<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 1-2958
HUBBELL INCORPORATED
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
CONNECTICUT 06-0397030
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
584 Derby Milford Road, Orange, Connecticut 06477-4024
(Address of principal executive offices) (Zip Code)
</TABLE>
(203) 799-4100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
Title of each Class Name of Exchange on which Registered
<S> <C>
Class A Common - $.01 par value (20 votes per share) New York Stock Exchange
Class B Common - $.01 par value (1 vote per share) New York Stock Exchange
Series A Junior Participating Preferred Stock Purchase Rights New York Stock Exchange
Series B Junior Participating Preferred Stock Purchase Rights New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The approximate aggregate market value of the voting stock held by
non-affiliates of the Registrant as of March 10, 2000 was $1,304,729,000. The
number of shares outstanding of the Class A Common Stock and Class B Common
Stock as of March 10, 2000 was 10,170,900 and 53,196,400, respectively.
Documents Incorporated by Reference
The definitive proxy statement for the proposed annual meeting of
stockholders to be held on May 1, 2000, filed with the Commission on March 27,
2000 - Part III.
- ---------------
* Calculated by excluding all shares held by executive Officers and
Directors of Registrant and the Roche Trust, the Hubbell Trust and the
Harvey Hubbell Foundation, without conceding that all such persons are
"affiliates" of registrant for purpose of the Federal Securities Laws.
<PAGE> 2
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PART I
Item 1. Business
Hubbell Incorporated (herein referred to as "Hubbell", the "Company" or the
"registrant", which references shall include its divisions and subsidiaries as
the context may require) was founded as a proprietorship in 1888, and was
incorporated in Connecticut in 1905. For over a century, Hubbell has
manufactured and sold high quality electrical and electronic products for a
broad range of commercial, industrial, telecommunications, and utility
applications. Since 1961, Hubbell has expanded its operations into other areas
of the electrical industry and related fields. Hubbell products are now
manufactured or assembled by twenty-three divisions and subsidiaries in the
United States, Canada, Switzerland, Puerto Rico, Mexico, and the United Kingdom.
Hubbell also participates in joint ventures with partners in South America,
Germany and Taiwan, and maintains sales offices in Mexico, Hong Kong, the
People's Republic of China, Southeast Asia, South Korea, and the Middle East.
Hubbell is primarily engaged in the engineering, manufacture and sale of
electrical and electronic products. For management reporting and control, the
businesses are divided into four operating segments: Electrical, Power,
Telecommunications and Other, as described below. Reference is made to page 41
for information relative to Industry Segment and Geographic Area Information for
1999, 1998 and 1997.
In February, 1999, Hubbell acquired from Chardon Electrical Components, Inc.
certain of its assets related to the manufacture of high voltage underground
cable accessory products and technology related to the electric utility market
to augment its Power Segments products portfolio. The acquired product line
includes loadbreak and deadbreak products, splices and terminations.
In July, 1999, Hubbell acquired from Trench Switzerland AG the assets related to
the Haefely high voltage test and instrumentation business. Based in Basil,
Switzerland, its product lines include high voltage test and measurement and
instrumentation equipment and electromagnetic test equipment used in compliance
testing of telecommunications and Local Area Network Systems (LANS).
In September, 1999, Hubbell sold to The Marmon Corporation the stock of The
Kerite Company subsidiary. Kerite sells premium quality, high performance,
insulated power and cable for application in critical circuits of electric
utilities and major industrials, as well as accessories for splicing and
terminating cable ends.
In February, 2000, Hubbell announced that it had entered into an agreement with
ECI Telecom Ltd. to sell to ECI Telecom its digital subscriber line
communications equipment business ("WavePacer(R)"), and certain related
intellectual property. WavePacer(R)xDSL solutions enable delivery of high speed
network access for data-intensive applications such as telecommuting, branch
office connectivity, and remote internet access; and WavePacer(R) remote access
multiplexers provide asymmetric digital subscriber designated line (ADSL) series
to remote locations and are capable of interfacing with any vendor's equipment
in the central office. Completion of the sale transaction is subject to closing
conditions, including regulatory clearances, and is expected to close by March
31, 2000.
ELECTRICAL SEGMENT
The Electrical Segment is comprised of businesses that primarily sell through
distributors, lighting showrooms, and home centers and represents stock items
including standard and special application wiring device products, lighting
fixtures, fittings, switches and outlet boxes, enclosures and wire management
products. The products are typically used in industrial, commercial, and
institutional facilities by electrical contractors, maintenance personnel and
electricians.
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Electrical Wiring Devices
Hubbell manufactures and sells highly durable and reliable wiring devices which
are supplied principally to industrial, commercial and institutional customers.
These products, comprising several thousand catalog items, include plugs,
dimmers, receptacles (including surge suppressor units), wall outlets,
connectors, adapters, floor boxes, switches, occupancy sensors (including
passive infrared and ultrasonic motion sensing devices), lampholders, control
switches, outlet strips, pendants, weatherproof enclosures, and wallplates.
Pin-and-sleeve devices built to IEC (International Electrotechnical Commission)
and new UL standards have incorporated improved water and dust-tight
construction and impact resistance. Switch and receptacle wall plates feature
proprietary thermoplastic materials offering high impact resistance and
durability, and are available in a variety of colors and styles. Delivery
systems, including nonmetallic surface raceway systems for power, data and
communications distribution, provide efficiency and flexibility in both initial
installations and remodeling applications. Hubbell also sells wiring devices for
use in certain environments requiring specialized products, such as multi-pin
connectors and cable assemblies for the connection of sensors in materials
processing, modular cable protection systems, and portable power distribution
units with ground fault protection for commercial and industrial applications.
Some of the portable power distribution units contain a number of outlets to
which electrically-powered equipment may be simultaneously connected for ground
fault protection. Circuit Guard(R) ground fault units protect the user from
electrical shock by interrupting the circuit to which they are connected when a
fault to ground is detected. Hubbell also manufactures TVSS, transient voltage
surge suppression devices, under the Spikeshield(R) trademark, which are used to
protect electronic equipment such as personal computers and other supersensitive
electronic equipment. Hubbell also manufactures and/or sells components designed
for use in local area networks (LANs) and other telecommunications applications
supporting high speed data and voice signals. Primary products include work
station modular jacks, faceplates, surface housings, modular furniture plates,
cross connect patch panels, connectorized cable assemblies, punch down blocks,
free standing racks, enclosures and other products used for installation,
testing and distribution of LANs. These products support unshielded, shielded
and fiber optic media types and typically service commercial, institutional and
industrial applications.
Lighting Fixtures
Hubbell manufactures and sells lighting fixtures and accessories for both indoor
and outdoor applications with three basic classifications of products: Outdoor,
Industrial and Commercial. The Outdoor products include poles, MiniLiter(R) and
Sterner's Infranor(TM) floodlights, Devine's Geometric 2000 series fixtures and
Magnusquare(R) II Architectural fixtures which are used to illuminate service
stations, outdoor display signs, parking lots, security areas, shopping centers
and similar areas, and Sportsliter(R) fixtures which are used to illuminate
athletic and recreational fields. In addition, a line of Lightscaper(R)
decorative outdoor fixtures is sold for use in landscaping applications such as
pools, gardens and walkways. The Industrial products include Superbay(R) 2.0,
Controlux(R) 2.0, Superwatt(R), The Detector(TM), and Kemlux(R) fixtures used to
illuminate factories, work spaces, and similar areas, including specialty
requirements such as paint rooms, clean rooms and warehouses. The Commercial
products include HID, fluorescent, Pathfinder(R) emergency and exit, and
recessed and track fixtures which are used for offices, schools, hospitals,
retail stores, and similar applications. The fixtures use high-intensity
discharge lamps, such as mercury-vapor, high-pressure sodium, and metal-halide
lamps, as well as quartz, fluorescent and incandescent lamps, all of which are
purchased from other sources. Hubbell also manufactures a broad range of track
and down lighting fixtures and accessories sold under the Marco(R) trademark, a
line of life safety products, fixtures and related components which are used in
specialized safety applications, and a line of IEC lighting fixtures designed
for hazardous, hostile and corrosive applications sold under the ChalmitTM
trademark.
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Outlet Boxes, Enclosures and Fittings
Hubbell manufactures and/or sells: (a) under the Raco(R) trademark, steel and
plastic boxes used at outlets, switch locations and junction points; (b) a broad
line of metallic and plastic fittings, including rigid plastic conduit fittings,
EMT (thinwall) fittings and metal conduit fittings; (c) a family of nonmetallic
electrical products including conduit tubing and Bell Outdoor(R) outlet boxes;
(d) a variety of electrical boxes, covers, combination devices, lampholders and
lever switches manufactured under the Bell(R) trademark, with an emphasis on
weather-resistant types suitable for outdoor applications; and (e) under the
Wiegmann(R) trademark, a full-line of fabricated steel enclosures such as
rainproof and dust-tight panels, consoles and cabinets, wireway and electronic
enclosures and a line of non-metallic enclosures. Wiegmann products are designed
to enclose and protect electrical conductors, terminations, instruments, power
distribution and control equipment.
Holding Devices
Hubbell manufactures and sells a line of Kellems(R) and Bryant(R) mesh grips
used to pull, support and relieve stress in elongated items such as cables,
electrical cords, hoses and conduits, a line of Gotcha(R) cord connectors
designed to prevent electrical conductors from pulling away from electrical
terminals to which the conductors are attached, and wire management products
including non-metallic surface raceway products for wiring and flexible conduit
for OEM applications. The grips are sold under the Dua Pull(R) and Kellems(R)
trademarks and range in size and strength to accommodate differing application
needs. These products, which are designed to tighten around the gripped items,
are sold to industrial, commercial, utility and microwave tower markets.
Hazardous and Hostile Location Application Products
Hubbell's special application products, which are sold under the Killark(R)
trademark, include weatherproof and hazardous location products suitable for
standard, explosion-proof and other hostile area applications, include conduit
raceway fittings, Disconex(R) switches, enclosures, HostileLite(R) lighting
fixtures, electrical distribution equipment, standard and custom electrical
motor controls, junction boxes, plugs and receptacles. Hazardous locations are
those areas where a potential for explosion and fire exists due to the presence
of flammable gasses, fibers, vapors, dust or other easily ignitable materials
and include such applications as refineries, petro-chemical plants, grain
elevators and material processing areas.
Sales and Distribution of Electrical Segment Products
A majority of Hubbell's Electrical Segment products are stock items and are sold
through electrical distributors, home centers, some retail and hardware outlets,
and lighting showrooms. Special application products are sold primarily through
wholesale distributors to contractors, industrial customers and original
equipment manufacturers. Voice and data signal processing equipment products are
represented worldwide through a direct sales organization and by selected,
independent telecommunications representatives, primarily sold through datacom,
electrical and catalogue distribution channels. Hubbell maintains a sales and
marketing organization to assist potential users with the application of certain
products to their specific requirements, and maintains regional offices in the
United States which work with architects, engineers, industrial designers,
original equipment manufacturers and electrical contractors for the design of
electrical systems to meet the specific requirements of industrial,
institutional, and commercial users. Hubbell is also represented by sales
representatives for its lighting fixtures and electrical wiring devices product
lines. The sales of Electrical Segment products accounted for approximately 59%
of Hubbell's total revenue in 1999, 57% in 1998 and 56% in 1997.
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POWER SEGMENT
Power Segment operations are comprised of a wide variety of construction,
switching and protection products, hot line tools, grounding equipment, cover
ups, fittings and fasteners, cable accessories, insulators, arresters, cutouts,
sectionalizers, connectors and compression tools for the building and
maintenance of overhead and underground power and telephone lines, as well as
applications in the industrial, construction and pipeline industries.
Electrical Transmission and Distribution Products
Hubbell manufactures and sells, under the Ohio Brass(R) registered trademark, a
complete line of polymer insulators and high-voltage surge arresters used in the
construction of electrical transmission and distribution lines and substations.
The primary focus in this product area are the Hi*Lite(R), Hi*Lite(R)XL and
Veri*Lite(TM) polymer insulator lines and the polymer housed metal-oxide
varistor surge arrester lines. Electrical transmission products, primarily
Hi*Lite(R)XL suspension insulators, are used in the expansion and upgrading of
electrical transmission capability.
Hubbell manufactures and sells, under the Chance(R) trademark, products used in
the electrical transmission and distribution and telecommunications industries,
including overhead and underground electrical apparatus such as (a) distribution
switches (to control and route the flow of power through electrical lines); (b)
cutouts, sectionalizers, and fuses (to protect against faults and over-current
conditions on power distribution systems); and (c) fiberglass insulation systems
(pole framing and conductor insulation).
Hubbell manufactures and sells, under the Anderson(TM) trademark, electrical
connectors and associated hardware including pole line, line and tower hardware,
compression crimping tools and accessories, mechanical and compression
connectors, suspension clamps, terminals, supports, couplers, and tees for
utility distribution and transmission systems, substations, and industry.
Hubbell manufactures and sells, under the Fargo(R) trademark, electrical power
distribution and transmission products, principally for the utility industry.
Distribution products include electrical connectors, automatic line splices,
dead ends, hot line taps, formed wire products, wildlife protectors, and various
associated products. Transmission products include splices, sleeves, connectors,
dead ends, spacers and dampers. Products also consist 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.
Hubbell manufactures and sells, under the Hubbell(R) trademark, cable
accessories including loadbreak switching technology, deadbreak products, cable
splicing and cable termination products, as well as automation-ready overhead
switches and aluminum transformer equipment mounts.
Construction Materials/Tools
Hubbell manufactures and sells, under the Chance(R) trademark, (a) line
construction materials including power-installed helical earth anchors and
power-installed foundations to secure overhead power and communications line
poles, and guy and support towers, streetlight poles and pipelines (Helical
Pier(R) Foundation Systems are used to screw foundations to support homes and
buildings, and earth anchors are used in a variety of farm, home and
construction projects including tie-back applications); (b) pole line hardware,
including galvanized steel fixtures and extruded plastic materials used in
overhead and underground line construction and connectors, and other accessories
for making high voltage connections and linkages; (c) construction tools and
accessories for building overhead and underground power and telephone lines; and
(d) hot-line tools (all types of tools mounted on insulated poles used to
construct and maintain energized high voltage lines) and other safety equipment.
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Sales and Distribution of Power Segment Products
Sales of high-voltage products are made through distributors and directly to
users such as electric utilities, mining operations, industrial firms, and
engineering and construction firms. While Hubbell believes its sales in this
area are not materially dependent upon any customer or group of customers, a
decrease in purchases by public utilities does affect this category. The sale of
Power Segment products accounted for approximately 28% of Hubbell's total
revenue in 1999, 1998 and in 1997.
TELECOMMUNICATIONS SEGMENT
Telecommunication operations design and manufacture voice and data signal
processing components primarily used by telephone and telecommunications
companies and consists of channel cards and banks for loop and trunk carriers,
and racks and cabinets.
Hubbell designs, manufactures and sells, under the Pulsecom(R) trademark, a
broad range of communications access solutions for use by the telephone and
telecommunications industry. These solutions encompass a comprehensive product
line ranging from POTS to ISDN to high-speed internet and broadband access
solutions designed to assist Network Access Providers (NAPs) in offering their
customers quality and cost-effective voice and data services. Hubbell's (a)
WavePacer(TM)xDSL solutions enable delivery of high speed network access for
data-intensive applications such as telecommuting, branch office connectivity,
and remote internet access; (b) remote access multiplexers provide asymetric
digital subscriber line (ADSL) services to remote locations and are capable of
interfacing with any vendor's equipment in the central office; (c) DLC solutions
to multiplex traffic from many users over a single link using existing copper or
fiber facilities providing easier and more cost-effective service to new users
since fewer and smaller cables are required for providing expanded service; and
(d) D4 solutions to provide delivery of integrated voice and data services.
Customers of these product lines include various telecommunications companies,
the Regional Bell Operating Companies (RBOCs), independent telephone companies,
competitive local exchange carriers, companies with private networks, and
internet service providers. These products are sold primarily by direct sales to
customers in the United States and in foreign countries through sales personnel
and sales representatives. Telecommunication Segment products accounted for
approximately 7% of Hubbell's total revenue in 1999 and 10% in 1998 and in 1997.
As noted on page 2, Hubbell announced that it had entered into an agreement with
ECI Telecom Ltd. to sell to ECI Telecom to sell its Wave Pacer(R) Digital
Subscriber Line.
OTHER INDUSTRY SEGMENT
The Other Industry Segment consists of operations that design and manufacture
test and measurement equipment, high voltage power supplies and variable
transformers, industrial controls including motor speed controls, pendant-type
push-button stations, overhead crane controls, and Gleason(R) electric cable and
hose reels. Products are sold primarily to steel mills, industrial complexes,
seaports, and cable and electronic equipment manufacturers.
High Voltage Test and Measurement Equipment
Hubbell manufactures and sells, under the Hipotronics(R), Haefely Test(R) and
Tettex(R) trademarks, a broad line of high voltage test and measurement systems
to test materials and equipment used in the generation, transmission and
distribution of electricity, and high voltage power supplies and electromagnetic
compliance equipment for use in the electrical and electronic industries.
Principal products include AC/DC hipot testers and megohmmeters, cable fault
location systems, oil testers and DC hipots, impulse generators, digital
measurement systems and tan-delta bridges, AC series resonant and corona
detection systems, DC test sets and power supplies, variable transformers,
voltage regulators, and motor and transformer test sets.
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Industrial Controls
Hubbell manufactures and sells a variety of heavy-duty electrical and radio
control products which have broad application in the control of industrial
equipment and processes. These products range from standard and specialized
industrial control components to combinations of components that control
industrial manufacturing processes. Standard products include motor speed
controls, pendant-type push-button stations, power and grounding resistors and
overhead crane controls. Also manufactured and sold are a line of transfer
switches used to direct electrical supply from alternate sources, and a line of
fire pump control products used in fire control systems.
Hubbell manufactures, under the Gleason(R) trademark, industrial-quality cable
management products including electric cable and hose reels, protective steel
and nylon cable tracks (cable and hose carriers), cable festooning hardware,
highly engineered container crane reels and festoons for the international
market, slip rings, and a line of ergonomic tool support systems (workstation
accessories and components such as balancers, retractors, torque reels, tool
supports, boom and jib kits).
Hubbell's Other Industry Segment products are sold through electrical
distributors and sales representatives to contractors, industrial customers and
original equipment manufacturers, with the exception of high voltage test and
measurement equipment which is sold primarily by direct sales to customers in
the United States and in foreign countries through its sales engineers and
independent sales representatives.
The sale of products in the Other Industry Segment accounted for approximately
6% of Hubbell's total revenue in 1999, 5% in 1998 and 6% in 1997.
INFORMATION APPLICABLE TO ALL GENERAL CATEGORIES
International Operations
Hubbell Ltd. in the United Kingdom manufactures and/or markets fuse switches,
contactors, selected wiring device products, premise wiring products,
specialized control gear, chart recording products, and industrial control
products used in motor control applications such as fuse switches and
contactors.
Hubbell Canada Inc. and Hubbell de Mexico, S.A. de C.V. manufacture and/or
market wiring devices, premise wiring products, lighting fixtures, grips,
fittings, non-metallic switches and outlet boxes, hazardous location products,
electrical transmission and distribution products and earth anchoring systems.
Industrial control products are sold in Canada through an independent sales
agent.
Harvey Hubbell S.E. Asia Pte. Ltd. markets wiring devices, lighting fixtures,
hazardous location products and electrical transmission and distribution
products.
Hubbell also manufactures lighting products, wiring devices, weatherproof outlet
boxes, fittings, and power products in Juarez, Mexico. Hubbell also has
interests in various other international operations such as joint ventures in
South America, Germany and Taiwan, and sales offices in Hong Kong, People's
Republic of China, Southeast Asia, South Korea and the Middle East.
The wiring devices sold by Hubbell's operations in the United Kingdom,
Singapore, Canada and Mexico are similar to those produced in the United States,
most of which are manufactured in the United States and Puerto Rico.
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As a percentage of total sales, international shipments from foreign
subsidiaries were 7% in 1999 and 6% in 1998 and 1997, with the Canadian market
representing approximately 55% of the total.
Raw Materials
Principal raw materials used in the manufacture of Hubbell products include
steel, brass, copper, aluminum, bronze, plastics, phenolics, bone fiber,
elastomers and petrochemicals. Hubbell also purchases certain electrical and
electronic components, including solenoids, lighting ballasts, printed circuit
boards, integrated circuit chips and cord sets, from a number of suppliers.
Hubbell is not materially dependent upon any one supplier for raw materials used
in the manufacture of its products and equipment and, at the present time, raw
materials and components essential to its operation are in adequate supply.
Patents
Hubbell has approximately 852 active United States and foreign patents covering
many of its products, which expire at various times. While Hubbell deems these
patents to be of value, it does not consider its business to be dependent upon
patent protection. Hubbell licenses under patents owned by others, as may be
needed, and grants licenses under certain of its patents.
Working Capital
Hubbell maintains sufficient inventory to enable it to provide a high level of
service to its customers. The inventory levels, payment terms and return
policies are in accord with the general practices of the electrical products
industry and standard business procedures.
Backlog
Backlog of orders believed to be firm at December 31, 1999 and 1998 were
approximately $117.3 million and $85.5 million, respectively. Most of the
backlog is expected to be shipped in the current year. Although this backlog is
important, the majority of Hubbell's revenues result from sales of inventoried
products or products that have short periods of manufacture.
Competition
Hubbell experiences substantial competition in all categories of its business,
but does not compete with the same companies in all of its product categories.
The number and size of competitors vary considerably depending on the product
line. Hubbell cannot specify with exactitude the number of competitors in each
product category or their relative market position. However, some of its
competitors are larger companies with substantial financial and other
resources. Hubbell considers product performance, reliability, quality and
technological innovation as important factors relevant to all areas of its
business and considers its reputation as a manufacturer of quality products to
be an important factor in its business. In addition, product price and other
factors can affect Hubbell's ability to compete.
Environment
Compliance with Federal, State and local provisions regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, is not believed to have any material effect upon the financial or
competitive position of Hubbell.
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Employees
As of December 31, 1999, Hubbell had approximately 10,190 full-time employees,
including salaried and hourly personnel. Approximately 44% of Hubbell's United
States employees are represented by 15 labor unions. Hubbell considers its labor
relations to be satisfactory.
Item 2. Properties
A list of Hubbell's material manufacturing facilities, classified by segment, is
included on Page 42 hereof under Industry Segment and Geographical Area
Information.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which Hubbell or any of its
subsidiaries is a party or of which any of their property is the subject, other
than ordinary and routine litigation incident to their business.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
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PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's Class A and Class B common stocks are principally traded on the
New York Stock Exchange under the symbols "HUBA" and "HUBB". The following
tables provide information on market prices, dividends declared and number of
common shareholders.
<TABLE>
<CAPTION>
Market Prices (Dollars Per Share) Common A Common B
- --------------------------------- -------- --------
Years Ended December 31, High Low High Low
- ------------------------ ---- --- ---- ---
<S> <C> <C> <C> <C>
1999-First quarter 39 5/8 33 3/8 41 3/4 34 7/16
1999-Second quarter 45 3/4 36 1/2 49 3/16 39 1/4
1999-Third quarter 42 33 5/8 45 3/16 31 5/8
1999-Fourth quarter 33 1/2 25 3/4 32 26 1/4
1998-First quarter 48 1/2 44 3/16 51 15/16 46 15/16
1998-Second quarter 48 13/16 43 5/8 52 3/16 41 5/8
1998-Third quarter 44 5/8 35 3/8 44 13/16 35 1/2
1998-Fourth quarter 42 15/16 34 1/4 42 3/4 34 9/16
</TABLE>
<TABLE>
<CAPTION>
Dividends Declared (Cents Per Share) Common A Common B
- ------------------------------------ -------- --------
Years Ended December 31, 1999 1998 1999 1998
- ------------------------ ---- ---- ---- -----
<S> <C> <C> <C> <C>
First quarter 31 29 31 29
Second quarter 32 31 32 31
Third quarter 32 31 32 31
Fourth quarter 32 31 32 31
</TABLE>
<TABLE>
<CAPTION>
Number of Common Shareholders
- -----------------------------
At December 31, 1999 1998 1997 1996 1995
- --------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Class A 1,090 1,176 1,242 1,285 1,308
Class B 4,805 5,153 5,339 5,359 5,521
</TABLE>
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Item 6. Selected Financial Data
The following summary should be read in conjunction with the consolidated
financial statements and notes contained herein (dollars and shares in millions,
except per share amounts).
<TABLE>
<CAPTION>
OPERATIONS, YEARS ENDED DECEMBER 31, 1999 1998 1997
- ------------------------------------ ---------- --------- --------
<S> <C> <C> <C>
Net sales $ 1,451.8 1,424.6 1,378.8
Gross profit $ 409.0 438.2 430.4
Special charge --- --- (52.0)(1)
Operating income $ 194.4 226.1 171.6
Provision for income taxes $ 51.2 61.1 49.8
Net income $ 145.8 169.4 130.3(1)
Return on sales 10.0% 11.9% 9.5%
Return on common shareholders' average equity 17.2% 20.3% 16.6%
Return on average total capital (2) 16.1% 18.9% 15.5%
Earnings per share:
Basic $ 2.24 2.56 1.94(1)
Diluted $ 2.21 2.50 1.89(1)
Cash dividends declared per common share $ 1.27 1.22 1.13
Average number of common shares
outstanding - (diluted) 65.9 67.7 68.8
Additions to property, plant, and equipment $ 53.7 86.1 60.6
Depreciation and amortization $ 52.8 48.1 43.2
FINANCIAL POSITION, AT YEAR-END
- -------------------------------
Working capital $ 209.4 219.8 339.9
Current ratio 1.6 to 1 1.6 to 1 2.3 to 1
Property, plant and equipment (net) $ 308.9 310.1 251.9
Total assets $ 1,399.2 1,390.4 1,284.8
Long-term debt $ 99.6 99.6 99.5
Common shareholders' equity:
Total $ 855.8 840.6 830.3
Per share $ 13.00 12.42 12.06
NUMBER OF EMPLOYEES, AT YEAR-END 10,190 10,562 8,801
- --------------------------------
<CAPTION>
OPERATIONS, YEARS ENDED DECEMBER 31, 1996 1995
- ------------------------------------ ---- ----
<S> <C> <C>
Net sales 1,297.4 1,143.1
Gross profit 392.3 339.9
Special charge --- ---
Operating income 197.5 165.0
Provision for income taxes 57.8 45.1
Net income 141.5 121.9
Return on sales 10.9% 10.7%
Return on common shareholders' average equity 20.1% 19.1%
Return on average total capital (2) 18.4% 18.5%
Earnings per share:
Basic 2.15 1.85
Diluted 2.10 1.83
Cash dividends declared per common share 1.02 .92
Average number of common shares
outstanding - (diluted) 67.2 66.7
Additions to property, plant, and equipment 39.1 38.2
Depreciation and amortization 39.3 36.2
FINANCIAL POSITION, AT YEAR-END
- -------------------------------
Working capital 335.8 305.2
Current ratio 2.3 to 1 2.6 to 1
Property, plant and equipment (net) 217.9 204.2
Total assets 1,185.4 1,057.2
Long-term debt 99.5 102.1
Common shareholders' equity:
Total 743.1 667.3
Per share 11.05 10.00
NUMBER OF EMPLOYEES, AT YEAR-END 8,178 7,410
- --------------------------------
</TABLE>
(1) In the fourth quarter of 1997, the Company recorded a special charge of
$52.0 million which reduced net income by $32.2 million or $0.47 per
share. Excluding the special charge, net earnings from operations would
have been $162.5 million or $2.36 per share-diluted.
(2) Calculated as net income before interest expense divided by average total
capital.
<PAGE> 12
Page 12
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The Company's business segment reporting was changed in 1998 to reflect the
internal reporting and management control structure in accordance with the
requirements of Financial Accounting Standard No. 131. Previously, the Company
reported segments based on product groupings. Accordingly, segment information
for 1997 has been reclassified to reflect the revised format.
1999 Compared to 1998
Consolidated net sales increased 2% on improved shipments of specification-grade
products in the Electrical Segment combined with acquisitions. Offsetting these
improvements was a decline in orders to telephone companies in the
Telecommunications Segment; increased price competition across all businesses
and the impact of the disposition of The Kerite Company in September. Operating
income declined 18%, excluding the gain on sale of Kerite, due to a downturn in
Telecommunications, underperformance in the Power Segment and erosion in
commercial products sales pricing.
Electrical Segment sales increased 7% on improved shipments of
specification-grade wiring and lighting products and the full year effect of the
1998 lighting business acquisitions, which contributed a majority of the
increase. Despite higher sales of higher margin specification-grade products and
a modest contribution from acquisitions, operating profits declined 3% due to
lower sales and margins in electrical commodity products; reduced demand from
petroleum industry customers for hazardous location products and start-up costs
of a new distribution center.
Power Segment sales increased 2% on higher shipments across most product lines
including construction products, tool & rod, arresters and apparatus. The 2%
year-over-year sales increase includes the negative volume effect of the
September disposition of The Kerite Company, partially offset by the February
purchase of Chardon Electrical Components. Operating income declined 20% due to
unanticipated delays and associated costs in implementing a complex series of
changes as described under the Company's previously announced streamlining
program. These changes include the relocation of production and distribution
facilities to lower cost sites, reorganization of the segment into a feeder
plant/centralized distribution structure and the implementation of integrated
business systems. The added costs of the delayed implementation of these
changes, consisting primarily of duplicate facility operating costs and low
productivity at new facilities, reduced profits substantially.
Telecommunications Segment sales and profits declined sharply due to the decline
in core product lines at Pulse Communications, Inc., and a high level of
development expenses associated with new Digital Subsriber Line (DSL) products.
Pulsecom's sales decline is due mainly to reduced expenditures by the Regional
Bell Operating Companies (RBOC's) beginning in the last four months of 1998. In
February 2000, the Company announced an agreement to sell its WavePacer Digital
Subscriber Line (DSL) assets to ECI Telecom Ltd. of Petah Tikva, Israel.
Completion of the transaction is subject to closing conditions, including
regulatory clearances. The transaction is expected to close by March 31, 2000,
at which point the Company will no longer absorb new product development costs
and associated operating costs for this business (a development stage company
with limited revenues) which on an annual basis total approximately $16 million.
Other Industry Segment sales were up 18% as a result of the July acquisition of
Haefely Test AG, a high voltage test and instrumentation business, from Trench
Switzerland AG. Excluding Haefely, segment sales declined slightly as favorable
year-over-year comparisons at the Hipotronics operation were more than offset by
continued low demand from customers in basic industries such as steel and
petrochemicals. Operating income increased 15% due to improved efficiencies and
effective cost control.
<PAGE> 13
Page 13
Gain on sale of business relates to the third quarter sale of The Kerite
Company, a manufacturer of power cable previously included in the Power Segment.
Investment income declined due to a decline in investable funds resulting from a
continuation of the stock repurchase program, acquisitions, additions to
property, plant and equipment, and overall lower earnings. The increase in
interest expense reflects the higher level of commercial paper outstanding
during the year. The effective tax rate was 26.0% in 1999 versus 26.5% in 1998.
The decrease in the consolidated effective tax rate reflects an overall higher
level of tax benefits from Puerto Rican operations.
Other income, net has increased principally as a result of first-half insurance
recoveries of $3.3 million in connection with prior year damage sustained from
Hurricane Georges and benefits received in connection with corporate-owned life
insurance.
Net income and diluted earnings per share declined in response to the segment
operating issues noted above, offset by the sale of Kerite and a 1.8 million
reduction in average diluted shares outstanding (see Notes to Consolidated
Financial Statements - Earnings Per Share). In 1999, the Company adopted
Statement of Financial Accounting Standard ("SFAS") 86, "Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed," which
requires capitalization of certain costs incurred in the development of software
other than internal-use software. Adoption of this statement resulted in the net
capitalization of $3.9 million of Research and Development Costs for the year in
the Telecommunications Segment which would have been otherwise expensed.
Capitalized Software, net of amortization, is reported in Other Assets in the
Consolidated Balance Sheet.
1998 Compared to 1997
Consolidated net sales increased 3% on improved shipments combined with the
acquisition of nine product lines (six in 1998 and three in 1997). Offsetting
these improvements was a decline in orders from telephone companies to the
Telecommunications Segment; weak international markets combined with a strong
U.S. dollar; and increased price competition across all businesses. Net
operating income increased 1%, as productivity increases offset erosion in sales
pricing.
Electrical Segment sales increased 4% on improved shipments of generally all
products and the acquisition of lighting businesses which contributed one point
of the growth. Operating profits increased 1% as price competition offset the
benefit of higher sales combined with the impact of redeployment expenses
associated with the streamlining and consolidation of the fittings, switch and
outlet box businesses.
Power Segment sales increased 2% on higher sales of anchors, hot line tools,
line splices and taps and the inclusion of Fargo, which was acquired in
February, 1997, which was offset by lower sales in Canada and Asia. Operating
income increased 13% on improved efficiencies from the streamlining initiatives
and completing the assimilation of Fargo.
Telecommunications Segment sales were up 5% as the acquisition of Siescor
Technologies, Inc. more than offset the decline in sales of Pulse
Communications, Inc., due to the slow down in the Asian markets and reduced
expenditures by the Regional Bell Operating Companies (RBOC's) during the last
four months of 1998. New product development programs were continued at planned
expenditure rates which when combined with lower sales of existing products
resulted in a 24% decline in operating profits.
Other Industry Segment sales were down 1% as spending programs within the
domestic steel industry were reduced in the last months of the year combined
with lower worldwide demand for test and measurement equipment. Operating income
increased more than 20% on improved efficiencies from the streamlining and
reorganization initiatives which were completed in the first part of 1998.
<PAGE> 14
Page 14
Sales through the Company's international units declined by 3% reflecting the
weakened economies in Asia and Canada. Profitability was affected by unfavorable
translation rates due to the strengthening of the U.S. dollar against foreign
currencies and combined with the lower sales volume resulted in operating income
declining by 10%. Export sales from United States operations were down 16% from
1997 reflecting the weak economic conditions in Asia and South America combined
with the impact of a strong U.S. dollar. Total sales into the international
market were 11% in 1998 and 14% in 1997 and 1996. The Canadian market represents
approximately 60% of total international sales followed by Latin America, Europe
and Asia. The Company's sales to countries in Europe which are adopting the Euro
as their common currency are not significant and, therefore, the impact of any
changes in currency related software programs is deemed to be immaterial.
Investment income declined as investable funds were used by the Company to fund
the stock repurchase program and additions to property, plant and equipment. The
increase in interest expense reflects the higher level of commercial paper
outstanding during the year. The effective tax rate was 26.5% in 1998 versus
27.7% in 1997. The decrease in tax rate reflects a reduction in state and other
taxes.
LIQUIDITY AND CAPITAL RESOURCES
Management views liquidity on the basis of the Company's ability to meet
operational needs, fund additional investments, including acquisitions, and make
dividend payments to shareholders. At December 31, 1999, the Company's financial
condition remained strong with working capital of $209.4 million and a current
ratio of 1.6 to 1. Total borrowings at December 31, 1999, were $226.7 million,
26% of shareholders' equity. Compared to December 31, 1998, the debt to equity
ratio increased 1 percentage point from 25% primarily as a result of a higher
investment in working capital.
Operating cash flow improved steadily throughout the year. Despite lower
earnings, successful inventory reduction programs and a major second half
improvement in receivables management allowed the Company to record strong
full-year operating cash flow. Overall, receivables grew at a rate in excess of
the growth in sales due to longer collection periods for commodity products sold
in the Electrical Segment resulting from a highly competitive business
environment. The decrease in current liabilities is primarily due to a reduction
of accrued income taxes payable, accrued employee benefits and other accrued
liabilities. Other accrued liabilities declined mainly due to favorable
experience with respect to product liability claims. The decline in Other
Non-Current Liabilities is primarily due to spending against the 1997
streamlining plan and a pension curtailment and settlement. Deferred Income
Taxes increased due to restructuring spending and the pension curtailment and
settlement.
Cash flow from investing activities reflects the completion of two acquisitions
and one divestiture during the year. In the first quarter, Chardon Electrical
Components of Greenville, TN was acquired in the Power Segment. Chardon is a
manufacturer of high voltage cable accessory products and technology for use in
the electric utility market. In the third quarter, the company completed the
purchase of Haefely Test AG, a high voltage test and instrumentation business
acquired from Trench Switzerland AG. As a significant part of the Other Industry
Segment, Haefely produces high voltage test and measurement and a full line of
electromagnetic test equipment used in compliance testing of telecommunications
and Local Area Network (LAN) systems. Also in the third quarter, the Company
completed the sale of The Kerite Company, a manufacturer of power cable
previously included in the Power Segment. Cash proceeds in 1999 from this sale
amounted to $37.4 million, which together with $1.0 million received in 2000,
comprise the total sales price of $38.4 million. During 1998 the Company
acquired three lighting businesses which augmented the existing lighting
products portfolio. Devine Lighting of Kansas City, MO, Sterner Lighting based
in Eden Prairie, MN and Chalmit Lighting based in Glasgow, Scotland. To broaden
the Company's telecommunication product lines, Siescor Technologies, Inc. based
in Tulsa, OK was acquired. In addition, two minor product lines were acquired in
the first quarter of the year. All of the businesses were acquired for cash of
$38.3 million and $78.4 million in 1999 and 1998, respectively. The purchase
prices of these businesses were immaterial to the Company's financial position
at December 31, 1999 and 1998.
<PAGE> 15
Page 15
The lower level of expenditures for property, plant and equipment reflects
completion of the majority of the plant expansion undertaken in connection with
the 1997 streamlining plan. While no significant commitments have been made at
December 31, 1999, the Company anticipates that capital expenditures will
approximate $65.0 million annually during the next three years. This level of
expenditures reflects the historical capital investment pattern plus the normal
capital requirements of acquired businesses.
Financing activities in 1999 reflect the thirty-ninth consecutive annual
increase in the dividend rate and the repurchase of $57.4 million of the
Company's Class A and Class B common stock under the 1997 stock repurchase
program. Implementation of the program through open market purchases and
privately negotiated transactions began in mid-December, 1997. The $300 million
program, of which $148.8 million has been completed through December 31, 1999,
is expected to be completed by the end of 2000.
The Company believes that currently available cash, available borrowing
facilities, and its ability to increase its credit lines if needed, combined
with internally generated funds should be more than sufficient to fund capital
expenditures, share repurchases as well as any increase in working capital that
would be required to accommodate a higher level of business activity. The
Company actively seeks to expand by acquisition as well as through the growth of
its present businesses. While a significant acquisition may require additional
borrowings, the Company believes it would be able to obtain financing based on
its favorable historical earnings performance and strong financial position.
