 25
Buildings..................................... 1,095 1,095 1,095 1,095
Improvements.................................. 1,852 1,852 1,772 1,626
Construction in progress -- machinery......... 175 982 207 46
Machinery and equipment....................... 5,511 4,877 4,686 4,564
Patterns and dies............................. 3,156 5,879 5,474 5,076
Furniture and fixtures........................ 593 566 598 581
Computer equipment............................ 696 600 526 451
Automotive equipment.......................... 371 351 238 57
------- ------- ------- -------
13,474 16,227 14,621 13,521
Less: accumulated depreciation................ 9,968 12,508 11,630 10,743
------- ------- ------- -------
Total property, plant and equipment......... 3,506 3,719 2,991 2,778
------- ------- ------- -------
OTHER ASSETS
Deferred income tax asset..................... 272 211 206 196
Cash surrender value of officers' life
insurance................................... 171 162 343 316
Notes receivable.............................. 23 25 25 25
Deposits...................................... 12 18 14 71
------- ------- ------- -------
Total other assets.......................... 478 416 588 608
------- ------- ------- -------
Total assets............................. $ 19,201 $16,610 $13,558 $11,835
======= ======= ======= =======
</TABLE>
(consolidated balance sheets continued on following page)
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 74
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--(CONTINUED)
DECEMBER 31, 1995, 1994, AND 1993
AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
------------- ------------- -------------
SEPT. 30, 1996
--------------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of capital lease
obligations................................. $ 145 $ 145 $ 34 $ --
Accounts payable.............................. 916 981 774 620
Accrued payroll and related taxes............. 779 569 212 284
Accrued expenses.............................. 662 206 183 72
Dividends payable............................. 104 92 82 76
Income taxes payable.......................... 321 141 112 73
------- ------- ------- -------
Total current liabilities................... 2,927 2,134 1,397 1,125
LONG-TERM LIABILITIES
Deferred employment obligation................ 508 510 498 526
Capital lease obligations, excluding current
portion..................................... 84 97 125 --
Deferred income taxes......................... 463 293 155 77
------- ------- ------- -------
Total liabilities........................... 3,982 3,034 2,175 1,728
------- ------- ------- -------
COMMITMENTS AND CONTINGENCIES (NOTES 4 AND 6)
STOCKHOLDERS' EQUITY
Common stock, no par value, authorized 360,000
shares; issued 257,810 shares at stated
value of $1.25 per share.................... 322 322 322 322
Retained earnings............................. 14,320 12,653 11,170 10,183
Surplus arising from transactions in treasury
stock....................................... 1,683 1,680 1,262 1,072
Foreign currency translation adjustment....... (78) (78) (89) (78)
------- ------- ------- -------
16,247 14,577 12,665 11,499
Less: common stock held in the treasury at
cost........................................ (1,028) (1,001) (1,282) (1,392)
------- ------- ------- -------
Total stockholders' equity.................. 15,219 13,576 11,383 10,107
------- ------- ------- -------
Total liabilities and stockholders'
equity................................. $ 19,201 $16,610 $13,558 $11,835
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 75
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
AND NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SURPLUS FOREIGN
COMMON STOCK ARISING FROM CURRENCY TREASURY STOCK TOTAL
---------------- TREASURY RETAINED TRANSLATION ----------------- STOCKHOLDERS
SHARES AMOUNT STOCK EARNINGS ADJUSTMENT SHARES AMOUNT EQUITY
------- ------ ------------ -------- ----------- ------- ------- ------------
(IN THOUSANDS, EXCEPT SHARE NUMBERS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992,
AS ORIGINALLY REPORTED....... 257,810 $322 $ 796 $ 9,825 $ (50) (50,200) $(1,526) $ 9,367
PRIOR PERIOD ADJUSTMENT....... (291) (291)
------- ---- ------ ------- ---- ------- ------- -------
BALANCE AT DECEMBER 31, 1992,
RESTATED.................... 257,810 322 796 9,534 (50) (50,200) (1,526) 9,076
Net income 1993............... 939 939
Dividends on common stock..... (290) (290)
Purchase of treasury stock.... (4,350) (196) (196)
Sale of treasury stock........ 276 13,443 330 606
Foreign currency translation
adjustment.................. (28) (28)
------- ---- ------ ------- ---- ------- ------- -------
BALANCE AT DECEMBER 31,
1993........................ 257,810 322 1,072 10,183 (78) (41,107) (1,392) 10,107
Net income 1994............... 1,304 1,304
Dividends on common stock..... (317) (317)
Purchase of treasury stock.... (2,436) (118) (118)
Sale of treasury stock........ 190 8,623 228 418
Foreign currency translation
adjustment.................. (11) (11)
------- ---- ------ ------- ---- ------- ------- -------
BALANCE AT DECEMBER 31,
1994........................ 257,810 322 1,262 11,170 (89) (34,920) (1,282) 11,383
Net income 1995............... 1,830 1,830
Dividends on common stock..... (347) (347)
Purchase of treasury stock.... (6,668) (354) (354)
Sale of treasury stock........ 418 19,837 635 1,053
Foreign currency translation
adjustment.................. 11 11
------- ---- ------ ------- ---- ------- ------- -------
BALANCE AT DECEMBER 31,
1995........................ 257,810 $322 $1,680 $ 12,653 $ (78) (21,751) $(1,001) $ 13,576
Net income nine months
ended(1) September 30,
1996........................ 1,978 1,978
Dividends on common stock..... (311) (655) (311)
Purchase of treasury stock.... 288 (38) (38)
Sale of treasury stock........ 3 11 14
------- ---- ------ ------- ---- ------- ------- -------
BALANCE AT SEPTEMBER 30,
1996........................ 257,810 $322 $1,683 $ 14,320 $ (78) (22,118) $(1,028) $ 15,219
======= ==== ====== ======= ==== ======= ======= =======
</TABLE>
- ---------------
(1) Figures with regard to the nine months ended September 30, 1996 are
unaudited.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 76
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
------------------------------- ---------------------------------------------
SEPT. 30, 1996 SEPT. 30, 1995 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
-------------- -------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND SHARE NUMBERS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales......................... $ 23,055 $ 19,396 $ 26,765 $ 26,133 $ 24,622
Cost of sales..................... 15,645 14,069 18,974 19,841 18,169
-------- -------- -------- -------- --------
Gross profit...................... 7,410 5,327 7,791 6,292 6,453
-------- -------- -------- -------- --------
OPERATING EXPENSES
Research and development.......... 653 550 752 715 650
Selling and distribution.......... 2,092 1,976 2,612 2,876 2,772
General and administrative........ 1,576 1,263 1,788 1,456 1,531
Provision for doubtful accounts... -- -- 2 15 --
-------- -------- -------- -------- --------
Total expenses.................. 4,321 3,789 5,154 5,062 4,953
-------- -------- -------- -------- --------
OPERATING INCOME.................. 3,089 1,538 2,637 1,230 1,500
-------- -------- -------- -------- --------
OTHER INCOME/(EXPENSES)
Interest income................... 177 118 180 67 25
Miscellaneous income.............. 14 14 1 542 67
Excess of increase in cash
surrender value over officers'
life insurance premiums......... 9 9 11 24 24
Interest expense.................. (96) (70) (122) (77) (71)
Gain/(loss) on foreign exchange
transaction..................... -- (15) (15) (8) 10
Proceeds from officer's life
insurance....................... -- -- 116 -- --
-------- -------- -------- -------- --------
Total other income.............. 104 56 171 548 55
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT ADJUSTMENT.... 3,193 1,594 2,808 1,778 1,555
-------- -------- -------- -------- --------
PROVISION FOR INCOME TAXES........ 1,215 634 978 474 604
-------- -------- -------- -------- --------
INCOME BEFORE EFFECT OF A CHANGE
IN ACCOUNTING PRINCIPLE......... 1,978 960 1,830 1,304 951
-------- -------- -------- -------- --------
CUMULATIVE EFFECT ON PRIOR YEARS
OF ACCOUNTING CHANGE............ -- -- -- -- 12
-------- -------- -------- -------- --------
NET INCOME........................ $ 1,978 $ 960 $ 1,830 $ 1,304 $ 939
======== ======== ======== ======== ========
NET EARNINGS PER SHARE............ $ 8.39 $ 4.32 $ 8.11 $ 5.97 $ 4.42
======== ======== ======== ======== ========
AVERAGE SHARES OUTSTANDING........ 235,774 222,420 225,543 218,553 212,355
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 77
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
--------------------------------- -------------------------------------------------
SEPT. 30, 1996 SEPT. 30, 1995 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
-------------- -------------- ------------- ------------- -------------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating activities
NET INCOME.............................. $1,978 $ 960 $ 1,830 $ 1,304 $ 939
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation.......................... 798 586 954 943 852
Loss/(gain) on sale of property, plant
and equipment....................... (5) -- 13 (5) (13)
Provision for bad debts............... -- -- 3 15 --
Increase in cash surrender value of
officers' life insurance............ (9) (9) (11) (24) (32)
Gain on surrender of officer's life
insurance........................... -- -- (116) -- --
Net change in deferred taxes.......... 119 113 124 95 79
Loss/(gain) on foreign exchange
transactions........................ -- -- 15 8 (10)
(Increase)/decrease in Accounts
receivable.......................... (831) (261) (575) (721) 353
Inventories......................... 758 714 231 262 194
Prepaid expenses.................... (30) (26) (4) (24) 9
Income taxes receivable............. 55 27 27 (82) --
Notes receivable.................... 1 -- -- -- 4
Deposits............................ 6 (21) (4) (67) (52)
Increase/(decrease) in Accounts
payable............................. (64) 76 206 155 (5)
Accrued payroll and related taxes... 210 126 561 (72) (60)
Accrued expenses.................... 456 301 (181) 92 (90)
Income taxes payable................ 180 (95) 30 (39) 53
Deferred employment obligation...... (2) 36 12 (10) 51
------ ------- ------- ------ ------
Net cash provided by operating
activities................... 3,620 2,527 3,115 1,830 2,272
------ ------- ------- ------ ------
INVESTING ACTIVITIES
Investment in Treasury Bills............ 179 (390) (1,290) -- --
Proceeds from officer's life
insurance............................. -- -- 309 -- --
Purchases of property, plant and
equipment............................. (617) (1,067) (1,707) (804) (938)
Proceeds from sale of property, plant
and equipment......................... 36 -- 14 8 36
------ ------- ------- ------ ------
Net cash used in investing
activities................... (402) (1,457) (2,674) (796) (902)
------ ------- ------- ------ ------
FINANCING ACTIVITIES
Net increase/(decrease) in capital lease
obligations........................... (13) 17 83 (34) --
Sale of treasury stock.................. 15 1,018 1,053 417 606
Purchase of treasury stock.............. (38) (331) (354) (118) (196)
Dividends paid........................ (300) (246) (357) (323) (282)
Debenture notes payable................. -- -- -- -- (400)
------ ------- ------- ------ ------
Net cash provided by/(used in)
financing activities................ (336) 458 425 (58) (272)
------ ------- ------- ------ ------
EFFECT OF EXCHANGE RATES ON CASH........ -- -- 11 (19) (18)
------ ------- ------- ------ ------
Net increase in cash and cash
equivalents......................... 2,882 1,528 877 957 1,080
Cash and cash equivalents -- beginning
of period............................. 3,605 2,728 2,728 1,771 691
------ ------- ------- ------ ------
Cash and cash equivalents -- end of
period................................ $6,487 $ 4,256 $ 3,605 $ 2,728 $ 1,771
====== ======= ======= ====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION
Cash paid during the year for
Interest.............................. $ 115 $ 70 $ 102 $ 39 $ 34
Income taxes.......................... 917 530 718 376 485
Noncash investing and financing
activities
Automotive equipment acquired through
capital lease obligations........... 81 38 140 194 --
</TABLE>
F-7
<PAGE> 78
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994, 1993 AND SEPTEMBER 30, 1996
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
(FIGURES ARE IN THOUSANDS EXCEPT FOR PER SHARE DATA AND SHARE NUMBERS)
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principal business activities
Fargo manufactures electrical connectors and related components for the
electric utility industry.
Estimates
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues
and expenses. Actual results could vary from the estimates that were used.
Revenue recognition
Fargo records revenue upon shipment of inventory to its customers.
Inventory
Inventory is valued at the lower of cost or market on a first-in, first-out
basis.
Property, plant and equipment
Land, buildings and equipment are carried at cost. Depreciation is
accumulated by the straight-line method for assets acquired prior to January 1,
1981, and accelerated methods for assets acquired after December 31, 1980 over
the estimated useful lives of the assets. Depreciation expense amounted to $954,
$943, and $852, for 1995, 1994 and 1993, respectively.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of
Fargo and its wholly-owned subsidiaries -- Fargo, Inc., Fargo Mfg. Company
(Canada) Ltd., and FISC. All significant intercompany transactions have been
eliminated in consolidation.
Investments
Marketable debt securities consist of U.S. Treasury Bills which are carried
in the financial statements at cost, which approximates fair value. The maturity
of these securities is less than one year.
Accounts receivable
Fargo uses the direct write-off method to recognize bad debts on trade
accounts receivable. If the reserve method of accounting for uncollectible
accounts receivable were used, it would not have a material effect on the
financial statements.