In early February 2000, the Company announced an agreement to sell its WavePacer
Digital Subscriber Line (DSL) assets to ECI Telecom Ltd. of Petah Tikva, Israel.
Completion of the transaction is subject to closing conditions, including
regulatory clearances. The transaction is expected to close by March 31, 2000.
The Company will continue to manufacture the core products of Pulse
Communications. The transaction, upon closing, is expected to add significantly
to the financial resources and cash flow of the Company.
Special Charge
In 1997 the Company recorded a special charge of $52.0 million ($32.2 million
after-tax or $.47 per share), comprised of $32.4 million of accrued
consolidation and streamlining costs, $9.5 million of facility asset
impairments, a $7.4 million goodwill asset impairment, and other current
employee and product line exit costs of $2.7 million. The $7.4 million asset
impairment write-down relates to the Other Industry Segment and consists of a
partial goodwill write-down determined in accordance with the Company's
accounting policy under SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."
The Company's consolidation and streamlining initiatives (the "Plan") were
undertaken to optimize the organization and cost structure primarily within the
Electrical and Power Segments. As part of the Plan, the Company has expanded its
manufacturing facilities by 335,000 square feet in Mexico, added an additional
63,000 square feet to its Canadian facility and constructed a 270,000 square
foot warehouse and distribution facility for its power products business.
Combined with the consolidation of other manufacturing and office facilities,
these programs will result in the relocation of approximately 2,000 jobs and
closure of 5 facilities. The table set forth below lists each of the five
manufacturing facilities and two buildings within the Electrical and Power
Segments covered by the Plan:
<PAGE> 16
Page 16
Facilities and Buildings Covered by the Plan
<TABLE>
<CAPTION>
Location Type Closing Date
- -------- ---- ------------
<S> <C> <C>
Clanton, AL Building Closure in First Quarter 2000
Madison, OH Facility Closed - Third Quarter 1998
Ontario, Canada Building Closed - Second Quarter 1998
Poughkeepsie, NY Facility Closure in stages commencing late 1999; complete in 2000
St. Louis, MO Facility Closure in stages commencing late 2000; complete in first half 2001
South Bend, IN Facility Closure in stages commencing late 2000; complete in first half 2001
Stonington, CT Facility Closed - First Quarter 1998
</TABLE>
After an approximate three to four year implementation period, the annual
savings and cost avoidance of the entire Plan should be as much as $25.0
million. As shown in the table below, the Company has expended $5.4 million in
1999, $6.8 million in 1998 and $.7 million in 1997.
The components of the initial reserve at December 31, 1997, amounts utilized in
1997 - 1999, and the accrued consolidation and streamlining reserve balances
remaining at December 31, 1999 were (in millions):
<TABLE>
<CAPTION>
Employee Asset Exit Accrued
Benefits Disposals Costs Charge
-------- --------- ----- ------
<S> <C> <C> <C> <C>
1997 Streamlining Charge $15.6 $10.7 $6.1 $32.4
Amounts Utilized in 1997 (.6) - (.1) (.7)
Amounts Utilized in 1998 (3.8) (2.4) (0.6) (6.8)
Amounts Utilized in 1999 (1.8) (0.8) (2.8) (5.4)
------ ------ ----- ------
Remaining Reserve $ 9.4 $ 7.5 $2.6 $19.5
====== ====== ===== =====
</TABLE>
Several major product line moves are scheduled to be completed during 2000 as
well as a plant closure. These actions are consistent with the timing
established in the Plan. However, as indicated in the Company's third quarter
report on Form 10Q, the Company was having significant difficulties in the
execution of certain of the action programs related to product moves contained
in the Plan. These difficulties resulted in lower second half 1999 earnings as
well as a number of management changes. The Company has increased resources on
these programs in an effort to complete product moves in process. In light of
the current difficulties and changes in management, the Company is undertaking a
review of the remaining programs to evaluate the remaining product moves, with
resolution expected in the first half of 2000.
Market Risks
In the operation of its business, the Company has market risk exposures to
foreign currency exchange rates, raw material prices and interest rates. Each of
these risks and the Company's strategies to manage the exposure is discussed
below.
<PAGE> 17
Page 17
The Company manufactures its products in the United States, Canada, Mexico,
Switzerland and the United Kingdom and sells products in those markets as well
as through sales offices in the Peoples Republic of China, Southeast Asia and
the Middle East. International sales were 12% of the Company's sales in 1999 and
11% in 1998. The Canadian market represents 55%, Mexico 19%, Switzerland 13%,
United Kingdom 10% and all other areas 3% of the total international sales. As
such, the Company's operating results could be affected by changes in foreign
currency exchange rates or weak economic conditions in the foreign markets in
which the Company distributes its products. To manage this exposure, the Company
closely monitors the working capital requirements of its international units and
to the extent possible will maintain their monetary assets in U.S. dollar
instruments. The Company views this exposure as not being material to its
operating results and, therefore, does not actively hedge its foreign currency
risk.
Raw materials used in the manufacture of the Company's products include steel,
brass, copper, aluminum, bronze, plastics, phenolics, bone fiber, elastomers and
petrochemicals as well as purchased electrical and electronic components. The
Company's financial results could be affected by the availability and changes in
prices of materials. The Company closely monitors its inventory requirements and
utilizes multiple suppliers. The Company is not materially dependent upon any
single material or supplier and does not actively hedge or use derivative
instruments in the management of its inventories.
The financial results of the Company are subject to risk from interest rate
fluctuations to the extent that there is a difference between the amount of the
Company's interest-earning assets and the amount of interest-bearing
liabilities. The principal objective of the Company's investment management
activities is to maximize net investment income while maintaining acceptable
levels of interest rate and liquidity risk and facilitating the funding needs of
the Company. As part of its investment management, the Company may use
derivative financial products such as interest rate hedges and interest rate
swaps. During the two years ended December 31, 1999 there were no material
derivative positions.
The following table presents information related to interest risk sensitive
instruments by maturity at December 31, 1999 (dollars in millions):
<TABLE>
<CAPTION>
Fair
Value
Assets 2000 2001 2002 2003 2004 Thereafter Total 12/31/99
- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale
Investments $ 2.2 $ 2.3 $ 3.4 $ 4.2 $ 1.1 $ --- $ 13.2 $ 13.2
Avg. Interest Rate 4.5% 4.4% 4.8% 4.9% 5.3% --- --- ---
Held-to-maturity
Investments $2.1 $ 0.6 $7.9 $ 2.9 $ 8.2 $171.7 $193.4 $186.2
Avg. Interest Rate 5.3% 5.9% 6.7% 5.9% 7.1% 6.3% --- ---
Liabilities
- -----------
Commercial Paper &
Short-Term Borrowings $(127.1) --- --- --- --- --- $(127.1) $(127.1)
Avg. Interest Rate 6.4% --- --- --- --- --- --- ---
Long-Term Debt --- --- --- --- --- $ (99.6) $ (99.6) $(96.9)
Avg. Interest Rate --- --- --- --- --- 6.7% --- ---
</TABLE>
As described in its Accounting Policies, the Company may use derivative
financial instruments only if they are matched with a specific asset or
liability. The Company does not speculate or use leverage when trading a
financial derivative product. There were no material derivative transactions
during 1999.
<PAGE> 18
Page 18
Inflation
In times of inflationary cost increases, the Company has historically been able
to maintain its profitability by improvements in operating methods and cost
recovery through price increases. In large measure, the reported operating
results have absorbed the effects of inflation since the Company's predominant
use of the LIFO method of inventory accounting generally has the effect of
charging operating results with costs (except for depreciation) that reflect
current price levels.
Impact of the Year 2000 Issue
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the Year 1900 rather than the Year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
During 1995, the Company established a task force which assessed the impact the
Year 2000 could have on the Company's operations and its relationship with
customers and vendors. The assessment resulted in development of appropriate
corrective action plans which addressed the following areas:
- - Internal business support systems (operations, engineering, accounting,
etc.)
- - Equipment and controls used in the factory and offices (presses, injection
molders, photocopiers, telephone systems, etc.)
- - Products sold that include electronic components
- - Third party suppliers for materials and supplies
- - Key service providers (banks, transportation companies, gas and electric
utilities, communication networks, etc.)
- - Customers' ability to place orders electronically with the Company
The corrective action plan for the Company's business support systems included
(a) identification of software and data processing equipment that was not Year
2000 ready, (b) the necessary modification, upgrade or replacement, (c) testing
and (d) establishing a timetable with estimated cost. The identification phase
was completed in 1996 and corrective activity was completed in the third quarter
1999.
The Company believes its efforts to address the Year 2000 Issue were successful
and there have been no problems associated with this risk. In total,
approximately $20 million was spent from 1995-1999 in connection with this
initiative. Despite these results, there can be no assurance that the Company's
customers' and suppliers' Year 2000 compliance efforts were successfully
completed. However, the Company has not experienced significant problems in this
regard.
Forward-Looking Statements
Certain statements made in the discussion and analysis of Results of Operations,
Liquidity and Capital Resources and Special Charge, and elsewhere in this
report, are forward-looking. In particular, the projected levels of capital
expenditures, project expenses and anticipated savings relating to the
consolidation, streamlining and reorganization programs and expected impact of
the announced sale of the WavePacer(R) Digital Subscriber Line (DSL) assets are
forward-looking and are based on the Company's reasonable current expectations.
Also, certain statements under the caption "Impact of the Year 2000 Issues" are
forward-looking. These statements may be identified by the use of
forward-looking words or phrases, such as "believe", "expect", "anticipate",
"should", "plan", "estimated",
<PAGE> 19
Page 19
"potential", "target", "goals", and "scheduled", among others. In connection
with the "safe harbor" provisions of the Private Securities Litigation Reform
Act of 1995, the Company is hereby identifying important factors that could
cause actual results to differ materially from those contained in the specified
statements.
The Company is currently implementing a program of consolidation, streamlining
and reorganization, primarily within its Power and Electrical Segments. The
risks and uncertainties that may affect the level of capital expenditures,
expenses and anticipated savings for this program include but are not limited
to: (1) timely delivery and installation of manufacturing equipment; (2)
training and hiring of new employees and retraining of existing employees for
different processes; (3) start-up of manufacturing and distribution processes in
a cost-effective and high quality manner without disruption; (4) maintaining
customer service levels during the transition; and (5) absence of labor disputes
during implementation of the program.
The Company has announced the signing of a contract to sell the assets of its
WavePacer Digital Subscriber Line (DSL) business, part of Pulse Communications,
Inc. Although the Company expects to close in 60 days or less, there is no
guarantee this transaction will close.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Hubbell Incorporated
In our opinion, the consolidated balance sheets and the related consolidated
statements of income, cash flows and changes in shareholders' equity listed in
the index on page 52 present fairly, in all material respects, the financial
position of Hubbell Incorporated and its subsidiaries (the "Company") at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Stamford, Connecticut
January 19, 2000
<PAGE> 20
Page 20
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31, 1999 1998 1997
- ------------------------ ---- ---- ----
<S> <C> <C> <C>
NET SALES $ 1,451.8 $ 1,424.6 $ 1,378.8
Cost of goods sold 1,042.8 986.4 948.4
--------- --------- ---------
GROSS PROFIT 409.0 438.2 430.4
Selling & administrative expenses 223.4 212.1 206.8
Special charge - - 52.0
Gain on sale of business (8.8) - -
--------- --------- ---------
OPERATING INCOME 194.4 226.1 171.6
--------- --------- ---------
OTHER INCOME (EXPENSE):
Investment income 13.4 16.7 18.3
Interest expense (15.9) (9.9) (7.3)
Other income (expense), net 5.1 (2.4) (2.5)
--------- --------- ---------
TOTAL OTHER INCOME, NET 2.6 4.4 8.5
--------- --------- ---------
INCOME BEFORE INCOME TAXES 197.0 230.5 180.1
Provision for income taxes 51.2 61.1 49.8
--------- --------- ---------
NET INCOME $ 145.8 $ 169.4 $ 130.3
========= ========= =========
EARNINGS PER SHARE:
Basic $ 2.24 $ 2.56 $ 1.94
Diluted $ 2.21 $ 2.50 $ 1.89
</TABLE>
See notes to consolidated financial statements.
<PAGE> 21
Page 21
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
<TABLE>
<CAPTION>
Years Ended December 31, 1999 1998 1997
- ------------------------ ---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $145.8 $169.4 $130.3
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of business (8.8) --- ---
Depreciation and amortization 52.8 48.1 43.2
Deferred income taxes 8.5 5.2 (11.5)
Special charge --- --- 52.0
Expenditures for streamlining, consolidation and restructuring (5.4) (6.8) (9.5)
Changes in assets and liabilities, net of the effects
of business acquisitions:
(Increase) Decrease in accounts receivable (15.6) (.2) (13.5)
(Increase) Decrease in inventories 25.0 (2.2) (27.2)
(Increase) Decrease in other current assets 2.7 10.4 (14.2)
Increase (Decrease) in current liabilities (23.4) (34.4) (3.5)
(Increase) Decrease in other, net (5.6) .9 2.5
------ ------ ------
Net cash provided by operating activities 176.0 190.4 148.6
------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current investments (37.4) (36.0) (54.6)
Receipt of principal, maturity and sale of
non-current investments 27.9 44.2 19.2
Sale of business 37.4 --- ---
Acquisition of businesses, net of cash acquired (38.3) (78.4) (21.1)
Additions to property, plant and equipment (53.7) (86.1) (60.6)
Other, net (2.1) (40.6) 14.8
------ ------ ------
Net cash used in investing activities (66.2) (196.9) (102.3)
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowing (repayment) 13.8 113.0 (18.4)
Payment of dividends (82.2) (79.7) (73.7)
Acquisition of treasury shares (57.4) (82.8) (21.8)
Exercise of stock options 9.9 10.9 8.4
------ ------ ------
Net cash used in financing activities (115.9) (38.6) (105.5)
------ ------ ------
INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS (6.1) (45.1) (59.2)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 30.1 75.2 134.4
------ ------ ------
End of period $ 24.0 $ 30.1 $ 75.2
====== ====== ======
</TABLE>
See notes to consolidated financial statements.
<PAGE> 22
Page 22
Hubbell Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
At December 31, (Dollars in millions)
<TABLE>
<CAPTION>
ASSETS 1999 1998
- ------ ---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $ 24.0 $ 30.1
Accounts receivable less allowances of $4.1
in 1999 and $5.7 in 1998 218.7 200.2
Inventories 278.5 300.9
Prepaid taxes 24.3 24.0
Other 7.3 9.6
-------- --------
Total current assets 552.8 564.8
-------- --------
PROPERTY, PLANT, AND EQUIPMENT, AT COST
Land 17.2 15.3
Buildings 157.4 125.6
Machinery and equipment 431.3 454.1
-------- --------
605.9 595.0
Less-accumulated depreciation 297.0 284.9
-------- --------
Net property plant and equipment 308.9 310.1
-------- --------
OTHER ASSETS
Investments 206.7 197.3
Purchase price in excess of net assets of
companies acquired, less accumulated amortization
of $37.2 in 1999 and $30.4 in 1998 241.3 232.6
Property held as investment 10.5 12.0
Other 79.0 73.6
-------- --------
Total other assets 537.5 515.5
-------- --------
$1,399.2 $1,390.4
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 23
Page 23
Hubbell Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
At December 31, (Dollars in millions)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998
- ------------------------------------ ---- ----
<S> <C> <C>
CURRENT LIABILITIES
Commercial paper and other borrowings $ 127.1 $ 113.3
Accounts payable 75.9 69.8
Accrued salaries, wages and employee benefits 22.6 26.6
Accrued income taxes 24.6 31.1
Dividends payable 20.8 20.4
Accrued consolidation and streamlining charge 10.0 10.0
Other accrued liabilities 62.4 73.8
-------- --------
Total current liabilities 343.4 345.0
-------- --------
LONG-TERM DEBT 99.6 99.6
-------- --------
OTHER NON-CURRENT LIABILITIES 90.5 104.1
-------- --------
DEFERRED INCOME TAXES 9.9 1.1
-------- --------
COMMON SHAREHOLDERS' EQUITY
Common Stock, par value $.01
Class A - authorized 50,000,000 shares, outstanding
10,274,567 and 10,781,483 shares .1 .1
Class B - authorized 150,000,000 shares, outstanding
53,977,630 and 54,813,287 shares .5 .5
Additional paid-in capital 349.7 397.8
Retained earnings 519.1 455.7
Cumulative translation adjustments (13.6) (13.6)
Unrealized gain (loss) on investments --- .1
-------- --------
Total common shareholders' equity 855.8 840.6
-------- --------
$1,399.2 $1,390.4
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 24
Page 24
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
Class A Class B Additional
For the three years ended Common Common Paid-In Retained
December 31, 1999 Stock Stock Capital Earnings
- ----------------- ------- ------- --------- --------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $ .1 $ .5 $ 438.3 $ 312.5
Net income 130.3
Translation adjustments
Unrealized (loss) on investments
Comprehensive Income
Exercise of stock options 5.8
Acquisition of treasury shares (21.8)
Shares issued for Fargo acquisition .1 50.4
Cash dividends declared
($1.13 per share) (75.9)
----- ----- ------- -------
BALANCE AT DECEMBER 31, 1997 $ .1 $ .6 $ 472.7 $ 366.9
Net income 169.4
Translation adjustments
Unrealized gain on investments
Comprehensive Income
Exercise of stock options 7.9
Acquisition of treasury shares (.1) (82.8)
Cash dividends declared
($1.22 per share) (80.6)
----- ----- ------- -------
BALANCE AT DECEMBER 31, 1998 $ .1 $ .5 $ 397.8 $ 455.7
===== ===== ======= =======
Net income 145.8
Translation adjustments
Unrealized (loss) on investments
Comprehensive Income
Exercise of stock options 9.3
Acquisition of treasury shares (57.4)
Cash dividends declared
($1.27 per share) (82.4)
----- ----- ------- -------
BALANCE AT DECEMBER 31, 1999 $ .1 $ .5 $349.7 $ 519.1
===== ===== ======= =======
<CAPTION>
Cumulative Unrealized
For the three years ended Translation Gain (Loss) Comprehensive
December 31, 1999 Adjustments on Investments Income
- ----------------- ----------- --------------- -------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $ (8.5) $ .2
Net income $ 130.3
Translation adjustments (1.6) (1.6)
Unrealized (loss) on investments (.1) (.1)
-------
Comprehensive Income $ 128.6
=======
Exercise of stock options
Acquisition of treasury shares
Shares issued for Fargo acquisition
Cash dividends declared
($1.13 per share)
------ ----- -------
BALANCE AT DECEMBER 31, 1997 $(10.1) $ .1
Net income $ 169.4
Translation adjustments (3.5) (3.5)
Unrealized gain on investments --
-------
Comprehensive Income $ 165.9
=======
Exercise of stock options
Acquisition of treasury shares
Cash dividends declared
($1.22 per share)
------ ----- -------
BALANCE AT DECEMBER 31, 1998 $(13.6) $ .1
====== =====
Net income $ 145.8
Translation adjustments --
Unrealized (loss) on investments (.1) (.1)
-------
Comprehensive Income $ 145.7
=======
Exercise of stock options
Acquisition of treasury shares
Cash dividends declared
($1.27 per share)
------ ----- -------
BALANCE AT DECEMBER 31, 1999 $(13.6) $ --
====== =====
</TABLE>
See notes to consolidated financial statements
<PAGE> 25
Page 25
Hubbell Incorporated and Subsidiaries
STATEMENT OF ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include all subsidiaries; all significant
intercompany balances and transactions have been eliminated. Investments in
joint ventures are accounted for by using the equity method. Certain
reclassifications, which were not significant, have been made in prior period
financial statements to conform to the 1999 presentation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and disclosures, if any, of
contingent assets and liabilities at the date of the financial statements.
Similarly, estimates and assumptions are required for the reporting of revenues
and expenses. Actual results could differ from the estimates that were used.
Foreign Currency Translation
The assets and liabilities of international subsidiaries are translated to U.S.
dollars at exchange rates in effect at the end of the year, and income and
expense items are translated at average rates of exchange in effect during the
year. The effects of exchange rate fluctuations on the translated amounts of
foreign currency assets and liabilities is included as translation adjustments
in shareholders' equity. Gains and losses from foreign currency transactions are
included in income of the period.
Cash and Temporary Cash Investments
Temporary cash investments consist of liquid investments with maturities of
three months or less when purchased. The carrying value of cash and temporary
cash investments approximates fair value because of their short maturities.
Investments
Investments in debt and equity securities are classified by individual security
into one of three separate categories: trading, available-for-sale or
held-to-maturity. Trading investments are bought and held principally for the
purpose of selling them in the near term and are carried at fair market value.
Adjustments to the carrying value of trading investments are included in current
earnings. Available-for-sale investments are intended to be held for an
indefinite period but may be sold in response to events reasonably expected in
the future. These investments are carried at fair value with adjustments
recorded in shareholders' equity net of tax. Investments which the Company has
the positive intent and ability to hold to maturity are classified as
held-to-maturity and carried at amortized cost.
Inventories
Inventories are stated at the lower of cost or market. The cost of substantially
all domestic inventories, 76% of total inventory value, is determined on the
basis of the last-in, first-out (LIFO) method of inventory accounting. The cost
of foreign inventories and certain domestic inventories is determined on the
basis of the first-in, first-out (FIFO) method of inventory accounting.
<PAGE> 26
Page 26
Property, Plant, and Equipment
Property, plant, and equipment placed in service prior to January 1, 1999 are
depreciated over their estimated useful lives, principally using accelerated
methods. Assets placed in service subsequent to January 1, 1999 are depreciated
using straight-line methods. The change to the straight-line method for assets
acquired in 1999 did not have a material impact on the Company's financial
position, or results of operations.
Capitalized Software
In 1999, the Company was first required to apply Statement of Financial
Accounting Standard ("SFAS") 86, "Accounting for the Costs of Computer Software
to Be Sold, Leased, or Otherwise Marketed". SFAS 86 requires capitalization of
certain costs incurred in the development of software other than internal-use
software. Adoption of this statement resulted in the net capitalization of $3.9
million of Research and Development costs for the year in the
Telecommunications Segment which would have been otherwise expensed.
Capitalized Software, net of amortization, is reported in Other Assets in the
Consolidated Balance Sheet.
Purchase Price in Excess of Net Assets of Companies Acquired
The cost of companies acquired in excess of the amount assigned to net assets is
being amortized on a straight-line basis over a 10 to 40 year period.
Impairment of Long-Lived Assets
Long-lived assets, including goodwill, are evaluated for financial impairment
when events or changes in circumstances indicate that the carrying amount of
such assets may not be fully recoverable. Recoverability is evaluated by
measuring the carrying amount of the assets against the estimated undiscounted
cash flow associated with them. Long-lived assets to be disposed of are valued
at the lower of their carrying amount or fair value less cost to sell.
Deferred Income Taxes
Deferred income taxes are recognized for the tax consequence of differences
between the financial statement carrying amounts and tax bases of assets and
liabilities by applying the currently enacted statutory tax rates. The effect of
a change in statutory tax rates is recognized in income in the period that
includes the enactment date. Federal income taxes have not been provided on the
undistributed earnings of the Company's international subsidiaries as the
Company has reinvested all of these earnings indefinitely.
Retirement Benefits
The Company's policy is to fund pension costs within the ranges prescribed by
applicable regulations. In addition to providing pension benefits, in some
circumstances the Company provides health care and life insurance benefits for
retired employees. The Company's policy is to fund these benefits through
insurance premiums or as actual expenditures are made.
<PAGE> 27
Page 27
Earnings Per Share
Earnings per share is based on reported net income and the weighted average
number of shares of common stock outstanding (basic) and the total of common
stock outstanding and common stock equivalents (diluted).
Stock-Based Compensation
SFAS 123 - "Accounting for Stock-Based Compensation" permits, but does not
require, a fair value based method of accounting for employee stock option and
performance plans which results in compensation expense being recognized in the
results of operations when awards are granted. The Company continues to use the
current intrinsic value based method of accounting for such plans where
compensation expense is measured as the excess, if any, of the quoted market
price of the Company's stock at the measurement date over the exercise price.
However, as required by SFAS 123, the Company provides pro forma disclosure
of net income and earnings per share in the notes to the consolidated financial
statements as if the fair value based method of accounting has been applied.
Comprehensive Income
As shown in the Statement of Changes in Shareholders' Equity, comprehensive
income is a measure of net income and all other changes in equity of the Company
that result from recognized transactions and other events of the period other
than transactions with shareholders. The other changes in equity are comprised
of the change in Cumulative Translation Adjustments for foreign currency items
and Unrealized Gain (Loss) on investments held for sale.
Derivatives
The Company, to limit financial risk in the management of its assets,
liabilities and debt may use derivative financial products such as: foreign
currency hedges, commodity hedges, interest rate hedges and interest rate swaps.
All derivative financial instruments must be matched with an existing Company
asset or liability. Market value gains or losses on the derivative financial
instrument are recognized in income when the effects of the related price
changes of the related asset or liability are recognized in income or at the
time the derivative instrument is closed. The Company does not speculate or use
leverage when trading a financial derivative product. There were no material
derivative transactions, individually or in total, for the three years ended
December 31, 1999. The impact of SFAS 133 - "Accounting for Derivative
Instruments and Hedging Activity" effective 2001 will change the current
practices of the Company, but will not have a significant impact on the
Company's financial condition, or results of operations.
Hubbell Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Special Charge
In 1997 the Company recorded a special charge of $52.0 million ($32.2 million
after-tax or $.47 per share), comprised of $32.4 million of accrued
consolidation and streamlining costs, $9.5 million of facility asset
impairments, a $7.4 million goodwill asset impairment, and other current
employee and product line exit costs of $2.7 million. The $7.4 million asset
impairment write-down relates to the Other Industry Segment and consists of a
partial goodwill write-down determined in accordance with the Company's
accounting policy under SFAS 121.
<PAGE> 28
Page 28
The Company's consolidation and streamlining initiatives (the "Plan") were
undertaken to optimize the organization and cost structure primarily within the
Electrical and Power Segments. The Plan will result in the relocation of
approximately 2,000 jobs and closure of 5 facilities. The table set forth below
lists each of the five manufacturing facilities and two buildings within the
Electrical and Power Segments covered by the Plan:
FACILITIES AND BUILDINGS COVERED BY THE PLAN
<TABLE>
<CAPTION>
Location Type Closing Date
- -------- ---- ------------
<S> <C> <C>
Clanton, AL Building Closure in First Quarter 2000
Madison, OH Facility Closed - Third Quarter 1998
Ontario, Canada Building Closed - Second Quarter 1998
Poughkeepsie, NY Facility Closure in stages commencing late 1999; complete in 2000
St. Louis, MO Facility Closure in stages commencing late 2000; complete in first half 2001
South Bend, IN Facility Closure in stages commencing late 2000; complete in first half 2001
Stonington, CT Facility Closed - First Quarter 1998
</TABLE>
The Company measured and provided for impairment on the property, plant and
equipment subject to the Plan in accordance with statement of SFAS 121.
Accordingly, these assets were reduced to the lower of carrying value or fair
value less cost to sell or abandon. Fair value for properties was estimated
based upon sales of similar properties in similar locations. Selling costs
included commissions, legal fees and closing costs. As shown in the table
below, the Company has expended $5.4 million in 1999, $6.8 million in 1998 and
$.7 million in 1997.
The components of the initial reserve at December 31, 1997, amounts utilized in
1997-1999, and the accrued consolidation and streaming reserve balances
remaining at December 31, 1999 were (in millions):
<TABLE>
<CAPTION>
Employee Asset Exit Accrued
Benefits Disposals Costs Charge
-------- --------- ----- ------
<S> <C> <C> <C> <C>
1997 Streamlining Charge $15.6 $10.7 $ 6.1 $32.4
Amounts Utilized in 1997 (.6) - (.1) (.7)
Amounts Utilized in 1998 (3.8) (2.4) (.6) (6.8)
Amounts Utilized in 1999 (1.8) (.8) (2.8) (5.4)
------- ------ ------ -----
Remaining Reserve $ 9.4 $ 7.5 $ 2.6 $19.5
====== ====== ====== =====
</TABLE>
Acquisitions
The Company's sales and profits were modestly impacted in 1999 by acquisitions.
In the first quarter, Chardon Electrical Components of Greenville, TN was
acquired in the Power Segment. Chardon is a manufacturer of high voltage cable
accessory products and technology for use in the electric utility market. In the
third quarter, the company completed the purchase of Haefely Test AG, a high
voltage test and instrumentation business from Trench Switzerland AG. As a
significant part of the Other Industry Segment, Haefely produces high voltage
test and measurement and a full line of electromagnetic test equipment used in
compliance testing of telecommunications and Local Area Network (LAN) systems.
With complementary high voltage product lines from Hubbell's Hipotronics
<PAGE> 29
Page 29
business, Haefely broadens the company's participation in the European and Asian
sectors of this global market.
During 1998 the Company acquired three lighting businesses which augmented the
existing lighting products portfolio. In the first quarter, Devine Lighting of
Kansas City, MO which specializes in design-oriented architectural outdoor
lighting fixtures was purchased. In the late fourth quarter, Sterner Lighting
based in Eden Prairie, MN which designs and manufactures specification grade
outdoor lighting fixtures and custom lighting products as well as indoor sports
and arena lighting and Chalmit Lighting based in Glasgow, Scotland which
manufactures lighting fixtures for hazardous and corrosive locations were
acquired. To broaden the Company's telecommunication product lines, Siescor
Technologies, Inc. based in Tulsa, OK was acquired. Siescor designs and
manufactures digital loop carrier systems used to connect subscribers to central
office telephone switches for voice and data communications over copper, fiber
and digital microwave networks. In addition, two minor product lines were
acquired in the first quarter of the year. All of the businesses were acquired
for cash of $78.4 million and the transactions were recorded under the purchase
method of accounting.
On February 14, 1997, Hubbell acquired Fargo Manufacturing Company, Inc.
("Fargo") based in Poughkeepsie, New York. Fargo manufactures distribution and
transmission line products primarily for the electric utility market. Each share
of Fargo common stock was converted into a right to receive shares or fractions
thereof of Hubbell's Class B Common Stock and accordingly 1,170,572 shares of
Class B Common Stock were issued. The acquisition of Fargo has been recorded
under the purchase method of accounting with a cost of $43.1 million net of cash
acquired. Additionally, three product lines and associated assets were acquired
during 1997 for $21.1 million in cash.
The costs of the acquired businesses have been allocated to assets acquired and
liabilities assumed based on fair values with the residual amount assigned to
goodwill, which is being amortized over ten to forty years. The businesses have
been included in the financial statements as of their respective acquisition
dates and represented approximately 1% of 1999, 3% of 1998 and 2% of 1997 net
sales with no material effect on the Company's reported earnings.
In connection with the above acquisitions, liabilities were assumed as follows
(in millions):
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fair value of assets acquired including goodwill $ 47.3 $ 95.1 $ 73.6
Issuance of Class B Common Stock - - (43.1)
Cash paid for businesses, net of cash acquired (38.3) (78.4) (21.1)
------- ------- -------
Liabilities assumed $ 9.0 $ 16.7 $ 9.4
====== ====== =======
</TABLE>
Dispositions
In September, the Company completed the sale of The Kerite Company, a
wholly-owned subsidiary reported in the Power Segment. Kerite, which
manufactures high-performance, insulated power cable, was sold to The Marmon
Corporation for a cash purchase price of $38.4 million. The sale produced a net
gain of $8.8 million which is included in Operating income in the Consolidated
Statement of Income.
<PAGE> 30
Page 30
INVESTMENTS
Investments consist primarily of mortgage-backed securities, asset-backed
securities, corporate bonds, U.S. Treasury Notes, and common stocks. Investments
which are available-for-sale are stated at market values based on current quotes
while investments which are being held-to-maturity are stated at amortized cost.
There were no securities during 1999 and 1998 that were classified as trading
investments. Certain portfolio securities that are affected by changes in
interest rates may be hedged with futures contracts for U.S. Treasury notes and
bonds. Market value gains and losses on the futures contracts are recognized in
income when the effects of the related price changes in the value of the hedged
securities are recognized. At December 31, 1999 there were no open futures
contracts.
The following tables set forth selected data with respect to the Company's
long-term investments at December 31, (in millions):
<TABLE>
<CAPTION>
1999
-----------
Gross Gross
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
INVESTMENTS
Common Stocks $ .1 $ --- $ --- $ .1 $ .1
Municipal Bonds 13.2 --- --- 13.2 13.2
------ ------ ------ ------ ------
Total Available-For-Sale Investments $ 13.3 $ $ --- $ 13.3 $ 13.3
====== ====== ====== ====== ======
HELD-TO-MATURITY
INVESTMENTS
Federal National Mortgage Assoc
Securities (FNMA) $ 78.0 $ 1.5 $ (5.6) $ 73.9 $ 78.0
Gov't. National Mortgage Assoc
Securities (GNMA) 23.5 1.4 (1.2) 23.7 23.5
Federal Home Loan Mortgage
Corporation Securities (FHLMC) 29.8 --- (2.1) 27.7 29.8
U.S. Treasury Notes & Municipal,
Asset-Backed and Corporate Bonds 62.1 .3 (1.5) 60.9 62.1
------ ------ ------ ------ ------
Total Held-To-Maturity Investments $193.4 $ 3.2 $(10.4) $186.2 $193.4
====== ====== ====== ====== ======
<CAPTION>
1998
------------
Gross Gross
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
INVESTMENTS
Common Stocks $ .1 $ --- $ --- $ .1 $ .1
Municipal Bonds 12.7 .1 (.1) 12.7 12.7
------ ------ ------ ------ ------
Total Available-For-Sale Investments $ 12.8 $ .1 $ (.1) $ 12.8 $ 12.8
====== ====== ====== ====== ======
HELD-TO-MATURITY
INVESTMENTS
Federal National Mortgage Assoc
Securities (FNMA) $ 87.9 $ 3.1 $ (1.5) $ 89.5 $ 87.9
Gov't. National Mortgage Assoc
Securities (GNMA) 25.2 2.0 (.6) 26.6 25.2
Federal Home Loan Mortgage
Corporation Securities (FHLMC) 8.8 .1 (.8) 8.1 8.8
U.S. Treasury Notes & Municipal,
Asset-Backed and Corporate Bonds 62.5 .9 --- 63.4 62.5
------ ------ ------ ------ ------
Total Held-To-Maturity Investments $184.4 $ 6.1 $ (2.9) $187.6 $184.4
====== ====== ====== ====== ======
</TABLE>
<PAGE> 31
Page 31
INVESTMENTS CONT'D.
Contractual maturities of investments in debt securities available-for-sale and
held-to-maturity at December 31, 1999 were as follows (in millions):
<TABLE>
<CAPTION>
FNMA GNMA
---- ----
Amortized Fair Amortized Fair
Cost Value Cost Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
INVESTMENTS
Due within 1 year $ --- $ --- $ --- $ ---
After 1 but within 5 years --- --- --- ---
-------- -------- -------- --------
TOTAL $ --- $ --- $ --- $ ---
======== ======== ======== ========
HELD-TO-MATURITY
INVESTMENTS
Due within 1 year $ --- $ --- $ --- $ ---
After 1 but within 5 years --- --- 1.4 1.6
After 5 but within 10 years 2.6 2.1 12.3 12.8
After 10 years 75.4 71.8 9.8 9.3
-------- -------- -------- --------
TOTAL $78.0 $73.9 $23.5 $23.7
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
U.S. Treasury
Notes &
FHLMC Other Bonds
----- -----------
Amortized Fair Amortized Fair
Cost Value Cost Value
-------- -------- ------- -------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
INVESTMENTS
Due within 1 year $ --- $ --- $ 2.2 $ 2.2
After 1 but within 5 years --- --- 11.0 11.0
-------- -------- ------- -------
TOTAL $ --- $ --- $ 13.2 $ 13.2
======== ======== ======= =======
HELD-TO-MATURITY
INVESTMENTS
Due within 1 year $ --- $ --- $ 2.1 $ 2.4
After 1 but within 5 years --- --- 18.2 18.0
After 5 but within 10 years --- --- 41.8 40.5
After 10 years 29.8 27.7 --- ---
-------- -------- ------- -------
TOTAL $29.8 $27.7 $62.1 $60.9
======== ======== ======= =======
</TABLE>
The change in net unrealized holding gain or loss on available-for-sale
securities that has been included in the separate component of shareholders'
equity was $(.1) million in 1999 and immaterial in 1998. The cost basis used in
computing the gain or loss on these securities was through specific
identification. The proceeds from the sale of these securities were $3.2 million
in 1999 and $4.5 million in 1998.
<PAGE> 32
Page 32
Inventories
Inventories are classified as follows at December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Raw material $ 92.8 $ 104.9
Work-in-process 72.3 79.6
Finished goods 158.9 162.0
------ ------
324.0 346.5
Excess of current production costs over LIFO cost basis 45.5 45.6
------ ------
Total $ 278.5 $ 300.9
====== ======
</TABLE>
The financial accounting basis for the LIFO inventories of acquired companies
exceeds the tax basis by approximately $29.8 million at December 31, 1999.
Income Taxes
The following table sets forth selected data with respect to the Company's
income tax provisions for the years ended December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Income before income taxes:
United States $ 193.0 $ 225.0 $ 176.0
International 4.0 5.5 4.1
------ ------ ------
Total $ 197.0 $ 230.5 $ 180.1
====== ====== ======
Provisions for income taxes:
Federal $ 38.5 $ 49.3 $ 54.1
State 3.0 4.0 6.3
International 1.2 2.6 .9
Deferred 8.5 5.2 (11.5)
------ ------ ------
Total $ 51.2 $ 61.1 $ 49.8
====== ====== ======
</TABLE>
The principal items making up the deferred tax provisions are set forth in the
following table for the years ended December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Transactions of leasing subsidiary $ (1.5) $ (1.4) $ (1.3)
Special charge --- --- (14.8)
Restructuring reserve 2.0 3.2 3.3
Depreciation (1.6) 1.5 .7
Other, net 9.6 1.9 .6
---- ---- -----
Total $ 8.5 $ 5.2 $ (11.5)
==== ==== =====
</TABLE>
<PAGE> 33
Page 33
The components of the net deferred tax (asset) liability at December 31, (in
millions) were as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Inventory $ 3.9 $ 3.8
Pensions 15.9 16.8
Postretirement and postemployment benefits 8.2 8.9
Accrued consolidation and streamlining charge 7.5 9.5
Accrued liabilities 37.4 43.6
----- -----
Total deferred tax asset 72.9 82.6
----- -----
Deferred tax liabilities:
Property, plant, and equipment 24.8 26.4
Leasing subsidiary 12.7 14.2
LIFO inventories of acquired businesses 11.3 11.3
Miscellaneous other 9.7 7.8
----- -----
Total deferred tax liability 58.5 59.7
----- -----
Net deferred tax (asset) liability $ (14.4) $ (22.9)
===== =====
</TABLE>
Deferred taxes are classified in the financial statements at December 31, 1999
as a net short-term deferred tax asset of $24.3 million and a net long-term
deferred tax liability of $9.9 million.
At December 31, 1999, United States income taxes had not been provided on
approximately $17.7 million of undistributed international earnings. Payments of
income taxes were $46.6 million in 1999, $60.7 million in 1998 and $62.4 million
in 1997.
The consolidated effective income tax rates varied from the United States
federal statutory income tax rate for the years ended December 31, as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal statutory income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 1.3 1.3 2.0
Tax-exempt income (.3) (1.9) (2.4)
Non-taxable income from
Puerto Rico operations (10.7) (8.4) (8.4)
Other, net .7 .5 1.5
---- ---- ----
Consolidated effective income tax rate 26.0% 26.5% 27.7%
==== ==== ====
</TABLE>
<PAGE> 34
Page 34
Other Non-Current Liabilities
Other Non-Current Liabilities consists of the following at December 31, (in
millions):
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Pensions $ 42.0 $ 43.6
Other postretirement benefits 18.9 20.3
Accrued consolidation and streamlining charge 9.5 14.9
Other, net 20.1 25.3
----- ------
Total $ 90.5 $ 104.1
===== ======
</TABLE>
Retirement Benefits
The Company and its subsidiaries have a number of non-contributory defined
benefit pension plans and other nonpension retirement benefit plans. During 1999
and 1998, the Company made acquisitions where defined benefit pension assets and
liabilities of the acquired company were assumed. In addition, the sale of the
Kerite Company in 1999 resulted in a settlement and curtailment of the pension
obligations for that company.
The following table sets forth the reconciliation of beginning and ending
balances of the benefit obligations and the plan assets for the above plans at
December 31, (in millions):
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1999 1998
---- ---- ---- ----
CHANGE IN BENEFIT OBLIGATION
<S> <C> <C> <C> <C>
Benefit obligation at beginning of year $252.4 $237.7 $ 20.3 $ 20.3
Service cost 9.8 8.9 .3 .3
Interest cost 16.7 16.1 1.2 1.2
Plan amendments --- .7 --- ---
Actuarial (gain) loss (17.3) (1.2) (1.2) ---
Settlement and curtailment gains
(Sale of The Kerite Company) (5.9) --- --- ---
Acquisitions 3.7 1.1 --- ---
Benefits paid (20.2) (10.9) (1.7) (1.5)
------- ------- ------- -------
Benefit obligation at end of year $239.2 $252.4 $ 18.9 $ 20.3
------- ------- ------- -------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $230.7 $218.0 $ --- $ ---
Actual return on plan assets 24.9 20.4 --- ---
Acquisitions 4.0 .9 --- ---
Employer contributions 3.2 2.3 --- ---
Benefits paid (20.2) (10.9) --- ---
------- ------- ------- -------
Fair value of plan assets at end of year $242.6 $230.7 $ --- $ ---
------- ------- ------- -------
FUNDED STATUS $ 3.4 $(21.7) $(18.9) $(20.3)
Unrecognized net actuarial gain (49.5) (26.1) --- ---
Unrecognized prior service cost 1.0 1.3 --- ---
------- ------- ------- -------
Accrued benefit cost $(45.1) $(46.5) $(18.9) $ (20.3)
------- ------- ------- -------
WEIGHTED-AVERAGE ASSUMPTIONS AS OF
DECEMBER 31
Discount rate 7.75% 6.75% 7.75% 7.25%
Expected return on plan assets 8.50% 8.00% N/A N/A
Rate of compensation increase 4.75% 4.00% N/A N/A
</TABLE>
<PAGE> 35
Page 35
The following table sets forth the components of pension and other benefits cost
for the years ended December 31, (in millions):
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
COMPONENTS OF NET PERIODIC
BENEFIT COST
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 9.8 $ 8.9 $ 7.7 $ .3 $ .3 $ .3
Interest cost 16.7 16.1 15.3 1.2 1.2 1.1
Expected return on plan assets (18.0) (16.6) (15.4) --- --- ---
Amortization of prior service cost .3 .7 .4 --- --- ---
Amortization of actuarial gains (1.0) (.5) (.6) (1.2) --- ---
Settlement and Curtailment Gain
(Sale of The Kerite Company) (5.9) --- --- --- --- ---
-------- ------- ------- ------ ------ ------
Net periodic benefit cost $ 1.9 $ 8.6 $ 7.4 $ .3 $ 1.5 $ 1.4
======== ======= ======= ====== ====== ======
</TABLE>
The Company and its subsidiaries have a number of health care and life insurance
benefit plans covering eligible employees who reached retirement age while
working for the Company. These other benefits were discontinued in 1991 for
substantially all future retirees, with the exception of A.B. Chance Company
which was acquired in 1994 and Anderson Electrical Products, Inc., which was
acquired in 1996. For measurement purposes, a 7% annual rate of increase in the
per capita cost of pre-65 covered health care benefits was assumed for 1999. The
rate was assumed to decrease gradually to 5.5% for 2002 and remain at that level
thereafter. The impact of a 1 percentage point increase or decrease in
assumptions would not be material to the Company. Some of the plans provide for
retiree contributions which are periodically increased. The plans anticipate
future cost-sharing changes that are consistent with the Company's past
practices.
At December 31, 1999, approximately $163.5 million of the pension plan assets
were invested in common stocks, including Hubbell Incorporated common stock with
a market value of $9.6 million. The balance of plan assets of $79.1 million were
invested in short term money market accounts, government and corporate bonds.
At December 31, 1999, the Company had certain defined benefit plans where the
accumulated benefit obligation exceeded plan assets. In total, the accumulated
benefit obligation for these plans at December 31, 1999 was $23.3 million and
there were no plan assets. No additional minimum liability was required to be
recognized for any of these plans.
The Company also maintains two qualified defined contribution plans. The total
cost of these plans was $1.5 million in 1999 and in 1998 and $1.1 million in
1997. This cost is not included in the above net periodic benefit cost for the
defined benefit pension plans. Total pension expense (including defined
contribution plans) as a percent of payroll was 1.1% in 1999, 3.2% in 1998 and
3.5% in 1997.
<PAGE> 36
Page 36
Commercial Paper, Other Borrowings and Long-Term Debt
The following table sets forth the components of the Company's debt structure at
December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998
----------------------------------------- ----------------------------------------
COMMERCIAL COMMERCIAL
PAPER AND PAPER AND
OTHER LONG-TERM OTHER LONG-TERM
BORROWINGS DEBT TOTAL BORROWINGS DEBT TOTAL
---------- --------- ---------- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at year end $ 127.1 $ 99.6 $ 226.7 $ 113.3 $ 99.6 $ 212.9
Highest aggregate $ 316.5 $ 215.5
month-end balance
Average borrowings $ 173.1 $ 99.6 $ 272.7 $ 55.3 $ 99.6 $ 154.9
during the year
Weighted average
interest rate:
At year end 6.39% 6.71% 6.53% 5.32% 6.72% 5.97%
Paid during the year 5.12% 6.71% 5.70% 5.50% 6.72% 6.28%
</TABLE>
Interest paid for commercial paper, bank borrowings, and long-term debt totaled
$15.8 million in 1999, $9.7 million in 1998, and $7.2 million in 1997. The
Company maintains various bank credit agreements primarily to support commercial
paper borrowings. At December 31, 1999, the Company had total used and unused
bank credit agreements of $150 million. The expiration date for these bank
credit agreements is September 27, 2000. Borrowings under credit agreements
generally are available at the prime rate or at a surcharge over the London
Interbank Offered Rate (LIBOR). Annual commitment fee requirements to support
availability of credit agreements at December 31, 1999, total approximately
$90,000. In October, 1995, the Company issued a ten year non-callable notes due
in 2005 at a face value of $100.0 million and a fixed interest rate of 6 5/8%.
The net proceeds of the offering were $99.4 million and were used to pay down
commercial paper.
<PAGE> 37
Page 37
Leases
Total rental expense under operating leases was $9.1 million in 1999, $7.9
million in 1998 and $7.4 million in 1997. The minimum annual rentals on
non-cancelable, long-term, operating leases in effect at December 31, 1999 will
approximate $2.6 million in 2000, $2.6 million in 2001, $1.8 million in 2002,
$.9 million in 2003 and $.8 million in 2004.
Research, Development and Engineering
Expenses for new product development and ongoing improvement of existing
products were $20.0 million in 1999, $27.0 million in 1998 and $19.0 million in
1997.
Financial Instruments
Concentration of Credit Risks: Financial instruments which potentially subject
the Company to concentration of credit risks consist of trade receivables and
temporary cash investments. The Company grants credit terms in the normal course
of business to its customers. Due to the diversity of its product lines, the
Company has a diverse customer base including electrical distributors and
wholesalers, electric utilities, equipment manufacturers, electrical
contractors, telephone operating companies and retail and hardware outlets. As
part of its ongoing procedures, the Company monitors the credit worthiness of
its customers. Bad debt write-offs have historically been minimal. The Company
places its temporary cash investments with financial institutions and limits the
amount of exposure to any one institution.
Fair Value: The carrying amounts reported in the consolidated balance sheets for
cash and temporary cash investments, receivables, commercial paper and bank
borrowings, accounts payable and accruals approximate their fair values given
the immediate or short-term maturity of these financial investments.
The fair value of investment securities and long term debt are as follows (in
millions):
<TABLE>
<CAPTION>
1999 1998
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
----- ----- ----- -----
Investments
- -----------
<S> <C> <C> <C> <C>
Available-for-sale $ 13.3 $ 13.3 $ 12.8 $ 12.8
Held-to-maturity $ 193.4 $ 186.2 $ 184.4 $ 187.6
Long-Term Debt $ (99.6) $ (96.9) $ (99.6) $ (106.4)
- --------------
</TABLE>
Fair value is based on quoted market prices for the same or similar securities.
<PAGE> 38
Page 38
Capital Stock
Share activity in the Company's preferred and common stocks is set forth below
for the three years ended December 31, 1999:
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
Class A Class B
------- -------
<S> <C> <C> <C>
OUTSTANDING AT DECEMBER 31, 1996 --- 11,446,120 54,612,590
Exercise of stock options 62,748 344,565
Acquisition of Fargo --- 1,170,572
Acquisition of treasury shares (362,806) (246,782)
-------------- ------------- -------------
OUTSTANDING AT DECEMBER 31, 1997 --- 11,146,062 55,880,945
Exercise of stock options 56,000 475,975
Acquisition of treasury shares (420,579) (1,543,633)
-------------- ------------- -------------
OUTSTANDING AT DECEMBER 31, 1998 --- 10,781,483 54,813,287
Exercise of stock options 26,000 391,845
Acquisition of treasury shares (532,916) (1,227,502)
-------------- ------------- -------------
OUTSTANDING AT DECEMBER 31, 1999 --- 10,274,567 53,977,630
</TABLE>
Treasury shares are retired when acquired and the purchase price is charged
against par value and additional paid-in capital. Voting rights per share: Class
A Common - twenty; Class B Common - one. In addition, the Company has 5,891,097
authorized shares of preferred stock; none are outstanding.
The Company has a Stockholder Rights Agreement under which holders of Class A
Common Stock have Class A Rights and holders of Class B Common Stock have Class
B Rights. These Rights become exercisable after a specified period of time only
if a person or group of affiliated persons acquires beneficial ownership of 20
percent or more of the outstanding Class A Common Stock of the Company or
announces or commences a tender or exchange offer that would result in the
offeror acquiring beneficial ownership of 20 percent or more of the outstanding
Class A Common Stock of the Company. Each Class A Right entitles the holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock ("Series A Preferred Stock"), without par value,
at a price of $175.00 per one one-thousandth of a share. Similarly, each Class B
Right entitles the holder to purchase one one-thousandth of a share of Class B
Junior Participating Preferred Stock ("Series B Preferred Stock"), without par
value, at a price of $175.00 per one one-thousandth of a share. The Rights may
be redeemed by the Company for one cent per Right prior to the day a person or
group of affiliated persons acquires 20 percent or more of the outstanding Class
A Common Stock of the Company. The Rights expire on December 31, 2008, unless
earlier redeemed by the Company.
Shares of Series A Preferred Stock or Series B Preferred Stock purchasable upon
exercise of the Rights will not be redeemable. Each share of Series A Preferred
Stock or Series B Preferred Stock will be entitled, when, as and if declared, to
a minimum preferential quarterly dividend payment of $10.00 per share but will
be entitled to an aggregate dividend of 1,000 times the dividend declared per
share of Common Stock. In the event of liquidation, the holders of the Series A
Preferred Stock or Series B Preferred Stock will be entitled to a minimum
preferential liquidation payment of $100 per share (plus any accrued but unpaid
dividends) but will be entitled to an aggregate payment of 1,000 times the
payment made per share of Class A Common Stock or Class B Common Stock,
respectively. Each share of Series A Preferred Stock will have 20,000 votes and
each share of Series B Preferred Stock will have 1,000 votes, voting together
with the Common Stock. Finally, in the event of any merger,
<PAGE> 39
Page 39
consolidation, transfer of assets or earning power or other transaction in which
shares of Common Stock are converted or exchanged, each share of Series A
Preferred Stock or Series B Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock. These rights are protected
by customary antidilution provisions.
Upon the occurrence of certain events or transactions specified in the Rights
Agreement, each holder of a Right will have the right to receive, upon exercise,
that number of shares of the Company's common stock or the acquiring company's
shares having a market value equal to twice the exercise price.
Shares of common stock were reserved at December 31, 1999 as follows:
<TABLE>
<CAPTION>
Common Stock
------------
Class A Class B Preferred Stock
------- ------- ---------------
<S> <C> <C> <C>
Exercise of outstanding stock options --- 6,340,898 ---
Future grant of stock options 959,012 2,894,053 ---
Exercise of stock purchase rights --- --- 64,252
--------- --------- ---------
Total 959,012 9,234,951 64,252
</TABLE>
Stock Options
The Company has granted to officers and key employees options to purchase the
Company's Class A and Class B Common Stock and the Company may grant to officers
and key employees options to purchase the Company's Class B Common Stock at not
less than 100% of market prices on the date of grant with a ten year term and a
three year vesting period. Stock option activity for the three years ended
December 31, 1999 is set forth below:
<TABLE>
<CAPTION>
Number Option price per Weighted
of shares share range Average
---------- ----------- -------
<S> <C> <C> <C>
OUTSTANDING AT DECEMBER 31, 1996 4,681,100 $10.95 - $41.69 $27.68
Granted 946,400 $47.13 $47.13
Exercised (407,313) $10.95 - $32.06 $28.38
Canceled or expired (53,399) $21.25 - $32.06 $25.31
-----------
OUTSTANDING AT DECEMBER 31, 1997 5,166,788 $13.82 - $47.13 $31.18
Granted 1,132,400 $39.34 $39.34
Exercised (531,975) $13.82 - $32.06 $31.54
Canceled or expired (70,591) $25.71 - $47.13 $39.75
-----------
OUTSTANDING AT DECEMBER 31, 1998 5,696,622 $16.86 - $47.13 $33.24
Granted 1,321,800 $27.66 $27.66
Exercised (417,845) $16.86 - $32.06 $23.55
Canceled or expired (259,688) $32.06 - $47.13 $41.79
-----------
OUTSTANDING AT DECEMBER 31, 1999 6,340,889 $19.33 - $47.13 $33.23
</TABLE>
On December 31, 1999, outstanding options were comprised of 1,329,677 shares
exerciseable with an average remaining life of three years and an average price
of $24.48 (range $19.33 - $26.99); 1,134,912 shares exerciseable with an average
remaining life of six years and an average price of $29.09 (range $25.71 -
$32.06); 695,200 shares exerciseable and 832,400 shares not vested with a
remaining life of eight years and an average price of $44.65 (range $41.69 -
$47.13); and 2,348,700 shares not vested with an average remaining life of ten
years and an average price of $32.77 (range $27.66 - $39.34).
<PAGE> 40
Page 40
On May 5, 1997, the Company's shareholders approved a performance unit plan for
employees who were primarily responsible in an administrative or executive
capacity for the direction of the functions or operation of the Company and its
subsidiaries. The performance units, which were awarded in the Company's Class B
Common Stock, were based on achieving targeted earnings per share growth over
the three-year period commencing January 1, 1997 and ending December 31, 1999.
Participants were to receive from 0 to 200 percent of the award grant depending
upon whether the average annual compounded earnings per share growth was (a)
below the 10% mark (no award), (b) 10% to 12.4% (100% of award), (c) 12.5% to
14.9% (150% of award), and (d) 15% and above (200% of award). The maximum number
of shares that could have been issued under the plan was 221,638. Based upon the
actual average annual compounded earnings per share growth for the three-year
period ended December 31, 1999, participants did not receive any award grants
under this program.
The following table summarizes the pro forma effect on net income if
compensation expense had been recognized for stock options using the
Black-Scholes option-pricing model and related assumptions:
<TABLE>
<CAPTION>
Weighted Avg.
Grant - Date Proforma
Dividend Expected Interest Expected Fair Value Effect on
Yield Volatility Rate Option Term of 1 Option Net Income*
---------- ----------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1999 4.0% 22% 6.6% 7 Years $6.16 $4.2 Million
1998 3.0% 17% 4.8% 7 Years $7.34 $4.1 Million
1997 2.5% 13% 6.0% 7 Years $10.26 $2.7 Million
</TABLE>
* These pro forma disclosures may not be representative of the effects on
reported net income for future years since options vest over several
years and options granted prior to 1995 are not considered. The pro
forma effect on earnings per share would be immaterial.
Earnings Per Share
The following table sets forth the computation of earnings per share for the
three years ended December 31, (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Income $ 145.8 $ 169.4 $ 130.3
Weighted average number of common
shares outstanding during the year (basic) 65.1 66.2 67.0
Common equivalent shares .8 1.5 1.8
------- ------- -------
Average number of shares outstanding (diluted) 65.9 67.7 68.8
======= ======= =======
Earnings per share:
Basic $ 2.24 $ 2.56 $ 1.94
Diluted $ 2.21 $ 2.50 $ 1.89
</TABLE>
<PAGE> 41
Page 41
Industry Segment and Geographic Area Information
Nature of Operations
Hubbell Incorporated was founded as a proprietorship in 1888, and was
incorporated in Connecticut in 1905. For over a century, Hubbell has
manufactured and sold high quality electrical and electronic products for a
broad range of commercial, industrial, telecommunications and utility
applications. Since 1961, Hubbell has expanded its operations into other areas
of the electrical industry and related fields. Hubbell products are now
manufactured or assembled by twenty-three divisions and subsidiaries in the
United States, Canada, Switzerland, Puerto Rico, Mexico, and the United Kingdom.
Hubbell also participates in joint ventures with partners in South America,
Germany and Taiwan, and maintains sales offices in Mexico, Hong Kong, the
People's Republic of China, Southeast Asia, South Korea and the Middle East.
The Company is primarily engaged in the engineering, manufacture and sale of
electrical and electronic products. For management reporting and control, the
businesses are divided into four operating segments: Electrical, Power,
Telecommunications and Other Industry. Information regarding operating segments
has been presented as required by Financial Accounting Standard No. 131. At
December 31, 1999 the operating segments were comprised as follows:
The Electrical Segment is comprised of businesses that primarily sell through
distributors, lighting showrooms, and home centers and represents stock items
including standard and special application wiring device products, lighting
fixtures, fittings, switch and outlet boxes, enclosures and wire management
products. The products are used in and around industrial and commercial
facilities by electrical contractors, maintenance personnel and electricians.
Power Segment operations are comprised of a wide variety of construction,
switching and protection products, hot line tools, grounding equipment, cover
ups, fittings and fasteners, cable accessories, insulators, arresters, cutouts,
sectionalizers, connectors and compression tools for the building and
maintenance of overhead and underground power and telephone lines, as well as
applications in the industrial, construction and pipeline industries.
The Telecommunication Segment designs and manufactures voice and data signal
processing components primarily used by telephone and telecommunications
companies and consists of channel cards and banks for loop and trunk carriers,
and racks and cabinets.
The Other Industry Segment consists of operations that design and manufacture
test and measurement equipment, high voltage power supplies and variable
transformers, industrial controls including motor speed controls, pendant-type
push-button stations, overhead crane controls; and Gleason(R) electric cable and
hose reels. Products are sold primarily to steel mills, industrial complexes,
seaports, and cable and electronic equipment manufacturers.
On a geographic basis, the Company defines "international" as operations and
subsidiaries based outside of the United States and its possessions. Sales of
international units were 7% of total sales in 1999, and 6% in 1998 and in 1997
with the Canadian market representing approximately 55% of the total. Net assets
of international subsidiaries were 9% of the consolidated total in 1999, 6% in
1998 and 5% in 1997. Export sales directly to customers or through electric
wholesalers from the United States operations were $75.8 million in 1999, $80.2
million in 1998 and $105.0 million in 1997.
<PAGE> 42
Page 42
The Company's principal manufacturing facilities are located in the following
areas, classified by segment:
<TABLE>
<CAPTION>
Approximate Floor
Segment Location No. of Facilities Area in Square Feet
------- -------- ----------------- -------------------
<S> <C> <C> <C>
Electrical Segment Connecticut 2 213,500
Puerto Rico 3 327,400 (1)
Tennessee 1 246,800
Virginia 1 328,100
Illinois 1 318,800 (7)
Indiana 1 314,800
Missouri 3 393,100 (6)
Minnesota 2 173,300 (2)
Georgia 1 57,100
Mexico 3 385,400 (5)
United Kingdom 3 105,500 (3)
Power Segment New York 1 109,800
Ohio 1 90,000
South Carolina 1 360,000
Alabama 2 288,000
Tennessee 1 74,000
Missouri 1 804,900
Puerto Rico 1 135,600 (3)
Mexico 1 208,000 (5)
Telecommunications
Segment Virginia 1 143,300
Other Industry Ohio 1 76,900
Segment North Carolina 1 81,000 (3)
Wisconsin 1 94,200 (4)
New York 2 169,900
Switzerland 2 104,100 (3)
</TABLE>
(1) 164,800 square feet leased
(2) 41,200 square feet leased
(3) Leased
(4) 20,000 square feet leased
(5) Shared with Electrical Segment
(6) 127,100 square feet leased
(7) 95,700 square feet leased
<PAGE> 43
Page 43
Additionally, the Company owns or leases warehouses and distribution centers
containing approximately 1,307,400 square feet. The Company believes its
manufacturing and warehousing facilities are adequate to carry on its business
activities.
As of December 31, 1999, the Company has approximately 10,190 full-time
employees, including salaried and hourly personnel. Approximately 44% of the
United States employees are represented by 15 labor unions. During the next
twelve months there are four union contracts due for renegotiation.
Financial Information
Financial information by industry segment and geographic area for the three
years ended December 31, 1999, is summarized below (in millions). When reading
the data the following items should be noted:
- - Net sales comprise sales to unaffiliated customers - intersegment and
inter-area sales are immaterial.
- - Segment operating income consists of net sales less operating expenses.
Interest expense, and other income have not been allocated to segments.
- - General corporate assets not allocated to segments are principally cash
and investments.
<PAGE> 44
Page 44
<TABLE>
<CAPTION>
INDUSTRY SEGMENT 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
NET SALES:
Electrical $ 863.0 $ 808.4 $ 776.3
Power 399.5 393.1 386.0
Telecommunications 102.4 149.5 142.2
Other 86.9 73.6 74.3
-------- -------- --------
Total $1,451.8 $1,424.6 $1,378.8
======== ======== ========
OPERATING INCOME:
Electrical 142.0 146.6 145.4
Special Charge - - (25.0)
Power 42.6 53.4 47.2
Special Charge - - (19.0)
Gain on Sale of Business 8.8 - -
Telecommunications (7.4) 18.8 25.0
Special Charge - - (2.0)
Other 8.4 7.3 6.0
Special Charge - - (6.0)
-------- -------- --------
Operating Income $ 194.4 $ 226.1 $ 171.6
Interest expense (15.9) (9.9) (7.3)
Investment and other income, net 18.5 14.3 15.8
-------- -------- --------
Income before income taxes $ 197.0 $ 230.5 $ 180.1
======== ======== ========
ASSETS:
Electrical $ 541.9 $ 540.7 $ 412.1
Power 370.4 390.4 359.9
Telecommunications 47.8 68.5 49.9
Other 111.0 80.7 86.8
General Corporate 328.1 310.1 376.1
-------- -------- --------
Total $1,399.2 $1,390.4 $1,284.8
======== ======== ========
CAPITAL EXPENDITURES:
Electrical $ 32.7 $ 49.4 $ 25.2
Power 17.6 32.1 29.1
Telecommunications 1.4 3.2 4.4
Other 1.4 .7 1.5
General Corporate .6 .7 .4
-------- -------- --------
Total $ 53.7 $ 86.1 $ 60.6
======== ======== ========
DEPRECIATION AND AMORTIZATION:
Electrical $ 26.7 $ 21.4 $ 21.8
Power 19.0 19.5 15.3
Telecommunications 3.6 3.7 2.5
Other 2.8 2.6 2.7
General Corporate .7 .9 .9
-------- -------- --------
Total $ 52.8 $ 48.1 $ 43.2
======== ======== ========
</TABLE>
<PAGE> 45
Page 45
GEOGRAPHIC AREA
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
NET SALES:
United States $1,347.0 $1,338.8 $1,290.6
International 104.8 85.8 88.2
-------- -------- --------
Total $1,451.8 $1,424.6 $1,378.8
======== ======== ========
OPERATING INCOME:
United States $ 171.5 $ 212.0 $ 208.0
Special Charge --- --- (51.1)
Gain on Sale of Business 8.8 --- ---
International 14.1 14.1 15.6
Special Charge --- --- (.9)
-------- -------- --------
Total $ 194.4 $ 226.1 $ 171.6
======== ======== ========
ASSETS:
United States $1,277.8 $1,302.3 $1,220.8
International 121.4 88.1 64.0
-------- -------- --------
Total $1,399.2 $1,390.4 $1,284.8
======== ======== ========
</TABLE>
Quarterly Financial Data (Unaudited)
The table below sets forth summarized quarterly financial data for the years
ended December 31, 1999 and 1998 (in millions, except per share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth
1999 Quarter Quarter Quarter Quarter
- ---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales $ 367.5 $ 368.6 $ 372.4 $ 343.3
Gross Profit $ 107.0 $ 110.5 $ 97.4 $ 94.1
Net Income $ 39.7 $ 43.1 $ 35.8 $ 27.2
Earnings Per Share:
Basic $ .61 $ .66 $ .55 $ .42
Diluted $ .60 $ .65 $ .54 $ .42
1998
- ----
Net Sales $ 339.7 $ 372.5 $ 361.6 $ 350.8
Gross Profit $ 104.5 $ 116.3 $ 110.9 $ 106.5
Net Income $ 39.9 $ 44.1 $ 43.2 $ 42.2
Earnings Per Share:
Basic $ .60 $ .67 $ .65 $ .64
Diluted $ .58 $ .65 $ .64 $ .63
</TABLE>
<PAGE> 46
Page 46
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Information relative to Executive Officers appears on Page 49 of this
report.
Item 10. Directors and Executive Officers of the Registrant(1)
Item 11. Executive Compensation (1)
Item 12. Security Ownership of Certain Beneficial Owners and
Management (1)
Item 13. Certain Relationships and Related Transactions (1)
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
1. Financial Statements and Schedules
Financial statements and schedules listed in the Index to Financial Statements
and Schedules appearing on Page are filed as part of this Annual Report on Form
10-K.
<TABLE>
<CAPTION>
2. Exhibits
--------
Number Description
------ -----------
<S> <C>
3a Restated Certificate of Incorporation, as amended and restated
as of May 14, 1998. (1) Exhibit 3a of the registrant's report on
Form 10-Q for the second quarter (ended June 30), 1998, and
filed on August 7, 1998, is incorporated by reference; (2)
Exhibit 1 of the registrant's reports on Form 8-A and 8-K, both
dated and filed on December 17, 1998, is incorporated by
reference; and (3) Exhibit 3(a), being a Certificate of
Correction to the Restated Certificate of Incorporation, of the
registrant's report on Form 10-Q for the third quarter (ended
September 30), 1999, and filed on November 12, 1999, is
incorporated by reference.
3b By-Laws, Hubbell Incorporated, as amended on March 8, 1999.
Exhibit 3b of the registrant's report on Form 10-Q for the first
quarter (ended March 31), 1999, filed on May 14, 1999, is
incorporated by reference.
</TABLE>
(1) The definitive proxy statement for the annual meeting of shareholders to
be held on May 1, 2000, filed with the Commission on March 27, 2000,
pursuant to Regulation 14A, is incorporated herein by reference.
<PAGE> 47
Page 47
<TABLE>
<CAPTION>
2. Exhibits - Continued
--------------------
Number Description
------ -----------
<S> <C>
3c Rights Agreement, dated as of December 9, 1998, between Hubbell
Incorporated and ChaseMellon Shareholder Services, L.L.C.) as
Rights Agent (incorporated by reference to Exhibit 1 to the
registrant's Registration Statement on Form 8-A and Form 8-K,
both dated and filed on December 17, 1998. Exhibit 3(c), being
an Amendment to Rights Agreement, of the registrant's report on
Form 10-Q for the third quarter (ended September 30), 1999, and
filed on November 12, 1999, is incorporated by reference.
4a Instruments with respect to the 1996 issue of long-term debt
have not been filed as exhibits to this Annual Report on Form
10-K as the authorized principal amount on such issue does not
exceed 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis; registrant agrees to
furnish a copy of each such instruments to the Commission upon
request.
10a+* Hubbell Incorporated Supplemental Executive Retirement Plan, as
amended and restated effective December 8, 1999.
10b(1)+* Hubbell Incorporated 1973 Stock Option Plan for Key Employees,
as amended and restated effective December 8, 1999.
10c+ Description of the Hubbell Incorporated, Post Retirement Death
Benefit Plan for Participants in the Supplemental Executive
Retirement Plan, as amended effective May 1, 1993. Exhibit 10c
of the registrant's report on Form 10-Q for the second quarter
(ended June 30), 1993, filed on August 12, 1993, is incorporated
by reference.
10f* Hubbell Incorporated Deferred Compensation Plan for Directors,
as amended and restated effective December 8, 1999.
10g+ Hubbell Incorporated Incentive Compensation Plan, as amended
effective January 1, 1996. Exhibit B of the registrant's proxy
statement, dated March 22, 1996 and filed on March 27, 1996, is
incorporated by reference.
10h Hubbell Incorporated Key Man Supplemental Medical Insurance, as
amended and restated effective December 9, 1986. Exhibit 10h of
the registrant's report on Form 10-K for the year 1987, filed on
March 25, 1988, is incorporated by reference.
10i* Hubbell Incorporated Retirement Plan for Directors, as amended
and restated effective December 8, 1999.
</TABLE>
+ This exhibit constitutes a management contract, compensatory plan, or
arrangement
* Filed hereunder
<PAGE> 48
Page 48
<TABLE>
<CAPTION>
2. Exhibits - Continued
--------------------
Number Description
------ ---------
<S> <C>
10l+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and G. Jackson Ratcliffe,
Chairman of the Board, President and Chief Executive Officer.
Exhibit 10l of the registrant's report on Form 10-K for the year
1988, filed on March 29, 1989, is incorporated by reference.
10n+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and Harry B. Rowell, Jr.,
Executive Vice President. Exhibit 10n of the registrant's report
on Form 10-K for the year 1988, filed on March 29, 1989, is
incorporated by reference.
10o+ Hubbell Incorporated Policy for Providing Severance Payments to
Key Managers, as amended and restated effective September 9,
1993. Exhibit 10o of the registrant's report on Form 10-Q for
the third quarter (ended September 30), 1993, filed on November
10, 1993, is incorporated by reference.
10p+ Hubbell Incorporated Senior Executive Incentive Compensation
Plan, effective January 1, 1996. Exhibit C of the registrant's
proxy statement, dated March 22, 1996 and filed on March 27,
1996, is incorporated by reference.
10q+ Hubbell Incorporated Performance Unit Plan, effective January 1,
1997. Exhibit B of the registrant's proxy statement, dated March
21, 1997, filed on March 27, 1997, is incorporated by reference.
10r+* Continuity Agreement, dated as of December 27, 1999, between
Hubbell Incorporated and G. Jackson Ratcliffe.
10s+* Continuity Agreement, dated as of December 27, 1999, between
Hubbell Incorporated and Harry B. Rowell, Jr.
10t+* Continuity Agreement, dated as of December 27, 1999, between
Hubbell Incorporated and Timothy H. Powers.
10u+* Continuity Agreement, dated as of December 27, 1999, between
Hubbell Incorporated and Richard W. Davies.
10v+* Continuity Agreement, dated as of December 27, 1999, between
Hubbell Incorporated and James H. Biggart.
21 Listing of significant subsidiaries.
27 Exhibit 27 Financial Data Schedule (Electronic filings
only)
</TABLE>
3. Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
December 31, 1999.
- ----------------------------------
+ This exhibit constitutes a management contract, compensatory plan, or
arrangement
* Filed hereunder
<PAGE> 49
Page 49
Executive Officers of the Registrant
<TABLE>
<CAPTION>
Name Age(1) Present Position Business Experience
---- ------ ---------------- -------------------
<S> <C> <C> <C>
G. Jackson Ratcliffe 63 Chairman of the Board, President President and Chief Executive Officer
and Chief Executive Officer Officer since January 1, 1988; Chairman
of the Board since 1987; Executive Vice President -
Administration 1983-1987; Senior Vice
President-Finance and Law 1980-1983; Vice
President, General Counsel and Secretary
1974-1980.
Harry B. Rowell, Jr. 58 Executive Vice President and Present position since
Chief Operating Officer January 1, 1988; Group Vice
President 1985-1987; Vice President
Corporate Development and Planning
1979-1985.
Timothy H. Powers 51 Senior Vice President and Present position since September 21,
Chief Financial Officer 1998; previously Executive Vice
President, Finance & Business Development,
Americas Region, Asea Brown Boveri
Thomas H. Pluff(2) 52 Group Vice President Present position since March 1989.
Richard W. Davies 53 Vice President, General Counsel Present position since January 1,
and Secretary 1996; General Counsel since 1987;
Secretary since 1982; Assistant
Secretary 1980-1982; Assistant General
Counsel 1974-1987.
James H. Biggart, Jr. 47 Vice President and Treasurer Present position since January 1, 1996;
Treasurer since 1987; Assistant Treasurer
1986-1987; Director of Taxes 1984-1986.
</TABLE>
There is no family relationship between any of the above-named executive
officers.
- -----------------------------
(1) As of March 10, 2000
(2) Resigned January 15, 2000
<PAGE> 50
Page 50
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
<TABLE>
<CAPTION>
HUBBELL INCORPORATED
<S> <C>
By /s/ G. J. Ratcliffe 3/6/00
----------------------------------- ---------------
G. J. Ratcliffe Date
Chairman of the Board, President, Chief
Executive Officer and Director
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<S> <C>
By /s/ G. J. Ratcliffe 3/6/00
----------------------------------- ---------------
G. J. Ratcliffe Date
Chairman of the Board, President, Chief
Executive Officer and Director
By /s/ T. H. Powers 3/6/00
----------------------------------- ---------------
T. H. Powers Date
Senior Vice President & Chief Financial Officer
(Chief Accounting Officer)
By /s/ E. R. Brooks 3/6/00
----------------------------------- ---------------
E. R. Brooks Date
Director
By /s/ G. W. Edwards, Jr. 3/6/00
----------------------------------- ---------------
G. W. Edwards, Jr. Date
Director
By /s/ J. S. Hoffman 3/6/00
----------------------------------- ---------------
J. S. Hoffman Date
Director
By /s/ A. McNally IV 3/6/00
----------------------------------- ---------------
A. McNally IV Date
Director
</TABLE>
<PAGE> 51
Page 51
<TABLE>
<S> <C>
By /s/ D. J. Meyer 3/6/00
----------------------------------- ---------------
D. J. Meyer Date
Director
By /s/ J. A. Urquhart 3/6/00
----------------------------------- ---------------
J. A. Urquhart Date
Director
By /s/ M. Wallop 3/6/00
----------------------------------- ---------------
M. Wallop Date
Director
</TABLE>
<PAGE> 52
Page 52
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
Form 10-K for
Financial Statements 1999, Page:
- -------------------- -------------
<S> <C>
Report of Independent Accountants............................................................19
Consolidated Statement of Income for the three years
ended December 31, 1999......................................................................20
Consolidated Statement of Cash Flows for the three years
ended December 31, 1999......................................................................21
Consolidated Balance Sheet at December 31, 1999 and 1998.....................................22
Consolidated Statement of Changes in Shareholders' Equity
for the three years ended December 31, 1999..................................................24
Statement of Accounting Policies.............................................................25
Notes to Consolidated Financial Statements...................................................27
Financial Statement Schedule
- ----------------------------
Report of Independent Accountants
on Financial Statement Schedule..............................................................53
Valuation and Qualifying Accounts and Reserves
(Schedule VIII)..............................................................................54
</TABLE>
All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
<PAGE> 53
Page 53
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Hubbell Incorporated
Our audits of the consolidated financial statements referred to in our report
dated January 19, 2000, appearing on page 19 of this Form 10-K also included an
audit of the Financial Statement Schedule listed in the index on page 52 of this
Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Stamford, Connecticut
January 19,2000
<PAGE> 54
Page 54
HUBBELL INCORPORATED Schedule VIII
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
(In millions)
Reserves deducted in the balance sheet from the assets to which they apply:
<TABLE>
<CAPTION>
Additions Deductions -
Balance at charged Acquisition uncollectable Balance
beginning to costs of accounts at end
of period and expenses businesses written off of period
--------- ------------ ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Allowances for doubtful
accounts receivable:
Year 1997 $ 4.9 $ 1.3 $.2 $ (.7) $ 5.7
Year 1998 $ 5.7 $ 1.4 $-- $ (1.4) $ 5.7
Year 1999 $ 5.7 $ .7 $.6 $ (2.9) $ 4.1
</TABLE>
<PAGE> 1
EXHIBIT 10a
HUBBELL INCORPORATED
AMENDED AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Restated and Amended, Effective December 8, 1999
<PAGE> 2
HUBBELL INCORPORATED
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I PURPOSE.............................................................................1
-------
ARTICLE II DEFINITIONS.......................................................................1-2
-----------
ARTICLE III EFFECTIVE DATE......................................................................3
--------------
ARTICLE IV ELIGIBILITY.......................................................................3-4
-----------
ARTICLE V RETIREMENT BENEFITS...............................................................4-6
-------------------
ARTICLE VI PAYMENT OF RETIREMENT BENEFITS....................................................7-8
------------------------------
ARTICLE VII DISABILITY BENEFIT................................................................8-9
------------------
ARTICLE VIII DEATH BENEFIT....................................................................9-11
-------------
ARTICLE IX FUNDING.........................................................................11-12
-------
ARTICLE X PLAN ADMINISTRATION................................................................12
-------------------
ARTICLE XI AMENDMENT AND TERMINATION..........................................................12
-------------------------
ARTICLE XII MISCELLANEOUS PROVISIONS........................................................13-15
------------------------
ARTICLE XIII CHANGE OF CONTROL...............................................................16-20
-----------------
</TABLE>
<PAGE> 3
ARTICLE I
PURPOSE
1.1 The purpose of this Supplemental Executive Retirement Plan (the "Plan")
is to provide monthly supplemental retirement income for a select group
of officers and other key employees of Hubbell Incorporated (the
"Employer"). It is intended to provide a retirement benefit which
supplements the retirement benefit payable under the Hubbell
Incorporated Retirement Plan for Salaried Employees and other such
pension plans of Hubbell Incorporated and its subsidiaries as deemed
appropriate by the Board of Directors in its sole and absolute
discretion.