Cash and cash equivalents
For purposes of the consolidated statements of cash flows, Fargo considers
cash in operating bank accounts, cash in money market accounts, cash on hand,
and certificates of deposit with maturities of 90 days or less as cash and cash
equivalents.
F-8
<PAGE> 79
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995, 1994, 1993 AND SEPTEMBER 30, 1996
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
(FIGURES ARE IN THOUSANDS EXCEPT FOR PER SHARE DATA AND SHARE NUMBERS)
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
Reclassifications
Certain accounts in the 1994 and 1993 financial statements have been
reclassified for comparative purposes to conform with the presentation in the
current year financial statements. These reclassifications have had no effect on
net income as previously reported.
2. INVENTORY
Inventories at December 31, 1995, 1994 and 1993 and at September 30, 1996
consist of the following:
<TABLE>
<CAPTION>
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
SEPT. 30, 1996 ------------- ------------- -------------
--------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Raw Materials..................... $1,338 $ 1,841 $ 1,718 $ 1,606
Work-in-Process................... 704 812 897 1,095
Finished Goods.................... 475 622 847 1,035
Shipping Supplies................. 48 48 92 81
------ ------ ------ ------
Total........................... $2,565 $ 3,323 $ 3,554 $ 3,817
====== ====== ====== ======
</TABLE>
3. CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject Fargo to concentration of
credit risk consist principally of temporary cash investments and trade
receivables. Fargo maintains its cash balances with two financial institutions.
At December 31, 1995, Fargo's uninsured cash balances total $2,836.
Concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising Fargo's customer base and their
dispersion across many different geographic areas.
4. LEASE COMMITMENTS
Fargo leases most of its automotive equipment under capital leases. The
economic substance of the leases is that Fargo is financing the acquisition of
the assets through the leases. Accordingly, Fargo has capitalized automotive
equipment in the amounts of $333 and $194, less accumulated depreciation of $95
and $30, as of December 31, 1995 and 1994, respectively.
The following is a schedule by years of future minimum payments required
under the leases together with their present value as of December 31, 1995:
<TABLE>
<S> <C>
Year ending: December 31, 1996........................................ $163
December 31, 1997....................................... 106
----
Total minimum lease payments.......................................... 269
Less: amount representing interest.................................... 26
----
Present value of minimum lease payments............................. $243
====
</TABLE>
Fargo leases other equipment on an as needed basis.
F-9
<PAGE> 80
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995, 1994, 1993 AND SEPTEMBER 30, 1996
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
(FIGURES ARE IN THOUSANDS EXCEPT FOR PER SHARE DATA AND SHARE NUMBERS)
4. LEASE COMMITMENTS--(CONTINUED)
As of December 31, 1995, the future minimum lease payments under existing
operating leases are:
<TABLE>
<S> <C>
Year ending: December 31, 1996.......................................... $4
</TABLE>
Total rental expense attributable to operating leases in 1995, 1994 and
1993 amounted to $5, $49 and $145, respectively.
5. BANK LINES OF CREDIT
Fargo has available two separate, unsecured lines of credit totaling $6,500
with two banks. Specific terms are subject to agreement at or before any
advances. Both lines of credit will expire on June 30, 1996 unless renewed or
extended by each respective bank in writing. No advances were outstanding under
either line of credit as of December 31, 1995, 1994 and 1993.
6. CONTINGENCIES
No provision has been accrued for deferred income taxes on $2,228, which
represents the accumulated income of FISC through December 31, 1992. Since an
election has been made to treat this corporation as an interest charged domestic
international sales corporation (DISC), management expects that Federal income
taxes on such accumulated income will be permanently deferred. In accordance
with SFAS No. 109, deferred income taxes have been recorded on the portion of
DISC income eligible for tax deferral in years beginning January 1, 1993. See
Note 11.
In March of 1995, the New York State Department of Environmental
Conservation notified Fargo that it had been identified as a Potentially
Responsible Party for the cost to clean up the FICA landfill in the Town of
Poughkeepsie. Fargo has indicated to the DEC that it did not place any hazardous
substances into the FICA landfill waste stream, and is currently negotiating a
settlement with the DEC. Based upon the nature of the negotiations to date,
Fargo believes that any possible settlement would be in the approximate range of
$15 to $20. Fargo has not accrued a liability for this amount.
During 1996 and 1995, Fargo continued a voluntary environmental remediation
project at its Poughkeepsie plant. The remediation process actually began in
1988. The current cost to maintain the cleanup system is approximately $7 to $15
per year, which is charged to income as the costs are incurred each year.
Environmental exposures are difficult to assess and estimate for numerous
reasons including the complexity and differing interpretations of governmental
regulations, the lack of reliable data, the number of potentially responsible
parties and their financial capabilities, the multiplicity of possible
solutions, and the years of remedial and monitoring activity required. Although
it can give no assurances, Fargo believes that any final settlement of the
aforementioned environmental exposures will not have a material adverse effect
on its consolidated financial position and results of operations.
7. DEFINED CONTRIBUTION PLAN
Fargo maintains defined contribution plans for both hourly and salary
employees. Annual contributions are determined by the Fargo Board based on
available business profits at the end of the plan year not in excess of 15% of
the total compensation of all participants. Contributions to the plans amounted
to $400, $380 and $390 in 1995, 1994 and 1993, respectively.
F-10
<PAGE> 81
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995, 1994, 1993 AND SEPTEMBER 30, 1996
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
(FIGURES ARE IN THOUSANDS EXCEPT FOR PER SHARE DATA AND SHARE NUMBERS)
8. INCOME TAXES
Effective January 1, 1993, Fargo adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, which requires an asset and
liability approach to financial accounting and reporting for income taxes. The
financial statements for prior years have not been restated and the cumulative
effect of the change in accounting principle is included in determining net
income for the year ended December 31, 1993.
Deferred taxes are recognized for temporary differences between the basis
of assets and liabilities for financial statement and income tax purposes. The
differences relate primarily to deferred employment obligations, inventory
capitalization costs and depreciable assets. The provision for income taxes
consists of taxes currently due plus deferred taxes.
The provision for income taxes consists of:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1995 1994 1994
---- ---- ----
<S> <C> <C> <C>
Currently due
Federal....................................................... $761 $367 $417
Foreign....................................................... 8 (60) --
State and local............................................... 85 108 120
---- ---- ----
Total current............................................... 854 415 537
---- ---- ----
Deferred taxes/(benefit)
Federal....................................................... 123 57 65
Foreign....................................................... (1) -- --
State and local............................................... 2 2 2
---- ---- ----
Total deferred.............................................. 124 59 67
---- ---- ----
Total provision.......................................... $978 $474 $604
==== ==== ====
</TABLE>
Fargo's total deferred tax assets and deferred tax liabilities are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal
Total deferred tax asset...................................... $196 $181 $166
Total deferred tax liability.................................. 289 148 75
---- ---- ----
Deferred tax asset/(liability).............................. (93) 33 91
---- ---- ----
Foreign
Deferred tax liability........................................ -- 4 --
---- ---- ----
State
Total deferred tax asset...................................... 35 37 34
Total deferred tax liability.................................. 4 3 3
---- ---- ----
Deferred tax asset.......................................... 31 34 31
---- ---- ----
Net deferred tax assets/(liabilities).................... $(62) $ 63 $122
==== ==== ====
</TABLE>
F-11
<PAGE> 82
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995, 1994, 1993 AND SEPTEMBER 30, 1996
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
(FIGURES ARE IN THOUSANDS EXCEPT FOR PER SHARE DATA AND SHARE NUMBERS)
8. INCOME TAXES--(CONTINUED)
There were no valuation allowances for deferred tax assets. Deferred taxes
have been presented in the Fargo's financial statements as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current deferred tax asset.................................... $ 20 $ 12 $ 4
Noncurrent deferred tax asset................................. 211 206 196
---- ---- ----
Total deferred tax asset.................................... $231 $218 $200
==== ==== ====
Noncurrent deferred tax liability........................ $293 $155 $ 78
==== ==== ====
</TABLE>
Fargo has available carryovers of New York State investment tax credits and
employment incentive credits of approximately $180. The credits are used on a
first-in, first-out basis to reduce Fargo's New York State income tax liability
subject to limitations under New York State tax law. The carryovers may be
carried forward for up to seven years after the year of origination. Fargo
utilizes the flow-through method of accounting for investment tax credits
whereby credits are accounted for as a reduction of the provision for income
taxes in the year in which the credits arise.
In 1994, the Internal Revenue Service (the "Service") completed an
examination of Fargo's Federal income tax returns for the years 1987-1993. The
adjustments made by the Service for these years resulted in a net tax refund to
Fargo in the amount of $5.
9. NET EARNINGS PER SHARE OF COMMON STOCK
On March 19, 1993, the Fargo Board authorized a two-for-one stock split in
the form of a 100% stock dividend payable on March 31, 1993 to stockholders of
record on March 30, 1993. A total of 128,905 shares of common stock were issued
in connection with the split. The stated value of each share was changed from
$2.50 to $1.25. All references in the financial statements to average number of
shares outstanding and related prices and per share amounts have been restated
to reflect the split.
Net earnings per share of common stock is computed by dividing net income
by the weighted average number of shares of common stock outstanding during the
period.
10. DEFERRED EMPLOYMENT OBLIGATION
Fargo is obligated to two former key employees of the Corporation. Under
the plan, Fargo has agreed to pay each covered employee a certain sum annually
for fifteen years upon their retirement or, in the event of their death, to
their designated beneficiary. Fargo has purchased individual life insurance
contracts with respect to each employee covered by this program. Fargo is the
owner and beneficiary of the insurance contracts. The former employees are
general creditors of Fargo with respect to these benefits. The expense
associated with the plan was $72, $18, and $51 for 1995, 1994 and 1993,
respectively.
11. RESTATEMENT
During 1996 management of Fargo determined that its previously issued
financial statements for 1995 did not fully comply with Statement of Financial
Accounting Standards (SFAS) No. 109.
F-12
<PAGE> 83
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995, 1994, 1993 AND SEPTEMBER 30, 1996
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
(FIGURES ARE IN THOUSANDS EXCEPT FOR PER SHARE DATA AND SHARE NUMBERS)
11. RESTATEMENT--(CONTINUED)
Statement of Financial Accounting Standards No. 109, Accounting For Income
Taxes, requires an asset and liability approach in accounting for income taxes.
Fargo initially adopted SFAS No. 109 as required in its 1993 financial
statements.
Fargo has determined that for financial reporting purposes the indefinite
reversal criterion no longer applies for post 1992 years to the portion of the
earnings of its domestic international sales corporation (DISC) that is eligible
for tax deferral. Fargo has recorded a deferred tax on the portion of the DISC
income that is eligible for deferral from federal income tax for the years ended
December 31, 1995, 1994 and 1993. The financial statements have been restated to
reflect this change. In accordance with SFAS No. 109, no deferred tax provision
is required for the portion of the DISC income that is eligible for tax deferral
that has accumulated through December 31, 1992. See Note 6.
Fargo's previously issued financial statements for 1995 had restated its
previously issued 1994 and 1993 financial statements in connection with the
accounting for its deferred employment obligation. Previously Fargo did not
recognize the balance sheet obligation related to the plan. Upon
reconsideration, Fargo determined that the obligation should be recorded at
present value. Fargo has also changed its accounting for automotive equipment
leases effective January 1, 1994. In previous years, the lease payments were
recorded as an expense when paid. Upon reconsideration, Fargo has determined
that the economic substance of the leases requires capitalization of the
equipment and the related obligation on the balance sheet. These restatement
adjustments reduced previously reported retained earnings as of December 31,
1992 by $291, which is net of the deferred tax benefit of $194 and previously
reported results of operations are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Income before income taxes
As previously reported...................................... $ 2,808 $ 1,763 $ 1,606
As restated................................................. 2,808 1,778 1,555
Provision for income taxes
As previously reported...................................... 836 397 548
As restated................................................. 978 474 604
Net income
As previously reported...................................... 1,972 1,366 1,047
As restated................................................. 1,830 1,304 939
Net earnings per share
as previously reported...................................... 8.74 6.25 4.93
As restated................................................. 8.11 5.97 4.42
Retained earnings
As previously reported...................................... 12,946 11,632 10,582
As restated................................................. 12,653 11,170 10,183
Book value per share
as previously reported...................................... 58.75 53.14 48.48
As restated................................................. 57.51 51.07 46.64
</TABLE>
F-13
<PAGE> 84
FARGO MFG. COMPANY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995, 1994, 1993 AND SEPTEMBER 30, 1996
(INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 IS UNAUDITED)
(FIGURES ARE IN THOUSANDS EXCEPT FOR PER SHARE DATA AND SHARE NUMBERS)
12. DIVIDENDS
Fargo declared the following cash dividends during the 1996 year:
<TABLE>
<CAPTION>
STOCKHOLDERS OF DIVIDEND
DATE DECLARED RECORD DATE PAYABLE PER SHARE
- ------------------ ------------------ --------------- ---------
<S> <C> <C> <C>
March 15, 1996 March 29, 1996 April 8, 1996 $0.44
June 21, 1996 June 30, 1996 July 8, 1996 $0.44
September 20, 1996 September 30, 1996 October 7, 1996 $0.44
</TABLE>
13. RETIREMENT PLAN
On January 1, 1996, Fargo amended its retirement plan by adding a 401(k)
feature which includes a Fargo match. The amended plan also includes a provision
to allow participants to self-direct their account balances among a choice of
five investments.