ARTICLE II
DEFINITIONS
2.1 "Accrued Deferred Vested Retirement Benefit" means the benefit
described in Article 5.4.
2.2 "Accrued Vested Participant" means a Participant who has been credited
with ten (10) or more years of Service.
2.3 "Average Earnings" means the annual average of the Participant's
Earnings for any three (3) calendar years in his last ten (10) years of
Service which produce the highest such average.
2.4 "Board of Directors" means the Board of Directors of Hubbell
Incorporated.
2.5 "Compensation Committee" means the Compensation Committee of the Board
of Directors.
2.6 "Early Retirement" means retirement under this Plan at a Participant's
election, between the ages of 55 and 65.
<PAGE> 4
2
2.7 "Earnings" means, with respect to a particular calendar year, the total
of (a) cash earnings paid to a Participant in the form of base salary,
(b) awards in respect of the prior calendar year (regardless of when
paid) under the incentive compensation plan (annual bonus) by his
Employer, and (c) any amount by which an Employee's base salary and
annual bonus awards are reduced under any 401(k) plan or any flexible
benefit plans under the Internal Revenue Code Sections 125 and 129
maintained by the Employer, during the respective calendar year.
2.8 "Employee" means a person who is employed by the Employer on a regular,
full-time basis.
2.9 "Employer" means Hubbell Incorporated, and its successor, and any of
its subsidiaries so designated by the Board of Directors.
2.10 "Key Executive" means (a) (i) any Officer elected prior to May 1,1993
and (ii) any other Employee who was so designated by the Compensation
Committee prior to May 1, 1993, and (b) any Officer or other Employee
who is so designated by the Compensation Committee on or after May 1,
1993 and as to who the Compensation Committee has not withdrawn such
designation.
2.11 "Normal Retirement" means retirement by a Participant under this Plan
on the first day of the month coinciding with or next following his
65th birthday.
2.12 "Officer" means the individual elected by the Board of Directors as
provided in Article IV of the By-Laws of Hubbell Incorporated to any of
the following offices: Chairman of the Board, President, Executive Vice
President, Senior Vice President, Group Vice President, Vice President,
Treasurer, Controller, or Secretary of Hubbell Incorporated.
2.13 "Participant" means a Key Executive.
<PAGE> 5
3
2.14 "Plan" means the Hubbell Incorporated Supplemental Executive Retirement
Plan.
2.15 "Postponed Retirement" means the Participant's actual retirement date
after Normal Retirement.
2.16 "Service" means a Participant's entire period of employment with the
Employer as an Officer and such other period of employment with the
Employer as a Key Executive as designated and determined by the
Compensation Committee.
2.17 "Spouse" shall mean the person to whom the Participant was lawfully
married for at least one (1) year on the Participant's actual date of
retirement (early, normal, postponed or disability, as the case may be)
or termination from the Employer.
2.18 "Total Disability" means the Compensation Committee's determination
that a Participant is totally and permanently disabled and can no
longer perform his duties as a Key Executive of the Employer.
ARTICLE III
EFFECTIVE DATE
3.1 This Plan shall be effective as of April 1, 1980.
ARTICLE IV
ELIGIBILITY
4.1 Key Executives shall continue to be Participants until their Service
with the Employer is terminated or they are no longer entitled to
retirement or deferred vested benefits under this Plan, whichever is
later. A Participant who has been credited with ten (10) or more years
of Service becomes an Accrued Vested Participant eligible for an
Accrued Deferred
<PAGE> 6
4
Vested Retirement Benefit. If a Participant is no longer a Key
Executive, but remains an Employee, his accrued Service as a
Participant shall not be forfeited.
ARTICLE V
RETIREMENT BENEFITS
5.1 Normal Retirement Benefit. A Participant's Normal Retirement Benefit
under this Plan, computed as a straight life annuity, shall equal (a)
minus (b), where:
(a) Equals - Six (6%) percent multiplied times the number of full
years of a Key Executive's Service.
In no event shall the percentage of benefit credit calculated under
this Article 5.1 (a) exceed sixty (60%) percent. The appropriate
percentage of benefit credit calculated under this Article 5.1 (a)
shall then be multiplied by the Participant's Average Earnings.
(b) Equals - The benefits, if any, available from the following
sources:
(i) any defined benefit pension plan or defined
contribution plan of the Employer which is qualified
under Section 401 of the Internal Revenue Code
(excluding, however: (a) any ancillary benefits such
as Medical or Transitional Supplements in the defined
benefit pension plans, and (b) any 401(k) plan
maintained by the Employer);
(ii) any top-hat excess pension plan of the Employer; and
(iii) any retirement benefits so designated and defined by
the Compensation Committee through a special
arrangement with the Employer.
For purposes of determining the benefits available from any qualified
defined benefit pension plan or qualified defined contribution plan of
the Employer, it shall be assumed
<PAGE> 7
5
that the Participant commenced receiving his benefits under such plan
on the fifteenth day of the month commencing after his actual
retirement date.
5.2 Early Retirement Benefit. A Participant who elects to retire on or
after age 55 shall be entitled to an early retirement benefit
commencing on the date described in Article 6.1 hereof. The annual
amount of the Early Retirement Benefit payable to a Participant who
elects Early Retirement shall be an amount computed in accordance with
Article 5.1 hereof except that the Early Retirement Benefit shall be
based upon the Participant's years of Service up to his actual Early
Retirement Date (the first day of any month elected by the Participant
between the date the Participant attains age 55 and the date he attains
age 65), with the amount reduced by three-tenths of one percent (3/10%)
for each complete month by which the commencement date of his Early
Retirement Benefit precedes his attainment of age 62 and by an
additional two-tenths of one percent (2/10%) for each complete month by
which the commencement date of his Early Retirement Benefit precedes
his 60th birthday, provided, however, the Compensation Committee may,
in its sole discretion, waive, in whole or in part, said early
retirement reduction factors and, for purposes of determining the
benefits available from any qualified defined benefit pension plan or
qualified defined contribution plan of the Employer, it shall be
assumed that the Participant commenced receiving his benefits under
such plan on the earliest date the Participant could have retired under
such plan.
5.3 Postponed Retirement. A Participant's Postponed Retirement Benefit
under this Plan shall be the same amount that would have been payable
had the Participant retired on his Normal Retirement Date. For purposes
of determining the benefits available from any qualified defined
benefit pension plan or qualified defined contribution plan of the
<PAGE> 8
6
Employer, it shall be assumed that the Participant commenced receiving
his benefits under such plan on the fifteenth day of the month
commencing after his actual retirement date.
5.4 Accrued Deferred Vested Retirement Benefit. Subject to Articles 12.4
and 12.5 hereof, an Accrued Vested Participant whose employment with
the Employer terminates on or after September 12, 1984, other than by
normal, early, postponed, or disability retirement or death shall, if
he has then completed ten (10) or more full years of Service, be
entitled to a non-forfeitable Accrued Deferred Vested Retirement
Benefit commencing on the date described in Article 6.1 hereof. The
annual amount of the Accrued Deferred Vested Retirement Benefit payable
to an Accrued Vested Participant shall be computed in accordance with
Article 5.1 hereof except that the Accrued Deferred Vested Retirement
Benefit shall be based upon the Accrued Vested Participant's Service as
of the date of his termination of employment, with the amount reduced
by three-tenths of one percent (3/10%) for each complete month by which
the commencement date of his Accrued Deferred Vested Retirement Benefit
precedes his Normal Retirement Date and by an additional two-tenths of
one percent (2/10%) for each complete month by which the commencement
date of his Accrued Deferred Vested Retirement Benefit precedes his
60th birthday, provided, however, the Compensation Committee may, in
its sole discretion, waive, in whole or in part, said reduction factors
and, for purposes of determining the benefits available from any
qualified defined benefit pension plan or qualified defined
contribution plan of the Employer, it shall be assumed that the
Participant commenced receiving his benefits under such plan on the
first date that the Participant could have received deferred vested
retirement benefits under such plan.
<PAGE> 9
7
ARTICLE VI
PAYMENT OF RETIREMENT BENEFITS
6.1 Payment of Benefits.
(a) Except as set forth herein and in Section 6.1(b) below, all
retirement benefits hereunder shall be payable in monthly
installments (on the fifteenth day of the month) equal to
one-twelfth (1/12th) of the annual amounts determined under
this Plan. A Participant's retirement benefit, if any,
hereunder shall be payable for the life of the Participant,
commencing (a) for normal, postponed or disability
retirements, on the fifteenth day of the month commencing
after his actual retirement date, (b) for Early Retirement, on
the fifteenth day of the month commencing after the
Participant's actual Early Retirement date and (c) for an
Accrued Vested Participant, on the fifteenth day of the month
commencing after the first date that the Accrued Vested
Participant may receive deferred vested retirement benefits
under the applicable defined benefit pension plan (qualified
under Section 401(a) of the Internal Revenue Code of 1986)
maintained by the Employer, or any successor defined benefit
pension plan. The Participant's last payment of retirement
benefits hereunder shall be made on the fifteenth day of the
month in which he dies unless the Participant has an eligible
surviving Spouse at his date of death, in which case survivor
benefit payments shall be made to said Spouse in accordance
with Article VIII hereof.
(b) In the case of a Participant who has attained age 61, he may
elect, by giving written notice to the Compensation Committee
at least one year prior to his Early Retirement at or after
age 62, Normal Retirement or Postponed Retirement, to
<PAGE> 10
8
receive any applicable retirement and death benefit otherwise
payable under Section 5 and Section 8.2 hereof in the form of
a lump sum. Such lump sum shall be payable as soon as
practicable after the Participant's retirement date, and
calculated as follows:
(i) Interest rate: Interest payable on 10 year U.S.
Treasury notes as of the October 1 preceding the
Participant's retirement date.
(ii) Mortality Table: The Mortality Table being utilized
by the Hubbell Incorporated Retirement Plan for
Salaried Employees as of the October 1 preceding the
Participant's retirement date.
6.2 Payments Rounded to Next Higher Full Dollar. Each monthly payment which
is computed in accordance with this Plan will, if not in whole dollars,
be increased to the next whole dollar. Such rounding shall be made
after applying any applicable reduction factors.
ARTICLE VII
DISABILITY BENEFIT
7.1 Disability Benefit. If a Participant is deemed by the Compensation
Committee to have incurred a Total Disability, he shall receive a
disability retirement benefit hereunder commencing on the fifteenth day
of the month commencing after the date he is deemed by the Compensation
Committee to be so disabled. The annual amount of the Participant's
Disability Retirement Benefit hereunder shall be computed as in Article
5.1 hereof, but assuming that the Participant has been employed with
the Employer until his Normal Retirement Date at the last rate of his
Earnings in effect at the time he was deemed by the Compensation
Committee to be permanently and totally disabled.
<PAGE> 11
9
7.2 Medical Examination. Any Participant retired for Total Disability may
be required by the Compensation Committee to submit to a medical
examination at any time prior to his 65th birthday, but not more than
once each year, to determine whether the Participant is eligible for
continuance of the Disability Retirement Benefit provided hereunder.
ARTICLE VIII
DEATH BENEFIT
8.1 Pre-Retirement Death Benefit.
(a) If an Accrued Vested Participant or a former Accrued Vested
Participant whose benefit has not yet commenced dies, and he
is survived by a spouse to whom he was married throughout the
one-year period ending on the date of his death, such spouse
shall be entitled to receive a spouse's benefit described
herein, payable in the amount and manner prescribed in
subsections (b) and (c) of this Section 8.1.
(b) The spouse's benefit is an annuity for the life of the spouse
in an amount which is equal to the benefit the spouse would
have received under a joint and survivor annuity that provided
the spouse on the date of death of the Participant an annual
pension equal to 50 percent of the Participant's annual
pension if:
(i) the Participant had retired on the day before his
death, in the case of a Participant who dies after he
is eligible for retirement, or
(ii) the Participant had separated from service with the
Employer on the date of his death, survived to his
earliest retirement date, retired on such date, and
died on the day after such date, in the case of a
Participant who dies before he is eligible for
retirement.
<PAGE> 12
10
(c) Payments of spouse's benefit shall commence as of the later of
(i) the first day of the month, following the Participant's
death; or (ii) the month following the date the Participant
would have attained the earliest age on which he could have
retired, provided the spouse survives to that date.
(d) For purposes of computing the spouse's benefit, actuarial
factors shall be used as are then applicable under the Hubbell
Incorporated Retirement Plan for Salaried Employees.
8.2 Post-Retirement Death Benefit. Unless such individual has elected to
receive his benefit in a lump sum pursuant to Section 6.1 (b), if a
Participant or Accrued Vested Participant dies while receiving
retirement benefits under this Plan, a death benefit equal to fifty
(50%) percent of the retirement benefit which the Participant or
Accrued Vested Participant was receiving under this Plan immediately
prior to his death shall be paid to his eligible surviving Spouse, if
any. If, as of the date of the Participant's or Accrued Vested
Participant's death, his eligible surviving Spouse, if any, is ten (or
more) years younger than the Participant or Accrued Vested Participant,
then the death benefit payable to said eligible surviving Spouse shall
be actuarially reduced pursuant to the actuarial factors then
applicable under the Hubbell Incorporated Retirement Plan for Salaried
Employees. Notwithstanding anything contained herein to the contrary,
in no event shall an eligible surviving Spouse receive in any year
under this Plan more than the excess (if any) of thirty-three and
one-third percent (33-1/3%) of the Participant's or Accrued Vested
Participant's Average Earnings over the aggregate value (as determined
by the Compensation Committee) of benefits receivable in such year
under the Hubbell Incorporated Retirement Plan for Salaried Employees
and any defined benefit pension plan
<PAGE> 13
11
or defined contribution plan of the Employer which is qualified under
Section 401(a) of the Internal Revenue Code (excluding, however: (a)
any ancillary benefits such as Medical or Transitional Supplements in
the defined benefit pension plans, and (b) any 401(k) plan maintained
by the Employer). Payments of said death benefit to the surviving
Spouse shall commence to be paid on the fifteenth day of the month
coinciding with or next following the Participant's or Accrued Vested
Participant's death and shall continue until the Spouse dies.
ARTICLE IX
FUNDING
9.1 The Employer may enter into a trust agreement creating an irrevocable
grantor trust for the holding of cash and/or annuity contracts for pension
benefits accrued by the Participants under the Plan. Any assets of such trust
shall be subject to the claims of creditors of the Employer to the extent set
forth in the trust and Participants' interests in benefits under this Plan
shall only be those of unsecured creditors of the Employer. In the event of a
Change of Control, the Employer shall enter into a trust agreement creating an
irrevocable grantor trust for the holding of cash and/or annuity contracts in
respect of the pension benefits accrued by the Participants (whether current or
former) and in respect of the pension benefits provided to certain Employees
who shall be deemed to be Participants pursuant to written agreements with the
Employer; provided, further, that upon the occurrence of a Change of Control
Transaction, the Employer shall transfer to the trustee of the foregoing trust
the
<PAGE> 14
12
maximum amount of assets estimated to be necessary to satisfy the Employer's
obligations hereunder, as in effect immediately prior to the Change of Control
Transaction.
ARTICLE X
PLAN ADMINISTRATION
10.1 The general administration of this Plan and the responsibility for
carrying out the provisions hereof shall be vested in the Compensation
Committee. The Compensation Committee may adopt, subject to the
approval of the Board of Directors, such rules and regulations as it
may deem necessary for the proper administration of this Plan, and its
decision in all matters shall be final, conclusive, and binding.
ARTICLE XI
AMENDMENT AND TERMINATION
11.1 The Board of Directors of the Employer reserves in its sole and
exclusive discretion the right at any time and from time to time to
amend this Plan in any respect or terminate this Plan without
restriction and without the consent of any Participant, Accrued Vested
Participant, or Spouse, provided, however, that no amendment or
termination of this Plan shall impair the right of any Participant,
Accrued Vested Participant, or Spouse to receive benefits earned and
accrued hereunder prior to such amendment or termination. The Board of
Directors shall not terminate this Plan solely to accelerate benefits
earned and accrued hereunder. Any amounts not currently payable to a
Participant, Accrued Vested Participant or Spouse shall revert to the
Employer in the event of termination of the Plan.
<PAGE> 15
13
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 No Guarantee of Employment. Nothing contained herein shall be deemed to
give any individual the right to be retained in the service of the
Employer or to interfere with the rights of the Employer to discharge
any individual at any time, with or without cause.
12.2 Non-Alienation of Benefits. No retirement benefit payable hereunder may
be assigned, pledged, mortgaged or hypothecated and, to the extent
permitted by law, no such retirement benefit shall be subject to legal
process or attachment for the payment of any claims against any person
entitled to receive the same. Notwithstanding any provision herein to
the contrary, the Employer may, as the Compensation Committee in its
sole and absolute discretion shall determine, offset any amount to be
paid to a Participant, Accrued Vested Participant, or Spouse hereunder
in order to recoup amounts that have been misappropriated by such
Participant or Accrued Vested Participant or in order to reimburse
amounts that have been advanced to such Participant or Accrued Vested
Participant for expense accounts or similar circumstances and that
remain outstanding upon termination of employment.
12.3 Payment to Incompetents. If a Participant or Accrued Vested Participant
entitled to receive any retirement benefit payments hereunder is deemed
by the Compensation Committee or is adjudged by a court of competent
jurisdiction to be legally incapable of giving valid receipt and
discharge for such retirement benefit, such payments shall be paid to
such person or persons as the Compensation Committee shall designate or
to the duly appointed guardian. Such payments shall, to the extent
made, be deemed a complete discharge for such payments under this Plan.
<PAGE> 16
14
12.4 Loss of Benefits. At the sole discretion of the Compensation Committee,
and after written notice to the Participant, Accrued Vested
Participant, or his Spouse as beneficiary, rights to receive any
retirement benefit under this Plan may be forfeited, suspended, reduced
or terminated in cases of gross misconduct by the Participant or
Accrued Vested Participant which is reasonably deemed to be prejudicial
to the interests of the Employer or a subsidiary of the Employer,
including but not limited to the utilization or disclosure of
confidential information for gain or otherwise.
12.5 Noncompetition. A Participant and Accrued Vested Participant shall
forfeit for himself and his Spouse any and all retirement benefits
pursuant to this Plan if said Participant or Accrued Vested Participant
violates the notice provision of the next paragraph hereof or anywhere
in the United States or outside of the United States, directly or
indirectly, owns, manages, operates, joins or controls, or participates
in the ownership, management, operation or control of, or becomes a
director or an employee of, or a consultant to, any person, firm, or
corporation which competes with the Employer; provided, however, that
the provisions of this Article 12.5 shall not apply to investments by
the Participant or Accrued Vested Participant in shares of stock traded
on a national securities exchange or on the national over-the-counter
market which shall have an aggregate market value, at the time of
acquisition, of less than two (2%) percent of the outstanding shares of
such stock.
A Participant and Accrued Vested Participant shall be obligated to give
the Employer at least sixty (60) days' prior written notice, registered
or certified mail, postage prepaid, addressed to the Secretary, Hubbell
Incorporated, 584 Derby Milford Road, Orange, Connecticut, 06477, of
his intention, directly or indirectly, to own, manage, operate, join
<PAGE> 17
15
or control, or participate in the ownership, management, operation or
control of, or become a director or an employee of, or a consultant to,
any person, firm, or corporation, following which, within a period of
sixty (60) days from its receipt of such notice, the Employer will mail
to the Participant or Accrued Vested Participant by registered or
certified mail, postage prepaid, a statement of its opinion as to
whether said intention of the Participant or Accrued Vested Participant
violates this Article 12.5.
12.6 Withholding. Payments made by the Employer under this Plan to any
Participant, Accrued Vested Participant, or Spouse shall be subject to
withholding as shall, at the time for such payment, be required under
any income tax or other laws, whether of the United States or any other
jurisdiction.
12.7 Expenses. All expenses and costs in connection with the operation of
this Plan shall be borne by the Employer.
12.8 Governing Law. The provisions of this Plan will be construed according
to the laws of the State of Connecticut, excluding the provisions of
any such laws that would require the application of the laws of another
jurisdiction.
12.9 Gender and Number. The masculine pronoun wherever used herein shall
include the feminine gender and the feminine the masculine and the
singular number as used herein shall include the plural and the plural
the singular unless the context clearly indicates a different meaning.
12.10 Titles and Heading. The titles to articles and headings of sections of
this Plan are for convenience of reference only and in case of any
conflict, the text of the Plan, rather than such titles and headings,
shall control.
<PAGE> 18
16
ARTICLE XIII
CHANGE OF CONTROL
13.1 The provisions of Section 13.3 shall become effective immediately upon
the occurrence of a Change of Control (as defined in Section 13.2(a)).
13.2 (a) "Change of Control" shall mean any one of the following:
(i) Continuing Directors no longer constitute at least
2/3 of the Directors;
(ii) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of the Employer entitled to
vote for the election of the Employer's directors;
provided that this Article XIII shall not apply with
respect to any holding of securities by (A) the trust
under a Trust Indenture dated September 2, 1957 made
by Louie E. Roche, (B) the trust under a Trust
Indenture dated August 23, 1957 made by Harvey
Hubbell, and (C) any employee benefit plan (within
the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended)
maintained by the Employer or any affiliate of the
Employer;
(iii) the approval by the Employer's stockholders of the
merger or consolidation of the Employer with any
other corporation, the sale of substantially all of
the assets of the Employer or the liquidation or
dissolution of the Employer, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such
<PAGE> 19
17
merger or consolidation will constitute at least 2/3
of the Directors of the surviving corporation of such
merger or consolidation and any parent (as such term
is defined in Rule 12b-2 under the Securities
Exchange Act of 1934) of such corporation; or
(iv) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Employer's stockholders determine that
such proposed action, if taken, would constitute a
change of control of the Employer and such action is
taken.
(b) "Continuing Director" shall mean any individual who is a
member of the Employer's Board of Directors on December 9,
1986 or was designated (before such person's initial election
as a Director) as a Continuing Director by 2/3 of the then
Continuing Directors.
(c) "Director" shall mean any individual who is a member of the
Employer's Board of Directors on the date the action in
question was taken.
(d) "Change of Control Transaction" shall mean the closing of the
transaction constituting the Change of Control, which shall
include, for purposes of the events described in Section
13.2(a)(iii), above, the consummation of the merger or
consolidation approved by Hubbell's stockholders.
13.3 (a) Section 2.10 is deleted and the following is inserted in lieu
thereof:
"Key Executive" means (a) (i) any Officer elected
prior to May 1, 1993 and (ii) any other Employee who
was so designated by the Compensation Committee prior
to May 1, 1993, and (b) any Officer or other Employee
<PAGE> 20
18
who is so designated by the Compensation Committee on
or after May 1, 1993."
(b) Section 2.18 is deleted and the following is inserted in lieu
thereof:
"Totally and Permanently Disabled" shall mean, with
reference to a Participant hereunder, that as a
result of bodily or mental injury or disease, whether
occupational or non-occupational in origin, as
determined by competent medical authority selected by
the Participant or by such Participant's
representative, he is wholly and permanently
prevented from engaging for remuneration or profit in
any occupation or employment for which he is
reasonably suited by education, training and
experience.
(c) The remainder of Section 5.2 is deleted after "attains age
65)" on the seventh and eighth lines of page 5.
(d) The remainder of Section 5.4 is deleted after "date of his
termination of employment" on the ninth and tenth lines in
Section 5.4 on page 6.
(e) The following is added to the end of Section 6.1(a):
"Notwithstanding any of the foregoing, unless otherwise
provided in an agreement between a Participant and the
Employer with respect to any benefit provided for herein,
upon the occurrence of a Change of Control Transaction,
unless a Participant (whether current or former) elects
otherwise during the period of ten days after the signing of
any agreement by the Company that would, upon the
consummation of the transactions contemplated therein, result
in a Change of Control, all amounts otherwise payable
pursuant to the schedules set forth in Section 6.1(a) and (b)
hereof, shall be paid out in one lump sum no later than ten
days after a Participant's termination of employment
<PAGE> 21
19
with the Employer. The amounts to be paid out in such lump sum
shall be calculated using the actuarial assumptions set forth
on Exhibit A, attached hereto."
(f) In the first sentence of Section 7.1, the phrase "If a
Participant is deemed by the Compensation Committee to have
incurred a Total Disability" is deleted and in lieu thereof is
inserted the phrase "If a Participant becomes Totally and
Permanently Disabled". Section 7.2 is deleted.
(g) Section 10.1 is deleted and the following is inserted in lieu
thereof:
"The Plan shall be administered by the Compensation
Committee which shall have full authority to
interpret the Plan, to establish rules and
regulations relating to the Plan, to determine the
criteria for eligibility to participate in the Plan,
to select Participants in the Plan, and to make all
other determinations and take all other actions
necessary or appropriate for the proper
administration of the Plan. No member of the
Compensation Committee shall be eligible to
participate in the Plan."
(h) The remainder of Section 12.2 is deleted beginning with
"Notwithstanding any provision herein" on the fourth and fifth
lines of Section 12.2 on page 13.
(i) In Section 12.3, all references to "Compensation Committee"
are deleted and in lieu thereof is inserted the term
"Trustee".
(j) Section 12.4 is deleted.
(k) Section 12.5 is deleted.
(l) New Section 12.11 is inserted as follows:
<PAGE> 22
20
"Notwithstanding any other provisions of the Plan to the
contrary:
(i) the accrued benefit hereunder of any Participant as
of the date of a Change of Control may not be
reduced;
(ii) any Service accrued by a Participant as of the date
of a Change of Control cannot be reduced;
(iii) no amendment or action of the Compensation Committee
which affects any Participant is valid and
enforceable without the prior written consent of such
Participant; and
(iv) no termination of the Plan shall have the effect of
reducing any benefits accrued under the Plan prior to
such termination."
Adopted by the Board of Directors on March 11, 1980 and amended on September 1,
1984, December 9, 1986, December 19, 1990, December 18, 1991, December 16, 1992,
May 1, 1993, December 11, 1996, December 10, 1997, and December 8, 1999.
<PAGE> 23
21
EXHIBIT A
ASSUMPTIONS
The assumptions to be used are those specified under Section 417(e) of the
Internal Revenue Code of 186, as amended, which assumptions are the minimum lump
sum factors permitted to be used for calculating pension benefits under
qualified defined benefit plans.
Benefit: Lump sum payment of unreduced benefit deferred to age 55,
increased to reflect the 50% joint and survivor form.
Mortality Rates: The 1983 Group Annuity Mortality (1983 GAM) blend of 50% male
and 50% female rates.
Interest Rate: 10-year treasury rate on the first day of the fourth quarter
of the calendar year immediately prior to the date on which
the Participant retires or otherwise separates from Service.
Other: 3% annual Social Security wage base increase.
2.5% annual CPI increase.
5% annual salary increase.
Qualified Plan
Offset: Amount actually payable at age 55 (or, if higher, the
participants actual age as of the date of termination of
employment).
<PAGE> 1
EXHIBIT 10b(1)
HUBBELL INCORPORATED
AMENDED AND RESTATED
1973 STOCK OPTION PLAN FOR KEY EMPLOYEES
1. Purpose of the Plan
The purpose of the 1973 Stock Option Plan for Key Employees (the
"Plan") is to further the growth and development of Hubbell Incorporated (the
"Company") by providing an incentive through encouraging ownership of stock of
the Company to officers and other key employees who are in a position to
contribute materially to the prosperity of the Company, to increase their
interest in the Company's welfare and continue their services, and by affording
a means through which the Company can attract to its services, employees of
outstanding ability.
2. Administration of the Plan
The Plan shall be administered by the Compensation Committee (the
"Committee"), consisting solely of at least two or more members of the Board of
Directors of the Company ("Board of Directors") who are each "non-employee
directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor rule thereto). The members of the Committee shall be
appointed from time to time by the Board of Directors, to serve at the pleasure
of the Board. From and after the first meeting of shareholders at which
directors are to be elected that occurs after July 1, 1994, the Committee shall
contain at least two "outside directors" as that term is defined in Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") (or any
successor section thereto).
Subject to the express provisions of the Plan, the Committee shall have
authority in its discretion to determine the individuals to whom, and the time
or times at which options shall be granted, and the number of shares to be
subject to each option. In making such determinations, the Committee may take
into account the nature of the services rendered by the respective employees,
their present and potential contribution to the Company's success, and such
other factors as the Committee in its discretion shall deem relevant.
Subject to the express provisions of the Plan, the Committee shall also
have authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective option agreements (which need not be identical) and to make all other
determinations necessary or advisable for the administration of the Plan.
The Committee shall select one of its members as a Chairman, who shall
preside at meetings and who shall have authority to execute and deliver
documents on behalf of the Committee. Meetings of the Committee shall be held at
such times and places as the members thereof may determine. The majority of its
members shall constitute a quorum, and all determinations of the Committee shall
be made by a majority of its members. No member of the Committee shall be liable
for anything done or omitted to be done by such member or by any
<PAGE> 2
2
other member of the Committee in connection with this Plan, except for such
member's own willful misconduct or as expressly provided by statute.
3. Stock Subject to the Plan
Subject to adjustment as provided in Paragraph 5(d) of this Plan, the
aggregate number of shares of stock which may be issued under options granted
under this Plan shall be 3,600,000 shares of the Company's Class A Common Stock,
par value $.01 per share, and 15,145,670 shares of the Company's Class B Common
Stock, par value $.01 per share. The number of shares of stock which may be
issued under options granted under this Plan to any one individual in any fiscal
year shall not exceed 300,000 shares, subject to adjustment pursuant to Section
5(d) hereof.
Options granted by the Committee may be "incentive stock options" (as
defined in Section 422 of the Code) or options which are not "incentive stock
options", or a combination thereof, as determined by the Committee.
Options may be granted with respect to authorized but unissued shares.
In the event that any option under the Plan expires or is terminated for any
reason prior to the end of the period during which options may be granted, the
shares allocable to the unexercised portion of such option shall again be
available for the purposes of this Plan.
4. Eligibility
Options may be granted only to officers and other key employees of the
Company and subsidiary corporations (as defined in Section 424(f) of the Code).
Directors who are not officers or employees shall not be eligible. Subject to
the other provisions of this Plan, an individual may hold or be granted more
than one option. No incentive stock option shall be granted hereunder which
would permit the person to whom the option is granted to own (within the meaning
of Section 424(d) of the Code), immediately after the option is granted, stock
(including stock issuable upon the exercise of options) possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company, unless at the time any such option is granted the option price is at
least 110 percent of the fair market value of the stock subject to the option,
and such option by its terms is not exercisable after the expiration of five
years from the date such option is granted.
5. Terms and Conditions of Options
Options shall be granted under this Plan upon such terms and conditions
as the Committee shall determine, subject to the following provisions:
(a) Option Price
The option price of the stock subject to each option shall not be less
than 100 percent of the fair market value of such stock, as determined in good
faith by the Committee, on the date such option is granted.
<PAGE> 3
3
(b) Term of Option
Options shall be granted for such term as the Committee shall determine
except that no option shall be exercisable after the expiration of ten years
from the date such option is granted.
(c) Exercise and Termination of Options
The options granted under the Plan shall be exercisable immediately or
in such installments as the Committee may prescribe. The Committee may
accelerate the exercisability of options at any time in its sole discretion.
Unless otherwise determined by the Committee, during the lifetime of
the individual to whom an option is granted, the option shall be exercisable
only by such individual.
(A) Termination of Employment -- General
If the participant ceases to be an employee of the Company or a
subsidiary for any reason (including, without limitation, the sale of a
subsidiary) other than death, retirement with the consent of the Company or
retirement by reason of "Permanent Disability," such option shall expire on the
earlier of (i) the end of the option exercise period specified in the option or
(ii) the date three months from the date of the participant's termination of
employment (even though such participant is subsequently reemployed). "Permanent
Disability" shall mean that the participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve
months.
(B) Retirement with Company Consent
If the employment of the participant with the Company or its
subsidiaries shall terminate by reason of the participant's retirement with the
consent of the Company, such participant's stock option shall continue to mature
in the normal manner and the participant (or in the event of his death after the
date of retirement, his estate or the person who acquires his option by bequest
or inheritance or by reason of his death) shall have the right to exercise his
option until the later of (i) the date three years after the date of such
retirement or (ii) in the event that the participant's death occurs during such
three-year period the date twelve months after the death of the participant; but
in no event later than the end of the option exercise period specified in the
option; provided, however, that in the event that the participant retires with
the consent of the Company, the Committee may, in its discretion, provide that
the participant shall have the right to exercise his option until the end of the
option exercise period specified in the option.
(C) Retirement Due to Permanent Disability
If the employment of the participant with the Company or its
subsidiaries shall terminate by reason of the participant's retirement due to
Permanent Disability, the participant (or in the event of his death after the
date of retirement, his estate or the person who acquires his option by
<PAGE> 4
4
bequest or inheritance or by reason of his death) shall have the right to
exercise his option, to the extent that he could have exercised it at the date
of such disability retirement, until the later of (i) the date twelve months
after the date of such termination of employment or (ii) in the event that the
participant's death occurs during such twelve-month period the date twelve
months after the date of such death; but in no event later than the end of the
option exercise period specified in the option.
(D) Termination Due to Death
If a participant's employment by the Company or any subsidiary
terminates by reason of death, any option held by the participant may thereafter
be immediately exercised, to the extent then exercisable, by his estate or the
person who acquires his option by bequest or inheritance or by reason of his
death for a period of one year from the date of such death or until the end of
the option exercise period specified in the option, whichever period is the
shorter.
(E) Miscellaneous
A participant who is absent from work with the Company or a subsidiary
because of illness or temporary disability, or who is on leave of absence for
such purpose or reason as the Committee may approve, shall not be deemed during
the period of such absence, by reason of such absence, to have ceased to be an
employee of the Company or a subsidiary. Where a cessation of employment is to
be considered a retirement with the consent of the Company or by reason of
Permanent Disability for the purpose of this Plan shall be determined by the
Committee, which determination shall be final and conclusive.
No option shall be exercisable unless at the time of exercise the
shares are covered by a currently effective registration statement filed under
the provisions of the Securities Act of 1933, as amended, or, in the sole
opinion of the Company and its counsel, the purchase of the shares upon exercise
of the option is otherwise exempt from the registration requirements of that
Act.
Each participant shall be required, as a condition of exercising any
option, to make such arrangements with the Company as the Committee shall
determine for withholding (including, but not limited to, the retention of
shares by the Company or the delivery to the Company of shares, in each case
equal in fair market value as described in Paragraph 5(f) to the amount of all
or any portion of the withholding obligation pursuant to such rules as may be
prescribed by the Committee) and, in the event of the death of a participant, a
further condition of such exercise shall be the delivery to the Company of such
tax waivers and other documents as the Committee shall determine. With the
consent of the Committee, a participant may elect to have the Company retain a
number of shares otherwise issuable on exercise of an option, or to deliver
shares, in each case equal in fair market value as described in Paragraph 5(f)
to the amount of all or any portion of the participant's federal, state and
local income tax obligation resulting from such exercise determined at the
participant's maximum marginal tax rates.
<PAGE> 5
5
(d) Adjustments Upon Changes in Capitalization
If (i) the Company shall at any time be involved in a transaction to
which Section 424(a) of the Code is applicable; (ii) the Company shall declare a
dividend payable in any class of shares, or shall subdivide or combine, its
shares; or (iii) any other event shall occur which in the judgment of the
Committee necessitates action by way of adjusting the terms of the outstanding
options, the Committee shall forthwith take any such action as in its judgment
shall be necessary to preserve the participant's rights substantially
proportionate to the rights existing prior to such event and to the extent that
such action shall include an increase or decrease in the number of shares
subject to outstanding options, the number of shares available under Paragraph 3
above shall be increased or decreased, as the case may be, proportionately. The
judgment of the Committee with respect to any matter referred to in this
Paragraph shall be conclusive and binding upon each participant.
In the event of the proposed dissolution or liquidation of the Company,
or in the event of any proposed reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the Company is not
the surviving corporation, or in the event of a proposed sale of all or
substantially all of the principal and/or assets of the Company to another
corporation, all options granted hereunder shall terminate as of a date to be
fixed by the Committee, provided that not less than 90 days' written notice of
the date so fixed shall be given to each participant, and each participant shall
have the right during such period to exercise his option as to all or any part
of the shares covered thereby to the extent such option is then otherwise
exercisable pursuant to the provisions of this Plan and of the option; and
provided further, however, that the Board of Directors may, in their discretion,
substitute or cause to be substituted new options for each such outstanding
option, provided each such new option applies to the stock of the new employer
corporation or a parent or subsidiary corporation of such corporation.
(e) Nontransferability of Options
Unless otherwise determined by the Committee, no option shall be
assigned or transferable, except by will or by the laws of descent and
distribution.
(f) Payment for Stock
The option price payable upon exercise of an option shall be payable to
the Company either (i) in cash (including check, bank draft, or money order),
(ii) by delivery to the Company of shares of either class of common stock of the
Company or a combination of common stock and cash, or (iii) to the extent
authorized by the Committee, through the written election of the optionee to
have shares of common stock withheld by the Company from the shares otherwise to
be received. The value of any common stock so delivered or withheld shall be the
fair market value of such common stock, as determined in good faith by the
Committee, on the date of the stock option exercise.
<PAGE> 6
6
(g) Limitation on Incentive Stock Options
With respect to incentive stock options granted after December 31,
1986, the aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options are
exercisable for the first time by a participant during any calendar year (under
all such plans of the individual's employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.
6. Term of Plan
No option shall be granted pursuant to the Plan after March 10, 2007.
7. Termination and Amendment of Plan
The Board of Directors of the Company may at any time amend, suspend or
terminate the Plan, except that no amendment which would increase the maximum
number of shares which may be issued under options granted under this Plan shall
be effective unless, within twelve months before or after the Board adopts such
amendment, it is approved by shareholders. No amendment, suspension or
termination of this Plan shall, without the consent of the participant,
terminate, or adversely affect the participant's rights under, any outstanding
option.
8. Privileges of Stock Ownership
The holder of an option shall not be entitled to the privileges of
stock ownership as to any shares of the Company not actually issued to him. No
shares shall be issued upon the exercise of an option until all applicable legal
requirements shall have been complied with to the satisfaction of the Company
and its counsel.
9. Time of Granting of Options
The granting of an option pursuant to this Plan shall take place at the
time the Committee makes a determination that an employee shall receive an
option.
10. Construction
Words and terms used in this Plan which are defined or used in Sections
421, 422 or 424 of the Code shall, unless the context clearly requires
otherwise, have the meanings assigned to them therein, in the regulations
promulgated thereunder and in the decisions construing the provisions thereof.
The place of administration of this Plan shall be conclusively deemed to be
within the State of Connecticut, and the validity, construction, interpretation
and effect of the Plan, its rules and regulations and the rights of any and all
participants having or claiming to have an interest therein or thereunder, shall
be governed by and determined conclusively and solely in accordance with the
laws of the State of Connecticut without regard to any conflicts of laws
provisions.
<PAGE> 7
7
11. Provisions Relating to Change of Control
(i) Each option granted under this Plan shall, to the
extent then exercisable determined after applying Paragraph 11(ii) below, have a
limited right of surrender allowing a participant who is an Officer, or any
other participant in the discretion of the Committee, to surrender his option
within the 30-day period following the Change of Control and to receive in cash,
in lieu of exercising the option, the amount by which the fair market value of
the common stock which the option represents exceeds the option exercise price
for all or part of the shares of common stock which are subject to the related
option. For this purpose, the fair market value of common stock shall be
determined as follows:
(a) if the share was a share of the Company's Class A
Common Stock, the fair market value shall be deemed
to be the closing price of one share of the Company's
Class A Common Stock on the New York Stock Exchange
on that day, within the 60 days preceding the date on
which the Change of Control occurs, on which such
closing price was the highest. In the event that the
shares are not listed or admitted to trading on such
exchange, the fair market value shall be deemed to be
the closing price of one share of the Company's Class
A Common Stock on the principal national securities
exchange on which the shares are listed or admitted
to trading, or, if the shares are not listed or
admitted to trading on any national securities
exchange, the average of the highest reported bid and
lowest reported asked prices as reported on the New
York Stock Exchange (the "NYSE") or similar
organization if the NYSE is no longer reporting such
information. If on any such date the shares are not
quoted by any such organization, the fair market
value of the shares on such date, as determined in
good faith by the Board of Directors of the Company,
shall be used; or
(b) if the share was a share of the Company's Class B
Common Stock, the fair market value shall be deemed
to be the closing price of one share of the Company's
Class B Common Stock on the NYSE on that day, within
the 60 days preceding the date on which the Change of
Control occurs, on which such closing price was the
highest. In the event that the shares are not listed
or admitted to trading on such exchange, the fair
market value shall be deemed to be the closing price
of one share of the Company's Class B Common Stock on
the principal national securities exchange on which
the shares are listed or admitted to trading, or, if
the shares are not listed or admitted to trading on
any national securities exchange, the average of the
highest reported bid and lowest reported asked prices
as reported on the NYSE or similar organization if
the NYSE is no longer reporting such information. If
on any such date the shares are not quoted by any
such organization, the fair market value of the
shares on such date, as determined in good faith by
the Board of Directors of the Company, shall be used.
<PAGE> 8
8
Notwithstanding the foregoing, if the payment of cash in respect of such option
would cause the Change in Control transaction to be ineligible for
pooling-of-interests accounting under APB No. 16, unless and until the Committee
provides otherwise, such payment shall not be made.
(ii) Notwithstanding any other provisions of this Plan, in
the event of a Change of Control all outstanding options which are not then
exercisable, except for incentive stock options granted on or after January 1,
1987, shall be immediately exercisable in full.
For purposes of this section the following definitions shall apply:
"Change of Control" shall mean any one of the following:
(w) Continuing Directors no longer constitute at least
2/3 of the Directors;
(x) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of 20% or more of the
voting power of the then outstanding securities of
the Company entitled to vote for the election of the
Company's Directors; provided that this Paragraph 11
shall not apply with respect to any holding of
securities by (A) the trust under a Trust Indenture
dated September 2, 1957 made by Louie E. Roche, (B)
the trust under a Trust Indenture dated August 23,
1957 made by Harvey Hubbell, and (C) any employee
benefit plan (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974,
as amended) maintained by the Company or any
affiliate of the Company;
(y) the approval by the Company's stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such merger or
consolidation will constitute at least 2/3 of the
Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation; or
(z) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Company's stockholders determine that
such proposed action, if taken, would constitute a
change of control of the Company and such action is
taken.
"Continuing Director" shall mean any individual who is a member of the
Company's Board of Directors on December 9, 1986 or was designated (before such
person's initial election as a Director) as a Continuing Director by 2/3 of the
then Continuing Directors.
<PAGE> 9
9
"Director" shall mean any individual who is a member of the Company's
Board of Directors on the date the action in question was taken.
"Officer" shall mean each of the officers specified in Section 1 of
Article IV of the by-laws of the Company except for any such officer whose title
begins with the word "Assistant".
* * * * *
Adopted by the Board of Directors on March 13, 1973 and amended May 5,
1980, December 9, 1980, March 9, 1982, June 12, 1985, March 10, 1987, May 7,
1990, September 12, 1991, May 2, 1994, May 5, 1997, May 3, 1999 and December 8,
1999.
L\P\BNFT\STOCKOPTPLAN
<PAGE> 1
EXHIBIT 10f
HUBBELL INCORPORATED
AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN FOR DIRECTORS
Restated and Amended, Effective December 8, 1999.
<PAGE> 2
HUBBELL INCORPORATED
DEFERRED COMPENSATION PLAN FOR DIRECTORS
<TABLE>
<CAPTION>
Table of Contents
Page(s)
-------
<S> <C> <C>
ARTICLE I DEFINITIONS.........................................................................1
-----------
ARTICLE II ELECTION TO DEFER...................................................................2
-----------------
ARTICLE III DEFERRED COMPENSATION ACCOUNTS....................................................3-6
------------------------------
ARTICLE IV PAYMENT OF DEFERRED COMPENSATION..................................................6-8
--------------------------------
ARTICLE V ADMINISTRATION......................................................................8
--------------
ARTICLE VI AMENDMENT OF PLAN.................................................................8-9
-----------------
ARTICLE VII CHANGE OF CONTROL................................................................9-14
-----------------
</TABLE>
<PAGE> 3
ARTICLE I
DEFINITIONS
1.1 "Board" shall mean the Board of Directors of Hubbell Incorporated.
1.2 "Director" shall mean a member of the Board of Directors of Hubbell who
is not an employee of Hubbell or any of its subsidiaries.
1.3 "Hubbell" shall mean Hubbell Incorporated and any corporate successors.
1.4 "Plan" shall mean this Deferred Compensation Plan for Directors as it
may be amended from time to time.
1.5 "Fees" shall mean amounts earned for serving as a member of the Board,
including any Committees of the Board.
1.6 "Year" shall mean calendar year.
1.7 "Cash Account" shall mean the account created by Hubbell pursuant to
Article III of this Plan in accordance with an election by a Director
to receive deferred cash compensation under Article II hereof.
1.8 "Stock Unit" shall mean one share of Hubbell Class A Common Stock and
one share of Hubbell Class B Common Stock.
1.9 "Stock Unit Account" shall mean the account created by Hubbell pursuant
to Article III of this Plan in accordance with an election by a
Director to receive deferred stock compensation under Article II
hereof.
1.10 "He", "Him" or "His" shall apply equally to male and female members of
the Board.
<PAGE> 4
2
ARTICLE II
ELECTION TO DEFER
2.1 A Director may elect, on or before December 31 of any Year, to defer
payment of all or a specified part of all Fees earned during the Year
following such election and succeeding Years (until the Director ceases
to be a Director). Any person who shall become a Director during any
Year, and who was not a Director of Hubbell on the preceding December
31, may elect, before the Director's term begins, to defer payment of
all or a specified part of such Fees earned during the remainder of
such Year and for succeeding Years. Any Fees deferred pursuant to this
Section shall be paid to the Director at the time(s) and in the manner
specified in Article IV hereof, in the form of cash or Hubbell Common
Stock, or any combination thereof, as designated by the Director.
2.2 The election to participate and manner of payment shall be designated
by submitting a letter in the form attached hereto as Appendix A to the
Secretary of Hubbell; provided, however, that during the period of ten
days after the signing of any agreement by the Company that would, upon
the consummation of the transactions contemplated therein, result in a
Change of Control, any Director (whether current or former) who has
previously elected to receive installment payments of the amounts
contained in the Director's Accounts shall have the opportunity to
reconfirm his prior election under the Plan to receive installment
payments in lieu of the receipt of payment of such amounts in one lump
payment, and provided, further, however, that in the event that a
Director does not so reconfirm, the Directors Cash Account and/or Stock
Account shall be paid out in one lump sum, in accordance with the terms
of Article IV hereof.
<PAGE> 5
3
2.3 The election shall continue from Year to Year unless the Director
terminates it by written request delivered to the Secretary of Hubbell
prior to the commencement of the Year for which the termination is
first effective.
ARTICLE III
DEFERRED COMPENSATION ACCOUNTS
3.1 Hubbell shall maintain separate memorandum accounts for the Fees
deferred by each Director.
3.2 Hubbell shall credit, on the date Fees become payable, to the Cash
Account of each Director the deferred portion of any Fees due the
Director as to which an election to receive cash has been made. Fees
deferred in the form of cash (and interest thereon) shall be held in
the general funds of Hubbell.
3.3 Hubbell shall credit the Cash Account of each Director on a quarterly
basis with interest at the prime rate in effect at Hubbell's principal
commercial bank on the date of the next immediately following regular
quarterly Directors' meeting. A Director's Cash Account shall continue
to accrue interest in the foregoing manner during the period beginning
on the date that the Director retires or separates from the Board and
ending two days prior to the date on which the balance of the
Director's Cash Account will be paid (whether the Director has elected
to receive the distribution of his or her Cash Account in a lump sum or
in installment payments), in accordance with the terms of Article IV
hereof, in satisfaction of all payments owed to the Director under the
Plan.
3.4 Hubbell shall credit, on the date Fees become payable, the Stock Unit
Account of each Director with the number of Stock Units which is equal
to: the deferred portion of any
<PAGE> 6
4
Fees due the Director as to which an election to receive Hubbell Common
Stock has been made, divided by the sum of the closing prices of
Hubbell's Class A Common Stock and Class B Common Stock as reported on
the New York Stock Exchange (the "NYSE") on the date such Fees would
otherwise have been paid (the "Stock Unit Value"). If closing prices
are not available from the NYSE for both the Class A Common Stock and
the Class B Common Stock on the date such Fees would otherwise have
been paid, then the next preceding practicable date for which such
closing prices are available shall be used.
3.5 Hubbell shall credit the Stock Unit Account of each Director who has
elected to receive deferred compensation in the form of Stock Units
with the number of Stock Units equal to any cash dividends (or the fair
market value of dividends paid in property other than dividends payable
in Common Stock of Hubbell) payable on the number of shares of Class A
Common Stock or Class B Common Stock represented by the number of Stock
Units in each Director's Stock Unit Account divided by the Stock Unit
Value on the dividend payment date. Dividends payable in Common Stock
on both Class A and Class B Common Stock of Hubbell and in respect of
each class in shares of such class will be credited to each Director's
Stock Unit Account in the form of Stock Units. Dividends payable on
both Class A and Class B Common Stock in shares of Class B Common Stock
will be credited to each Director's Stock Unit Account in the form of
Stock Units in an amount determined by multiplying the number of Class
B dividend shares payable to such Director by the closing price of the
Class B Common Stock on the dividend payment date and dividing that
product by the Stock Unit Value on such dividend payment date. A
Director's Stock Unit Account shall continue to be credited with
dividends in the foregoing manner during the period beginning on the
date that the Director retires or
<PAGE> 7
5
separates from the Board and ending two days prior to the date on which
the balance of the Director's Stock Unit Account will be paid (whether
the Director has elected to receive the distribution of his or her
Stock Unit Account in a lump sum or in installment payments), in
accordance with the terms of Article IV hereof, in satisfaction of all
payments owed to the Director under the Plan. If adjustments are made
to the outstanding shares of Hubbell Common Stock as a result of
split-ups, recapitalizations, mergers, consolidations and the like, an
appropriate adjustment also will be made in the number of Stock Units
credited to the Director's Stock Unit Account.
3.6 Stock Units shall be computed to three decimal places.
3.7 Stock Units shall not entitle any person to rights of a stock holder
with respect to such Stock Units unless and until shares of Hubbell
Class A Common Stock or Class B Common Stock have been issued to such
person in respect of such Stock Units pursuant to Article IV hereof.
3.8 Hubbell shall not be required to acquire, reserve, segregate, or
otherwise set aside shares of its Class A Common Stock or Class B
Common Stock for the payment of its obligations under the Plan, but
shall make available as and when required a sufficient number of its
Class A Common Stock and Class B Common Stock to meet the needs of the
Plan.
3.9 Nothing contained herein shall be deemed to create a trust of any kind
or any fiduciary relationship. To the extent that any person acquires a
right to receive payments from Hubbell under the Plan, such right shall
be no greater than the right of any unsecured general creditor of
Hubbell.
<PAGE> 8
6
3.10 Hubbell may enter into a trust agreement creating an irrevocable
grantor trust for the holding of cash credited to the Cash Account of
each Director under the Plan. Any assets of such trust shall be subject
to the claims of creditors of Hubbell to the extent set forth in the
trust, and Directors' interests in benefits under this Plan shall only
be those of unsecured creditors of Hubbell. In the event of a Change of
Control, if, unless all Directors (whether current or former) elect
(pursuant to Section 2.2 hereof) to receive payment of his or her Cash
Account in lump sum payments following a Change of Control Transaction,
then, prior to the consummation of the Change of Control, Hubbell shall
enter into a trust agreement creating an irrevocable grantor trust for
the holding of cash, annuity contracts, and/or any other assets as
determined by the Board in respect of the amounts contained in each
such Director's Cash Account; provided, further, that upon the
occurrence of a Change of Control, Hubbell shall transfer to the
trustee of the foregoing trust the maximum amount of assets estimated
to be necessary to satisfy Hubbell's obligations hereunder, as in
effect immediately prior to the Change of Control.
ARTICLE IV
PAYMENT OF DEFERRED COMPENSATION
4.1 Timing and Form of Payment. Unless otherwise provided for in this Plan,
amounts contained in a Director's Cash Account and/or Stock Unit
Account will be distributed in a lump sum or in installment payments as
the Director's election (made pursuant to Section 2.2) shall provide.
Distributions shall begin with the first day of the Year following the
Director's retirement or separation from the Board. Amounts credited to
a Director's Cash Account shall be paid in cash. Amounts credited to a
Director's Stock
<PAGE> 9
7
Unit Account prior to July 7, 1988 (the "Cutoff Date") shall be paid in
the form of one share of Hubbell Class A Common Stock and one share of
Class B Common Stock for each Stock Unit. Amounts credited to a
Director's Stock Unit Account on or after the Cutoff Date shall be paid
in the form of (x) one share of Class B Common Stock for each Stock
Unit, plus (y) the aggregate number of shares of Class B Common Stock
equal to the total number of Stock Units in such Director's Stock Unit
Account, multiplied by the closing price of the Class A Common Stock as
reported on NYSE on the third business day preceding the date of
payment, divided by the closing price of the Class B Common Stock as
reported on NYSE on the third business day preceding the date of
payment. A cash payment will be made with any final installment for any
fractions of a Stock Unit remaining in the Director's Stock Unit
Account. Such fractional share will be valued at the Stock Unit Value
on the date of settlement.
4.2 Designation of Beneficiary. Each Director shall have the right to
designate a beneficiary who is to succeed to his right to receive
payments hereunder in the event of death. Any designated beneficiary
will receive payments in the same manner as the Director if he had
lived. In case of a failure of designation or the death of a designated
beneficiary without a designated successor, the balance of the amounts
contained in the Director's Cash Account and/or Stock Unit Account
shall be payable in accordance with Section 4.1 to the Director's or
former Director's estate in full on the first day of the Year following
the Year in which the Director or his designated beneficiary dies. No
designation of beneficiary or change in beneficiary shall be valid
unless in writing signed by the Director and filed with the Secretary
of Hubbell. Any beneficiary may be changed without the consent of any
prior beneficiary.
<PAGE> 10
8
4.3 No Termination. The Board shall not terminate this Plan solely to
accelerate the payment of any amounts previously credited to a
Director's Cash Account or Stock Unit Account.
ARTICLE V
ADMINISTRATION
5.1 The books and records to be maintained for the purpose of the Plan
shall be maintained by Hubbell at its expense. All expenses of
administering the Plan shall be paid by Hubbell.
5.2 Except to the extent required by law, the right of any Director or any
beneficiary to any benefit or to any payment hereunder shall not be
subject in any manner to attachment or other legal process for the
debts of such Director or beneficiary; and any such benefit or payment
shall not be subject to alienation, sale, transfer, assignment or
encumbrance.
5.3 No member of the Board and no officer or employee of Hubbell shall be
liable to any person for any action taken or omitted in connection with
the administration of the Plan unless attributable to his own fraud or
willful misconduct, and Hubbell shall not be liable to any person for
any such action unless attributable to fraud or willful misconduct on
the part of a Director, officer or employee of Hubbell.
ARTICLE VI
AMENDMENT OF PLAN
6.1 The Plan may be amended, suspended or terminated in whole or in part
from time to time by the Board except that no amendment, suspension, or
termination shall apply to the
<PAGE> 11
9
payment to any Director or beneficiary of a deceased Director of any
amounts previously credited to a Director's Cash Account or Stock Unit
Account.
6.2 Notice of every such amendment shall be given in writing to each
Director and beneficiary of a deceased director.
ARTICLE VII
CHANGE OF CONTROL
7.1 The provisions of Sections 7.3 and 7.4 of this Article VII shall become
effective immediately upon the occurrence of a Change of Control (as
defined in Section 7.2(a) of this Article VII).
7.2 (a) "Change of Control" - shall mean any one of the following:
(i) Continuing Directors no longer constitute at least
2/3 of the Directors;
(ii) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of Hubbell entitled to vote
for the election of Hubbell's directors; provided
that this Article VII shall not apply with respect to
any holding of securities by (A) the trust under a
Trust Indenture dated September 2, 1957 made by Louie
E. Roche, (B) the trust under a Trust Indenture dated
August 23, 1957 made by Harvey Hubbell, and (C) any
employee benefit plan (within the meaning of Section
3(3) of the Employee Retirement Income Security Act
of 1974, as amended) maintained by Hubbell or any
affiliate of Hubbell;
<PAGE> 12
10
(iii) the approval by Hubbell's stockholders of the merger
or consolidation of Hubbell with any other
corporation, the sale of substantially all of the
assets of Hubbell or the liquidation or dissolution
of Hubbell, unless, in the case of a merger or
consolidation, the incumbent Directors in office
immediately prior to such merger or consolidation
will constitute at least 2/3 of the Directors of the
surviving corporation of such merger or consolidation
and any parent (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934) of such
corporation; or
(iv) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by Hubbell's stockholders determine that such
proposed action, if taken, would constitute a change
of control of Hubbell and such action is taken.
(b) "Continuing Director" shall mean any individual who is a
member of Hubbell's Board of Directors on December 9, 1986 or
was designated (before such person's initial election as a
Director) as a Continuing Director by 2/3 of the then
Continuing Directors.
(c) "Change of Control Transaction" shall mean the closing of the
transaction constituting the Change of Control, which shall
include, for purposes of the events described in Section
7.2(a)(iii), above, the consummation of the merger or
consolidation approved by Hubbell's stockholders.
7.3 Article IV is amended by inserting at the end of the second sentence of
Section 4.1 the following proviso:
<PAGE> 13
11
"; provided, however, that in the event that such retirement or
separation occurs on or after a Change of Control Transaction such
distributions shall begin, if earlier, 30 days after the date of any
such retirement or separation if such retirement or separation occurs
after January 1 but prior to November 1 of any Year; and provided,
further, that in the event that such Change of Control Transaction is
intended to be, and is, otherwise eligible for pooling-of-interests
accounting treatment under APB No. 16, any portion of such
distributions payable in shares of common stock shall not commence
until the first day on which a Director could sell such shares of
common stock acquired in the Change of Control Transaction without
incurring any liability under any federal or state securities laws or
eliminating the ability of the Company to meet any applicable
pooling-of-interests accounting requirements under APB No. 16."
7.4 Article IV is further amended by adding a new Section 4.4 as follows:
Form of Payment Upon the Occurrence of a Change of Control Transaction.
(a) Upon the occurrence of a Change of Control Transaction, the
amounts credited to a Director's Cash Account shall be paid in
cash.
(b) Upon the occurrence of a Change of Control Transaction, the
amounts credited to a Director's Stock Unit Account shall be
converted into a Director's Cash Account under the following
circumstances:
(i) In the event of a Change of Control Transaction in
which the shareholders of Hubbell are entitled to
receive cash in exchange for their shares of Hubbell
Common Stock, any Stock Unit credited to a Director's
Stock Unit Account shall be converted into a right to
receive cash and shall thereafter be treated in all
respects as part of such Director's Cash
<PAGE> 14
12
Account. The amount added to the Cash Account
pursuant to the preceding sentence shall be
determined by converting each Stock Unit into the
right to receive an amount of cash equal to the
highest of the product of (x) the number of Units
held in the Stock Unit Account multiplied by (y) (A)
the per share amount payable to a shareholder of
Hubbell holding one share of Hubbell Class A Common
Stock and one share of Hubbell Class B Common Stock
in the Change of Control or (B) the sum of the
closing prices of one share of Hubbell Class A Common
Stock and one share of Hubbell Class B Common Stock,
as applicable, on the NYSE on that day on which the
aggregate of such closing prices was the highest,
within the 60 days preceding either (I) the date on
which the shareholders of Hubbell approve the Change
of Control Transaction or (II) the date on which the
Change of Control Transaction occurs.
(ii) In the event of a Change of Control Transaction in
which the shareholders of Hubbell are entitled to
receive some number of shares of common stock of the
acquiror (or, if applicable, the merger partner) and
some amount of cash in exchange for their shares of
Hubbell Common Stock, any Stock Unit credited to a
Director's Stock Unit Account shall be converted into
a right to receive cash and shall thereafter be
treated in all respects as part of such Director's
Cash Account. The amount added to the Cash Account
pursuant to the preceding sentence shall be
determined by converting each Stock Unit into the
right to receive an amount of cash equal to the
highest of the product of (x) the number of Units
held in the Stock Unit Account
<PAGE> 15
13
multiplied by (y) the sum of the closing prices of
one share of Hubbell Class A Common Stock and one
share of Hubbell Class B Common Stock, as applicable,
on the NYSE on that day on which the aggregate of
such closing prices was the highest, within the 60
days preceding either (A) the date on which the
shareholders approve the Change of Control
Transaction or (B) the date on which the Change of
Control Transaction occurs.
(iii) In the event of a Change of Control Transaction in
which the shareholders of Hubbell are entitled to
receive only shares of common stock in the acquiror
(or the merger partner, if applicable), but the
Change of Control Transaction is not intended to be,
and is not otherwise, accounted for using
pooling-of-interests accounting treatment under APB
No. 16, the Director's Stock Unit Account shall be
treated as provided in Section 4.4(b)(ii).
(c) The amounts credited to a Director's Stock Unit Account shall
be paid in shares of common stock only upon the occurrence of
the following: (i) a Change of Control Transaction occurs in
which the shareholders of Hubbell are entitled to receive only
shares of common stock in the acquiror (or the merger partner,
if applicable), which Transaction is intended to be, and is
otherwise, accounted for using pooling-of-interests accounting
treatment under APB No. 16, and (ii) the conversion into a
right to receive cash in respect of any portion of such
Director's Stock Unit Account would cause such Transaction to
be ineligible for pooling-of-interests accounting under APB
No. 16. Under such circumstances, the foregoing conversion
shall not be made unless and until the Board provides
otherwise
<PAGE> 16
14
and, in lieu thereof, a Director's Stock Unit Account shall be
immediately converted into a right to receive (x) the number
of shares of common stock otherwise receivable by a
shareholder of Hubbell holding one share of Hubbell Class A
Common Stock and one share of Hubbell Class B Common Stock in
the Change of Control Transaction multiplied by (y) the number
of Units held in the Director's Stock Unit Account, and shall
thereafter continue to be treated in all respects as part of
such Director's Stock Account, payable in accordance with
Section 4.1.
7.4 Article VI is amended by adding a new Section 6.3 as follows:
"Notwithstanding any other provision of the Plan to the
contrary:
(i) any amounts credited to a Director's Cash Account or
Stock Unit Account as of the date of a Change of
Control may not be reduced;
(ii) no amendment or action by the Board which affects any
Director under the Plan is valid and enforceable
without the prior written consent of such Director;
and
(iii) no termination of the Plan shall have the effect of
reducing any amounts credited to a Director's Cash
Account or Stock Unit Account."
Adopted by the Board of Directors on December 12, 1978 and amended on December
14, 1982, December 9, 1986, June 14, 1989, June 20, 1991 and December 8, 1999.
<PAGE> 1
EXHIBIT 10i
HUBBELL INCORPORATED
AMENDED AND RESTATED
RETIREMENT PLAN FOR DIRECTORS
Amended, Effective December 8, 1999
<PAGE> 2
HUBBELL INCORPORATED
RETIREMENT PLAN FOR DIRECTORS
Table of Contents
<TABLE>
<CAPTION>
Article Title Page(s)
- ------- ----- -------
<S> <C> <C>
I PURPOSE.....................................................................1
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II DEFINITIONS...............................................................1-2
-----------
III EFFECTIVE DATE..............................................................2
--------------
IV ELIGIBILITY.................................................................2
-----------
V RETIREMENT BENEFITS.......................................................2-3
-------------------
VI PAYMENT OF RETIREMENT BENEFITS..............................................3
------------------------------
VII DEATH BENEFIT...............................................................3
-------------
VIII FUNDING...................................................................3-4
-------
IX PLAN ADMINISTRATION.........................................................4
-------------------
X AMENDMENT AND TERMINATION...................................................4
-------------------------
XI MISCELLANEOUS PROVISIONS..................................................4-6
------------------------
XII CHANGE OF CONTROL.........................................................6-8
-----------------
</TABLE>
<PAGE> 3
ARTICLE I
PURPOSE
1.1 The purpose of this Plan is to provide retirement benefits to Directors
of Hubbell Incorporated (the "Company") who meet the eligibility
requirements of the Plan.
ARTICLE II
DEFINITIONS
2.1 "Base Retainer" means the regular active service annual retainer in
effect during the calendar year immediately preceding the year in which
a Director retires from the Board of Directors.
2.2 "Board of Directors" means the Board of Directors of Hubbell
Incorporated.
2.3 "Chairman Retainer" means the retainer in effect for service as the
Chairman of any committee of the Board of Directors during the calendar
year immediately preceding the year in which a Director retires from
the Board of Directors.
2.4 "Committee Chairman" means an Eligible Director who for the one year
immediately preceding his retirement from the Board of Directors was
the Chairman of any committee of the Board of Directors.
2.5 "Company" means Hubbell Incorporated.
2.6 "Compensation Committee" means the Compensation Committee of the Board
of Directors.
2.7 "Director" means a duly-elected member of the Board of Directors.
2.8 "Early Retirement" means retirement from the Board of Directors prior
to age 70.
2.9 "Eligible Director" means a Director with at least five (5) years of
Service, who is not an Employee, and does not qualify to receive a
retirement benefit under any pension plan of the Company or its
subsidiaries. However, a Director who qualifies to receive a retirement
benefit under any pension plan of the Company or its subsidiaries will
nonetheless be considered a Director entitled to the Special Retirement
Benefit described in Article 5.3 hereof.
2.10 "Employee" means a person employed by the Company or its subsidiaries
in any capacity other than as a Director.
2.11 "Normal Retirement" means retirement from the Board of Directors at or
after age 70.
<PAGE> 4
2
2.12 "Plan" means this Retirement Plan for Directors.
2.13 "Service" means service as a non-Employee Director.
ARTICLE III
EFFECTIVE DATE
3.1 This Plan shall be effective as of April 1, 1984 (the "Effective
Date").
ARTICLE IV
ELIGIBILITY
4.1 Each Eligible Director shall participate in the Plan.
ARTICLE V
RETIREMENT BENEFITS
5.1 Normal Retirement Benefit. An Eligible Director's annual Normal
Retirement Benefit under this Plan shall be calculated as follows:
(a) With respect to an Eligible Director with less
than ten years of Service, the annual Normal Retirement
Benefit shall be the sum of (i) fifty percent (50%) of the
Eligible Director's Base Retainer in respect to the first five
full years of Service plus (ii) if applicable, ten percent
(10%) of the Eligible Director's Base Retainer for each full
year of Service beyond five years up to a maximum of nine
years.
(b) With respect to an Eligible Director with ten or
more years of Service, the annual Normal Retirement Benefit
shall be the sum of (i) one hundred and ten percent (110%) of
the Eligible Director's Base Retainer plus, (ii) if
applicable, the Chairman Retainer.
5.2 In no event shall the benefit calculated under Article 5.1 exceed one
hundred percent (100%) of the Base Retainer (in the case of an Eligible
Director with less than ten years of Service) or the sum of (x) one
hundred ten percent (110%) of the Base Retainer and the Chairman
Retainer (in the case of an Eligible Director with ten or more years of
Service), as applicable.
5.3 Special Retirement Benefit. A Director who is not an Eligible Director
is not otherwise entitled to the benefit provided under Section 5.1 (as
limited by Section 5.2). Notwithstanding the foregoing, a Director who
has at least five (5) years of Service as a Director subsequent to his
retirement as an Employee, and who retires from the Board of
<PAGE> 5
3
Directors at or after 70, is eligible to receive a special retirement
benefit hereunder equal to 25% of his Base Retainer.
5.4 Early Retirement Benefit. An Eligible Director who elects an Early
Retirement shall receive a benefit computed in accordance with Article
5.1, except that such Early Retirement Benefit shall commence in
accordance with Article VI hereof.
ARTICLE VI
PAYMENT OF RETIREMENT BENEFITS
6.1 Payment of Benefits. Unless otherwise provided in Section 6.2, all
retirement benefits hereunder shall be payable in monthly installments
(on the fifteenth day of the month) equal to one-twelfth (l/12th) of
the annual amounts determined under this Plan. A Director's retirement
benefit hereunder, if any, shall be payable for the life of the
Director, commencing on the fifteenth day of the month coinciding with
or next following the later to occur of (i) such Director's 70th
birthday and (ii) the date on which such Director retires from the
Board of Directors; provided, however, that, with respect to an
election to receive an Early Retirement Benefit, such Benefit shall
commence on the fifteenth day of the month following the Director's
70th birthday. The Director's last payment of retirement benefits
hereunder shall be made on the fifteenth day of the month in which he
dies.
6.2 Payments Rounded to Next Higher Full Dollar. Each monthly payment which
is computed in accordance with this Plan will, if not in whole dollars,
be increased to the next whole dollar.
ARTICLE VII
DEATH BENEFIT
7.1 Death Benefit. Notwithstanding anything herein to the contrary, in the
event an Eligible Director dies prior to his actual retirement from the
Board of Directors, no death benefit shall be paid hereunder. If an
Eligible Director dies while receiving retirement benefits pursuant to
Article VI, no death benefit shall be paid hereunder.
ARTICLE VIII
FUNDING
8.1 The Company shall enter into a trust agreement creating an irrevocable
grantor trust for the holding of cash, annuity contracts and/or any
other form of assets as shall be determined by the Board of Directors,
for retirement benefits accrued by the Eligible Directors (whether
current or former) under the Plan; provided, however, that upon the
occurrence of a Change of Control Transaction (as defined in Section
12.2), the Company
<PAGE> 6
4
shall transfer to the trustee of the foregoing trust the maximum amount
of assets estimated to be necessary to satisfy the Company's
obligations hereunder, as in effect immediately prior to the Change of
Control Transaction; provided, further, that in no event shall the
amount transferred to the trustee of the foregoing trust be less than
the amount of the accrued benefit determined under the same factors
which would be used under the Company's qualified retirement plan. Any
assets of such trust shall be subject to the claims of creditors of the
Company to the extent set forth in the trust. Eligible Directors'
(whether current or former) interests in benefits under this Plan shall
only be those of unsecured creditors of the Company.
ARTICLE IX
PLAN ADMINISTRATION
9.1 The general administration of this Plan and the responsibility for
carrying out the provisions hereof shall be vested in the Compensation
Committee. The Compensation Committee may adopt, subject to the
approval of the Board of Directors, such rules and regulations as it
may deem necessary for the proper administration of this Plan, and its
decision in all matters shall be final, conclusive, and binding.
ARTICLE X
AMENDMENT AND TERMINATION
10.1 The Board of Directors reserves in its sole and exclusive discretion
the right at any time and from time to time to amend this Plan in any
respect or terminate this Plan without restriction and without the
consent of any Eligible Director, provided, however, that no amendment
or termination of this Plan shall impair the right of any Eligible
Director to receive benefits earned and accrued hereunder prior to such
amendment or termination. The Board of Directors shall not terminate
this Plan solely to accelerate benefits earned and accrued hereunder.
Any amounts not currently payable to an Eligible Director shall revert
to the Company in the event of termination of the Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 This Plan does not in any way obligate the Company to continue to
retain a Director on the Board of Directors, nor does this Plan limit
the right of the Company to terminate a Director's service on the Board
of Directors.
11.2 Non-Alienation of Benefits. No retirement benefit payable hereunder may
be assigned, pledged, mortgaged or hypothecated and to the extent
permitted by law, no such retirement benefit shall be subject to legal
process or attachment for the payment of any claims against any person
entitled to receive the same.
<PAGE> 7
5
11.3 Payment to Incompetents. If an Eligible Director entitled to receive
any retirement benefit payments hereunder is deemed by the Compensation
Committee or is adjudged by a court of competent jurisdiction to be
legally incapable of giving valid receipt and discharge for such
retirement benefit, such payments shall be paid to such person or
persons as the Compensation Committee shall designate or to the duly
appointed guardian of such Eligible Director. Such payments shall, to
the extent made, be deemed a complete discharge for such payments under
this Plan.
11.4 Loss of Benefits. At the sole discretion of the Compensation Committee,
and after written notice to the Eligible Director, rights to receive
any retirement benefit under this Plan may be forfeited, suspended,
reduced or terminated in cases of gross misconduct by the Eligible
Director, or of any conduct, activity or competitive occupation which
is reasonably deemed to be prejudicial to the interests of the Company
or a subsidiary of the Company, including but not limited to the
utilization or disclosure of confidential information for gain or
otherwise.
11.5 Noncompetition. An Eligible Director shall forfeit any and all
retirement benefits pursuant to this Plan if said Eligible Director
violates the notice provision of the next paragraph hereof or anywhere
in the United States or outside of the United States, directly or
indirectly, owns, manages, operates, joins or controls, or participates
in the ownership, management, operation or control of, or becomes a
director or an employee of, or a consultant to, any person, firm, or
corporation which competes with the Company; provided, however, that
the provisions of this Article 11.5 shall not apply to investments by
the Eligible Director in shares of stock traded on a national
securities exchange or on the national over-the-counter market which
shall have an aggregate market value, at the time of acquisition, of
less than two (2%) percent of the outstanding shares of such stock.
An Eligible Director shall be obligated to give the Company at least
sixty (60) days' prior written notice, registered or certified mail,
postage prepaid, addressed to the Secretary, Hubbell Incorporated, 584
Derby Milford Road, Orange, Connecticut, 06477, of his intention,
directly or indirectly, to own, manage, operate, join or control, or
participate in the ownership, management, operation or control of, or
become a director or an employee of, or a consultant to, any person,
firm, or corporation, following which, within a period of sixty (60)
days from its receipt of such notice, the Company will mail to the
Eligible Director by registered or certified mail, postage prepaid, a
statement of its opinion as to whether said intention of the Eligible
Director violates this Article 11.5.
11.6 Withholding. Payments made by the Company under this Plan to any
Eligible Director shall be subject to withholding as shall, at the time
for such payment, be required under any income tax or other laws,
whether of the United States or any other jurisdiction.
11.7 Expenses. All expenses and costs in connection with the operation of
this Plan shall be borne by the Company.
<PAGE> 8
6
11.8 Governing Law. The provisions of this Plan will be construed according
to the laws of the State of Connecticut, excluding the provisions of
any such laws that would require the application of the laws of another
jurisdiction.
11.9 Gender and Number. The masculine pronoun wherever used herein shall
include the feminine gender and the feminine the masculine and the
singular number as used herein shall include the plural and the plural
the singular unless the context clearly indicates a different meaning.
11.10 Titles and Headings. The titles to articles and headings of sections of
this Plan are for convenience of reference only and in case of any
conflict, the text of the Plan, rather than such titles and headings,
shall control.
ARTICLE XII
CHANGE OF CONTROL
12.1 The provisions of Section 12.3 shall become effective immediately upon
the occurrence of a Change of Control (as defined in Section 12.2(a)).
12.2 (a) "Change of Control" -- shall mean any one of the following:
(i) Continuing Directors no longer constitute at least
2/3 of the Directors;
(ii) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of the Company entitled to
vote for the election of the Company's directors;
provided that this Article XII shall not apply with
respect to any holding of securities by (A) the trust
under a Trust Indenture dated September 2, 1957 made
by Louie E. Roche, (B) the trust under a Trust
Indenture dated August 23, 1957 made by Harvey
Hubbell, and (C) any employee benefit plan (within
the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended)
maintained by the Company or any affiliate of the
Company;
(iii) the approval by the Company's stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such merger or
consolidation will constitute at least 2/3 of the
Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation; or
<PAGE> 9
7
(iv) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Company's stockholders determines that
such proposed action, if taken, would constitute a
change of control of the Company and such action is
taken.
(b) "Continuing Director" shall mean any individual who is a
member of the Company's Board of Directors on December 9, 1986
or was designated (before such person's initial election as a
Director) as a Continuing Director by 2/3 of the then
Continuing Directors.
(c) "Change of Control Transaction" shall mean the closing of the
transaction constituting the Change of Control, which shall
include, for purposes of the events described in Section
12.2(a)(iii), above, the consummation of the merger or
consolidation approved by the Company's stockholders.