14. TREASURY STOCK
The Company held the following number of shares as treasury stock:
<TABLE>
<CAPTION>
SHARES
------
<S> <C>
September 30, 1996.......................................................... 22,118
December 31, 1995........................................................... 21,751
December 31, 1994........................................................... 34,920
December 31, 1993........................................................... 41,107
</TABLE>
F-14
<PAGE> 85
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the CBCA, unless limited by its certificate of incorporation, a
corporation must indemnify a director or officer who was wholly successful, on
the merits or otherwise, in the defense of any proceeding to which he was a
party because he is or was a director or officer of the corporation against
reasonable expenses incurred by him in connection with the proceeding. As to
other employees or agents of the corporation who were wholly successful in such
defense, the indemnification is permissive rather than mandatory. Additionally,
the CBCA permits indemnification of a director or officer, as well as other
employees or agents of the corporation, made party to a proceeding if (i) he
conducted himself in good faith and (ii) he reasonably believed (A) in the case
of conduct in his official capacity with the corporation, that his conduct was
in its best interests and (B) in all other cases, that his conduct was at least
not opposed to its best interests and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful. The
CBCA forbids indemnification (i) in connection with a proceeding by or in the
right of the corporation in which the director was adjudged liable to the
corporation or (ii) in connection with any other proceeding charging improper
personal benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal benefit was
improperly received by him. Indemnification permitted under the CBCA in
connection with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
Under the CBCA, a corporation such as Hubbell which was incorporated under
the laws of Connecticut prior to January 1, 1996 is required, except to the
extent that the certificate of incorporation expressly provides otherwise, to
provide its directors or officers with the full amount of indemnification that
the corporation is permitted to provide such directors or officers pursuant to
the CBCA. This requirement remains limited by the provision in the CBCA that
requires, prior to indemnification of a director or officer, that the
corporation be authorized in the specific case after a determination that
indemnification of the director or officer is permissible in the circumstances
because he has met the standard of conduct set forth by the CBCA. The
determination must be made (i) by the board of directors by majority vote of a
quorum consisting of directors not at the time parties to the proceeding; (ii)
if a quorum cannot be obtained, by majority vote of a committee duly designated
by the board of directors, in which designation directors who are parties may
participate, consisting solely of two or more directors not at the time parties
to the proceeding, (iii) by special legal counsel or (iv) by the shareholders,
but shares owned by or voted under the control of directors who are at the time
parties to the proceeding may not be voted on the determination.
The CBCA provides that a corporation may purchase and maintain insurance on
behalf of an individual who is or was a director or officer against liability
asserted or incurred by him in that capacity or arising from his status as a
director or officer, whether or not the corporation would have power to
indemnify him against the same liability under the CBCA.
Hubbell has in effect liability insurance policies covering certain claims
against any of its officers or directors by reason of certain breaches of duty,
neglect, error, misstatement, omission or other act committed or alleged to have
been committed by such person in his capacity as an officer or director.
II-1
<PAGE> 86
ITEM 21. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <C> <S>
2.1* -- Agreement and Plan of Merger, dated as of November 13, 1996, among the Registrant,
Fargo Mfg. Company, Inc. and FMC Acquisition Corporation (attached as Exhibit A to
the Prospectus/Proxy Statement).
2.2* -- Form of Escrow Agreement among the Registrant, Fargo Mfg. Company, Inc., Jack F.
Myers, as Shareholder Representative and The Chase Manhattan Bank, as Escrow Agent
(attached as Exhibit B to the Prospectus/Proxy Statement).
2.3 -- Amendment No. 1, dated as of January 8, 1997, to Agreement and Plan of Merger,
dated as of November 13, 1996, among the Registrant, FMC Acquisition Corporation
and Fargo Mfg. Company, Inc. (which includes as Exhibit A thereto a revised form
of the Escrow Agreement).
3.1 -- Restated Certificate of Incorporation of the Registrant (incorporated by reference
to Exhibit 3a of the Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 1996).
3.2 -- By-Laws of the Registrant (incorporated by reference to Exhibit 3b of Registrant's
Annual Report on Form 10-K for the year ended December 31, 1989).
4.1 -- Rights Agreement, dated as of December 13, 1988, between the Registrant and
Manufacturers Hanover Trust Company (now known as ChaseMellon Shareholder
Services, L.L.C.) as Rights Agent (incorporated by reference to Exhibit 6 to the
Registrant's Registration Statement on Form 8-A dated March 3, 1992).
5.1 -- Opinion of Richard W. Davies, Esq. regarding the legality of the securities being
offered.
8.1 -- Opinion of Simpson Thacher & Bartlett regarding certain tax matters.
21 -- Subsidiaries of Registrant.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Richard W. Davies, Esq. (included in Exhibit 5.1).
23.3 -- Consent of Simpson Thacher & Bartlett (included in Exhibit 8.1).
23.4 -- Consent of D'Arcangelo & Co., LLP.
24.1* -- Powers of Attorney.
99.1 -- Form of Proxy Card.
99.2 -- Restated Certificate of Incorporation of Fargo Mfg. Company, Inc.
99.3 -- Amended and Restated By-Laws of Fargo Mfg. Company, Inc.
</TABLE>
- ---------------
* Previously filed.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
II-2
<PAGE> 87
(b) that, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment will be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time will be deemed to be the initial bona fide offering
thereof,
(c) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(d) that, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section 13 (a) or
section 15 (d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement will be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to be
the initial bona fide offering thereof;
(e) that prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the Registrant undertakes that such reoffering
prospectus will contain the information called for by Form S-4 with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of Form S-4;
(f) that every prospectus (i) that is filed pursuant to paragraph (e)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the Registration
Statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act, each such
post-effective amendment will be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering thereof;
(g) insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue;
(h) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request; and
(i) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
II-3
<PAGE> 88
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of Orange,
State of Connecticut, on January 9, 1997.
HUBBELL INCORPORATED
By: /s/ RICHARD W. DAVIES
------------------------------------
Richard W. Davies
Vice President, General Counsel and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
HUBBELL INCORPORATED
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ----------------
<C> <S> <C>
* Chairman of the Board, January 9, 1997
- --------------------------------------------- President, Chief Executive
G.J. Ratcliffe Officer and Director
* Executive Vice President (Chief January 9, 1997
- --------------------------------------------- Financial and Accounting
Harry B. Rowell, Jr. Officer)
* Director January 9, 1997
- ---------------------------------------------
E.R. Brooks
* Director January 9, 1997
- ---------------------------------------------
George W. Edwards, Jr.
* Director January 9, 1997
- ---------------------------------------------
Joel S. Hoffman
* Director January 9, 1997
- ---------------------------------------------
Horace G. McDonell
* Director January 9, 1997
- ---------------------------------------------
Andrew McNally IV
* Director January 9, 1997
- ---------------------------------------------
Daniel J. Meyer
* Director January 9, 1997
- ---------------------------------------------
J.A. Urquhart
* Director January 9, 1997
- ---------------------------------------------
Malcolm Wallop
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign this Amendment
No. 1 to the Registration Statement on behalf of each of the above-indicated
directors and officers of the Registrant pursuant to powers of attorney signed
by such directors and officers.
/s/ RICHARD W. DAVIES
--------------------------------------
Richard W. Davies
Attorney-in-fact
II-4
<PAGE> 89
EXHIBIT INDEX
<TABLE>
<C> <C> <S>
2.1* -- Agreement and Plan of Merger, dated as of November 13, 1996, among the
Registrant, Fargo Mfg. Company, Inc. and FMC Acquisition Corporation (attached as
Exhibit A to the Prospectus/Proxy Statement).
2.2* -- Form of Escrow Agreement among the Registrant, Fargo Mfg. Company, Inc., Jack F.
Myers, as Shareholder Representative and The Chase Manhattan Bank, as Escrow
Agent (attached as Exhibit B to the Prospectus/Proxy Statement).
2.3 -- Amendment No. 1, dated as of January 8, 1997, to Agreement and Plan of Merger,
dated as of November 13, 1996, among the Registrant, FMC Acquisition Corporation
and Fargo Mfg. Company, Inc. (which includes as Exhibit A thereto a revised form
of the Escrow Agreement).
3.1 -- Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3a of the Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1996).
3.2 -- By-Laws of the Registrant (incorporated by reference to Exhibit 3b of
Registrant's Annual Report on Form 10-K for the year ended December 31, 1989).
4.1 -- Rights Agreement, dated as of December 13, 1988, between the Registrant and
Manufacturers Hanover Trust Company (now known as ChaseMellon Shareholder
Services, L.L.C.) as Rights Agent (incorporated by reference to Exhibit 6 to the
Registrant's Registration Statement on Form 8-A dated March 3, 1992).
5.1 -- Opinion of Richard W. Davies, Esq. regarding the legality of the securities being
offered.
8.1 -- Opinion of Simpson Thacher & Bartlett regarding certain tax matters.
21 -- Subsidiaries of Registrant.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Richard W. Davies, Esq. (included in Exhibit 5.1).
23.3 -- Consent of Simpson Thacher & Bartlett (included in Exhibit 8.1).
23.4 -- Consent of D'Arcangelo & Co., LLP.
24.1* -- Powers of Attorney.
99.1 -- Form of Proxy Card.
99.2 -- Restated Certificate of Incorporation of Fargo Mfg. Company, Inc.
99.3 -- Amended and Restated By-Laws of Fargo Mfg. Company, Inc.
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 2.3
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
AMENDMENT NO. 1 (the "Amendment"), dated as of January 8,
1997, to the AGREEMENT AND PLAN OF MERGER (the "Original Merger Agreement"),
dated as of November 13, 1996, among HUBBELL INCORPORATED, a Connecticut
corporation ("Parent"), FMC Acquisition Corporation, a New York corporation and
a wholly owned subsidiary of Parent (the "Purchaser"), and FARGO MFG. COMPANY,
INC., a New York corporation (the "Company").
WHEREAS, Parent, the Purchaser and the Company have entered
into the Original Merger Agreement; and
WHEREAS, Parent, the Purchaser and the Company desire to amend
the Original Merger Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises set forth
herein, Parent, the Purchaser and the Company hereby agree that the Original
Merger Agreement is, subject to the satisfaction of the condition referred to
below, amended as follows:
ARTICLE I
AMENDMENTS
SECTION 1.1 Section 2.1 of the Original Merger Agreement is
hereby amended by deleting the phrase:
", which meeting shall not be held later than ten (10) business days
following the end of a calendar month".
SECTION 1.2 Exhibit A of the Original Merger Agreement is
hereby amended by deleting Exhibit A in its entirety and substituting Exhibit A
attached hereto.
ARTICLE II
MISCELLANEOUS
SECTION 2.1 This Amendment shall become effective upon the
execution and delivery hereof by the Parent, the Purchaser and the Company.
SECTION 2.2 Capitalized terms defined in the Original Merger
Agreement and not otherwise defined herein shall have the meanings assigned
thereto in the Original Merger Agreement.
<PAGE> 2
2
SECTION 2.3 This Amendment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all of which counterparts together shall
constitute but one and the same instrument.
SECTION 2.4 This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 2.5 All references in the Original Merger Agreement to
"this Agreement," "hereof," "herein" or the like shall mean and refer to the
Original Merger Agreement as amended by this Amendment (as well as by all other
subsequent amendments, restatements, modifications and supplements thereto).
SECTION 2.6 Except as expressly amended herein, the Original
Merger Agreement shall continue to be, and shall remain, in full force and
effect in accordance with its terms.
<PAGE> 3
3
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Amendment to the Original Merger Agreement to be executed as of the
day and year first written above.
HUBBELL INCORPORATED
By: /s/ James K. Braun
-----------------------------
Name: James K. Braun
Title: Vice President
FMC ACQUISITION CORPORATION
By: /s/ James K. Braun
------------------------------
Name: James K. Braun
Title: Vice President
FARGO MFG. COMPANY, INC.
By: /s/ Richard C. Raible
------------------------------
Name: Richard C. Raible
Title: President
<PAGE> 4
EXHIBIT A
TO EXHIBIT 2.3
FORM OF ESCROW AGREEMENT
Escrow Agreement (the "Escrow Agreement") dated as of [ ], 1996
among HUBBELL INCORPORATED, a Connecticut corporation ("Hubbell"), FARGO MFG.
COMPANY, INC., a New York corporation ("Fargo"), Jack F. Myers in his capacity
as the person selected by the Company as the representative (the "Shareholder
Representative") of the former holders of the Common Stock of Fargo (the
"Shareholders") and The Chase Manhattan Bank, as escrow agent (the "Escrow
Agent").
1. Introduction. This is the Escrow Agreement referred to in the
Agreement and Plan of Merger, dated as of November 13, 1996, as amended by
Amendment No. 1 thereto dated as of January 8, 1997, among Hubbell, FMC
Acquisition Corporation, a New York corporation and a wholly owned subsidiary of
Hubbell, and Fargo (the "Merger Agreement"), providing for the acquisition of
Fargo by Hubbell and related transactions (the "Merger"). All capitalized terms
used herein without definition have the meanings specified in the Merger
Agreement.
2. Appointment of Escrow Agent. Hubbell and the Shareholder
Representative do hereby appoint and designate the Escrow Agent as escrow agent
for the purposes set forth herein, and the Escrow Agent does hereby accept such
appointment under the terms and conditions set forth herein.
3. Establishment of Escrow Account. (a) As promptly as practicable
after the execution of this Escrow Agreement, Fargo shall deliver to the Escrow
Agent an accurate list of (i) the names and mailing addresses of all of the
holders of record of Common Stock, without par value, of Fargo (the "Fargo
Common Stock") immediately prior to the Closing of the Merger and (ii) the
number of shares of Fargo Common Stock held by each Shareholder.
(b) Upon execution of this Escrow Agreement, Hubbell shall deposit
in an escrow account (the "Escrow Account") a certificate (the "Certificate")
representing the number of whole shares (after rounding down to the nearest
share in the case of fractional shares) equal to 10% of the number of whole
shares of Class B Common Stock, par value $0.01 per share, of Hubbell (the
"Class B Common Stock") to be issued pursuant to the Merger to each Shareholder
(such shares of Class B Common Stock, the "Initial Escrow Shares"). The
Certificate will be registered in the name of the Escrow Agent as escrow agent
hereunder.
<PAGE> 5
2
(c) Each holder of Fargo Common Stock for whom at least one whole
share of Class B Common Stock is deposited pursuant to Section 3(b) above shall
be deemed an "Escrow Participant." Each Escrow Participant shall have an
interest in the Escrow Account equal to the quotient obtained by dividing (i)
the number of whole shares deposited into the Escrow Account with regard to such
Escrow Participant pursuant to Section 3(b) above by (ii) the number of Initial
Escrow Shares (each such quotient hereinafter referred to individually as an
"Interest" and the aggregate of all such quotients collectively as the
"Interests"). Such Interests shall be set forth on Schedule A hereto and made a
part hereof. The Escrow Agent shall be entitled to rely upon such list as most
recently updated in making any distributions to Escrow Participants hereunder.
Dissenting Shares shall be excluded for all purposes hereunder.
(d) The Escrow Account shall be used solely at the option of Hubbell
to (i) reimburse Hubbell to the extent that the Estimated Net Worth Amount used
in determining the Merger Consideration exceeds the Final Closing Net Worth
Amount and (ii) satisfy any indemnification obligations to Hubbell set forth in
Section 7 of the Merger Agreement.
(e) The Escrow Agent hereby agrees to act as escrow agent and to
hold, safeguard and disburse the Escrow Account pursuant to the terms and
conditions hereof.
4. Disbursements from the Escrow Account. (a) In the event that the
Estimated Net Worth Amount exceeds the Final Closing Net Worth Amount (as such
amounts are determined pursuant to Section 2.2 of the Merger Agreement and
subject to the dispute resolution procedures set forth therein), Hubbell may
submit to the Escrow Agent (i) a certificate signed by a duly authorized officer
of Hubbell stating that the Estimated Net Worth Amount exceeded the Final
Closing Net Worth Amount (as finally determined pursuant to Section 2.2 of the
Merger Agreement) and specifying the amount of such excess (the "Excess Net
Worth Amount") and (ii) written instructions to the Escrow Agent signed by a
duly authorized officer requesting that such Excess Net Worth Amount be paid to
Hubbell from shares of Class B Common Stock on deposit in the Escrow Account.
The Escrow Agent shall deliver such Excess Net Worth Amount, in accordance with
Section 4(d) hereof, not later than the second business day following receipt of
such written instructions. Hubbell shall send copies of the foregoing documents
to the Shareholder Representative concurrently with the delivery thereof to the
Escrow Agent.
(b) In the event that Hubbell suffers any loss, claim, damage or
liability for which it is entitled to be indemnified pursuant to Section 7 of
the Merger Agreement (each, a "Claim"), Hubbell may submit to the Escrow Agent
and the Shareholder Representative (i) a certificate signed by a duly authorized
officer of Hubbell (A) stating that Hubbell has a Claim and specifying the
section or sections of the Merger Agreement which are the subject of the Claim
and (B) specifying in reasonable detail, with reasonable supporting
documentation, the components of such Claim, including a calculation of the
amount of the requested indemnity or other payment and (ii) written instructions
to the Escrow Agent signed by a duly authorized officer of Hubbell setting forth
the amount (the "Escrow Payment") to be paid to
<PAGE> 6
3
Hubbell from the Escrow Account based upon the information set forth in such
certificate. Hubbell shall furnish the Shareholder Representative with copies of
all books, records and other information reasonably requested by the Shareholder
Representative to the extent necessary (or reasonably appropriate) to
substantiate such Claim. If, within thirty (30) days (the "Objection Period") of
delivery of the certificate pursuant to clause (i) above and the instructions
pursuant to clause (ii) above, the Shareholder Representative does not object
thereto in a writing (the "Objection Notice") delivered to the Escrow Agent and
Hubbell, then the Escrow Agent shall act in accordance with such instructions
and Section 4(d) hereof. If during the Objection Period, the Shareholder
Representative delivers to the Escrow Agent and Hubbell an Objection Notice,
signed by the Shareholder Representative, specifying in reasonable detail the
Shareholder Representative's objection to such certificate and the portion of
the Escrow Payment to which the Shareholder Representative objects, then the
Escrow Agent shall pay to Hubbell only such portion of the Escrow Payment as is
not specifically objected to in such Objection Notice. The Shareholder
Representative and Hubbell shall negotiate in good faith to determine whether,
and to what extent, Hubbell is entitled to the disputed portion of the Escrow
Payment. To the extent such agreement is reached, Hubbell and the Shareholder
Representative shall within two (2) business days thereof set forth the
determination regarding the remainder of the Escrow Payment, if any, to be paid
to Hubbell in written instructions to the Escrow Agent signed by a duly
authorized officer of Hubbell and by the Shareholder Representative, and the
Escrow Agent shall deliver shares of Class B Common Stock representing such
amount to Hubbell in accordance with Section 4(d). If within thirty (30) days of
delivery of the Objection Notice the Shareholder Representative and Hubbell have
not reached agreement as to such matter, such matter shall be determined by a
competent disinterested person acting as arbitrator, to be selected by mutual
agreement of the Shareholder Representative and Hubbell within ten (10) days
after such 30-day period. The determination of such arbitrator shall be binding
and final for all purposes on Hubbell and the Shareholders and may be enforced
as such by any court of competent jurisdiction. If Hubbell and the Shareholder
Representative fail to agree on the selection of an arbitrator during such
period, then each of Hubbell and the Shareholder Representative shall designate
a competent disinterested person to act as arbitrator within ten (10) days after
such 10-day period. Within thirty (30) days of their appointment, each of the
two arbitrators shall submit to Hubbell and the Shareholder Representative a
written report setting forth its determination and the factors utilized in
making such determination. If the two arbitrators agree as to whether and to
what extent Hubbell is entitled to be indemnified pursuant to Section 7 of the
Merger Agreement for such Claim, such determination shall be binding and final
for all purposes on Hubbell and the Shareholders and may be enforced as such by
any court of competent jurisdiction. If the two arbitrators do not agree as to
whether and to what extent Hubbell is entitled to be indemnified for such Claim,
a third arbitrator shall be selected by the two arbitrators within five (5) days
thereof, and within ten (10) days of such arbitrator's selection such arbitrator
shall select one of the determinations of the two arbitrators as the most
accurate, and the determination so selected shall be binding and final for all
purposes on Hubbell and the Shareholders and may be enforced as such by any
court of competent jurisdiction. Within two business days of a binding
determination made by the first arbitrator, by the two arbitrators or by the
third arbitrator, as the case may be, Hubbell and the Shareholder Representative
shall set forth the determination regarding the remainder of the Escrow Payment,
if any, to be paid to Hubbell in written instructions to the Escrow Agent signed
by
<PAGE> 7
4
a duly authorized officer of Hubbell and by the Shareholder Representative, and
the Escrow Agent shall deliver shares of Class B Common Stock representing such
amount to Hubbell in accordance with Section 4(d). The costs incurred in
retaining the arbitrator selected by mutual agreement of the parties and the
third arbitrator shall be borne one-half by Hubbell and one-half by the
Shareholder Representative on behalf of the Shareholders. The costs incurred in
retaining the arbitrator (x) selected by Hubbell shall be borne by Hubbell and
(y) selected by the Shareholder Representative shall be borne by the Shareholder
Representative on behalf of the Shareholders.
(c) The Escrow Agent shall deliver the Escrow Payment, or any
portion thereof, as instructed, not later than (i) the second business day
following receipt of written instructions signed by a duly authorized officer of
Hubbell and by the Shareholder Representative or (ii) the second business day
following the last day of an Objection Period in the event that the Shareholder
Representative does not deliver an Objection Notice during such period in
response to any certificate and instructions delivered to the Escrow Agent.
(d) Any payment of the Excess Net Worth Amount or of any Claim made
by the Escrow Agent pursuant to this Section 4 shall be paid in shares of Class
B Common Stock deposited in the Escrow Account, such number of shares to be
equal to the quotient (rounded up to the nearest whole share) of (i) the amount
of the payment to be made by the Escrow Agent divided by (ii) the Average Price.
The Escrow Agent shall effect such payment by surrendering the certificate for
such shares to Hubbell's transfer agent (ChaseMellon Shareholder Services,
L.L.C.) for cancellation upon receipt by the Escrow Agent of a copy of a letter
from Hubbell to Hubbell's transfer agent, instructing such transfer agent to
issue a new certificate to the Escrow Agent for the shares of Class B Common
Stock remaining in the Escrow Account. In surrendering the shares to the
transfer agent, the Escrow Agent shall instruct the transfer agent to issue a
certificate for the number of shares of Class B Common Stock equal to the Excess
Net Worth Amount or the Claim, as the case may be, to Hubbell. Upon delivery by
the Escrow Agent of shares of Class B Common Stock and such instructions to the
transfer agent, the Escrow Agent shall have no further obligations with respect
to the application of such shares of Class B Common Stock by the recipient
thereof. All shares of Class B Common Stock distributed from the Escrow Account
shall be deemed to be distributed pro rata by the Escrow Participants in
accordance with each Escrow Participant's Interest. If the amount of the Excess
Net Worth Amount or any Claim exceeds the aggregate value of the shares of Class
B Common Stock then on deposit with the Escrow Agent, the Escrow Agent shall
have no liability or responsibility for any deficiency.
(e) In the event that either Hubbell or the Shareholder
Representative fails to select an arbitrator as required in accordance with
paragraph (b) of this Section 4, or if the arbitrator selected by such party in
accordance with such paragraph fails to comply with the provisions of such
paragraph, then the determination made by the arbitrator selected by the other
party shall be binding and final for all purposes on Hubbell and the
Shareholders and may be enforced as such by any court of competent jurisdiction
in respect of the matter to be arbitrated under such paragraph.
<PAGE> 8
5
(f) Nothing contained herein shall be deemed to obligate the Escrow
Agent to pay or transfer any shares of Class B Common Stock hereunder unless the
same shall have been received by the Escrow Agent pursuant to the provisions of
this Escrow Agreement.
(g) With respect to any Claim for which Hubbell requests indemnity
or other payment pursuant to Section 4(b) above, where such Claim is one arising
out of a third-party claim, the Shareholder Representative will have the right
to assume the defense of such third-party claim. To the extent that the
Shareholder Representative elects not to assume the defense of such third-party
claim, the Shareholder Representative will have the right to participate in or
consent to any settlement of such third-party claim which would result in an
Escrow Payment to Hubbell. Any and all costs or expenses (including, but not
limited to, reasonable costs of investigation, court costs, and attorneys' fees
and disbursements) incurred in such defense, participation, or consent shall be
borne by the Shareholder Representative on behalf of the Shareholders.
5. Termination of the Escrow Account. Upon the earlier of (i)
eighteen (18) months from the Closing Date or (ii) at the completion of the
first full audit cycle for the year commencing on January 1, 1997 during which
the Company has been consolidated with Hubbell and its subsidiaries (each a
"Termination Date"), the Escrow Agent shall disburse all shares of Class B
Common Stock then in the Escrow Account (the "Remaining Escrow Shares") by (x)
disbursing to each Escrow Participant that number of whole shares (after
rounding down to the nearest share in the case of fractional shares) equal to
such Escrow Participant's Interest multiplied by the number of Remaining Escrow
Shares and (y) aggregating and transferring to Hubbell any and all fractions of
Remaining Escrow Shares; provided, however, that if the dispute resolution
process for determination of the Final Closing Net Worth Amount is still
continuing or if there are any outstanding or unsatisfied Claims against the
Escrow Account as to which the Escrow Agent has received notice pursuant to
Section 4 hereof on or prior to the Termination Date, this Escrow Agreement
shall continue in full force and effect until the resolution of the Final
Closing Net Worth Amount or all such Claims, as the case may be, and a number of
shares of Class B Common Stock (rounded up to the nearest whole share) equal in
value (with each such share valued at the Average Price) to satisfy the Excess
Net Worth Amount or any outstanding or unsatisfied Claims against the Escrow
Account, as the case may be, shall be retained in the Escrow Account until the
Excess Net Worth Amount or such Claims have been satisfied and discharged, and
any unused amount remaining after such satisfaction and discharge shall be
promptly paid to the Escrow Participants. Upon the transfer to Hubbell pursuant
to (y) above, Hubbell shall deliver to the Escrow Agent an amount equal to the
(a) the number of Remaining Escrow Shares transferred pursuant to (y) above
(including any fractional share) multiplied by (b) the closing price of the
Class B Common Stock on the business day immediately preceding such transfer.