12.3 (a) Section 9.1 is deleted and the following is inserted in lieu
thereof:
"The Plan shall be administered by the Compensation Committee
which shall have full authority to interpret the Plan, to
establish rules and regulations relating to the Plan, and to
make all other determinations and take all other actions
necessary or appropriate for the proper administration of the
Plan. No member of the Compensation Committee, other than a
Continuing Director, shall be eligible to participate in the
Plan."
(b) New Section 6.3 is inserted as follows:
Payment of Benefits Upon the Occurrence of a Change of Control
Transaction.
(a) Upon the occurrence of a Change of Control
Transaction (as defined in Section 12.2(c) above), in
the event that a Director retires or is otherwise
separated from Service or a Director has previously
retired or otherwise separated from Service and is,
as of the date of the signing of any Change of
Control Agreement (as hereinafter defined) receiving
installment payments under the Plan, all retirement
benefits hereunder shall, unless a Director has
elected otherwise with respect to the time of payment
in respect of a Change of Control, become payable in
a lump sum on the 30th day after the later to occur
of (i) the date of the Change of Control Transaction
and (ii) the date of any such retirement or
separation.
(b) During the period of ten days after the signing of
any agreement (a "Change of Control Agreement") by
the Company that would, upon the consummation of the
transactions contemplated therein, result in a Change
of Control, a Director shall be provided with the
opportunity to elect to
<PAGE> 10
8
receive payment of the amounts provided to him or her
under this Plan in installment payments, payable in
accordance with Section 6.1, above.
(c) In the event that a Director does not elect to
receive the payment of his or her benefits in
installment payments, the Director's lump sum payment
as provided for hereunder shall be calculated using
the actuarial assumptions set forth on Exhibit A
attached hereto.
(c) In Section 11.3, all references to "Compensation Committee"
are deleted and in lieu thereof is inserted the phrase
"trustee under the trust, created pursuant to Section 8.1".
(d) Section 11.4 is deleted.
(e) Section 11.5 is deleted.
(f) New Section 11.11 is inserted as follows:
"Notwithstanding any other provisions of the Plan to the
contrary:
(i) the accrued benefit hereunder of any Eligible
Director as of the date of a Change of Control may
not be reduced;
(ii) any Service accrued by an Eligible Director as of the
date of a Change of Control cannot be reduced;
(iii) no amendment or action of the Compensation Committee
which affects any Eligible Director is valid and
enforceable without the prior written consent of such
Eligible Director; and
(iv) no termination of the Plan shall have the effect of
reducing any benefits accrued under the Plan prior to
such termination."
Adopted by the Board of Directors on March 12, 1984 and amended on December 9,
1986, March 12, 1990 and December 8, 1999.
<PAGE> 11
9
EXHIBIT A
ASSUMPTIONS
The assumptions to be used are those specified under Section 417(e) of the
Internal Revenue Code of 186, as amended, which assumptions are the minimum lump
sum factors permitted to be used for calculating pension benefits under
qualified defined benefit plans.
Benefit: Lump sum payment of unreduced benefit deferred to age 55,
increased to reflect the 50% joint and survivor form.
Mortality Rates: The 1983 Group Annuity Mortality (1983 GAM) blend of 50% male
and 50% female rates.
Interest Rate: 10-year treasury rate on the first day of the fourth quarter
of the calendar year immediately prior to the date on which
the Director retires or otherwise separates from Service.
<PAGE> 1
EXHIBIT 10r
CONTINUITY AGREEMENT
This Agreement (the "Agreement") is dated as of December 27,
1999 by and between HUBBELL INCORPORATED, a Connecticut corporation (the
"Company"), and G. JACKSON RATCLIFFE (the "Executive").
WHEREAS, the Company's Board of Directors considers the
continued services of key executives of the Company to be in the best interests
of the Company and its stockholders; and
WHEREAS, the Company's Board of Directors desires to assure,
and has determined that it is appropriate and in the best interests of the
Company and its stockholders to reinforce and encourage the continued attention
and dedication of key executives of the Company to their duties of employment
without personal distraction or conflict of interest in circumstances which
could arise from the occurrence of a change in control of the Company; and
WHEREAS, the Company's Board of Directors has authorized the
Company to enter into continuity agreements with those key executives of the
Company and any of its respective subsidiaries (all of such entities, with the
Company hereinafter referred to as an "Employer"), such agreements to set forth
the severance compensation which the Company agrees under certain circumstances
to pay such executives; and
WHEREAS, the Executive is a key executive of an Employer and
has been designated by the Board as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term. This Agreement shall become effective on the
date hereof and remain in effect until the second anniversary thereof; provided,
however, that, thereafter, this Agreement shall automatically renew on each
successive anniversary, unless an Employer provides the Executive, in writing,
at least 180 days prior to the renewal date, notice that this Agreement shall
not be renewed. Notwithstanding the foregoing, in the event that a Change in
Control occurs at any time prior to the termination of this Agreement in
accordance with the preceding sentence, this Agreement shall not terminate until
the second anniversary of the Change in Control (or, if later, until the second
anniversary of the consummation of the transaction(s) contemplated in the Change
in Control).
2. Change in Control.
(a) No compensation or other benefit pursuant to Section 4
hereof shall be payable under this Agreement unless and until either (i) a
Change in Control of the Company (as hereinafter defined) shall have occurred
while the Executive is an employee of an Employer and the Executive's employment
by an Employer thereafter shall have terminated in accordance with
<PAGE> 2
2
Section 3 hereof or (ii) the Executive's employment by the Company shall have
terminated in accordance with Section 3(a)(ii) hereof prior to the occurrence of
the Change in Control.
(b) For purposes of this Agreement:
(i) "Change in Control" shall mean any one of the following:
(A) Continuing Directors no longer constitute at least
2/3 of the Directors;
(B) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of the Company entitled to
vote for the election of the Company's directors;
provided that this Section 2 shall not apply with
respect to any holding of securities by (I) the trust
under a Trust Indenture dated September 2, 1957 made
by Louie E. Roche, (II) the trust under a Trust
Indenture dated August 23, 1957 made by Harvey
Hubbell, and (III) any employee benefit plan (within
the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended)
maintained by the Company or any affiliate of the
Company;
(C) the approval by the Company's stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such merger or
consolidation will constitute at least 2/3 of the
Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation; or
(D) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Company's stockholders determine that
such proposed action, if taken, would constitute a
change of control of the Company and such action is
taken.
(ii) "Continuing Director" shall mean any individual who
is a member of the Company's Board of Directors on
December 9, 1986 or was designated (before such
person's initial election as a Director) as a
Continuing Director by 2/3 of the then Continuing
Directors.
(iii) "Director" shall mean any individual who is a member
of the Company's Board of Directors on the date the
action in question was taken.
<PAGE> 3
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(iv) "Change in Control Transaction" shall mean a Change
in Control or, if later, the consummation of the
transaction contemplated by the Change in Control.
3. Termination of Employment; Definitions.
(a) Termination without Cause by the Company or for Good
Reason by the Executive. (i) The Executive shall be entitled to the
compensation provided for in Section 4 hereof, if within two years
after a Change in Control Transaction, the Executive's employment shall
be terminated (A) by an Employer for any reason other than (I) the
Executive's Disability or Retirement, (II) the Executive's death or
(III) for Cause, or (B) by the Executive with Good Reason (as such
terms are defined herein).
(ii) In addition, the Executive shall be entitled to the
compensation provided for in Section 4 hereof if, (A) in the event that
an agreement is signed which, if consummated, would result in a Change
of Control and the Executive is terminated without Cause by the Company
or terminates employment with Good Reason prior to the Change in
Control, (B) such termination is at the direction of the acquiror or
merger partner or otherwise in connection with the anticipated Change
in Control, and (C) such Change in Control actually occurs.
(b) Disability. For purposes of this Agreement,
"Disability" shall mean the Executive's absence from the full-time performance
of the Executive's duties (as such duties existed immediately prior to such
absence) for 180 consecutive business days, when the Executive is disabled as a
result of incapacity due to physical or mental illness.
(c) Retirement. For purposes of this Agreement,
"Retirement" shall mean the Executive's voluntary termination of employment
pursuant to late, normal or early retirement under a pension plan sponsored by
an Employer, as defined in such plan, but only if such retirement occurs prior
to a termination by an Employer without Cause or by the Executive for Good
Reason.
(d) Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the
Executive to perform substantially all of his or her duties
with an Employer (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to such
Executive by the Board of Directors (the "Board") of the
Company which specifically identifies the manner in which the
Board believes that the Executive has not substantially
performed his or her duties,
(ii) the willful engaging by the Executive in
gross misconduct which is materially and demonstrably
injurious to the Company or any Employer; or
<PAGE> 4
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(iii) the conviction of, or plea of guilty or nolo
contendere to, a felony.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a three-fourths majority of the non-employee Directors of the Company
or of the ultimate parent of the entity which caused the Change in Control (if
the Company has become a subsidiary) at a meeting of such Directors called and
held for such purpose, after 30 days' prior written notice to the Executive
specifying the basis for such termination and the particulars thereof and a
reasonable opportunity for the Executive to cure or otherwise resolve the
behavior in question prior to such meeting, finding that in the reasonable
judgment of such Directors, the conduct or event set forth in any of clauses (i)
through (iii) above has occurred and that such occurrence warrants the
Executive's termination.
(e) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, within the Term of this Agreement, of any of
the following without the Executive's express written consent:
(i) after a Change of Control, any reduction in the
Executive's base salary from that which was in effect immediately prior
to the Change of Control, any reduction in the Executive's annual cash
bonus below such bonus paid or payable in respect of the calendar year
immediately prior to the year in which the Change of Control occurs, or
any reduction in the Executive's aggregate annual cash compensation
(including base salary and bonus) from that which was in effect
immediately prior to the Change of Control; or
(ii) after a Change of Control, the failure to increase
(within 12 months of the last increase in base salary) the Executive's
salary in an amount which at least equals, on a percentage basis, the
average percentage of increase in base salary effected in the preceding
12 months (which period may include some period of time prior to the
Change of Control) for all senior executives of the Company (unless
such reduction is offset by an increase in the amount of annual cash
bonus that is paid to the Executive); or
(iii) any material and adverse diminution in the Executives'
duties, responsibilities, status, position or authority with the
Company or any of its affiliates following a Change of Control;
provided, however, that no such diminution shall be deemed to exist
solely because of changes in Executive's duties, responsibilities or
titles as a consequence of the Company ceasing to be a company with
publicly-traded securities or becoming a wholly-owned subsidiary of
another company; or
(iv) any relocation of the Executive's primary workplace to a
location that is more than 35 miles from the Executive's primary
workplace as of the date of this Agreement or the Company's requiring
the Executive to be based anywhere other than the location at which the
Executive performed his duties prior to the commencement of the Term;
or
<PAGE> 5
5
(v) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to the Executive to
assume and perform this Agreement, as contemplated by Section 10(a)
hereof; or
(vii) during the thirty-day period immediately following the
first anniversary of the Change in Control Transaction (or, if
earlier, the Executive's attainment of age 65), the voluntary
termination of employment by the Executive for any reason or no reason
at all.
Notwithstanding the foregoing, in the event Executive provides the Company with
a Notice of Termination (as defined below) referencing this Section 3(e) (with
the exception of Section 3(e)(vii)), the Company shall have 30 days thereafter
in which to cure or resolve the behavior otherwise constituting Good Reason. Any
good faith determination by Executive that Good Reason exists shall be presumed
correct and shall be binding upon the Company.
(f) Notice of Termination. Any purported termination of
the Executive's employment (other than on account of Executive's death) with an
Employer shall be communicated by a Notice of Termination to the Executive, if
such termination is by an Employer, or to an Employer, if such termination is by
the Executive. For purposes of this Agreement, "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated; provided, however, that in
connection with a termination for Good Reason under Section 3(e)(vii), no
details shall be necessary other than reference to such Section. For purposes of
this Agreement, no purported termination of Executive's employment with an
Employer shall be effective without such a Notice of Termination having been
given.
4. Compensation Upon Termination.
Subject to Section 9 hereof, if within two years of a Change
in Control Transaction, the Executive's employment with an Employer shall be
terminated in accordance with Section 3(a) (the "Termination"), the Executive
shall be entitled to the following payments and benefits:
(a) Severance. The Company shall pay or cause to be paid
to the Executive a cash severance amount equal to (i) three times the
sum of (A) the Executive's annual base salary on the date of the Change
in Control (or, if higher, the annual base salary in effect immediately
prior to the giving of the Notice of Termination), and (B) the highest
of the actual bonuses paid or payable to the Executive under the
Company's annual incentive Compensation plan in any of the three
consecutive fiscal years prior to the year in which the Change in
Control occurs, plus (ii) in lieu of the continuation of any of the
Executive's perquisites as provided under the Executive's employment
agreement, a cash payment equal to 35% of the Executive's annual base
salary as in effect on the date of the Change in Control for each of
the three years following the Change in Control. This cash severance
amount shall be payable in a lump sum calculated without any discount.
<PAGE> 6
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(b) Additional Payments and Benefits. The Executive shall
also be entitled to:
(i) a lump sum cash payment equal to the sum of (A)
the Executive's accrued but unpaid annual base salary through
the date of Termination, (B) the unpaid portion, if any, of
bonuses previously earned by the Executive pursuant to the
Company's annual incentive compensation plan, plus the pro
rata portion of (I) the Bonus or (II) if payable, the target
bonus to be paid for the year in which the date of Termination
occurs, in either case (calculated through the date of
Termination), and (C) an amount, if any, equal to compensation
previously deferred (excluding any qualified plan deferral)
and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto; and
(ii) an annual benefit under the Company's
Supplemental Retirement Plan (the "SERP"), calculated based on
10 years of service, unreduced for early retirement; and
(iii) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and disability
insurance) for the Executive and the Executive's eligible
dependents pursuant to the terms of the Company's Key Man
Supplemental Medical Plan, on the same basis as in effect
prior to the Change in Control or the Executive's Termination,
whichever is deemed to provide for more substantial benefits;
and
(iv) all other accrued or vested benefits in
accordance with the terms of the applicable plan (with an
offset for any amounts paid under Section 4(b)(i)(C), above).
All lump sum payments under this Section 4 shall be paid
within 10 business days after Executive's date of Termination;
provided, however, that with respect to the SERP benefit set
forth in Section 4(b)(ii), above, unless the Executive, during
the ten day period after the Company signs any agreement that
would, upon the consummation of the transactions contemplated
therein, result in a Change of Control, elects to receive a
lump sum payment equal to the present value of his SERP
benefit (as calculated in Section 4(b)(ii) and otherwise in
accordance with Exhibit A, as attached hereto), the Executive
shall be entitled to receive the SERP benefit in installment
payments (payable in accordance with the terms of the SERP),
beginning upon the later to occur of (i) the date on which the
Executive achieves age 55 and (ii) the date on which
Executive's employment terminates in accordance with the terms
hereunder.
(c) Outplacement. If so requested by the Executive,
outplacement services shall be provided by a professional outplacement
provider selected by Executive; provided, however, that such
outplacement services shall be provided the Executive at a cost to the
Company of not more than fifteen (15) percent of such Executive's
annual base salary.
<PAGE> 7
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(d) Withholding. Payments and benefits provided pursuant
to this Section 4 shall be subject to any applicable payroll and other
taxes required to be withheld.
5. Compensation Upon Termination for Death, Disability
or Retirement.
If an Executive's employment is terminated by reason of Death,
Disability or Retirement prior to any other termination, Executive will receive:
(a) the sum of (i) Executive's accrued but unpaid salary
through the date of Termination, (ii) the pro rata portion of the
Executive's target bonus for the year of Executive's Death or
Disability (calculated through the date of Termination), and (iii) an
amount equal to any compensation previously deferred and any accrued
vacation pay; and
(b) other accrued or vested benefits in accordance with
the terms of the applicable plan (with an offset for any amounts paid
under item (a)(iii), above.
6. Excess Parachute Excise Tax Payments.
(a) (i) If it is determined (as hereafter provided) that any
payment or distribution by the Company or any Employer to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision thereto) by reason of
being "contingent on a change in ownership or control" of the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments; provided, however, if the Executive's Payment is,
when calculated on a net-after-tax basis, less than $50,000 in excess of the
amount of the Payment which could be paid to the Executive under Section 280G of
the Code without causing the imposition of the Excise Tax, then the Payment
shall be limited to the largest amount payable (as described above) without
resulting in the imposition of any Excise Tax (such amount, the "Capped
Amount").
(ii) Subject to the provisions of Section 6(a)(i) hereof,
all determinations required to be made under this Section 6, including whether
an Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in
<PAGE> 8
8
Control (or, if such Accounting Firm declines to serve, the Accounting Firm
shall be a nationally recognized firm of certified public accountants selected
by the Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the Termination Date, if applicable, and any other such time or times as may be
requested by the Company or the Executive. If the Accounting Firm determines
that any Excise Tax is payable by the Executive and that the criteria for
reducing the Payment to the Capped Amount (as described in Section 6(a)(i)
above) is met, then the Company shall reduce the Payment by the amount which,
based on the Accounting Firm's determination and calculations, would provide the
Executive with the Capped Amount, and pay to the Executive such reduced Payment.
If the Accounting Firm determines that an Excise Tax is payable, without
reduction pursuant to Section 6(a)(i), above, the Company shall pay the required
Gross-Up Payment to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his/her
federal, state, local income or other tax return. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
the Company and the Executive absent a contrary determination by the Internal
Revenue Services or a court of competent jurisdiction; provided, however, that
no such determination shall eliminate or reduce the Company's obligation to
provide any Gross-Up Payment that shall be due as a result of such contrary
determination. As a result of the uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
6(a) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(iii) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 6(a) hereof.
(iv) The federal, state and local income or other tax
returns filed by the Executive (or any filing made by a consolidated tax group
which includes the Company) shall be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive shall make proper payment of the amount
of any Excise Tax, and at the request of the Company, provide to the Company
true and correct copies (with any amendments) of his/her federal income tax
return as filed with the
<PAGE> 9
9
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of the Executive's federal income tax return, or corresponding
state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Executive shall within
five business days pay to the Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations
contemplated by Sections 6(a)(ii) and (iv) hereof shall be borne by the Company.
If such fees and expenses are initially advanced by the Executive, the Company
shall reimburse the Executive the full amount of such fees and expenses within
five business days after receipt from the Executive of a statement therefor and
reasonable evidence of his/her payment thereof.
(b) In the event that the Internal Revenue Service claims
that any payment or benefit received under this Agreement constitutes an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code, the
Executive shall notify the Company in writing of such claim. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the 30
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company and reasonably satisfactory to the Executive; (iii) cooperate with
the Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for and against any Excise Tax or other tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses.
(c) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall
<PAGE> 10
10
advance the amount of such payment to the Executive on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or other tax (including interest and penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and provided, further, that if the
Executive is required to extend the statute of limitations to enable the Company
to contest such claim, the Executive may limit this extension solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a corporate deduction would be disallowed pursuant
to Section 280G of the Code and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. In addition, no position may be taken nor
any final resolution be agreed to by the Company without the Executive's consent
if such position or resolution could reasonably be expected to adversely affect
the Executive (including any other tax position of the Executive unrelated to
matters covered hereby).
(d) If, after the receipt by the Executive of an amount
advanced by the Company in connection with the contest of the Excise Tax claim,
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds the amount
advanced by the Company or it is otherwise determined for any reason that
additional amounts could be paid to the Named Executive without incurring any
Excise Tax, any such amount will be promptly paid by the Company to the named
Executive. If, after the receipt by the Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest the
denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid and shall be deemed to be in consideration for services rendered after
the date of the Termination.
7. Expenses. In addition to all other amounts payable to
the Executive under this Agreement, the Company shall pay or reimburse the
Executive for legal fees (including without limitation, any and all court costs
and attorneys' fees and expenses) incurred by the Executive in connection with
or as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; provided, however, that in the case of an action brought by the
Executive, the Company shall have no obligation for any such legal fees, if the
Company is successful in establishing with the court that the Executive's action
was frivolous or otherwise without any reasonable legal or factual basis.
8. Obligations Absolute; Non-Exclusivity of Rights;
Joint Several Liability.
(a) The obligations of the Company to make the payment to
the Executive, and to make the arrangements, provided for herein shall be
absolute and unconditional and shall not be reduced by any circumstances,
including without limitation any set-off, counterclaim,
<PAGE> 11
11
recoupment, defense or other right which the Company may have against the
Executive or any third party at any time.
(b) Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company or any other Employer and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any agreements with the Company or any
other Employer.
(c) Each entity included in the definition of "Employer"
and any successors or assigns shall be joint and severally liable with the
Company under this Agreement.
9. Not an Employment Agreement; Effect On Other Rights.
(a) This Agreement is not, and nothing herein shall be
deemed to create, a contract of employment between the Executive and the
Company. Any Employer may terminate the employment of the Executive at any time,
subject to the terms of this Agreement and/or any employment agreement or
arrangement between the Employer and the Executive that may then be in effect.
(b) With respect to any employment agreement with the
Executive in effect immediately prior to the Change in Control, nothing herein
shall have any effect on the Executive's rights thereunder; provided, however,
that in the event of the Executive's termination of employment in accordance
with Section 3 hereof, this Agreement shall govern solely for the purpose of
providing the terms of all payments and additional benefits to which the
Executive is entitled upon such termination and any payments or benefit provided
thereunder shall reduce the corresponding type of payments or benefits
hereunder. Notwithstanding the foregoing, in the event that the Executive's
employment is terminated prior to the occurrence of a Change in Control under
the circumstances provided for in Section 3(a)(ii) and such circumstances also
entitle Executive to payments and benefits under any other employment or other
agreement as in effect prior to the Change in Control ("Other Agreement"), then,
until the Change in Control occurs, the Executive will receive the payments and
benefits to which he/she is entitled under such Other Agreement. Upon the
occurrence of the Change in Control, the Company will pay to the Executive in
cash the amount to which he/she is entitled to under this Agreement (reduced by
the amounts already paid under the Other Agreement) in respect of cash payments
and shall provide or increase any other noncash benefits to those provided for
hereunder (after taking into Account noncash benefits, if any, provided under
such Other Agreement). Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan or program of the Company or any
other Employer shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
(c) With respect to any limited stock appreciation rights
("LSARs") granted to the Executive pursuant to the Company's 1973 Stock Option
Plan for Key Executives held, as of the date of this Agreement, by the
Executive, the Executive hereby agrees to the cancellation of
<PAGE> 12
12
such LSARs in the event that the Change in Control contemplated hereunder is
intended to be, and is otherwise, eligible for pooling-of-interests accounting
treatment under APB No. 16.
10. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all the stock of the Company or to all or substantially
all of the Company's business or assets which executes and delivers an agreement
provided for in this Section 10(a) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law, including any parent
or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
11. Notice. For purpose of this Agreement, notices and
all other communications provided for in this Agreement or contemplated hereby
shall be in writing and shall be deemed to have been duly given when personally
delivered, delivered by a nationally recognized overnight delivery service or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
Hubbell Incorporated
584 Derby Milford Road
Orange, Connecticut 06477-4024
Attention: General Counsel
and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.
Either party may designate a different address by giving notice of
change of address in the manner provided above, except that notices of change of
address shall be effective only upon receipt.
<PAGE> 13
13
12. Confidentiality. The Executive shall retain in
confidence any and all confidential information concerning the Company and its
respective business which is now known or hereafter becomes known to the
Executive, except as otherwise required by law and except information (i)
ascertainable or obtained from public information, (ii) received by the
Executive at any time after the Executive's employment by the Company shall have
terminated, from a third party not employed by or otherwise affiliated with the
Company or (iii) which is or becomes known to the public by any means other than
a breach of this Section 12. Upon the Termination of employment, the Executive
will not take or keep any proprietary or confidential information or
documentation belonging to the Company.
13. Miscellaneous. No provision of this Agreement may be
amended, altered, modified, waived or discharged unless such amendment,
alteration, modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer of the Company as shall be specifically
designated by the Committee or by the Board of Directors of the Company. No
waiver by either party, at any time, of any breach by the other party of, or of
compliance by the other party with, any condition or provision of this Agreement
to be performed or complied with by such other party shall be deemed a waiver of
any similar or dissimilar provision or condition of this Agreement or any other
breach of or failure to comply with the same condition or provision at the same
time or at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
14. Severability. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party hereto waives any provision of law which renders any provision
of this Agreement invalid, illegal or unenforceable in any respect.
15. Governing Law; Venue. The validity, interpretation,
construction and performance of this Agreement shall be governed on a
non-exclusive basis by the laws of the State of Connecticut without giving
effect to its conflict of laws rules. For purposes of jurisdiction and venue,
the Company and each Employer hereby consents to jurisdiction and venue in any
suit, action or proceeding with respect to this Agreement in any court of
competent jurisdiction in the state in which Executive resides at the
commencement of such suit, action or proceeding and waives any objection,
challenge or dispute as to such jurisdiction or venue being proper.
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.
<PAGE> 14
14
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
HUBBELL INCORPORATED
By:
---------------------------------
Title:
-----------------------------
----------------------------------
Executive
----------------------------------
----------------------------------
Address
<PAGE> 15
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EXHIBIT A
ASSUMPTIONS
The assumptions to be used are those specified under Section 417(e) of the
Internal Revenue Code of 186, as amended, which assumptions are the minimum lump
sum factors permitted to be used for calculating pension benefits under
qualified defined benefit plans.
Benefit: Lump sum payment of unreduced benefit deferred to age 55,
increased to reflect the 50% joint and survivor form.
Mortality Rates: The 1983 Group Annuity Mortality (1983 GAM) blend of 50% male
and 50% female rates.
Interest Rate: 10-year treasury rate on the first day of the fourth quarter
of the calendar year immediately prior to the date on which
the Executive retires or otherwise separates from Service.
Other: 3% annual Social Security wage base increase.
2.5% annual CPI increase.
5% annual salary increase.
Qualified Plan
Offset: Amount actually payable at age 55 (or, if higher, the
participants actual age as of the date of termination of
employment).
<PAGE> 1
EXHIBIT 10s
CONTINUITY AGREEMENT
This Agreement (the "Agreement") is dated as of December 27,
1999 by and between HUBBELL INCORPORATED, a Connecticut corporation (the
"Company"), and HARRY B. ROWELL (the "Executive").
WHEREAS, the Company's Board of Directors considers the
continued services of key executives of the Company to be in the best interests
of the Company and its stockholders; and
WHEREAS, the Company's Board of Directors desires to assure,
and has determined that it is appropriate and in the best interests of the
Company and its stockholders to reinforce and encourage the continued attention
and dedication of key executives of the Company to their duties of employment
without personal distraction or conflict of interest in circumstances which
could arise from the occurrence of a change in control of the Company; and
WHEREAS, the Company's Board of Directors has authorized the
Company to enter into continuity agreements with those key executives of the
Company and any of its respective subsidiaries (all of such entities, with the
Company hereinafter referred to as an "Employer"), such agreements to set forth
the severance compensation which the Company agrees under certain circumstances
to pay such executives; and
WHEREAS, the Executive is a key executive of an Employer and
has been designated by the Board as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term. This Agreement shall become effective on the
date hereof and remain in effect until the second anniversary thereof; provided,
however, that, thereafter, this Agreement shall automatically renew on each
successive anniversary, unless an Employer provides the Executive, in writing,
at least 180 days prior to the renewal date, notice that this Agreement shall
not be renewed. Notwithstanding the foregoing, in the event that a Change in
Control occurs at any time prior to the termination of this Agreement in
accordance with the preceding sentence, this Agreement shall not terminate until
the second anniversary of the Change in Control (or, if later, until the second
anniversary of the consummation of the transaction(s) contemplated in the Change
in Control).
2. Change in Control.
(a) No compensation or other benefit pursuant to Section
4 hereof shall be payable under this Agreement unless and until either (i) a
Change in Control of the Company (as hereinafter defined) shall have occurred
while the Executive is an employee of an Employer and
<PAGE> 2
2
the Executive's employment by an Employer thereafter shall have terminated in
accordance with Section 3 hereof or (ii) the Executive's employment by the
Company shall have terminated in accordance with Section 3(a)(ii) hereof prior
to the occurrence of the Change in Control.
(b) For purposes of this Agreement:
(i) "Change in Control" shall mean any one of the following:
(A) Continuing Directors no longer constitute at least
2/3 of the Directors;
(B) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of the Company entitled to
vote for the election of the Company's directors;
provided that this Section 2 shall not apply with
respect to any holding of securities by (I) the trust
under a Trust Indenture dated September 2, 1957 made
by Louie E. Roche, (II) the trust under a Trust
Indenture dated August 23, 1957 made by Harvey
Hubbell, and (III) any employee benefit plan (within
the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended)
maintained by the Company or any affiliate of the
Company;
(C) the approval by the Company's stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such merger or
consolidation will constitute at least 2/3 of the
Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation; or
(D) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Company's stockholders determine that
such proposed action, if taken, would constitute a
change of control of the Company and such action is
taken.
(ii) "Continuing Director" shall mean any individual who
is a member of the Company's Board of Directors on
December 9, 1986 or was designated (before such
person's initial election as a Director) as a
Continuing Director by 2/3 of the then Continuing
Directors.
(iii) "Director" shall mean any individual who is a member
of the Company's Board of Directors on the date the
action in question was taken.
<PAGE> 3
3
(iv) "Change in Control Transaction" shall mean a Change
in Control or, if later, the consummation of the
transaction contemplated by the Change in Control.
3. Termination of Employment; Definitions.
(a) Termination without Cause by the Company or for Good
Reason by the Executive. (i) The Executive shall be entitled to the
compensation provided for in Section 4 hereof, if within two years
after a Change in Control Transaction, the Executive's employment shall
be terminated (A) by an Employer for any reason other than (I) the
Executive's Disability or Retirement, (II) the Executive's death or
(III) for Cause, or (B) by the Executive with Good Reason (as such
terms are defined herein).
(ii) In addition, the Executive shall be entitled to the
compensation provided for in Section 4 hereof if, (A) in the event that
an agreement is signed which, if consummated, would result in a Change
of Control and the Executive is terminated without Cause by the Company
or terminates employment with Good Reason prior to the Change in
Control, (B) such termination is at the direction of the acquiror or
merger partner or otherwise in connection with the anticipated Change
in Control, and (C) such Change in Control actually occurs.
(b) Disability. For purposes of this Agreement,
"Disability" shall mean the Executive's absence from the full-time performance
of the Executive's duties (as such duties existed immediately prior to such
absence) for 180 consecutive business days, when the Executive is disabled as a
result of incapacity due to physical or mental illness.
(c) Retirement. For purposes of this Agreement,
"Retirement" shall mean the Executive's voluntary termination of employment
pursuant to late, normal or early retirement under a pension plan sponsored by
an Employer, as defined in such plan, but only if such retirement occurs prior
to a termination by an Employer without Cause or by the Executive for Good
Reason.
(d) Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the
Executive to perform substantially all of his or her duties
with an Employer (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to such
Executive by the Board of Directors (the "Board") of the
Company which specifically identifies the manner in which the
Board believes that the Executive has not substantially
performed his or her duties,
(ii) the willful engaging by the Executive in
gross misconduct which is materially and demonstrably
injurious to the Company or any Employer; or
<PAGE> 4
4
(iii) the conviction of, or plea of guilty or nolo
contendere to, a felony.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a three-fourths majority of the non-employee Directors of the Company
or of the ultimate parent of the entity which caused the Change in Control (if
the Company has become a subsidiary) at a meeting of such Directors called and
held for such purpose, after 30 days' prior written notice to the Executive
specifying the basis for such termination and the particulars thereof and a
reasonable opportunity for the Executive to cure or otherwise resolve the
behavior in question prior to such meeting, finding that in the reasonable
judgment of such Directors, the conduct or event set forth in any of clauses (i)
through (iii) above has occurred and that such occurrence warrants the
Executive's termination.
(e) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, within the Term of this Agreement, of any of
the following without the Executive's express written consent:
(i) after a Change of Control, any reduction in the
Executive's base salary from that which was in effect immediately prior
to the Change of Control, any reduction in the Executive's annual cash
bonus below such bonus paid or payable in respect of the calendar year
immediately prior to the year in which the Change of Control occurs, or
any reduction in the Executive's aggregate annual cash compensation
(including base salary and bonus) from that which was in effect
immediately prior to the Change of Control; or
(ii) after a Change of Control, the failure to increase
(within 12 months of the last increase in base salary) the Executive's
salary in an amount which at least equals, on a percentage basis, the
average percentage of increase in base salary effected in the preceding
12 months (which period may include some period of time prior to the
Change of Control) for all senior executives of the Company (unless
such reduction is offset by an increase in the amount of annual cash
bonus that is paid to the Executive); or
(iii) any material and adverse diminution in the Executives'
duties, responsibilities, status, position or authority with the
Company or any of its affiliates following a Change of Control;
provided, however, that no such diminution shall be deemed to exist
solely because of changes in Executive's duties, responsibilities or
titles as a consequence of the Company ceasing to be a company with
publicly-traded securities or becoming a wholly-owned subsidiary of
another company; or
(iv) any relocation of the Executive's primary workplace to a
location that is more than 35 miles from the Executive's primary
workplace as of the date of this Agreement or the Company's requiring
the Executive to be based anywhere other than the location at which the
Executive performed his duties prior to the commencement of the Term;
or
<PAGE> 5
5
(v) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to the Executive to
assume and perform this Agreement, as contemplated by Section 10(a)
hereof; or
(vii) during the thirty-day period immediately following the
first anniversary of the Change in Control Transaction, the voluntary
termination of employment by the Executive for any reason or no reason
at all.
Notwithstanding the foregoing, in the event Executive provides the Company with
a Notice of Termination (as defined below) referencing this Section 3(e) (with
the exception of Section 3(e)(vii)), the Company shall have 30 days thereafter
in which to cure or resolve the behavior otherwise constituting Good Reason. Any
good faith determination by Executive that Good Reason exists shall be presumed
correct and shall be binding upon the Company.
(f) Notice of Termination. Any purported termination of
the Executive's employment (other than on account of Executive's death) with an
Employer shall be communicated by a Notice of Termination to the Executive, if
such termination is by an Employer, or to an Employer, if such termination is by
the Executive. For purposes of this Agreement, "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated; provided, however, that in
connection with a termination for Good Reason under Section 3(e)(vii), no
details shall be necessary other than reference to such Section. For purposes of
this Agreement, no purported termination of Executive's employment with an
Employer shall be effective without such a Notice of Termination having been
given.
4. Compensation Upon Termination.
Subject to Section 9 hereof, if within two years of a Change
in Control Transaction, the Executive's employment with an Employer shall be
terminated in accordance with Section 3(a) (the "Termination"), the Executive
shall be entitled to the following payments and benefits:
(a) Severance. The Company shall pay or cause to be paid
to the Executive a cash severance amount equal to three times the sum
of (i) the Executive's annual base salary on the date of the Change in
Control (or, if higher, the annual base salary in effect immediately
prior to the giving of the Notice of Termination), and (ii) the highest
of the actual bonuses paid or payable to the Executive under the
Company's annual incentive Compensation plan in any of the three
consecutive fiscal years prior to the year in which the Change in
Control occurs. This cash severance amount shall be payable in a lump
sum calculated without any discount.
(b) Additional Payments and Benefits. The Executive shall
also be entitled to:
<PAGE> 6
6
(i) a lump sum cash payment equal to the sum of (A)
the Executive's accrued but unpaid annual base salary through
the date of Termination, (B) the unpaid portion, if any, of
bonuses previously earned by the Executive pursuant to the
Company's annual incentive compensation plan, plus the pro
rata portion of (I) the Bonus or (II) if payable, the target
bonus to be paid for the year in which the date of Termination
occurs, in either case (calculated through the date of
Termination), and (C) an amount, if any, equal to compensation
previously deferred (excluding any qualified plan deferral)
and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto; and
(ii) an annual benefit under the Company's
Supplemental Retirement Plan (the "SERP"), calculated based on
10 years of service, unreduced for early retirement
thereunder; and
(iii) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and disability
insurance) for the Executive and the Executive's eligible
dependents pursuant to the terms of the Company's Key Man
Supplemental Medical Plan, on the same basis as in effect
prior to the Change in Control or the Executive's Termination,
whichever is deemed to provide for more substantial benefits;
and
(iv) for a period ending on the earlier of (A) the
end of the third anniversary of the date of the Executive's
Termination (B) the commencement of comparable coverage by the
Executive with a subsequent employer, continuation of the
Executive's perquisites, including the provision of an
automobile and payment of all related expenses (including
maintenance, other than gas), annual social and/or health club
dues, and tax and financial planning services, as in effect
immediately prior to the Change of Control; and
(v) all other accrued or vested benefits in
accordance with the terms of the applicable plan (with an
offset for any amounts paid under Section 4(b)(i)(C), above).
All lump sum payments under this Section 4 shall be paid
within 10 business days after Executive's date of Termination;
provided, however, that with respect to the SERP benefit set
forth in Section 4(b)(ii), above, unless the Executive, during
the ten day period after the Company signs any agreement that
would, upon the consummation of the transactions contemplated
therein, result in a Change of Control, elects to receive a
lump sum payment equal to the present value of his SERP
benefit (as calculated in Section 4(b)(ii) and otherwise in
accordance with Exhibit A, as attached hereto), the Executive
shall be entitled to receive the SERP benefit in installment
payments (payable in accordance with the terms of the SERP),
beginning upon the later to occur of (i) the date on which the
Executive achieves age 55 and (ii) the date on which
Executive's employment terminates in accordance with the terms
hereunder.
<PAGE> 7
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(c) Outplacement. If so requested by the Executive,
outplacement services shall be provided by a professional outplacement
provider selected by Executive; provided, however, that such
outplacement services shall be provided the Executive at a cost to the
Company of not more than fifteen (15) percent of such Executive's
annual base salary.
(d) Withholding. Payments and benefits provided pursuant
to this Section 4 shall be subject to any applicable payroll and other
taxes required to be withheld.
5. Compensation Upon Termination for Death, Disability
or Retirement.
If an Executive's employment is terminated by reason of Death,
Disability or Retirement prior to any other termination, Executive will receive:
(a) the sum of (i) Executive's accrued but unpaid salary
through the date of Termination, (ii) the pro rata portion of the
Executive's target bonus for the year of Executive's Death or
Disability (calculated through the date of Termination), and (iii) an
amount equal to any compensation previously deferred and any accrued
vacation pay; and
(b) other accrued or vested benefits in accordance with
the terms of the applicable plan (with an offset for any amounts paid
under item (a)(iii), above.
6. Excess Parachute Excise Tax Payments.
(a) (i) If it is determined (as hereafter provided) that any
payment or distribution by the Company or any Employer to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision thereto) by reason of
being "contingent on a change in ownership or control" of the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments; provided, however, if the Executive's Payment is,
when calculated on a net-after-tax basis, less than $50,000 in excess of the
amount of the Payment which could be paid to the Executive under Section 280G of
the Code without causing the imposition of the Excise Tax, then the Payment
shall be limited to the largest amount payable (as described above) without
resulting in the imposition of any Excise Tax (such amount, the "Capped
Amount").