Such amount shall be distributed by the Escrow Agent to the Escrow Participants
in proportion to the fraction of a share of Class B Common Stock so allocable to
each such Escrow Participant.
<PAGE> 9
6
6. Dividends; Voting Rights. (a) Any distributions or dividends
("Dividends") payable with respect to the Class B Common Stock held in the
Escrow Account shall not be deemed to be part of the Escrow Account and shall be
distributed on the dividend payment date therefor or as soon as practical
thereafter by the Escrow Agent directly to the Escrow Participants in accordance
with each such Escrow Participant's Interest. Dividends shall not be made a part
of the Escrow Account, shall not be deemed to be part of the Escrow Account and
shall not be available hereunder for the payment of the Excess Net Worth Amount
or of any Claims made by Hubbell against the Escrow Account.
(b) The Escrow Participants shall retain all voting rights with
respect to the shares of Class B Common Stock held in the Escrow Account for so
long as any such shares are held by the Escrow Agent hereunder. Upon receipt of
any notice, or other voting or proxy materials, from Hubbell with respect to the
Class B Common Stock, the Escrow Agent shall promptly remit such materials to
the Escrow Participants in order to allow such persons to exercise their
respective voting rights hereunder based on the Interest owned by each such
Escrow Participant. On any matter for which the Class B Common Stock has a vote,
the Escrow Agent shall vote the shares of Class B Common Stock held by it as
instructed by the Escrow Participants in accordance with their Interests. If any
Escrow Participant fails to provide voting instructions to the Escrow Agent,
then the Escrow Agent shall abstain from voting with respect to the shares of
Class B Common Stock represented by the Interest held by such Escrow
Participant.
7. Escrow Agent Expenses. Hubbell and the Shareholder Representative
(on behalf of the Shareholders) hereby agree that the Escrow Agent's fees as set
forth on Schedule B attached hereto and made a part hereof shall be initially
advanced by Hubbell to the Escrow Agent and subsequently reimbursed to Hubbell
by the transfer to Hubbell by the Escrow Agent of a certificate representing
that number of whole shares of Class B Common Stock equal in value (valued at
the Average Price) to the amount of such fees. All expenses of the Escrow Agent,
if any, apart from the fee set forth on Schedule B hereto, shall be recouped by
the Escrow Agent as incurred from time to time through the sale at fair market
value by the Escrow Agent of that number of whole shares of Class B Common Stock
necessary to pay such expenses. Any shares of Class B Common Stock sold by the
Escrow Agent to pay expenses shall be deemed to be sold pro rata by the Escrow
Participants in accordance with each Escrow Participant's Interest. The Escrow
Agent shall notify Hubbell and the Shareholder Representative of any sale of
shares of Class B Common Stock pursuant to this Section 7, and such notice shall
state the amount of the expenses recouped, the date of the sale and the number
of shares of Class B Common Stock sold. The Escrow Agent shall have no duty to
solicit any payments which may be due it under this Escrow Agreement.
8. Tax Matters. For purposes of federal and other taxes based on
income, the Escrow Participants will be treated as the owners of the Escrow
Account in proportion to their respective Interests therein. The Escrow Agent
shall report the income, if any, that is earned on, or derived from, the Escrow
Account as income of the Escrow Participants in the taxable year or years in
which such income is properly includible and shall prepare and
<PAGE> 10
7
distribute to the Escrow Participants Forms 1099 or equivalent tax reporting
forms reflecting such income. The Shareholder Representative will provide the
Escrow Agent with the Tax Identification Numbers (TIN) of the Escrow
Participants as assigned by the Internal Revenue Service. All interest or other
income earned under the Escrow Agreement shall be allocated and paid as provided
herein and reported by the recipient Escrow Participant to the Internal Revenue
Service as having been so allocated and paid.
9. The Shareholder Representative. The Shareholder Representative
shall mean Jack F. Myers, or such replacement or successor as shall be
designated by Shareholders owning an aggregate of a majority of Fargo Common
Stock. The Shareholder Representative shall be entitled to take the actions
specified in this Escrow Agreement and the Merger Agreement without seeking the
concurrence of any Shareholders, except that the voluntary acceptance of a Claim
without any objection whatsoever thereto, which would result in the payment to
Hubbell of shares of Class B Common Stock having a value (based on the Average
Price) of $500,000 or more, shall require the prior concurrence (which may be by
written consent without a meeting) of the holders of a majority of the
Interests.
10. The Escrow Agent. (a) The Escrow Agent undertakes to perform
only such duties as are expressly set forth herein.
(b) The Escrow Agent may rely and shall be protected in acting or
refraining from acting upon any written notice, instruction or request furnished
to it hereunder and reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties.
(c) The Escrow Agent shall not be liable for any action taken by it
in good faith and reasonably believed by it to be authorized or within the
rights or powers conferred upon it by this Escrow Agreement, and may consult
with counsel of its own choice and shall have full and complete authorization
and protection for any action taken or suffered by it hereunder in good faith
and in accordance with the opinion of such counsel.
(d) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Escrow Agreement, it shall be entitled to refrain from taking any action
and its sole obligation shall be to keep safely all property held in escrow
until it shall be directed otherwise in writing by all of the other parties
hereto or by a final order or judgment of a court of competent jurisdiction.
(e) The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving notice in writing of such resignation specifying
a date upon which such resignation shall take effect, which date shall not be
less than sixty (60) days prior to the date such notice is given and provided
that such resignation shall not take effect until a successor Escrow Agent shall
have been appointed jointly by Hubbell and the hareholder Representative.
<PAGE> 11
8
(f) This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Escrow Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Escrow Agreement and shall
not be deemed to have knowledge of nor responsibility under the terms of the
Merger Agreement. The Escrow Agent shall be under no duty to inquire into or
investigate the validity, accuracy or content of any such document.
(g) Hubbell and the Shareholder Representative (on behalf of the
Shareholders) hereby agree, jointly and severally, to indemnify and hold
harmless the Escrow Agent against any and all costs, losses, claims, damages,
liabilities, expenses, including reasonable costs of investigation, court costs,
and attorneys' fees and disbursements, which may be imposed upon the Escrow
Agent in connection with its acceptance of appointment as Escrow Agent
hereunder, including any litigation arising from this Agreement or involving the
subject matter hereof, except in the case of the Escrow Agent's own willful
default or gross negligence; 50% of any such amount shall be payable by Hubbell
and 50% shall be payable by the Shareholder Representative on behalf of the
Shareholders. Anything in this agreement to the contrary notwithstanding, in no
event shall the Escrow Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action; provided, however, that
this sentence shall not apply in the case of gross negligence or bad faith on
the part of the Escrow Agent in the performance of its duties as Escrow Agent.
11. Interests. Interests will not be represented by any form of
certificate or other instrument and will not be transferable or assignable,
other than by will, the laws of intestacy or other operation of law.
12. Assignment. Neither this Escrow Agreement nor any right or
interest hereunder may be assigned in whole or in part by any party without the
prior consent of the other parties. This Escrow Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
assigns.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York and any action brought
hereunder shall be brought in the courts of the State of New York, located in
the County of New York. Each party hereto irrevocably waives any objection on
the grounds of venue, forum non-conveniens or any similar grounds and
irrevocably consents to service of process by mail or in any other manner
permitted by applicable law and consents to the jurisdiction of said courts.
14. Amendment. This Agreement cannot be amended or modified except
by a writing signed by Hubbell, the Shareholder Representative and the Escrow
Agent.
<PAGE> 12
9
15. Notices. (a) All notices and other communications under this
Escrow Agreement shall be in writing and shall be deemed to have been duly given
or delivered when delivered in person, or sent by courier or other overnight
delivery service, or when sent by telecopy (with receipt confirmed) provided
that a copy is then mailed by registered or certified mail, return receipt
requested, with first class postage prepaid; except that, with respect to the
Escrow Agent, notices and other communications under this Escrow Agreement shall
be deemed to have been duly given or delivered on the date received by the
Escrow Agent:
(i) If to Hubbell:
Hubbell Incorporated
584 Derby Milford Road
Orange, Connecticut 06477
Attention: Richard W. Davies, Esq.
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Joel S. Hoffman, Esq.
(ii) If to the Shareholder Representative:
Jack F. Myers
16 Delano Drive
Rhinebeck, New York 12572
with a copy to:
Finn Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
Attention: Edmund M. Remondino, Esq.
(iii) If to the Escrow Agent:
The Chase Manhattan Bank
Corporate Trust Group
450 West 33rd Street
New York, NY 10001
Attention: Joe Morales Escrow Administration,
15th Floor
212-946-7598 (Fax 212-946-8155/56)
<PAGE> 13
10
(b) In the event that the Escrow Agent, in its sole discretion,
shall determine that an emergency exists, the Escrow Agent may use such other
means of communications as the Escrow Agent deems advisable.
16. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
instrument and all of which together shall constitute a single agreement.
17. Termination. This Agreement shall terminate at the time that all
shares of Class B Common Stock held by the Escrow Agent hereunder have been
disbursed.
<PAGE> 14
11
IN WITNESS WHEREOF, each of the parties hereto has duly executed
this Escrow Agreement on the date first above written.
HUBBELL INCORPORATED
By:________________________________
FARGO MFG. COMPANY, INC.
By:________________________________
THE CHASE MANHATTAN BANK
By:________________________________
<PAGE> 15
SCHEDULE A
TO EXHIBIT A
TO EXHIBIT 2.3
Shareholder Interests
Shareholder Interests
<PAGE> 16
SCHEDULE B
TO EXHIBIT A
TO EXHIBIT 2.3
Escrow Agent Fees
$10,000, such fee to be in full payment of the fees of the Escrow Agent for so
long as this Escrow Agreement shall be in effect.
<PAGE> 17
SCHEDULE C
TO EXHIBIT A
TO EXHIBIT 2.3
TELEPHONE NUMBER(S) FOR CALL-BACKS AND
PERSON(S) DESIGNATED TO CONFIRM FUNDS TRANSFER INSTRUCTIONS
If to Hubbell:
Name Telephone Number
1.
------------------------- -------------------------
2.
------------------------- -------------------------
3.
------------------------- -------------------------
If to Fargo:
1.
------------------------- -------------------------
2.
------------------------- -------------------------
3.
------------------------- -------------------------
If to Shareholder Representative:
1. Jack F. Myers
------------------------- -------------------------
Telephone call-backs shall be made to each of Hubbell and Fargo or to Hubbell
and the Shareholder Representative, as the case may be, if joint instructions
are required pursuant to the Agreement.
<PAGE> 1
EXHIBIT 5.1
HUBBELL INCORPORATED
584 Derby Milford Road
Orange, Connecticut 06477-4024
January 9, 1997
Hubbell Incorporated
584 Derby Milford Road
Orange, Connecticut 06477-4024
Ladies and Gentlemen:
I am General Counsel of Hubbell Incorporated, a Connecticut corporation
(the "Company"), and I render this opinion in such capacity in connection with
the Registration Statement on Form S-4 (File No. 333-18191) (the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"), relating
to the proposed issuance of shares (the "Shares") of Class B Common Stock, par
value $.01 per share, of the Company ("Class B Common Stock") to the holders of
common stock, no par value, of Fargo Mfg. Company, Inc., a New York corporation
("Fargo"), in connection with the proposed merger (the "Merger") of FMC
Acquisition Corporation ("FMC"), a direct, wholly owned subsidiary of the
Company, with and into Fargo pursuant to the terms of an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of November 13, 1996, among the
Company, FMC and Fargo, as amended by Amendment No. 1 thereto, dated as of
January 8, 1997, each of which has been filed as an exhibit to the Registration
Statement. The Class B Common Stock is described in the Prospectus/Proxy
Statement included in the Registration Statement, to which this opinion is an
exhibit.
I have examined an executive copy of the Registration Statement
(including the exhibits thereto). In addition, I have examined, and have relied
upon as to matters of fact
<PAGE> 2
Hubbell Incorporated -2- January 9, 1997
upon, originals or copies, certified or otherwise identified to my
satisfaction, of such corporate records, agreements, documents and other
instruments and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such other
and further investigations, as I have deemed relevant and necessary as a basis
for the opinions hereinafter set forth.
In such examination, I have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, and assuming the effectiveness of the Registration
Statement under the Securities Act, I am of the opinion that the Shares, upon
consummation of the Merger, will be validly issued, fully paid and
nonassessable.
I am a member of the Bar of the State of Connecticut, and I do not
express any opinion herein concerning any law other than the law of the State
of Connecticut and the federal law of the United States.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
/s/ Richard W. Davies
---------------------------
Richard W. Davies, Esq.
General Counsel
<PAGE> 1
EXHIBIT 8.1
January 9, 1997
Re: Agreement and Plan of Merger, dated as of
November 13, 1996, as amended by Amendment No. 1 thereto dated
as of January 8, 1997, among Hubbell Incorporated,
FMC Acquisition Corporation and Fargo Mfg. Company, Inc.
Fargo Mfg. Company, Inc.
130 Salt Point Road
P.O. Box 2900
Poughkeepsie, New York 12603-1016
Ladies and Gentlemen:
You have requested our opinion with respect to certain United States
federal income tax consequences of the proposed transaction in which FMC
Acquisition Corporation ("Merger Sub"), which is a newly-formed wholly-owned
subsidiary of Hubbell Incorporated ("Parent"), will merge (the "Merger") with
and into Fargo Mfg. Company, Inc., ("Company"). All capitalized terms used but
not defined herein have the meanings ascribed to them in the Agreement and Plan
of Merger, dated as of November 13, 1996, as amended by Amendment No. 1 thereto
dated as of January 8, 1997, among Parent, Merger Sub and Company (the "Merger
Agreement").
In acting as counsel to Parent in connection with the Merger, we have,
in preparing our opinions, as hereinafter set forth, participated in the
preparation of the Merger Agreement and the preparation and filing with the
Securities and Exchange Commission of a Proxy Statement of Company and
Prospectus of Parent relating to the proposed Merger and to the shares of Class
B Common Stock to be issued to Company stockholders in the Merger Agreement
(the "Proxy Statement/Prospectus").
You have requested that we render the opinions set forth below. In
rendering such opinions, we have assumed with your consent (i) that the Merger
will be effected in accordance with the Merger Agreement, (ii) that at the time
of Closing we will receive (A) representation letters from Parent and Company
(forms of which are attached hereto as Exhibits A and B, respectively) and (B)
representation letters (a form of which is attached hereto as Exhibit C) from
Shareholders listed on Schedule 9.3(d) of the Merger Agreement who, in the
aggregate, own on (x) the date of the Merger Agreement and (y) the Closing Date
at least fifty percent of the issued and outstanding shares of Company Common
Stock and that such representation letters of Parent, Company and the
Shareholders will be true and accurate as of the date thereof and will remain
true and accurate as of the Effective Time unless we are otherwise notified in
writing and (iii) that the amount of cash required to be paid by Hubbell or
Merger Sub to Dissenting Shares and pursuant to Sections 2.2(v)(B) and 3.1(f)
of the Merger Agreement does not exceed ten percent of the aggregate
consideration to be paid by Hubbell or Merger Sub to the Shareholders pursuant
to the Merger Agreement. We have examined the documents referred to above and
the originals, or copies certified or otherwise identified to our satisfaction,
of such records, documents, certificates or other instruments and made such
other inquiries as in our judgment are necessary or appropriate to enable us to
render the opinions set forth below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
If the Merger is effected on a factual basis different from that
contemplated in the Merger Agreement, the opinions expressed herein may be
inapplicable. Our opinions are based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, administrative interpretations, and
judicial precedents as of the date hereof. If there is any subsequent change in
the applicable law or regulations, or if there are subsequently any new
administrative or judicial interpretations of the law or regulations, the
opinions expressed herein may become inapplicable.
Subject to the foregoing and to the qualifications and limitations set
forth herein, and assuming that the Merger is consummated in accordance with
the Merger Agreement (and exhibits thereto) and the Delaware General
Corporation Law and as described in the Proxy Statement/Prospectus, we are of
the opinion that (i) for United States federal income tax purposes the Merger
will be treated as a reorganization within the meaning of section 368(a) of the
Code, and Parent, Merger Sub and Company will each be a party to that
reorganization within the meaning of section 368(b) of the Code and (ii) the
statements made in the Proxy Statement/Prospectus under the caption "The
Merger -- Certain Federal Income Tax Consequences," insofar as they purport to
constitute summaries of matters of United States federal tax law and
regulations or legal conclusions with respect thereto, constitute accurate
summaries of the matters described therein in all material respects.
We express our opinions herein only as to those matters specifically
set forth above and no opinion should be inferred as to the tax consequences of
the Merger under any state, local or foreign law, or with respect to other
areas of United States federal taxation. We are members of the Bar of the State
of New York, and we do not express any opinion herein concerning any law other
than the federal law of the United States. This opinion letter is rendered to
you in connection with the above described transaction. This opinion letter may
not be relied upon by you for any other purpose, or relied upon by, or
furnished to, any other person, firm or corporation without our prior written
consent. This opinion has been delivered to you as required under Section
9.3(d) of the Merger Agreement and we hereby consent to the filing of this
opinion as an exhibit to the Registration Statement on Form S-4 filed by Parent
in connection with the Class B Common Stock to be issued in the Merger and to
the use of our name under the caption "The "Merger -- Certain Federal Income
Tax Consequences" and "Legal Opinions" in the Proxy Statement/Prospectus.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE> 2
EXHIBIT A TO EXHIBIT 8.1
[Hubbell Incorporated Letterhead]
[ ], 1997
Re: Agreement and Plan of Merger,
dated as of November 13, 1996, as amended by Amendment
No. 1 thereto dated as of January 8, 1997, among
Hubbell Incorporated, FMC Acquisition Corporation and
Fargo Mfg. Company, Inc.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Ladies and Gentlemen:
The following facts and representations are being furnished to you in
connection with the preparation of your tax opinion to be provided in connection
with the Merger. We understand that you will be relying on such facts and
representations in delivering your opinion and that the delivery of such opinion
is a condition precedent to the Merger. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed to them in the Agreement and
Plan of Merger, dated as of November 13, 1996, as amended by Amendment No. 1
thereto dated as of January 8, 1997, among Hubbell Incorporated ("Parent"), FMC
Acquisition Corporation ("Merger Sub") and Fargo Mfg. Company, Inc., ("Company")
(the "Merger Agreement").
Assuming the Merger will be effected in accordance with the Merger
Agreement, the following facts and representations are true and accurate as of
the date hereof and you may assume that such facts and representations remain
true and accurate as of the Effective Time unless we otherwise notify you in
writing:
1. The fair market value of the Class B Common Stock and other
consideration received by each holder of Company Common Stock will be
approximately equal to the fair market value of the Company Common Stock
surrendered in the Merger.
2. Following the Merger, Company will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets and at least 90 percent of the fair market value of
Merger Sub's net assets and at least 70 percent of the fair market value of
Merger Sub's gross assets held immediately prior to the Merger. For purposes of
this representation, amounts paid by Company or Merger Sub to dissenters,
amounts paid by Company or Merger Sub to holders of Company Common Stock who
receive cash or other property, amounts used by Company or Merger Sub to pay
reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) made by Company, will be included as assets of
Company or Merger Sub, respectively, held immediately prior to the Merger.
3. Prior to the Merger, Parent will be in control of Merger Sub within
the meaning of Section 368(c) of the Code.
4. Parent has no plan or intention to cause Company after the Merger
to issue additional shares of its stock that would result in Parent losing
control of Company within the meaning of Section 368(c) of the Code.
5. Parent has no plan or intention ot reacquire any of the Class B
Common Stock issued in the Merger.
6. Parent has no plan or intention to liquidate Company; to merge
Company with or into another corporation; to sell or otherwise dispose of
Company Common Stock except for transfers of Company Common Stock to
corporations controlled by Parent; or to cause Company to sell or otherwise
dispose of any of its assets or any of the assets acquired from Merger Sub,
except for dispositions made in the ordinary course of business or transfers
described in Section 368(a)(2)(C) of the Code.
7. Merger Sub will have no liabilities assumed by Company, and will
not transfer to Company any assets subject to liabilities, in the Merger.
8. Following the Merger, Company will continue its historic business
or use a significant portion of its historic business assets in a business.
9. Parent, Merger Sub and Company will pay their respective expenses,
if any, incurred in connection with the Merger.
10. There is no intercoporate indebtedness existing between Parent and
Company or between Merger Sub and Company that was issued, acquired or has been
settled at a discount.
11. Parent does not own, nor has it owned during the past five years,
any Company Common Stock.
12. Neither Parent nor Merger Sub are investment companies as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
13. The payment of cash in lieu of fractional shares of Class B Common
Stock was not separately bargained for consideration, and is being made for
the sole purpose of saving Parent the expense and inconvenience of issuing
fractional shares. The fractional share interests of each holder of Company
Common Stock will be aggregated, and no holder of Company Common Stock will
receive cash in an amount greater than the value of one full share of Class B
Common Stock.
14. None of the compensation received by any stockholder-employee of
Company pursuant to any employment, consulting or similar arrangement is or
will be separate consideration for, or allocable to, any of his/her Company
Common Stock. None of the shares of Class B Common Stock received by any
stockholder-employee of Company pursuant to the Merger is nor will be separate
consideration for, or allocable to, any such employment, consulting or similar
arrangement. The compensation paid to any stockholder-employee of Company
pursuant to any such employment, consulting or similar arrangement is or will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
Parent acknowledges that your tax opinion may not accurately describe
the effects of the Merger if any of the foregoing facts or representations are
inaccurate.
Very truly yours,
Hubbell Incorporated
_______________________________
By:
Title:
<PAGE> 3
Exhibit B to Exhibit 8.1
-------------------------
[Fargo Mfg. Company Letterhead]
[ ], 1997
Re: Agreement and Plan of Merger,
dated as of November 13, 1996, as amended by Amendment
No. 1 thereto dated as of January 8, 1997, among
Hubbell Incorporated, FMC Acquisition
Corporation and Fargo Mfg. Company, Inc.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Ladies and Gentlemen:
The following facts and representations are being furnished to you in
connection with the preparation of your tax opinion to be provided in
connection with the Merger. We understand that you will be relying on such
facts and representations in delivering your opinion and that the delivery of
such opionion is a condition precedent to the Merger. Unless otherwise defined
herein, capitalized terms shall have the meanings ascribed to them in the
Agreement and Plan of Merger, dated as of November 13, 1996, as amended by
Amendment No. 1 thereto dated as of January 8, 1997, among Hubbell
Incorporated ("Parent"), FMC Acquisition Corporation ("Merger Sub") and Fargo
Mfg. Company, Inc., ("Company") (the "Merger Agreement").
Assuming the Merger will be effected in accordance with the Merger
Agreement, the following facts and representations are true and accurate as of
the date hereof and you may assume that such facts and representations remain
true and accurate as of the Effective Time unless we otherwise notify you in
writing:
1. The fair market value of the Class B Common Stock and other
consideration received by each holder of Company Common Stock will be
approximately equal to the fair market value of the Company Common Stock
surrendered in the Merger.
2. There is no plan or intention by the holders of Company Common
Stock who own (either directly or through attribution) 1 percent or more of the
Company Common Stock, and to the best of the knowledge of the management of
Company there is no plan or intention on the part of the remaining holders of
Company Common Stock to sell, exchange, or otherwise dispose of a number of
shares of Class B Common Stock received in the Merger that would, in the
aggregate, reduce the ownership of Class B Common Stock by the former holders
of the Company Common Stock to a number of shares having a value, as of the
Effective Time, of less than fifty percent (50%) of the value of all the
formerly outstanding stock of Company as of the same date. For purposes of this
representation, shares of Company Common Stock exchanged for cash or other
property (including any amounts received pursuant to section 2.2(v)(B) of the
Merger Agreement), surrendered by dissenters or exchanged for cash in lieu of
fractional share interests of Class B Common Stock will be treated as
outstanding Company Common Stock on the date of the Merger. Moreover, shares of
Company Common Stock and Class B Common Stock held by holders of Company Common
Stock and otherwise sold, redeemed or disposed of prior or subsequent to and as
part of the overall plan of Merger will be considered in making this
representation. Except as set forth in Exhibit A to this letter, to the best of
the knowledge of the management of the Company, there are no holders of Company
Common Stock who own 1 percent or more of the Company Common Stock on the date
hereof.
3. Following the Merger, Company will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets held immediately prior to the Merger. For puposes of
this representation, amounts paid by Company to dissenters, amounts paid by
Company to holders of Company Common Stock who receive cash or other prpoperty,
amounts used by Company to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by Company, will be
included as assets of Company held immediately prior to the Merger.
4. Company and the holders of Company Common Stock will pay their
respective expenses, if any, incurred in connection with the Merger.
5. There is no intercorporate indebtedness existing between Parent and
Company or between Merger Sub and Company that was issued, acquired or has been
settled at a discount.
6. In the Merger, Company Common Stock representing control of Company
(as defined in Section 368(c) of the Code) will be exchanged solely for voting
stock of Parent. For purposes of this representation, Company Common Stock
exchanged for cash or other property originating with Parent (including, but
not limited to, amounts paid to dissenters, amounts paid in lieu of fractional
share interests of Class B Common Stock and amounts paid pursuant to section
2.2(v)(B) of the Merger Agreement) will be treated as outstanding Company
Common Stock at the time of the Merger.