<PAGE> 8
8
(ii) Subject to the provisions of Section 6(a)(i) hereof, all
determinations required to be made under this Section 6, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the Termination Date, if applicable, and any other such time or times as may be
requested by the Company or the Executive. If the Accounting Firm determines
that any Excise Tax is payable by the Executive and that the criteria for
reducing the Payment to the Capped Amount (as described in Section 6(a)(i)
above) is met, then the Company shall reduce the Payment by the amount which,
based on the Accounting Firm's determination and calculations, would provide the
Executive with the Capped Amount, and pay to the Executive such reduced Payment.
If the Accounting Firm determines that an Excise Tax is payable, without
reduction pursuant to Section 6(a)(i), above, the Company shall pay the required
Gross-Up Payment to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his/her
federal, state, local income or other tax return. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
the Company and the Executive absent a contrary determination by the Internal
Revenue Services or a court of competent jurisdiction; provided, however, that
no such determination shall eliminate or reduce the Company's obligation to
provide any Gross-Up Payment that shall be due as a result of such contrary
determination. As a result of the uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
6(a) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(iii) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 6(a) hereof.
<PAGE> 9
9
(iv) The federal, state and local income or other tax returns
filed by the Executive (or any filing made by a consolidated tax group which
includes the Company) shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(v) The fees and expenses of the Accounting Firm for
its services in connection with the determinations and calculations contemplated
by Sections 6(a)(ii) and (iv) hereof shall be borne by the Company. If such fees
and expenses are initially advanced by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his/her payment thereof.
(b) In the event that the Internal Revenue Service claims
that any payment or benefit received under this Agreement constitutes an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code, the
Executive shall notify the Company in writing of such claim. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the 30
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company and reasonably satisfactory to the Executive; (iii) cooperate with
the Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for and against any Excise Tax or other tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses.
(c) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals,
<PAGE> 10
10
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and provided,
further, that if the Executive is required to extend the statute of limitations
to enable the Company to contest such claim, the Executive may limit this
extension solely to such contested amount. The Company's control of the contest
shall be limited to issues with respect to which a corporate deduction would be
disallowed pursuant to Section 280G of the Code and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In addition, no position
may be taken nor any final resolution be agreed to by the Company without the
Executive's consent if such position or resolution could reasonably be expected
to adversely affect the Executive (including any other tax position of the
Executive unrelated to matters covered hereby).
(d) If, after the receipt by the Executive of an amount
advanced by the Company in connection with the contest of the Excise Tax claim,
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds the amount
advanced by the Company or it is otherwise determined for any reason that
additional amounts could be paid to the Named Executive without incurring any
Excise Tax, any such amount will be promptly paid by the Company to the named
Executive. If, after the receipt by the Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest the
denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid and shall be deemed to be in consideration for services rendered after
the date of the Termination.
7. Expenses. In addition to all other amounts payable to
the Executive under this Agreement, the Company shall pay or reimburse the
Executive for legal fees (including without limitation, any and all court costs
and attorneys' fees and expenses) incurred by the Executive in connection with
or as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; provided, however, that in the case of an action brought by the
Executive, the Company shall have no obligation for any such legal fees, if the
Company is successful in establishing with the court that the Executive's action
was frivolous or otherwise without any reasonable legal or factual basis.
<PAGE> 11
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8. Obligations Absolute; Non-Exclusivity of Rights;
Joint Several Liability.
(a) The obligations of the Company to make the payment to
the Executive, and to make the arrangements, provided for herein shall be
absolute and unconditional and shall not be reduced by any circumstances,
including without limitation any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Executive or any third party
at any time.
(b) Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company or any other Employer and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any agreements with the Company or any
other Employer.
(c) Each entity included in the definition of "Employer"
and any successors or assigns shall be joint and severally liable with the
Company under this Agreement.
9. Not an Employment Agreement; Effect On Other Rights.
(a) This Agreement is not, and nothing herein shall be
deemed to create, a contract of employment between the Executive and the
Company. Any Employer may terminate the employment of the Executive at any time,
subject to the terms of this Agreement and/or any employment agreement or
arrangement between the Employer and the Executive that may then be in effect.
(b) With respect to any employment agreement with the
Executive in effect immediately prior to the Change in Control, nothing herein
shall have any effect on the Executive's rights thereunder; provided, however,
that in the event of the Executive's termination of employment in accordance
with Section 3 hereof, this Agreement shall govern solely for the purpose of
providing the terms of all payments and additional benefits to which the
Executive is entitled upon such termination and any payments or benefit provided
thereunder shall reduce the corresponding type of payments or benefits
hereunder. Notwithstanding the foregoing, in the event that the Executive's
employment is terminated prior to the occurrence of a Change in Control under
the circumstances provided for in Section 3(a)(ii) and such circumstances also
entitle Executive to payments and benefits under any other employment or other
agreement as in effect prior to the Change in Control ("Other Agreement"), then,
until the Change in Control occurs, the Executive will receive the payments and
benefits to which he/she is entitled under such Other Agreement. Upon the
occurrence of the Change in Control, the Company will pay to the Executive in
cash the amount to which he/she is entitled to under this Agreement (reduced by
the amounts already paid under the Other Agreement) in respect of cash payments
and shall provide or increase any other noncash benefits to those provided for
hereunder (after taking into Account noncash benefits, if any, provided under
such Other Agreement). Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan or program of the Company or any
other Employer shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
<PAGE> 12
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(c) With respect to any limited stock appreciation rights
("LSARs") granted to the Executive pursuant to the Company's 1973 Stock Option
Plan for Key Executives held, as of the date of this Agreement, by the
Executive, the Executive hereby agrees to the cancellation of such LSARs in the
event that the Change in Control contemplated hereunder is intended to be, and
is otherwise, eligible for pooling-of-interests accounting treatment under APB
No. 16.
10. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all the stock of the Company or to all or substantially
all of the Company's business or assets which executes and delivers an agreement
provided for in this Section 10(a) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law, including any parent
or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
11. Notice. For purpose of this Agreement, notices and
all other communications provided for in this Agreement or contemplated hereby
shall be in writing and shall be deemed to have been duly given when personally
delivered, delivered by a nationally recognized overnight delivery service or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
Hubbell Incorporated
584 Derby Milford Road
Orange, Connecticut 06477-4024
Attention: General Counsel
and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.
<PAGE> 13
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Either party may designate a different address by giving notice of
change of address in the manner provided above, except that notices of change of
address shall be effective only upon receipt.
12. Confidentiality. The Executive shall retain in
confidence any and all confidential information concerning the Company and its
respective business which is now known or hereafter becomes known to the
Executive, except as otherwise required by law and except information (i)
ascertainable or obtained from public information, (ii) received by the
Executive at any time after the Executive's employment by the Company shall have
terminated, from a third party not employed by or otherwise affiliated with the
Company or (iii) which is or becomes known to the public by any means other than
a breach of this Section 12. Upon the Termination of employment, the Executive
will not take or keep any proprietary or confidential information or
documentation belonging to the Company.
13. Miscellaneous. No provision of this Agreement may be
amended, altered, modified, waived or discharged unless such amendment,
alteration, modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer of the Company as shall be specifically
designated by the Committee or by the Board of Directors of the Company. No
waiver by either party, at any time, of any breach by the other party of, or of
compliance by the other party with, any condition or provision of this Agreement
to be performed or complied with by such other party shall be deemed a waiver of
any similar or dissimilar provision or condition of this Agreement or any other
breach of or failure to comply with the same condition or provision at the same
time or at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
14. Severability. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party hereto waives any provision of law which renders any provision
of this Agreement invalid, illegal or unenforceable in any respect.
15. Governing Law; Venue. The validity, interpretation,
construction and performance of this Agreement shall be governed on a
non-exclusive basis by the laws of the State of Connecticut without giving
effect to its conflict of laws rules. For purposes of jurisdiction and venue,
the Company and each Employer hereby consents to jurisdiction and venue in any
suit, action or proceeding with respect to this Agreement in any court of
competent jurisdiction in the state in which Executive resides at the
commencement of such suit, action or proceeding and waives any objection,
challenge or dispute as to such jurisdiction or venue being proper.
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
HUBBELL INCORPORATED
By:
------------------------------
Title:
--------------------------
---------------------------------
Executive
---------------------------------
---------------------------------
Address
<PAGE> 15
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EXHIBIT A
ASSUMPTIONS
The assumptions to be used are those specified under Section 417(e) of the
Internal Revenue Code of 186, as amended, which assumptions are the minimum lump
sum factors permitted to be used for calculating pension benefits under
qualified defined benefit plans.
Benefit: Lump sum payment of unreduced benefit deferred to age 55,
increased to reflect the 50% joint and survivor form.
Mortality Rates: The 1983 Group Annuity Mortality (1983 GAM) blend of 50% male
and 50% female rates.
Interest Rate: 10-year treasury rate on the first day of the fourth quarter
of the calendar year immediately prior to the date on which
the Executive retires or otherwise separates from Service.
Other: 3% annual Social Security wage base increase.
2.5% annual CPI increase.
5% annual salary increase.
Qualified Plan
Offset: Amount actually payable at age 55 (or, if higher, the
participants actual age as of the date of termination of
employment).
<PAGE> 1
EXHIBIT 10t
CONTINUITY AGREEMENT
This Agreement (the "Agreement") is dated as of December 27,
1999 by and between HUBBELL INCORPORATED, a Connecticut corporation (the
"Company"), and TIMOTHY H. POWERS (the "Executive").
WHEREAS, the Company's Board of Directors considers the
continued services of key executives of the Company to be in the best interests
of the Company and its stockholders; and
WHEREAS, the Company's Board of Directors desires to assure,
and has determined that it is appropriate and in the best interests of the
Company and its stockholders to reinforce and encourage the continued attention
and dedication of key executives of the Company to their duties of employment
without personal distraction or conflict of interest in circumstances which
could arise from the occurrence of a change in control of the Company; and
WHEREAS, the Company's Board of Directors has authorized the
Company to enter into continuity agreements with those key executives of the
Company and any of its respective subsidiaries (all of such entities, with the
Company hereinafter referred to as an "Employer"), such agreements to set forth
the severance compensation which the Company agrees under certain circumstances
to pay such executives; and
WHEREAS, the Executive is a key executive of an Employer and
has been designated by the Board as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term. This Agreement shall become effective on the
date hereof and remain in effect until the second anniversary thereof; provided,
however, that, thereafter, this Agreement shall automatically renew on each
successive anniversary, unless an Employer provides the Executive, in writing,
at least 180 days prior to the renewal date, notice that this Agreement shall
not be renewed. Notwithstanding the foregoing, in the event that a Change in
Control occurs at any time prior to the termination of this Agreement in
accordance with the preceding sentence, this Agreement shall not terminate until
the second anniversary of the Change in Control (or, if later, until the second
anniversary of the consummation of the transaction(s) contemplated in the Change
in Control).
2. Change in Control.
(a) No compensation or other benefit pursuant to Section
4 hereof shall be payable under this Agreement unless and until either (i) a
Change in Control of the Company (as hereinafter defined) shall have occurred
while the Executive is an employee of an Employer and the Executive's employment
by an Employer thereafter shall have terminated in accordance with
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Section 3 hereof or (ii) the Executive's employment by the Company shall have
terminated in accordance with Section 3(a)(ii) hereof prior to the occurrence of
the Change in Control.
(b) For purposes of this Agreement:
(i) "Change in Control" shall mean any one of the following:
(A) Continuing Directors no longer constitute at least
2/3 of the Directors;
(B) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of the Company entitled to
vote for the election of the Company's directors;
provided that this Section 2 shall not apply with
respect to any holding of securities by (I) the trust
under a Trust Indenture dated September 2, 1957 made
by Louie E. Roche, (II) the trust under a Trust
Indenture dated August 23, 1957 made by Harvey
Hubbell, and (III) any employee benefit plan (within
the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended)
maintained by the Company or any affiliate of the
Company;
(C) the approval by the Company's stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such merger or
consolidation will constitute at least 2/3 of the
Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation; or
(D) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Company's stockholders determine that
such proposed action, if taken, would constitute a
change of control of the Company and such action is
taken.
(ii) "Continuing Director" shall mean any individual who
is a member of the Company's Board of Directors on
December 9, 1986 or was designated (before such
person's initial election as a Director) as a
Continuing Director by 2/3 of the then Continuing
Directors.
(iii) "Director" shall mean any individual who is a member
of the Company's Board of Directors on the date the
action in question was taken.
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(iv) "Change in Control Transaction" shall mean a Change
in Control or, if later, the consummation of the
transaction contemplated by the Change in Control.
3. Termination of Employment; Definitions.
(a) Termination without Cause by the Company or for Good
Reason by the Executive. (i) The Executive shall be entitled to the
compensation provided for in Section 4 hereof, if within two years
after a Change in Control Transaction, the Executive's employment shall
be terminated (A) by an Employer for any reason other than (I) the
Executive's Disability or Retirement, (II) the Executive's death or
(III) for Cause, or (B) by the Executive with Good Reason (as such
terms are defined herein).
(ii) In addition, the Executive shall be entitled to the
compensation provided for in Section 4 hereof if, (A) in the event that
an agreement is signed which, if consummated, would result in a Change
of Control and the Executive is terminated without Cause by the Company
or terminates employment with Good Reason prior to the Change in
Control, (B) such termination is at the direction of the acquiror or
merger partner or otherwise in connection with the anticipated Change
in Control, and (C) such Change in Control actually occurs.
(b) Disability. For purposes of this Agreement,
"Disability" shall mean the Executive's absence from the full-time performance
of the Executive's duties (as such duties existed immediately prior to such
absence) for 180 consecutive business days, when the Executive is disabled as a
result of incapacity due to physical or mental illness.
(c) Retirement. For purposes of this Agreement,
"Retirement" shall mean the Executive's voluntary termination of employment
pursuant to late, normal or early retirement under a pension plan sponsored by
an Employer, as defined in such plan, but only if such retirement occurs prior
to a termination by an Employer without Cause or by the Executive for Good
Reason.
(d) Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the
Executive to perform substantially all of his or her duties
with an Employer (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to such
Executive by the Board of Directors (the "Board") of the
Company which specifically identifies the manner in which the
Board believes that the Executive has not substantially
performed his or her duties,
(ii) the willful engaging by the Executive in
gross misconduct which is materially and demonstrably
injurious to the Company or any Employer; or
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(iii) the conviction of, or plea of guilty or nolo
contendere to, a felony.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a three-fourths majority of the non-employee Directors of the Company
or of the ultimate parent of the entity which caused the Change in Control (if
the Company has become a subsidiary) at a meeting of such Directors called and
held for such purpose, after 30 days' prior written notice to the Executive
specifying the basis for such termination and the particulars thereof and a
reasonable opportunity for the Executive to cure or otherwise resolve the
behavior in question prior to such meeting, finding that in the reasonable
judgment of such Directors, the conduct or event set forth in any of clauses (i)
through (iii) above has occurred and that such occurrence warrants the
Executive's termination.
(e) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, within the Term of this Agreement, of any of
the following without the Executive's express written consent:
(i) after a Change of Control, any reduction in the
Executive's base salary from that which was in effect immediately prior
to the Change of Control, any reduction in the Executive's annual cash
bonus below such bonus paid or payable in respect of the calendar year
immediately prior to the year in which the Change of Control occurs, or
any reduction in the Executive's aggregate annual cash compensation
(including base salary and bonus) from that which was in effect
immediately prior to the Change of Control; or
(ii) after a Change of Control, the failure to increase
(within 12 months of the last increase in base salary) the Executive's
salary in an amount which at least equals, on a percentage basis, the
average percentage of increase in base salary effected in the preceding
12 months (which period may include some period of time prior to the
Change of Control) for all senior executives of the Company (unless
such reduction is offset by an increase in the amount of annual cash
bonus that is paid to the Executive); or
(iii) any material and adverse diminution in the Executives'
duties, responsibilities, status, position or authority with the
Company or any of its affiliates following a Change of Control;
provided, however, that no such diminution shall be deemed to exist
solely because of changes in Executive's duties, responsibilities or
titles as a consequence of the Company ceasing to be a company with
publicly-traded securities or becoming a wholly-owned subsidiary of
another company; or
(iv) any relocation of the Executive's primary workplace to a
location that is more than 35 miles from the Executive's primary
workplace as of the date of this Agreement or the Company's requiring
the Executive to be based anywhere other than the location at which the
Executive performed his duties prior to the commencement of the Term;
or
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(v) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to the Executive to
assume and perform this Agreement, as contemplated by Section 10(a)
hereof; or
(vii) during the thirty-day period immediately following the
first anniversary of the Change in Control Transaction, the voluntary
termination of employment by the Executive for any reason or no reason
at all.
Notwithstanding the foregoing, in the event Executive provides the Company with
a Notice of Termination (as defined below) referencing this Section 3(e) (with
the exception of Section 3(e)(vii)), the Company shall have 30 days thereafter
in which to cure or resolve the behavior otherwise constituting Good Reason. Any
good faith determination by Executive that Good Reason exists shall be presumed
correct and shall be binding upon the Company.
(f) Notice of Termination. Any purported termination of
the Executive's employment (other than on account of Executive's death) with an
Employer shall be communicated by a Notice of Termination to the Executive, if
such termination is by an Employer, or to an Employer, if such termination is by
the Executive. For purposes of this Agreement, "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated; provided, however, that in
connection with a termination for Good Reason under Section 3(e)(vii), no
details shall be necessary other than reference to such Section. For purposes of
this Agreement, no purported termination of Executive's employment with an
Employer shall be effective without such a Notice of Termination having been
given.
4. Compensation Upon Termination.
Subject to Section 9 hereof, if within two years of a Change
in Control Transaction, the Executive's employment with an Employer shall be
terminated in accordance with Section 3(a) (the "Termination"), the Executive
shall be entitled to the following payments and benefits:
(a) Severance. The Company shall pay or cause to be paid
to the Executive a cash severance amount equal to three times the sum
of (i) the Executive's annual base salary on the date of the Change in
Control (or, if higher, the annual base salary in effect immediately
prior to the giving of the Notice of Termination), and (ii) the highest
of the actual bonuses paid or payable to the Executive under the
Company's annual incentive Compensation plan in any of the three
consecutive fiscal years prior to the year in which the Change in
Control occurs. This cash severance amount shall be payable in a lump
sum calculated without any discount.
(b) Additional Payments and Benefits. The Executive shall
also be entitled to:
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(i) a lump sum cash payment equal to the sum of (A)
the Executive's accrued but unpaid annual base salary through
the date of Termination, (B) the unpaid portion, if any, of
bonuses previously earned by the Executive pursuant to the
Company's annual incentive compensation plan, plus the pro
rata portion of (I) the Bonus or (II) if payable, the target
bonus to be paid for the year in which the date of Termination
occurs, in either case (calculated through the date of
Termination), and (C) an amount, if any, equal to compensation
previously deferred (excluding any qualified plan deferral)
and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto; and
(ii) an annual benefit under the Company's
Supplemental Retirement Plan (the "SERP"), calculated based on
5 years of service, unreduced for early retirement thereunder;
and
(iii) unless otherwise provided under the Key Man
Supplemental Medical Plan, continued medical, dental, vision,
and life insurance coverage (excluding accident, death, and
disability insurance) for the Executive and the Executive's
eligible dependents or, to the extent such coverage is not
commercially available, such other arrangements reasonably
acceptable to the Executive, on the same basis as in effect
prior to the Change in Control or the Executive's Termination,
whichever is deemed to provide for more substantial benefits,
for a period ending on the earlier of (A) the end of the third
anniversary of the date of the Executive's Termination (B) the
commencement of comparable coverage by the Executive with a
subsequent employer (the "Continuation Period"); and
(iv) during the Continuation Period, continuation of
the Executive's perquisites, including the provision of an
automobile and payment of all related expenses (including
maintenance, other than gas), annual social and/o health club
dues, and tax and financial planning services, as in effect
immediately prior to the Change of Control; and
(v) all other accrued or vested benefits in
accordance with the terms of the applicable plan (with an
offset for any amounts paid under Section 4(b)(i)(C), above).
All lump sum payments under this Section 4 shall be paid
within 10 business days after Executive's date of Termination;
provided, however, that with respect to the SERP benefit set
forth in Section 4(b)(ii), above, unless the Executive, during
the ten day period after the Company signs any agreement that
would, upon the consummation of the transactions contemplated
therein, result in a Change of Control, elects to receive a
lump sum payment equal to the present value of his SERP
benefit (as calculated in Section 4(b)(ii) and otherwise in
accordance with Exhibit A, as attached hereto), the Executive
shall be entitled to receive the SERP benefit in installment
payments (payable in accordance with the terms of the SERP),
beginning upon the later to occur of (i) the date on which the
Executive
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achieves age 55 and (ii) the date on which Executive's
employment terminates in accordance with the terms hereunder.
(c) Outplacement. If so requested by the Executive,
outplacement services shall be provided by a professional outplacement
provider selected by Executive; provided, however, that such
outplacement services shall be provided the Executive at a cost to the
Company of not more than fifteen (15) percent of such Executive's
annual base salary.
(d) Withholding. Payments and benefits provided pursuant
to this Section 4 shall be subject to any applicable payroll and other
taxes required to be withheld.
5. Compensation Upon Termination for Death, Disability
or Retirement.
If an Executive's employment is terminated by reason of Death,
Disability or Retirement prior to any other termination, Executive will receive:
(a) the sum of (i) Executive's accrued but unpaid salary
through the date of Termination, (ii) the pro rata portion of the
Executive's target bonus for the year of Executive's Death or
Disability (calculated through the date of Termination), and (iii) an
amount equal to any compensation previously deferred and any accrued
vacation pay; and
(b) other accrued or vested benefits in accordance with
the terms of the applicable plan (with an offset for any amounts paid
under item (a)(iii), above.
6. Excess Parachute Excise Tax Payments.
(a) (i) If it is determined (as hereafter provided) that any
payment or distribution by the Company or any Employer to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision thereto) by reason of
being "contingent on a change in ownership or control" of the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments; provided, however, if the Executive's Payment is,
when calculated on a net-after-tax basis, less than $50,000 in excess of the
amount of the Payment which could be paid to the Executive under
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Section 280G of the Code without causing the imposition of the Excise Tax, then
the Payment shall be limited to the largest amount payable (as described above)
without resulting in the imposition of any Excise Tax (such amount, the "Capped
Amount").
(ii) Subject to the provisions of Section 6(a)(i) hereof, all
determinations required to be made under this Section 6, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the Termination Date, if applicable, and any other such time or times as may be
requested by the Company or the Executive. If the Accounting Firm determines
that any Excise Tax is payable by the Executive and that the criteria for
reducing the Payment to the Capped Amount (as described in Section 6(a)(i)
above) is met, then the Company shall reduce the Payment by the amount which,
based on the Accounting Firm's determination and calculations, would provide the
Executive with the Capped Amount, and pay to the Executive such reduced Payment.
If the Accounting Firm determines that an Excise Tax is payable, without
reduction pursuant to Section 6(a)(i), above, the Company shall pay the required
Gross-Up Payment to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his/her
federal, state, local income or other tax return. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
the Company and the Executive absent a contrary determination by the Internal
Revenue Services or a court of competent jurisdiction; provided, however, that
no such determination shall eliminate or reduce the Company's obligation to
provide any Gross-Up Payment that shall be due as a result of such contrary
determination. As a result of the uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
6(a) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(iii) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise
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cooperate with the Accounting Firm in connection with the preparation and
issuance of the determination contemplated by Section 6(a) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive (or any filing made by a consolidated tax group which
includes the Company) shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(v) The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations
contemplated by Sections 6(a)(ii) and (iv) hereof shall be borne by the Company.
If such fees and expenses are initially advanced by the Executive, the Company
shall reimburse the Executive the full amount of such fees and expenses within
five business days after receipt from the Executive of a statement therefor and
reasonable evidence of his/her payment thereof.
(b) In the event that the Internal Revenue Service claims
that any payment or benefit received under this Agreement constitutes an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code, the
Executive shall notify the Company in writing of such claim. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the 30
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company and reasonably satisfactory to the Executive; (iii) cooperate with
the Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for and against any Excise Tax or other tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses.
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(c) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis, and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided, further, that if the Executive is required to extend the statute
of limitations to enable the Company to contest such claim, the Executive may
limit this extension solely to such contested amount. The Company's control of
the contest shall be limited to issues with respect to which a corporate
deduction would be disallowed pursuant to Section 280G of the Code and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be agreed to by the
Company without the Executive's consent if such position or resolution could
reasonably be expected to adversely affect the Executive (including any other
tax position of the Executive unrelated to matters covered hereby).
(d) If, after the receipt by the Executive of an amount
advanced by the Company in connection with the contest of the Excise Tax claim,
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds the amount
advanced by the Company or it is otherwise determined for any reason that
additional amounts could be paid to the Named Executive without incurring any
Excise Tax, any such amount will be promptly paid by the Company to the named
Executive. If, after the receipt by the Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest the
denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid and shall be deemed to be in consideration for services rendered after
the date of the Termination.
7. Expenses. In addition to all other amounts payable to
the Executive under this Agreement, the Company shall pay or reimburse the
Executive for legal fees (including without limitation, any and all court costs
and attorneys' fees and expenses) incurred by the Executive in connection with
or as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; provided, however, that in the case of an action brought by the
Executive, the Company shall have no obligation for any such legal fees, if the
Company is successful in establishing with
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the court that the Executive's action was frivolous or otherwise without any
reasonable legal or factual basis.
8. Obligations Absolute; Non-Exclusivity of Rights;
Joint Several Liability.
(a) The obligations of the Company to make the payment to
the Executive, and to make the arrangements, provided for herein shall be
absolute and unconditional and shall not be reduced by any circumstances,
including without limitation any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Executive or any third party
at any time.
(b) Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company or any other Employer and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any agreements with the Company or any
other Employer.
(c) Each entity included in the definition of "Employer"
and any successors or assigns shall be joint and severally liable with the
Company under this Agreement.
9. Not an Employment Agreement; Effect On Other Rights.
(a) This Agreement is not, and nothing herein shall be
deemed to create, a contract of employment between the Executive and the
Company. Any Employer may terminate the employment of the Executive at any time,
subject to the terms of this Agreement and/or any employment agreement or
arrangement between the Employer and the Executive that may then be in effect.
(b) With respect to any employment agreement with the
Executive in effect immediately prior to the Change in Control, nothing herein
shall have any effect on the Executive's rights thereunder; provided, however,
that in the event of the Executive's termination of employment in accordance
with Section 3 hereof, this Agreement shall govern solely for the purpose of
providing the terms of all payments and additional benefits to which the
Executive is entitled upon such termination and any payments or benefit provided
thereunder shall reduce the corresponding type of payments or benefits
hereunder. Notwithstanding the foregoing, in the event that the Executive's
employment is terminated prior to the occurrence of a Change in Control under
the circumstances provided for in Section 3(a)(ii) and such circumstances also
entitle Executive to payments and benefits under any other employment or other
agreement as in effect prior to the Change in Control ("Other Agreement"), then,
until the Change in Control occurs, the Executive will receive the payments and
benefits to which he/she is entitled under such Other Agreement. Upon the
occurrence of the Change in Control, the Company will pay to the Executive in
cash the amount to which he/she is entitled to under this Agreement (reduced by
the amounts already paid under the Other Agreement) in respect of cash payments
and shall provide or increase any other noncash benefits to those provided for
hereunder (after taking into Account noncash benefits, if any, provided under
such Other Agreement). Amounts which are
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vested benefits or which the Executive is otherwise entitled to receive under
any plan or program of the Company or any other Employer shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.
(c) With respect to any limited stock appreciation rights
("LSARs") granted to the Executive pursuant to the Company's 1973 Stock Option
Plan for Key Executives held, as of the date of this Agreement, by the
Executive, the Executive hereby agrees to the cancellation of such LSARs in the
event that the Change in Control contemplated hereunder is intended to be, and
is otherwise, eligible for pooling-of-interests accounting treatment under APB
No. 16.
10. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all the stock of the Company or to all or substantially
all of the Company's business or assets which executes and delivers an agreement
provided for in this Section 10(a) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law, including any parent
or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
11. Notice. For purpose of this Agreement, notices and
all other communications provided for in this Agreement or contemplated hereby
shall be in writing and shall be deemed to have been duly given when personally
delivered, delivered by a nationally recognized overnight delivery service or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
Hubbell Incorporated
584 Derby Milford Road
Orange, Connecticut 06477-4024
Attention: General Counsel
<PAGE> 13
13
and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.
Either party may designate a different address by giving notice of
change of address in the manner provided above, except that notices of change of
address shall be effective only upon receipt.
12. Confidentiality. The Executive shall retain in
confidence any and all confidential information concerning the Company and its
respective business which is now known or hereafter becomes known to the
Executive, except as otherwise required by law and except information (i)
ascertainable or obtained from public information, (ii) received by the
Executive at any time after the Executive's employment by the Company shall have
terminated, from a third party not employed by or otherwise affiliated with the
Company or (iii) which is or becomes known to the public by any means other than
a breach of this Section 12. Upon the Termination of employment, the Executive
will not take or keep any proprietary or confidential information or
documentation belonging to the Company.
13. Miscellaneous. No provision of this Agreement may be
amended, altered, modified, waived or discharged unless such amendment,
alteration, modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer of the Company as shall be specifically
designated by the Committee or by the Board of Directors of the Company. No
waiver by either party, at any time, of any breach by the other party of, or of
compliance by the other party with, any condition or provision of this Agreement
to be performed or complied with by such other party shall be deemed a waiver of
any similar or dissimilar provision or condition of this Agreement or any other
breach of or failure to comply with the same condition or provision at the same
time or at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
14. Severability. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party hereto waives any provision of law which renders any provision
of this Agreement invalid, illegal or unenforceable in any respect.
15. Governing Law; Venue. The validity, interpretation,
construction and performance of this Agreement shall be governed on a
non-exclusive basis by the laws of the State of Connecticut without giving
effect to its conflict of laws rules. For purposes of jurisdiction and venue,
the Company and each Employer hereby consents to jurisdiction and venue in any
suit, action or proceeding with respect to this Agreement in any court of
competent jurisdiction in the state in which Executive resides at the
commencement of such suit, action or proceeding and waives any objection,
challenge or dispute as to such jurisdiction or venue being proper.
<PAGE> 14
14
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.
<PAGE> 15
15
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
HUBBELL INCORPORATED
By:
---------------------------------
Title:
-----------------------------
------------------------------------
Executive
------------------------------------
------------------------------------
Address
<PAGE> 16
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EXHIBIT A
ASSUMPTIONS
The assumptions to be used are those specified under Section 417(e) of the
Internal Revenue Code of 186, as amended, which assumptions are the minimum lump
sum factors permitted to be used for calculating pension benefits under
qualified defined benefit plans.
Benefit: Lump sum payment of unreduced benefit deferred to age 55,
increased to reflect the 50% joint and survivor form.
Mortality Rates: The 1983 Group Annuity Mortality (1983 GAM) blend of 50% male
and 50% female rates.
Interest Rate: 10-year treasury rate on the first day of the fourth quarter
of the calendar year immediately prior to the date on which
the Executive retires or otherwise separates from Service.
Other: 3% annual Social Security wage base increase.
2.5% annual CPI increase.
5% annual salary increase.
Qualified Plan
Offset: Amount actually payable at age 55 (or, if higher, the
participants actual age as of the date of termination of
employment).
<PAGE> 1
EXHIBIT 10u
CONTINUITY AGREEMENT
This Agreement (the "Agreement") is dated as of December 27,
1999 by and between HUBBELL INCORPORATED, a Connecticut corporation (the
"Company"), and RICHARD W. DAVIES (the "Executive").
WHEREAS, the Company's Board of Directors considers the
continued services of key executives of the Company to be in the best interests
of the Company and its stockholders; and
WHEREAS, the Company's Board of Directors desires to assure,
and has determined that it is appropriate and in the best interests of the
Company and its stockholders to reinforce and encourage the continued attention
and dedication of key executives of the Company to their duties of employment
without personal distraction or conflict of interest in circumstances which
could arise from the occurrence of a change in control of the Company; and
WHEREAS, the Company's Board of Directors has authorized the
Company to enter into continuity agreements with those key executives of the
Company and any of its respective subsidiaries (all of such entities, with the
Company hereinafter referred to as an "Employer"), such agreements to set forth
the severance compensation which the Company agrees under certain circumstances
to pay such executives; and
WHEREAS, the Executive is a key executive of an Employer and
has been designated by the Board as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term. This Agreement shall become effective on the
date hereof and remain in effect until the second anniversary thereof; provided,
however, that, thereafter, this Agreement shall automatically renew on each
successive anniversary, unless an Employer provides the Executive, in writing,
at least 180 days prior to the renewal date, notice that this Agreement shall
not be renewed. Notwithstanding the foregoing, in the event that a Change in
Control occurs at any time prior to the termination of this Agreement in
accordance with the preceding sentence, this Agreement shall not terminate until
the second anniversary of the Change in Control (or, if later, until the second
anniversary of the consummation of the transaction(s) contemplated in the Change
in Control).
2. Change in Control.
(a) No compensation or other benefit pursuant to Section
4 hereof shall be payable under this Agreement unless and until either (i) a
Change in Control of the Company (as hereinafter defined) shall have occurred
while the Executive is an employee of an Employer and the Executive's employment
by an Employer thereafter shall have terminated in accordance with
<PAGE> 2
2
Section 3 hereof or (ii) the Executive's employment by the Company shall have
terminated in accordance with Section 3(a)(ii) hereof prior to the occurrence of
the Change in Control.
(b) For purposes of this Agreement:
(i) "Change in Control" shall mean any one of the
following:
(A) Continuing Directors no longer constitute at least
2/3 of the Directors;
(B) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of the Company entitled to
vote for the election of the Company's directors;
provided that this Section 2 shall not apply with
respect to any holding of securities by (I) the trust
under a Trust Indenture dated September 2, 1957 made
by Louie E. Roche, (II) the trust under a Trust
Indenture dated August 23, 1957 made by Harvey
Hubbell, and (III) any employee benefit plan (within
the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended)
maintained by the Company or any affiliate of the
Company;
(C) the approval by the Company's stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such merger or
consolidation will constitute at least 2/3 of the
Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation; or
(D) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Company's stockholders determine that
such proposed action, if taken, would constitute a
change of control of the Company and such action is
taken.
(ii) "Continuing Director" shall mean any individual who
is a member of the Company's Board of Directors on
December 9, 1986 or was designated (before such
person's initial election as a Director) as a
Continuing Director by 2/3 of the then Continuing
Directors.
(iii) "Director" shall mean any individual who is a member
of the Company's Board of Directors on the date the
action in question was taken.
<PAGE> 3
3
(iv) "Change in Control Transaction" shall mean a Change
in Control or, if later, the consummation of the
transaction contemplated by the Change in Control.
3. Termination of Employment; Definitions.
(a) Termination without Cause by the Company or for Good
Reason by the Executive. (i) The Executive shall be entitled to the
compensation provided for in Section 4 hereof, if within two years
after a Change in Control Transaction, the Executive's employment shall
be terminated (A) by an Employer for any reason other than (I) the
Executive's Disability or Retirement, (II) the Executive's death or
(III) for Cause, or (B) by the Executive with Good Reason (as such
terms are defined herein).
(ii) In addition, the Executive shall be entitled to the
compensation provided for in Section 4 hereof if, (A) in the event that
an agreement is signed which, if consummated, would result in a Change
of Control and the Executive is terminated without Cause by the Company
or terminates employment with Good Reason prior to the Change in
Control, (B) such termination is at the direction of the acquiror or
merger partner or otherwise in connection with the anticipated Change
in Control, and (C) such Change in Control actually occurs.
(b) Disability. For purposes of this Agreement,
"Disability" shall mean the Executive's absence from the full-time performance
of the Executive's duties (as such duties existed immediately prior to such
absence) for 180 consecutive business days, when the Executive is disabled as a
result of incapacity due to physical or mental illness.
(c) Retirement. For purposes of this Agreement,
"Retirement" shall mean the Executive's voluntary termination of employment
pursuant to late, normal or early retirement under a pension plan sponsored by
an Employer, as defined in such plan, but only if such retirement occurs prior
to a termination by an Employer without Cause or by the Executive for Good
Reason.
(d) Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the
Executive to perform substantially all of his or her duties
with an Employer (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to such
Executive by the Board of Directors (the "Board") of the
Company which specifically identifies the manner in which the
Board believes that the Executive has not substantially
performed his or her duties,
(ii) the willful engaging by the Executive in
gross misconduct which is materially and demonstrably
injurious to the Company or any Employer; or
<PAGE> 4
4
(iii) the conviction of, or plea of guilty or nolo
contendere to, a felony.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a three-fourths majority of the non-employee Directors of the Company
or of the ultimate parent of the entity which caused the Change in Control (if
the Company has become a subsidiary) at a meeting of such Directors called and
held for such purpose, after 30 days' prior written notice to the Executive
specifying the basis for such termination and the particulars thereof and a
reasonable opportunity for the Executive to cure or otherwise resolve the
behavior in question prior to such meeting, finding that in the reasonable
judgment of such Directors, the conduct or event set forth in any of clauses (i)
through (iii) above has occurred and that such occurrence warrants the
Executive's termination.
(e) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, within the Term of this Agreement, of any of
the following without the Executive's express written consent:
(i) after a Change of Control, any reduction in the
Executive's base salary from that which was in effect immediately prior
to the Change of Control, any reduction in the Executive's annual cash
bonus below such bonus paid or payable in respect of the calendar year
immediately prior to the year in which the Change of Control occurs, or
any reduction in the Executive's aggregate annual cash compensation
(including base salary and bonus) from that which was in effect
immediately prior to the Change of Control; or
(ii) after a Change of Control, the failure to increase
(within 12 months of the last increase in base salary) the Executive's
salary in an amount which at least equals, on a percentage basis, the
average percentage of increase in base salary effected in the preceding
12 months (which period may include some period of time prior to the
Change of Control) for all senior executives of the Company (unless
such reduction is offset by an increase in the amount of annual cash
bonus that is paid to the Executive); or
(iii) any material and adverse diminution in the Executives'
duties, responsibilities, status, position or authority with the
Company or any of its affiliates following a Change of Control;
provided, however, that no such diminution shall be deemed to exist
solely because of changes in Executive's duties, responsibilities or
titles as a consequence of the Company ceasing to be a company with
publicly-traded securities or becoming a wholly-owned subsidiary of
another company; or
(iv) any relocation of the Executive's primary workplace to a
location that is more than 35 miles from the Executive's primary
workplace as of the date of this Agreement or the Company's requiring
the Executive to be based anywhere other than the location at which the
Executive performed his duties prior to the commencement of the Term;
or
<PAGE> 5
5
(v) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to the Executive to
assume and perform this Agreement, as contemplated by Section 10(a)
hereof; and
(vii) during the thirty-day period immediately following the
first anniversary of the Change in Control Transaction, the voluntary
termination of employment by the Executive for any reason or no reason
at all.