7. Company does not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any person could
acquire stock in Company that, if exercised or converted, would affect Parent's
acquisition or retention of control of Company within the meaning of Section
368(c) of the Code.
8. Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. The fair market value of the assets of the Company exceeds the sum
of its liabilities, plus the amount of liabilities, if any, to which the assets
are subject.
10. Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
11. The payment of cash in lieu of fractional shares of Class B Common
Stock was not separately bargained for consideration, and is being made for
the sole purpose of saving Parent the expense and inconvenience of issuing
fractional shares.
12. None of the compensation received by any stockholder-employee of
Company pursuant to any employment, consulting or similar arrangement is or
will be separate consideration for, or allocable to, any of his/her Company
Common Stock. None of the shares of Class B Common Stock received by any
stockholder-employee of Company pursuant to the Merger is or will be separate
consideration for, or allocable to, any such employment, consulting or similar
arrangement. The compensation paid to any stockholder-employee of Company
pursuant to any such employment, consulting or similar arrangement is or will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
Company acknowledges that your tax opinion may not accurately describe
the effects of the Merger if any of the foregoing facts or representations are
inaccurate.
Very truly yours,
Fargo Mfg. Company, Inc.
--------------------------
By:
Title:
<PAGE> 4
Exhibit A to Exhibit B to Exhibit 8.1
Approximate Percentage of
Name Company Common Stock
- ---- --------------------
<PAGE> 5
Exhibit C to Exhibit 8.1
------------------------
[Shareholder Representation Letter]
[ ], 1997
Re: Agreement and Plan of Merger, dated as of November 13, 1996,
as amended by Amendment No. 1 thereto dated as of January 8, 1997,
among Hubbell Incorporated, FMC Acquisition Corporation
and Fargo Mfg. Company, Inc.
----------------------------
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Ladies and Gentlemen:
The following representation is being furnished to you in connection
with the preparation of your tax opinion to be provided in connection with the
Merger. I understand that you will be relying on such representation in
delivering your opinion and that the delivery of such opinion is a condition
precedent to the Merger. Unless otherwise defined herein, capitalized terms
shall have the meanings ascribed to them in the Agreement and Plan of Merger,
dated as of November 13, 1996, as amended by Amendment No. 1 thereto dated as
of January 8, 1997, among Hubbell Incorporated ("Parent"), FMC Acquisition
Corporation ("Merger Sub") and Fargo Mfg. Company, Inc., ("Company") (the
"Merger Agreement").
Assuming the Merger will be effected in accordance with the Merger
Agreement, the following representation is true and accurate as of the date
hereof and you may assume that such representation remains true and accurate as
of the Effective Time unless I otherwise notify you in writing:
1. I have no plan or intention to, directly or indirectly, offer, sell,
transfer, tender, pledge or encumber (except on a recourse basis),
assign or otherwise dispose of, or enter into any contract, option
or other arrangement with respect to, or consent to the sale,
transfer, pledge or encumbrance (except on a recourse basis),
assignment or other disposition of ________ shares of the Class B
Common Stock that I receive in the Merger (the "Restricted
Shares").1/; and
2. The shares of Company Common Stock in exchange for which I received
the Restricted Shares were not acquired in contemplation of the
Merger and have been held by me at all times since November 13,
1996.
I acknowledge that your tax opinion may not accurately describe the
effects of the Merger if the foregoing representation is inaccurate.
Very truly yours,
[Shareholder]
_________________________________
___________
1/ The amount of Restricted Shares to which each shareholder representation
letter pertains will be determined so that, in the aggregate, the number of
Restricted Shares have a value equal to or greater than fifty percent of the
value of all the formerly outstanding shares of Company Common Stock.
<PAGE> 1
Exhibit 21
HUBBELL INCORPORATED
AND SUBSIDIARIES
LISTING OF SIGNIFICANT SUBSIDIARIES
(as of December 31, 1996)
State or Other Percentage
Jurisdiction of Owned By
Incorporation Registrant
-------------- ----------
Anderson Electrical Products, Inc. Delaware 100%
The Kerite Company Connecticut 100%
Gleason Reel Corp. Delaware 100%
Hubbell, Ltd. England 100%
Hubbell Canada Inc. Canada 100%
Killark Electric Manufacturing Company Missouri 100%
The Ohio Brass Company Delaware 100%
Raco Inc. Delaware 100%
Hubbell Industrial Controls, Inc. Delaware 100%
Hubbell Plastics, Inc. Delaware 100%
Harvey Hubbell Caribe, Inc. Delaware 100%
Hubbell Lighting, Inc. Connecticut 100%
Pulse Communications, Inc. Virginia 100%
Bryant Electric, Inc. Delaware 100%
Harvey Hubbell S.E. Asia (Pte.) Ltd. Singapore 100%
Hipotronics, Inc. Delaware 100%
E. M. Wiegmann & Company, Inc. Missouri 100%
Wepawaug Development Corp. Connecticut 100%
A. B. Chance Industries, Inc. Delaware 100%
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Hubbell
Incorporated of our report dated January 18, 1996, except as to the subsequent
event note on page 42 which is as of January 31, 1996 which appears on page 18
of Hubbell Incorporated's 1995 Annual Report on Form 10-K for the year ended
December 31, 1995. We also consent to the incorporation by reference of our
report on the Financial Statement Schedules, which appears on page 50 of such
Annual Report on Form 10-K. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Stamford, Connecticut
January 9, 1997
<PAGE> 1
EXHIBIT 23.4
[D'ARCANGELO & CO., LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report, which is dated February 2, 1996 except for Note 11 as to
which the date is November 1, 1996, in the Registration Statement on Form S-4
and related Prospectus of Hubbell Incorporated for the registration of
1,833,334 shares of its Class B Common Stock.
/s/ D'Arcangelo & Co., LLP
D'Arcangelo & Co., LLP
January 6, 1997
Poughkeepsie, New York
<PAGE> 1
EXHIBIT 99.1
[FORM OF PROXY CARD]
FARGO MFG. COMPANY, INC.
PROXY FOR SPECIAL MEETING
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned, revoking all previous proxies, hereby appoints Amos
Berry and Susan Gallagher, or either of them (the "Proxies"), as attorneys and
proxies, each with full power of substitution and all of the powers which the
undersigned would possess, if present in person, to represent and vote, as
designated on the reverse side of this proxy, all of the shares of Common Stock
of Fargo Mfg. Company, Inc. (the "Company") registered in the name of the
undersigned at the Special Meeting of Shareholders of the Company to be held on
February 14, 1997, and at any adjournment thereof.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS DIRECTED BY THIS PROXY.
IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE SUCH SHARES FOR THE APPROVAL AND
ADOPTION OF THE AGREEMENT AND PLAN OF MERGER DESCRIBED IN PROPOSAL 1.
(IMPORTANT - TO BE MARKED, SIGNED AND DATED ON REVERSE SIDE)
<PAGE> 2
|X| PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
1. Proposal to approve and adopt the Agreement and Plan of Merger, dated as of
November 13, 1996, as amended, among Hubbell Incorporated ("Hubbell"), FMC
Acquisition Corporation, a direct, wholly owned subsidiary of Hubbell
("Merger Sub"), and the Company, with respect to the merger of Merger Sub
with and into the Company as provided for in the Merger Agreement, with the
Company surviving as a direct, wholly owned subsidiary of Hubbell.
| | FOR | | AGAINST | | ABSTAIN
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
___________________________________________
Signature of Shareholder
___________________________________________
Signature if held jointly
Date:_______________________________, 1997
NOTE: WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES
AND OTHER FIDUCIARIES SHOULD SO
INDICATE WHEN SIGNING. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT, OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON. THIS PROXY MAY BE MAILED,
POSTAGE-FREE, IN THE ENCLOSED
ENVELOPE.
<PAGE> 1
EXHIBIT 99.2
RESTATED CERTIFICATE OF INCORPORATION
OF
FARGO MFG. COMPANY, INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
FIRST: The name of the corporation is Fargo Mfg. Company, Inc.
SECOND: The certificate of incorporation of the corporation was filed
by the Department of State on January 3, 1946.
THIRD: The certificate of incorporation of the corporation, as
heretofore amended, is hereby changed to effect changes authorized by the
Business Corporation Law, to wit:
to change the post office address to which the secretary of state
shall mail a copy of any process against the corporation served upon
him to 130 Salt Point Road, P.O. Box 2900, Poughkeepsie, New York
12603-1016.
To accomplish the foregoing change, the paragraph of the certificate of
incorporation of the corporation, relating to the location of the corporation's
office and service of process, is hereby amended to read as set forth in
Paragraph "SIXTH" of the certificate of incorporation of the corporation, as
hereinafter restated.
Paragraphs "NINTH", "TENTH" and "ELEVENTH" of the certificate of
incorporation of the corporation are hereby removed, and the remaining
provisions of the certificate of incorporation of the corporation are hereby
renumbered as hereinafter provided.
FOURTH: The restatement of the certificate of incorporation of the
corporation herein provided for was authorized by the Board of Directors of the
corporation pursuant to Sections 803(b) and 807(a) of the Business Corporation
Law.
FIFTH: The text of the certificate of incorporation of the corporation
is hereby restated as further amended or changed herein to read as follows:
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
FARGO MFG. COMPANY, INC.
WE, the undersigned for the purpose of forming a corporation pursuant
to Article Four of the Business Corporation Law of the State of New York do
hereby certify:
FIRST: The name of the proposed corporation shall be FARGO MFG.
COMPANY, INC.
SECOND: The purposes for which it is to be formed are: To manufacture,
assemble, process, design, improve, construct, buy, sell and deal in articles
made of wood, metal, plastic or rubber.
To acquire by purchase or otherwise domestic and foreign patent, patent
rights, copyrights, licenses to manufacture or sell, or both, patented or
copyrighted things or articles and to sell, lease or license the use of the same
or otherwise dispose of the same.
To acquire, hold, own, use and sell copyrights or similar rights, and
to own, deal in and deal with any and all materials or articles of any kind in
connection with any of the above said objects.
To make, manufacture, purchase or otherwise acquire, hold, own, manage,
sell, pledge, transfer, export, import, trade and deal in, goods, wares and
merchandise of every character and description which may lawfully be made,
bought, sold or dealt in by corporation organized under Article Two of the Stock
Corporation Law of the State of New York.
To borrow money for its corporate purposes, to make, accept, indorse,
execute, issue and deliver bonds, debentures, notes, bill of exchange or other
obligations; to mortgage, pledge and hypothecate any stocks, notes, bonds or
other evidences of indebtedness, and any other property held by it; and to lend
money, with or without collateral security.
To carry on any business or operation deemed advantageous which is
incidental or accessory to any of the powers or purposes hereinbefore specified;
to acquire, use, undertake, manage and dispose of contracts, properties and
rights of all kinds, including the assets, franchises, business, good will and
liabilities of corporations, associations, firms and individuals, and to give
guaranties in respect thereto; and generally, to do anything that
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<PAGE> 3
a natural person might lawfully do or cause to be done in connection with any of
the said things.
To take, buy, exchange, lease or otherwise acquire real estate and any
interest or right therein, and to hold, own, operate, control, maintain, manage
and develop the same and to construct, maintain, alter, manage and control
directly or through ownership of stock in any other corporation any and all
kinds of buildings, stores, offices, warehouses, mills, shops, factories,
machinery and plants, and any and all other structures and erections which may
at any time be necessary, useful or advantageous for the purposes of this
corporation.
To sell, assign and transfer, convey, lease, or otherwise alienate or
dispose of, and to mortgage or otherwise encumber the lands, buildings, real and
personal property of the corporation wherever situated, and any and all legal
and equitable interests therein.
To purchase, sell, lease, manufacture, deal in and deal with such kinds
of goods, wares and merchandise, and such kinds of personal property, including
patents and patent rights, chattels, easements, privileges and franchises as may
lawfully be purchased, sold, produced or dealt in by corporations organized
under Article Two of the Stock Corporation Law of the State of New York.
To purchase, acquire, hold and dispose of the stocks, bonds, and other
evidences of indebtedness of any corporation domestic or foreign and to issue in
exchange therefor its stocks, bonds, or other obligations and to exercise in
respect thereof all the rights, powers and privileges of individual owners,
including the right to vote thereon; and to aid in any manner permitted by law
any corporation of which any bonds or other securities or evidences of
indebtedness or stocks are held by this corporation, and to do any acts or
things designed to protect, preserve, improve or enhance the value of any such
bonds or other securities or evidences of indebtedness or stock.
This corporation shall have the power to conduct its business in all
its branches in the State of New York, or any other State, territory or
possession of the United States and in all foreign countries and generally to do
all acts and things and to exercise all the powers, now or hereafter authorized
by law, necessary to carry on the business of this corporation or to promote any
of the objects for which this corporation is formed.
To purchase, hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital except as otherwise permitted by law; and provided further that shares
of its own
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<PAGE> 4
capital stock belonging to it shall not be voted upon directly or indirectly.
The foregoing clauses shall be construed both as objects and powers,
and it is hereby expressly provided that the foregoing enumeration of specific
powers shall not be held to limit or restrict in any manner the powers of this
corporation.
THIRD: The aggregate number of shares which the Corporation shall have
authority to issue is Three Hundred Sixty Thousand (360,000) shares of common
stock, without par value, all of the same class.
FOURTH: The office of the corporation shall be located in the Town of
Poughkeepsie, County of Dutchess, New York.
FIFTH: The duration of the corporation shall be perpetual.
SIXTH: The Secretary of State is designated as the agent of the
corporation upon whom process in any action or proceeding against the
corporation may be served, and the address to which the Secretary of State shall
mail a copy of process in any section or proceeding against the corporation
which may be served upon him, is 130 Salt Point Road, P.0. Box 2900,
Poughkeepsie, New York 12603-1016.
SEVENTH: The Corporation shall indemnify and reimburse directors and
officers of the Corporation to the full extent permitted by Section 722 (and
related sections) of the Business Corporation Law of the State of New York,
including any amendment to or substitutions for such sections which may be made
from time to time. The personal liability of every director of the Corporation
shall be limited to the full extent permitted by Section 402(b) of the Business
Corporation Law of the State of New York, including any amendment to or
substitution for such section which may be made from time to time.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained herein have been examined by us and are true and correct.
Dated: April 19, 1996.
/s/ Richard C. Raible
--------------------------------
Richard C. Raible, President
/s/ Keryl M. Briggs
-------------------------------
Keryl M. Briggs, Secretary
-4-
<PAGE> 1
EXHIBIT 99.3
BY-LAWS
OF
FARGO MFG. COMPANY, INC.
(Amended and Restated as of March 15, 1996)
ARTICLE I
Meetings of Shareholders
Section 1. Place of Meetings, etc. Except as otherwise provided in
these By-laws, all meetings of the shareholders shall be held at such dates,
times and places, within or without the State of New York, as shall be
determined by the Board or the Chairman and as shall be stated in the notice of
the meeting or in waivers of notice thereof. If the place of any meeting is not
so fixed, it shall be held at the principal office of the Corporation in the
State of New York.
Section 2. Annual Meeting. The annual meeting of shareholders for the
election of directors and the transaction of such other business as may be
properly brought before the meeting shall be held on such date after the close
of the Corporation's fiscal year, as the Board may from time to time determine,
provided that such date shall not be later than the 31st of March.
Section 3. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, may be called by a majority of the Board, and shall be
called by the Chairman upon the written request of holders of record of 15% of
the outstanding shares of the Corporation's Common Stock. Any such request shall
state the date, time, place and purpose or purposes of the proposed meeting. The
only business which may be transacted at a special meeting is that relating to
the purpose or purposes set forth in the notice or waivers of notice thereof.
-1-
<PAGE> 2
Section 4. Notice of Meetings. Except as otherwise required or
permitted by law, whenever the shareholders are required or permitted to take
any action at a meeting, written notice thereof shall be given, stating the
place, date and time of the meeting and, unless it is the annual meeting, by or
at whose direction it is being issued. Notice of a special meeting also shall
state the purpose or purposes for which the meeting is called. A copy of the
notice of any meeting shall be delivered personally or shall be mailed, not
fewer than ten (10) nor more than fifty (50) days before the date of the
meeting, to each shareholder of record entitled to vote at the meeting.
Section 5. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, at all meetings of shareholders the holders of a
majority of the shares of the Corporation issued and outstanding and entitled to
vote thereat shall be present in person or by proxy in order to constitute a
quorum for the transaction of business.
Section 6. Voting. Except as otherwise provided by the Certificate of
Incorporation, at any meeting of the shareholders every shareholder of record
having the right to vote thereat shall be entitled to one vote for every share
of stock standing in his name as of the record date and entitling him to so
vote. A shareholder may vote in person or by proxy. Except as otherwise provided
by law or by the Certificate of Incorporation, any corporate action to be taken
by a vote of the shareholders, other than the election of directors, shall be
authorized by a majority of the votes cast at a meeting by the shareholders
present in person or by proxy and entitled to vote thereon. Directors shall be
elected as provided in Section 2 of Article II of these By-laws. Any question or
any election at a meeting of the shareholders may be decided by voice vote
unless the presiding officer shall order that voting be by ballot or unless
otherwise provided in the Certificate of Incorporation or required by statute.
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<PAGE> 3
Section 7. List of Shareholders. A list of shareholders as of the
record date, certified by the Secretary or by the transfer agent for the
Corporation, shall be produced at any meeting of the shareholders upon the
request of any shareholder made at or prior to the meeting.
Section 8. Inspectors. The Board, in advance of any meeting of
shareholders, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not appointed or if any of them shall
fail to appear or act, the chairman of the meeting may, and on the request of
any shareholder entitled to vote thereat shall, appoint one or more inspectors.
Each inspector, before discharging his duties, shall take and sign an oath
faithfully to execute the duties of inspector at the meeting with strict
impartiality and according to the best of his ability. Each inspector shall
perform his duties in accordance with the laws of the state of New York.
Section 9. Conduct of Meetings. At each meeting of the shareholders,
the Chairman, if any, or, if none or in the Chairman's absence, the
Vice-Chairman or the President, shall act as chairman of the meeting. The
Secretary or any other person appointed by the chairman of the meeting shall act
as Secretary of the meeting and shall keep the minutes thereof. The order of
business at all meetings of the shareholders shall be as determined by the
chairman of the meeting.
Section 10. Consent of Shareholders in Lieu of Meeting. Any action
which may be taken by vote of shareholders may be taken without a meeting on
written consent, setting forth the action so taken, signed, in person or by
proxy, by the holders of all outstanding shares entitled to vote thereon.
ARTICLE II
Board of Directors
Section 1. Number of Board Members. The Board shall consist of not less
than four (4) nor more than nineteen (19) directors. The number of directors may
be reduced or increased
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<PAGE> 4
(within the foregoing limits) from time to time by action of a majority of the
entire Board, but no decrease may shorten the term of an incumbent director.
Section 2. Term. Except as otherwise provided by law or by these
By-laws, the directors shall be elected at the annual meeting of the
shareholders and the persons receiving a plurality of the votes cast shall be so
elected. Subject to his earlier death, resignation or removal, each director
shall hold office until the next annual meeting of the shareholders and until
his successor shall have been duly elected and shall have qualified.
Section 3. Removal. Any director may be removed with or without cause
by vote of the shareholders.
Section 4. Resignations. Any director may resign at any time by giving
written notice of his resignation to the Corporation. A resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt, and,
unless otherwise specified therein, the acceptance of a resignation shall not be
necessary to make it effective.
Section 5. Vacancies. Except as otherwise required by law, any vacancy
in the Board, whether arising from death, resignation, removal (with or without
cause), an increase in the number of directors or any other cause, shall be
filled by vote of a majority of the remaining directors. Subject to his earlier
death, resignation or removal, each director so elected shall hold office until
the next annual meeting of the shareholders and until his successor shall have
been duly elected and shall have qualified.
Section 6. Meetings. Regular meetings of the Board shall be held
immediately following the annual meeting of shareholders and in the same place,
and on such other dates and at such places and times as the Board determines.
Special meetings of the Board may be called by the Chairman and shall be called
by the Chairman, upon the written request of one or more of the directors.
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<PAGE> 5
Any such request shall state the date, time, place and purpose or purposes of
the proposed meeting.
Section 7. Notice of Meetings. Notice of meetings of directors (other
than the regular meeting immediately following the annual meeting of
shareholders for which notice need not be given) shall be given not later than
24 hours before the meeting is scheduled to commence by the Chairman and shall
state the place, date and time of the meeting. Notice of each meeting may be
given to a director by hand or given to a director orally (whether by telephone
or in person) or shall be mailed or telegraphed to each director at his
residence or usual place of business. If notice of less than 48 hours is given,
it shall not be mailed.
Section 8. Quorum. Except as otherwise provided by law or in these
By-laws, at all meetings of the Board a majority of the entire Board shall
constitute a quorum for the transaction of business, and the vote of a majority
of the directors present at the time of the vote, if a quorum is present, shall
be the act of the Board. A majority of the directors present, whether or not a
quorum is present, may adjourn any meeting to another place, date and time.
Section 9. Conduct of Meetings. At each meeting of the Board, the
Chairman, if any, or if none or in his absence, the Vice-Chairman or President,
shall act as chairman of the meeting. The Secretary or any other person
appointed by the chairman of the meeting shall act as Secretary of the meeting
and keep the minutes thereof. The order of business at all meetings of the Board
shall be as determined by the chairman of the meeting.
Section 10. Consent of Directors in Lieu of Meeting. Any action
required or permitted to be taken by the Board or any committee thereof may be
taken without a meeting if all of the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action.
Section 11. Other meetings. Any one or more members of the Board or any
committee thereof may participate in a meeting of
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<PAGE> 6
the board or such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
Section 12. Committees of the Board. The Board, by resolution adopted
by a majority of the entire Board from time to time, may designate from among
its members an executive committee and/or other committees, each consisting of
three (3) or more directors. Each such committee, to the extent provided in the
resolution(s) establishing it, but subject to limitations on the authority of
committees imposed by the laws of the State of New York, shall have and may
exercise all the authority of the Board with respect to all matters. The
designation of any committee and the delegation of authority thereto shall not
alone relieve any director of his duty to the Corporation.
Section 13. Chairman; Vice-Chairman of the Board. The directors may
elect one of their members to be Chairman (or Vice Chairman) of the Board. Such
persons shall be subject to control of and may be removed by the Board of
Directors and shall perform such duties as may from time to time be assigned to
them by the Board, but such persons shall not by such designation(s) be
considered officers of the Corporation. References in these By-laws to the
"Chairman" are references to the Chairman of the Board.
ARTICLE III
Officers
Section 1. Executive Officers, etc. The executive officers of the
Corporation shall be a President, a Secretary and a Treasurer, each of whom
shall be elected by the Board. The Board also may elect or appoint one or more
Vice Presidents (any of whom may be designated as Executive Vice Presidents or
otherwise), and any other officers as it deems necessary or desirable, each of
whom shall have such powers and duties as the Board determines.
Section 2. Powers and Duties. The President shall be the chief
executive officer of the Corporation. In the absence of
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<PAGE> 7
the President, a Vice President appointed by the President or, if the President
fails to make such appointment, by the Board, shall perform all the duties of
the President. The officers and agents of the Corporation shall each have such
powers and authority and shall perform such duties in the management of the
business, properties, and affairs of the Corporation as generally pertain to
their respective offices, as well as such powers and authority and such duties
as from time to time may be prescribed by the Board of Directors.
Section 3. Election: Removal; Vacancies. Subject to his
earlier death, resignation or removal as hereinafter provided, each officer
shall hold his office until the next annual meeting of the Board and until his
successor shall have been duly elected or appointed and shall have qualified.
The authority of any officer to act as such may be suspended for cause at any
time by the Board. Any officer may be removed with or without cause at any time
by the Board. Vacancies shall be filled by the Board.
Section 4. Resignations. Any officer may resign at any time by
giving written notice of his resignation to the Corporation. A resignation shall
take effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt, and,
unless otherwise specified therein, the acceptance of a resignation shall not be
necessary to make it effective.
ARTICLE TV
Provisions Relating to Stock Certificates and Shareholders
Section 1. Certificates. Certificates for the Corporation's
capital stock shall be in such form as required by law and as approved by the
Board. The Corporation may issue a new certificate for shares in place of any
certificate theretofore issued by it, alleged to have been lost, mutilated,
stolen or destroyed, and the Board may require the owner of such lost,
mutilated, stolen or destroyed certificate, or his legal representatives, to
make an affidavit of that fact and to give the
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Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation on account of the alleged loss,
mutilation, theft or destruction of any such certificate or the issuance of any
such new certificate.
Section 2. Transfers of Shares. Transfers of shares shall be
registered on the books of the Corporation maintained for that purpose upon
presentation of stock certificates appropriately indorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, and upon the
satisfaction of any other conditions precedent to transfer as are contained in
any agreement to which the Corporation is a party.
Section 3. Record Date. For the purpose of determining the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or to express consent to or dissent from any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board may fix, in advance, a record date, which
shall not be fewer than ten (10) nor more than fifty (50) days before the
date of any such meeting, nor more than fifty (50) days prior to any other
action.
ARTICLE V
General Provisions
Section 1. Dividends, etc. To the extent permitted by law, the
Board shall have full power and discretion, subject to the provisions of the
Certificate of Incorporation and the terms of any other corporate document or
instrument binding upon the Corporation, to determine what, if any, dividends
or distributions shall be declared and paid or made.
Section 2. Seal. The Corporation's seal shall be in such form as is
required by law and as shall be approved by the Board.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board.
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ARTICLE VI
Amendments
The holders of shares entitled at the time to vote for the election of
directors shall have power to adopt, amend or repeal the By-laws of the
Corporation by vote of not less than a majority of such shares, and the Board of
Directors by vote of not less than a majority of the entire Board shall have
power equal in all respects to that of the shareholders to adopt, amend, or
repeal the By-laws. However, any By-law adopted by the Board may be amended or
repealed by vote of the holders of a majority of the shares entitled at the
time to vote for the election of directors. If any By-law regulating an
impending election of directors is adopted, amended, or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of
shareholders for the election of directors the By-law or By-laws so adopted,
amended, or repealed, together with a concise statement of the changes made.
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