Notwithstanding the foregoing, in the event Executive provides the Company with
a Notice of Termination (as defined below) referencing this Section 3(e) (with
the exception of Section 3(e)(vii)), the Company shall have 30 days thereafter
in which to cure or resolve the behavior otherwise constituting Good Reason. Any
good faith determination by Executive that Good Reason exists shall be presumed
correct and shall be binding upon the Company.
(f) Notice of Termination. Any purported termination of
the Executive's employment (other than on account of Executive's death) with an
Employer shall be communicated by a Notice of Termination to the Executive, if
such termination is by an Employer, or to an Employer, if such termination is by
the Executive. For purposes of this Agreement, "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated; provided, however, that in
connection with a termination for Good Reason under Section 3(e)(vii), no
details shall be necessary other than reference to such Section. For purposes of
this Agreement, no purported termination of Executive's employment with an
Employer shall be effective without such a Notice of Termination having been
given.
4. Compensation Upon Termination.
Subject to Section 9 hereof, if within two years of a Change
in Control Transaction, the Executive's employment with an Employer shall be
terminated in accordance with Section 3(a) (the "Termination"), the Executive
shall be entitled to the following payments and benefits:
(a) Severance. The Company shall pay or cause to be paid
to the Executive a cash severance amount equal to three times the sum
of (i) the Executive's annual base salary on the date of the Change in
Control (or, if higher, the annual base salary in effect immediately
prior to the giving of the Notice of Termination) and (ii) the highest
of the actual bonuses paid or payable to the Executive under the
Company's annual incentive Compensation plan in any of the three
consecutive fiscal years prior to the year in which the Change in
Control occurs. This cash severance amount shall be payable in a lump
sum calculated without any discount.
(b) Additional Payments and Benefits. The Executive shall
also be entitled to:
<PAGE> 6
6
(i) a lump sum cash payment equal to the sum of (A)
the Executive's accrued but unpaid annual base salary through
the date of Termination, (B) the unpaid portion, if any, of
bonuses previously earned by the Executive pursuant to the
Company's annual incentive compensation plan, plus the pro
rata portion of (I) the Bonus or (II) if payable, the target
bonus to be paid for the year in which the date of Termination
occurs, in either case (calculated through the date of
Termination), and (C) an amount, if any, equal to compensation
previously deferred (excluding any qualified plan deferral)
and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto; and
(ii) an annual benefit under the Company's
Supplemental Retirement Plan (the "SERP"), calculated based on
10 years of service, unreduced for early retirement
thereunder; and
(iii) continued medical, dental, vision, and life
insurance coverage (excluding accident, death, and disability
insurance) for the Executive and the Executive's eligible
dependents or, to the extent such coverage is not commercially
available, such other arrangements reasonably acceptable to
the Executive, on the same basis as in effect prior to the
Change in Control or the Executive's Termination, whichever is
deemed to provide for more substantial benefits, for a period
ending on the third anniversary of the date of the Executive's
Termination (the "Continuation Period"); thereafter, the
Executive and the Executive's eligible dependents shall
receive continued medical, dental, vision, and life insurance
coverage (excluding accident, death, and disability insurance)
pursuant to the terms of the Company's Key Man Supplemental
Medical Plan, on the same basis as in effect prior to the
Change in Control or the Executive's Termination, whichever is
deemed to provide for more substantial benefits; and
(iv) during the Continuation Period, continuation of
the Executive's perquisites, including the provision of an
automobile and payment of all related expenses (including
maintenance, other than gas), annual social and/or health club
dues, and tax and financial planning services, as in effect
immediately prior to the Change of Control; and
(v) all other accrued or vested benefits in
accordance with the terms of the applicable plan (with an
offset for any amounts paid under Section 4(b)(i)(C), above).
All lump sum payments under this Section 4 shall be paid
within 10 business days after Executive's date of Termination;
provided, however, that with respect to the SERP benefit set
forth in Section 4(b)(ii), above, unless the Executive, during
the ten day period after the Company signs any agreement that
would, upon the consummation of the transactions contemplated
therein, result in a Change of Control, elects to receive a
lump sum payment equal to the present value of his SERP
benefit (as calculated in Section 4(b)(ii) and otherwise in
accordance with
<PAGE> 7
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Exhibit A, as attached hereto), the Executive
shall be entitled to receive the SERP benefit in installment
payments (payable in accordance with the terms of the SERP),
beginning upon the later to occur of (i) the date on which
which the Executive achieves age 55 and (ii) the date on
which Executive's employment terminates in accordance
with the terms hereunder.
(c) Outplacement. If so requested by the Executive,
outplacement services shall be provided by a professional outplacement
provider selected by Executive; provided, however, that such
outplacement services shall be provided the Executive at a cost to the
Company of not more than fifteen (15) percent of such Executive's
annual base salary.
(d) Withholding. Payments and benefits provided pursuant
to this Section 4 shall be subject to any applicable payroll and other
taxes required to be withheld.
5. Compensation Upon Termination for Death, Disability
or Retirement.
If an Executive's employment is terminated by reason of Death,
Disability or Retirement prior to any other termination, Executive will receive:
(a) the sum of (i) Executive's accrued but unpaid salary
through the date of Termination, (ii) the pro rata portion of the
Executive's target bonus for the year of Executive's Death or
Disability (calculated through the date of Termination), and (iii) an
amount equal to any compensation previously deferred and any accrued
vacation pay; and
(b) other accrued or vested benefits in accordance with
the terms of the applicable plan (with an offset for any amounts paid
under item (a)(iii), above.
6. Excess Parachute Excise Tax Payments.
(a) (i) If it is determined (as hereafter provided) that any
payment or distribution by the Company or any Employer to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision thereto) by reason of
being "contingent on a change in ownership or control" of the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount
<PAGE> 8
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of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments;
provided, however, if the Executive's Payment is, when calculated on a
net-after-tax basis, less than $50,000 in excess of the amount of the Payment
which could be paid to the Executive under Section 280G of the Code without
causing the imposition of the Excise Tax, then the Payment shall be limited to
the largest amount payable (as described above) without resulting in the
imposition of any Excise Tax (such amount, the "Capped Amount").
(ii) Subject to the provisions of Section 6(a)(i) hereof, all
determinations required to be made under this Section 6, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in Control (or,
if such Accounting Firm declines to serve, the Accounting Firm shall be a
nationally recognized firm of certified public accountants selected by the
Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the Termination Date, if applicable, and any other such time or times as may be
requested. If the Accounting Firm determines that any Excise Tax is payable by
the Executive and that the criteria for reducing the Payment to the Capped
Amount (as described in Section 6(a)(i) above) is met, then the Company shall
reduce the Payment by the amount which, based on the Accounting Firm's
determination and calculations, would provide the Executive with the Capped
Amount, and pay to the Executive such reduced Payment. If the Accounting Firm
determines that an Excise Tax is payable, without reduction pursuant to Section
6(a)(i), above, the Company shall pay the required Gross-Up Payment to, or for
the benefit of, the Executive within five business days after receipt of such
determination and calculations. If the Accounting Firm determines that no Excise
Tax is payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his/her federal, state, local income
or other tax return. Any determination by the Accounting Firm as to the amount
of the Gross-Up Payment shall be binding upon the Company and the Executive
absent a contrary determination by the Internal Revenue Services or a court of
competent jurisdiction; provided, however, that no such determination shall
eliminate or reduce the Company's obligation to provide any Gross-Up Payment
that shall be due as a result of such contrary determination. As a result of the
uncertainty in the application of Section 4999 of the Code (or any successor
provision thereto) and the possibility of similar uncertainty regarding state or
local tax law at the time of any determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments that will not have been made by the
Company should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 6(a) hereof and the
Executive thereafter is required to make a payment of any Excise Tax, the
Executive shall direct the Accounting Firm to determine the amount of the
Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company to, or for
the benefit of, the Executive within five business days after receipt of such
determination and calculations.
<PAGE> 9
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(iii) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 6(a) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive (or any filing made by a consolidated tax group which
includes the Company) shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income tax return as
filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such
other documents reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the
Executive shall within five business days pay to the Company the amount of such
reduction.
(v) The fees and expenses of the Accounting Firm for
its services in connection with the determinations and calculations contemplated
by Sections 6(a)(ii) and (iv) hereof shall be borne by the Company. If such fees
and expenses are initially advanced by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his/her payment thereof.
(b) In the event that the Internal Revenue Service claims
that any payment or benefit received under this Agreement constitutes an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code, the
Executive shall notify the Company in writing of such claim. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the 30
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company and reasonably satisfactory to the Executive; (iii) cooperate with
the Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and
<PAGE> 10
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shall indemnify and hold the Executive harmless, on an after-tax basis, for and
against any Excise Tax or other tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses.
(c) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis, and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest and penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided, further, that if the Executive is required to extend the statute
of limitations to enable the Company to contest such claim, the Executive may
limit this extension solely to such contested amount. The Company's control of
the contest shall be limited to issues with respect to which a corporate
deduction would be disallowed pursuant to Section 280G of the Code and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be agreed to by the
Company without the Executive's consent if such position or resolution could
reasonably be expected to adversely affect the Executive (including any other
tax position of the Executive unrelated to matters covered hereby).
(d) If, after the receipt by the Executive of an amount
advanced by the Company in connection with the contest of the Excise Tax claim,
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds the amount
advanced by the Company or it is otherwise determined for any reason that
additional amounts could be paid to the Named Executive without incurring any
Excise Tax, any such amount will be promptly paid by the Company to the named
Executive. If, after the receipt by the Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest the
denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid and shall be deemed to be in consideration for services rendered after
the date of the Termination.
7. Expenses. In addition to all other amounts payable to
the Executive under this Agreement, the Company shall pay or reimburse the
Executive for legal fees (including without limitation, any and all court costs
and attorneys' fees and expenses) incurred by the Executive in connection with
or as a result of any claim, action or proceeding brought by the
<PAGE> 11
11
Company or the Executive with respect to or arising out of this Agreement or any
provision hereof; provided, however, that in the case of an action brought by
the Executive, the Company shall have no obligation for any such legal fees, if
the Company is successful in establishing with the court that the Executive's
action was frivolous or otherwise without any reasonable legal or factual basis.
8. Obligations Absolute; Non-Exclusivity of Rights;
Joint Several Liability.
(a) The obligations of the Company to make the payment to
the Executive, and to make the arrangements, provided for herein shall be
absolute and unconditional and shall not be reduced by any circumstances,
including without limitation any set-off, counterclaim, recoupment, defense or
other right which the Company may have against the Executive or any third party
at any time.
(b) Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company or any other Employer and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any agreements with the Company or any
other Employer.
(c) Each entity included in the definition of "Employer"
and any successors or assigns shall be joint and severally liable with the
Company under this Agreement.
9. Not an Employment Agreement; Effect On Other Rights.
(a) This Agreement is not, and nothing herein shall be
deemed to create, a contract of employment between the Executive and the
Company. Any Employer may terminate the employment of the Executive at any time,
subject to the terms of this Agreement and/or any employment agreement or
arrangement between the Employer and the Executive that may then be in effect.
(b) With respect to any employment agreement with the
Executive in effect immediately prior to the Change in Control, nothing herein
shall have any effect on the Executive's rights thereunder; provided, however,
that in the event of the Executive's termination of employment in accordance
with Section 3 hereof, this Agreement shall govern solely for the purpose of
providing the terms of all payments and additional benefits to which the
Executive is entitled upon such termination and any payments or benefit provided
thereunder shall reduce the corresponding type of payments or benefits
hereunder. Notwithstanding the foregoing, in the event that the Executive's
employment is terminated prior to the occurrence of a Change in Control under
the circumstances provided for in Section 3(a)(ii) and such circumstances also
entitle Executive to payments and benefits under any other employment or other
agreement as in effect prior to the Change in Control ("Other Agreement"), then,
until the Change in Control occurs, the Executive will receive the payments and
benefits to which he/she is entitled under such Other Agreement. Upon the
occurrence of the Change in Control, the Company will pay to the Executive in
cash the amount to which he/she is entitled to under this Agreement (reduced by
<PAGE> 12
12
the amounts already paid under the Other Agreement) in respect of cash payments
and shall provide or increase any other noncash benefits to those provided for
hereunder (after taking into Account noncash benefits, if any, provided under
such Other Agreement). Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan or program of the Company or any
other Employer shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
(c) With respect to any limited stock appreciation rights
("LSARs") granted to the Executive pursuant to the Company's 1973 Stock Option
Plan for Key Executives held, as of the date of this Agreement, by the
Executive, the Executive hereby agrees to the cancellation of such LSARs in the
event that the Change in Control contemplated hereunder is intended to be, and
is otherwise, eligible for pooling-of-interests accounting treatment under APB
No. 16.
10. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all the stock of the Company or to all or substantially
all of the Company's business or assets which executes and delivers an agreement
provided for in this Section 10(a) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law, including any parent
or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
11. Notice. For purpose of this Agreement, notices and
all other communications provided for in this Agreement or contemplated hereby
shall be in writing and shall be deemed to have been duly given when personally
delivered, delivered by a nationally recognized overnight delivery service or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
<PAGE> 13
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Hubbell Incorporated
584 Derby Milford Road
Orange, Connecticut 06477-4024
Attention: General Counsel
and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.
Either party may designate a different address by giving notice of
change of address in the manner provided above, except that notices of change of
address shall be effective only upon receipt.
12. Confidentiality. The Executive shall retain in
confidence any and all confidential information concerning the Company and its
respective business which is now known or hereafter becomes known to the
Executive, except as otherwise required by law and except information (i)
ascertainable or obtained from public information, (ii) received by the
Executive at any time after the Executive's employment by the Company shall have
terminated, from a third party not employed by or otherwise affiliated with the
Company or (iii) which is or becomes known to the public by any means other than
a breach of this Section 12. Upon the Termination of employment, the Executive
will not take or keep any proprietary or confidential information or
documentation belonging to the Company.
13. Miscellaneous. No provision of this Agreement may be
amended, altered, modified, waived or discharged unless such amendment,
alteration, modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer of the Company as shall be specifically
designated by the Committee or by the Board of Directors of the Company. No
waiver by either party, at any time, of any breach by the other party of, or of
compliance by the other party with, any condition or provision of this Agreement
to be performed or complied with by such other party shall be deemed a waiver of
any similar or dissimilar provision or condition of this Agreement or any other
breach of or failure to comply with the same condition or provision at the same
time or at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
14. Severability. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party hereto waives any provision of law which renders any provision
of this Agreement invalid, illegal or unenforceable in any respect.
15. Governing Law; Venue. The validity, interpretation,
construction and performance of this Agreement shall be governed on a
non-exclusive basis by the laws of the State of Connecticut without giving
effect to its conflict of laws rules. For purposes of jurisdiction and venue,
the Company and each Employer hereby consents to jurisdiction and venue in any
suit, action or proceeding with respect to this Agreement in any court of
competent
<PAGE> 14
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jurisdiction in the state in which Executive resides at the commencement of such
suit, action or proceeding and waives any objection, challenge or dispute as to
such jurisdiction or venue being proper.
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.
<PAGE> 15
15
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
HUBBELL INCORPORATED
By:
--------------------------------
Title:
--------------------------------
-----------------------------------
Executive
-----------------------------------
-----------------------------------
Address
<PAGE> 16
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EXHIBIT A
ASSUMPTIONS
The assumptions to be used are those specified under Section 417(e) of the
Internal Revenue Code of 186, as amended, which assumptions are the minimum lump
sum factors permitted to be used for calculating pension benefits under
qualified defined benefit plans.
Benefit: Lump sum payment of unreduced benefit deferred to age 55,
increased to reflect the 50% joint and survivor form.
Mortality Rates: The 1983 Group Annuity Mortality (1983 GAM) blend of 50% male
and 50% female rates.
Interest Rate: 10-year treasury rate on the first day of the fourth quarter
of the calendar year immediately prior to the date on which
the Executive retires or otherwise separates from Service.
Other: 3% annual Social Security wage base increase.
2.5% annual CPI increase.
5% annual salary increase.
Qualified Plan
Offset: Amount actually payable at age 55 (or, if higher, the
participants actual age as of the date of termination of
employment).
<PAGE> 1
EXHIBIT 10v
CONTINUITY AGREEMENT
This Agreement (the "Agreement") is dated as of December 27,
1999 by and between HUBBELL INCORPORATED, a Connecticut corporation (the
"Company"), and JAMES H. BIGGART (the "Executive").
WHEREAS, the Company's Board of Directors considers the
continued services of key executives of the Company to be in the best interests
of the Company and its stockholders; and
WHEREAS, the Company's Board of Directors desires to assure,
and has determined that it is appropriate and in the best interests of the
Company and its stockholders to reinforce and encourage the continued attention
and dedication of key executives of the Company to their duties of employment
without personal distraction or conflict of interest in circumstances which
could arise from the occurrence of a change in control of the Company; and
WHEREAS, the Company's Board of Directors has authorized the
Company to enter into continuity agreements with those key executives of the
Company and any of its respective subsidiaries (all of such entities, with the
Company hereinafter referred to as an "Employer"), such agreements to set forth
the severance compensation which the Company agrees under certain circumstances
to pay such executives; and
WHEREAS, the Executive is a key executive of an Employer and
has been designated by the Board as an executive to be offered such a continuity
compensation agreement with the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Executive agree as follows:
1. Term. This Agreement shall become effective on the
date hereof and remain in effect until the second anniversary thereof; provided,
however, that, thereafter, this Agreement shall automatically renew on each
successive anniversary, unless an Employer provides the Executive, in writing,
at least 180 days prior to the renewal date, notice that this Agreement shall
not be renewed. Notwithstanding the foregoing, in the event that a Change in
Control occurs at any time prior to the termination of this Agreement in
accordance with the preceding sentence, this Agreement shall not terminate until
the second anniversary of the Change in Control (or, if later, until the second
anniversary of the consummation of the transaction(s) contemplated in the Change
in Control).
2. Change in Control.
(a) No compensation or other benefit pursuant to Section
4 hereof shall be payable under this Agreement unless and until either (i) a
Change in Control of the Company (as hereinafter defined) shall have occurred
while the Executive is an employee of an Employer and
<PAGE> 2
2
the Executive's employment by an Employer thereafter shall have terminated in
accordance with Section 3 hereof or (ii) the Executive's employment by the
Company shall have terminated in accordance with Section 3(a)(ii) hereof prior
to the occurrence of the Change in Control.
(b) For purposes of this Agreement:
(i) "Change in Control" shall mean any one of the following:
(A) Continuing Directors no longer constitute at least
2/3 of the Directors;
(B) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934),
together with its affiliates, becomes the beneficial
owner, directly or indirectly, of twenty (20%)
percent or more of the voting power of the then
outstanding securities of the Company entitled to
vote for the election of the Company's directors;
provided that this Section 2 shall not apply with
respect to any holding of securities by (I) the trust
under a Trust Indenture dated September 2, 1957 made
by Louie E. Roche, (II) the trust under a Trust
Indenture dated August 23, 1957 made by Harvey
Hubbell, and (III) any employee benefit plan (within
the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended)
maintained by the Company or any affiliate of the
Company;
(C) the approval by the Company's stockholders of the
merger or consolidation of the Company with any other
corporation, the sale of substantially all of the
assets of the Company or the liquidation or
dissolution of the Company, unless, in the case of a
merger or consolidation, the incumbent Directors in
office immediately prior to such merger or
consolidation will constitute at least 2/3 of the
Directors of the surviving corporation of such merger
or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation; or
(D) at least 2/3 of the incumbent Directors in office
immediately prior to any other action proposed to be
taken by the Company's stockholders determine that
such proposed action, if taken, would constitute a
change of control of the Company and such action is
taken.
(ii) "Continuing Director" shall mean any individual who
is a member of the Company's Board of Directors on
December 9, 1986 or was designated (before such
person's initial election as a Director) as a
Continuing Director by 2/3 of the then Continuing
Directors.
(iii) "Director" shall mean any individual who is a member
of the Company's Board of Directors on the date the
action in question was taken.
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(iv) "Change in Control Transaction" shall mean a Change
in Control or, if later, the consummation of the
transaction contemplated by the Change in Control.
3. Termination of Employment; Definitions.
(a) Termination without Cause by the Company or for Good
Reason by the Executive. (i) The Executive shall be entitled to the
compensation provided for in Section 4 hereof, if within two years
after a Change in Control Transaction, the Executive's employment shall
be terminated (A) by an Employer for any reason other than (I) the
Executive's Disability or Retirement, (II) the Executive's death or
(III) for Cause, or (B) by the Executive with Good Reason (as such
terms are defined herein).
(ii) In addition, the Executive shall be entitled to the
compensation provided for in Section 4 hereof if, (A) in the event that
an agreement is signed which, if consummated, would result in a Change
of Control and the Executive is terminated without Cause by the Company
or terminates employment with Good Reason prior to the Change in
Control, (B) such termination is at the direction of the acquiror or
merger partner or otherwise in connection with the anticipated Change
in Control, and (C) such Change in Control actually occurs.
(b) Disability. For purposes of this Agreement,
"Disability" shall mean the Executive's absence from the full-time performance
of the Executive's duties (as such duties existed immediately prior to such
absence) for 180 consecutive business days, when the Executive is disabled as a
result of incapacity due to physical or mental illness.
(c) Retirement. For purposes of this Agreement,
"Retirement" shall mean the Executive's voluntary termination of employment
pursuant to late, normal or early retirement under a pension plan sponsored by
an Employer, as defined in such plan, but only if such retirement occurs prior
to a termination by an Employer without Cause or by the Executive for Good
Reason.
(d) Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the willful and continued failure of the
Executive to perform substantially all of his or her duties
with an Employer (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to such
Executive by the Board of Directors (the "Board") of the
Company which specifically identifies the manner in which the
Board believes that the Executive has not substantially
performed his or her duties,
(ii) the willful engaging by the Executive in
gross misconduct which is materially and demonstrably
injurious to the Company or any Employer; or
<PAGE> 4
4
(iii) the conviction of, or plea of guilty or nolo
contendere to, a felony.
Termination of the Executive for Cause shall be made by delivery to the
Executive of a copy of a resolution duly adopted by the affirmative vote of not
less than a three-fourths majority of the non-employee Directors of the Company
or of the ultimate parent of the entity which caused the Change in Control (if
the Company has become a subsidiary) at a meeting of such Directors called and
held for such purpose, after 30 days' prior written notice to the Executive
specifying the basis for such termination and the particulars thereof and a
reasonable opportunity for the Executive to cure or otherwise resolve the
behavior in question prior to such meeting, finding that in the reasonable
judgment of such Directors, the conduct or event set forth in any of clauses (i)
through (iii) above has occurred and that such occurrence warrants the
Executive's termination.
(e) Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence, within the Term of this Agreement, of any of
the following without the Executive's express written consent:
(i) after a Change of Control, any reduction in the
Executive's base salary from that which was in effect immediately prior
to the Change of Control, any reduction in the Executive's annual cash
bonus below such bonus paid or payable in respect of the calendar year
immediately prior to the year in which the Change of Control occurs, or
any reduction in the Executive's aggregate annual cash compensation
(including base salary and bonus) from that which was in effect
immediately prior to the Change of Control; or
(ii) after a Change of Control, the failure to increase
(within 12 months of the last increase in base salary) the Executive's
salary in an amount which at least equals, on a percentage basis, the
average percentage of increase in base salary effected in the preceding
12 months (which period may include some period of time prior to the
Change of Control) for all senior executives of the Company (unless
such reduction is offset by an increase in the amount of annual cash
bonus that is paid to the Executive); or
(iii) any material and adverse diminution in the Executives'
duties, responsibilities, status, position or authority with the
Company or any of its affiliates following a Change of Control; or
(iv) any relocation of the Executive's primary workplace to a
location that is more than 35 miles from the Executive's primary
workplace as of the date of this Agreement or the Company's requiring
the Executive to be based anywhere other than the location at which the
Executive performed his duties prior to the commencement of the Term;
or
(v) any failure by the Company to obtain from any successor to
the Company an agreement reasonably satisfactory to the Executive to
assume and perform this Agreement, as contemplated by Section 10(a)
hereof.
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Notwithstanding the foregoing, in the event Executive provides the Company with
a Notice of Termination (as defined below) referencing this Section 3(e), the
Company shall have 30 days thereafter in which to cure or resolve the behavior
otherwise constituting Good Reason. Any good faith determination by Executive
that Good Reason exists shall be presumed correct and shall be binding upon the
Company.
(f) Notice of Termination. Any purported termination of
the Executive's employment (other than on account of Executive's death) with an
Employer shall be communicated by a Notice of Termination to the Executive, if
such termination is by an Employer, or to an Employer, if such termination is by
the Executive. For purposes of this Agreement, "Notice of Termination" shall
mean a written notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provisions so indicated. For purposes of this Agreement, no
purported termination of Executive's employment with an Employer shall be
effective without such a Notice of Termination having been given.
4. Compensation Upon Termination.
Subject to Section 9 hereof, if within two years of a Change
in Control Transaction, the Executive's employment with an Employer shall be
terminated in accordance with Section 3(a) (the "Termination"), the Executive
shall be entitled to the following payments and benefits:
(a) Severance. The Company shall pay or cause to be paid
to the Executive a cash severance amount equal to three times the sum
of (i) the Executive's annual base salary on the date of the Change in
Control (or, if higher, the annual base salary in effect immediately
prior to the giving of the Notice of Termination) and (ii) the highest
of the actual bonuses paid or payable to the Executive under the
Company's annual incentive Compensation plan in any of the three
consecutive fiscal years prior to the year in which the Change in
Control occurs. This cash severance amount shall be payable in a lump
sum calculated without any discount.
(b) Additional Payments and Benefits. The Executive shall
also be entitled to:
(i) a lump sum cash payment equal to the sum of (A)
the Executive's accrued but unpaid annual base salary through
the date of Termination, (B) the unpaid portion, if any, of
bonuses previously earned by the Executive pursuant to the
Company's annual incentive compensation plan, plus the pro
rata portion of (I) the Bonus or (II) if payable, the target
bonus to be paid for the year in which the date of Termination
occurs, in either case (calculated through the date of
Termination), and (C) an amount, if any, equal to compensation
previously deferred (excluding any qualified plan deferral)
and any accrued vacation pay, in each case, in full
satisfaction of Executive's rights thereto; and
<PAGE> 6
6
(ii) an annual benefit under the Company's
Supplemental Retirement Plan (the "SERP"), calculated based on
10 years of service, unreduced for early retirement
thereunder; and
(iii) unless otherwise provided under the Key Man
Supplemental Medical Plan, continued medical, dental, vision,
and life insurance coverage (excluding accident, death, and
disability insurance) for the Executive and the Executive's
eligible dependents or, to the extent such coverage is not
commercially available, such other arrangements reasonably
acceptable to the Executive, on the same basis as in effect
prior to the Change in Control or the Executive's Termination,
whichever is deemed to provide for more substantial benefits,
for a period ending on the earlier of (A) the end of the third
anniversary of the date of the Executive's Termination (B) the
commencement of comparable coverage by the Executive with a
subsequent employer (the "Continuation Period"); and
(iv) during the Continuation Period, continuation of
the Executive's perquisites, including the provision of an
automobile and payment of all related expenses (including
maintenance, other than gas), annual social and/or health club
dues, and tax and financial planning services, as in effect
immediately prior to the Change of Control; and
(v) all other accrued or vested benefits in
accordance with the terms of the applicable plan (with an
offset for any amounts paid under Section 4(b)(i)(C), above).
All lump sum payments under this Section 4 shall be paid
within 10 business days after Executive's date of Termination;
provided, however, that with respect to the SERP benefit set
forth in Section 4(b)(ii), above, unless the Executive, during
the ten day period after the Company signs any agreement that
would, upon the consummation of the transactions contemplated
therein, result in a Change of Control, elects to receive a
lump sum payment equal to the present value of his SERP
benefit (as calculated in Section 4(b)(ii) and otherwise in
accordance with Exhibit A, as attached hereto), the Executive
shall be entitled to receive the SERP benefit in installment
payments (payable in accordance with the terms of the SERP),
beginning upon the later to occur of (i) the date on which the
Executive achieves age 55 and (ii) the date on which
Executive's employment terminates in accordance with the terms
hereunder.
(c) Outplacement. If so requested by the Executive,
outplacement services shall be provided by a professional outplacement
provider selected by Executive; provided, however, that such
outplacement services shall be provided the Executive at a cost to the
Company of not more than fifteen (15) percent of such Executive's
annual base salary.
<PAGE> 7
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(d) Withholding. Payments and benefits provided pursuant
to this Section 4 shall be subject to any applicable payroll and other
taxes required to be withheld.
5. Compensation Upon Termination for Death, Disability
or Retirement.
If an Executive's employment is terminated by reason of Death,
Disability or Retirement prior to any other termination, Executive will receive:
(a) the sum of (i) Executive's accrued but unpaid salary
through the date of Termination, (ii) the pro rata portion of the
Executive's target bonus for the year of Executive's Death or
Disability (calculated through the date of Termination), and (iii) an
amount equal to any compensation previously deferred and any accrued
vacation pay; and
(b) other accrued or vested benefits in accordance with
the terms of the applicable plan (with an offset for any amounts paid
under item (a)(iii), above.
6. Excess Parachute Excise Tax Payments.
(a) (i) If it is determined (as hereafter provided) that any
payment or distribution by the Company or any Employer to or for the benefit of
the Executive, whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise pursuant to or by reason of any
other agreement, policy, plan, program or arrangement, including without
limitation any stock option, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of
any of the foregoing (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision thereto) by reason of
being "contingent on a change in ownership or control" of the Company, within
the meaning of Section 280G of the Code (or any successor provision thereto) or
to any similar tax imposed by state or local law, or any interest or penalties
with respect to such excise tax (such tax or taxes, together with any such
interest and penalties, are hereafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an additional payment or
payments (a "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments; provided, however, if the Executive's Payment is,
when calculated on a net-after-tax basis, less than $50,000 in excess of the
amount of the Payment which could be paid to the Executive under Section 280G of
the Code without causing the imposition of the Excise Tax, then the Payment
shall be limited to the largest amount payable (as described above) without
resulting in the imposition of any Excise Tax (such amount, the "Capped
Amount").
(ii) Subject to the provisions of Section 6(a)(i) hereof, all
determinations required to be made under this Section 6, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by the nationally recognized firm of certified public accountants
(the "Accounting Firm") used by the Company prior to the Change in
<PAGE> 8
8
Control (or, if such Accounting Firm declines to serve, the Accounting Firm
shall be a nationally recognized firm of certified public accountants selected
by the Executive). The Accounting Firm shall be directed by the Company or the
Executive to submit its preliminary determination and detailed supporting
calculations to both the Company and the Executive within 15 calendar days after
the Termination Date, if applicable, and any other such time or times as may be
requested by the Company or the Executive. If the Accounting Firm determines
that any Excise Tax is payable by the Executive and that the criteria for
reducing the Payment to the Capped Amount (as described in Section 6(a)(i)
above) is met, then the Company shall reduce the Payment by the amount which,
based on the Accounting Firm's determination and calculations, would provide the
Executive with the Capped Amount, and pay to the Executive such reduced Payment.
If the Accounting Firm determines that an Excise Tax is payable, without
reduction pursuant to Section 6(a)(i), above, the Company shall pay the required
Gross-Up Payment to, or for the benefit of, the Executive within five business
days after receipt of such determination and calculations. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Executive with an opinion
that he has substantial authority not to report any Excise Tax on his/her
federal, state, local income or other tax return. Any determination by the
Accounting Firm as to the amount of the Gross-Up Payment shall be binding upon
the Company and the Executive absent a contrary determination by the Internal
Revenue Services or a court of competent jurisdiction; provided, however, that
no such determination shall eliminate or reduce the Company's obligation to
provide any Gross-Up Payment that shall be due as a result of such contrary
determination. As a result of the uncertainty in the application of Section 4999
of the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
6(a) hereof and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the
amount of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment shall be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(iii) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 6(a) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive (or any filing made by a consolidated tax group which
includes the Company) shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his/her federal income tax return as
filed with the
<PAGE> 9
9
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of the Executive's federal income tax return, or corresponding
state or local tax return, if relevant, the Accounting Firm determines that the
amount of the Gross-Up Payment should be reduced, the Executive shall within
five business days' pay to the Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm for
its services in connection with the determinations and calculations contemplated
by Sections 6(a)(ii) and (iv) hereof shall be borne by the Company. If such fees
and expenses are initially advanced by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses within five
business days after receipt from the Executive of a statement therefor and
reasonable evidence of his/her payment thereof.
(b) In the event that the Internal Revenue Service claims
that any payment or benefit received under this Agreement constitutes an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code, the
Executive shall notify the Company in writing of such claim. Such notification
shall be given as soon as practicable but no later than 10 business days after
the Executive is informed in writing of such claim and shall apprise the Company
of the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the 30
day period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall (i) give the Company any information reasonably
requested by the Company relating to such claim; (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company and reasonably satisfactory to the Executive; (iii) cooperate with
the Company in good faith in order to effectively contest such claim; and (iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for and against any Excise Tax or other tax (including interest
and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses.
(c) The Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall
<PAGE> 10
10
advance the amount of such payment to the Executive on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or other tax (including interest and penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and provided, further, that if the
Executive is required to extend the statute of limitations to enable the Company
to contest such claim, the Executive may limit this extension solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a corporate deduction would be disallowed pursuant
to Section 280G of the Code and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. In addition, no position may be taken nor
any final resolution be agreed to by the Company without the Executive's consent
if such position or resolution could reasonably be expected to adversely affect
the Executive (including any other tax position of the Executive unrelated to
matters covered hereby).
(d) If, after the receipt by the Executive of an amount
advanced by the Company in connection with the contest of the Excise Tax claim,
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto); provided, however, if the amount of that refund exceeds the amount
advanced by the Company or it is otherwise determined for any reason that
additional amounts could be paid to the Named Executive without incurring any
Excise Tax, any such amount will be promptly paid by the Company to the named
Executive. If, after the receipt by the Executive of an amount advanced by the
Company in connection with an Excise Tax claim, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest the
denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid and shall be deemed to be in consideration for services rendered after
the date of the Termination.
7. Expenses. In addition to all other amounts payable to
the Executive under this Agreement, the Company shall pay or reimburse the
Executive for legal fees (including without limitation, any and all court costs
and attorneys' fees and expenses) incurred by the Executive in connection with
or as a result of any claim, action or proceeding brought by the Company or the
Executive with respect to or arising out of this Agreement or any provision
hereof; provided, however, that in the case of an action brought by the
Executive, the Company shall have no obligation for any such legal fees, if the
Company is successful in establishing with the court that the Executive's action
was frivolous or otherwise without any reasonable legal or factual basis.
8. Obligations Absolute; Non-Exclusivity of Rights;
Joint Several Liability.
(a) The obligations of the Company to make the payment to
the Executive, and to make the arrangements, provided for herein shall be
absolute and unconditional and shall not be reduced by any circumstances,
including without limitation any set-off, counterclaim,
<PAGE> 11
11
recoupment, defense or other right which the Company may have against the
Executive or any third party at any time.
(b) Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any benefit, bonus, incentive
or other plan or program provided by the Company or any other Employer and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any agreements with the Company or any
other Employer.
(c) Each entity included in the definition of "Employer"
and any successors or assigns shall be joint and severally liable with the
Company under this Agreement.
9. Not an Employment Agreement; Effect On Other Rights.
(a) This Agreement is not, and nothing herein shall be
deemed to create, a contract of employment between the Executive and the
Company. Any Employer may terminate the employment of the Executive at any time,
subject to the terms of this Agreement and/or any employment agreement or
arrangement between the Employer and the Executive that may then be in effect.
(b) With respect to any employment agreement with the
Executive in effect immediately prior to the Change in Control, nothing herein
shall have any effect on the Executive's rights thereunder; provided, however,
that in the event of the Executive's termination of employment in accordance
with Section 3 hereof, this Agreement shall govern solely for the purpose of
providing the terms of all payments and additional benefits to which the
Executive is entitled upon such termination and any payments or benefit provided
thereunder shall reduce the corresponding type of payments or benefits
hereunder. Notwithstanding the foregoing, in the event that the Executive's
employment is terminated prior to the occurrence of a Change in Control under
the circumstances provided for in Section 3(a)(ii) and such circumstances also
entitle Executive to payments and benefits under any other employment or other
agreement as in effect prior to the Change in Control ("Other Agreement"), then,
until the Change in Control occurs, the Executive will receive the payments and
benefits to which he/she is entitled under such Other Agreement. Upon the
occurrence of the Change in Control, the Company will pay to the Executive in
cash the amount to which he/she is entitled to under this Agreement (reduced by
the amounts already paid under the Other Agreement) in respect of cash payments
and shall provide or increase any other noncash benefits to those provided for
hereunder (after taking into Account noncash benefits, if any, provided under
such Other Agreement). Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan or program of the Company or any
other Employer shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.
(c) With respect to any limited stock appreciation rights
("LSARs") granted to the Executive pursuant to the Company's 1973 Stock Option
Plan for Key Executives held, as of the date of this Agreement, by the
Executive, the Executive hereby agrees to the cancellation of
<PAGE> 12
12
such LSARs in the event that the Change in Control contemplated hereunder is
intended to be, and is otherwise, eligible for pooling-of-interests accounting
treatment under APB No. 16.
10. Successors; Binding Agreement, Assignment.
(a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company, by agreement to expressly,
absolutely and unconditionally assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall be a material
breach of this Agreement and shall entitle the Executive to terminate the
Executive's employment with the Company or such successor for Good Reason
immediately prior to or at any time after such succession. As used in this
Agreement, "Company" shall mean (i) the Company as hereinbefore defined, and
(ii) any successor to all the stock of the Company or to all or substantially
all of the Company's business or assets which executes and delivers an agreement
provided for in this Section 10(a) or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law, including any parent
or subsidiary of such a successor.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would be payable to the Executive
hereunder if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's estate or designated beneficiary. Neither this
Agreement nor any right arising hereunder may be assigned or pledged by the
Executive.
11. Notice. For purpose of this Agreement, notices and
all other communications provided for in this Agreement or contemplated hereby
shall be in writing and shall be deemed to have been duly given when personally
delivered, delivered by a nationally recognized overnight delivery service or
when mailed United States certified or registered mail, return receipt
requested, postage prepaid, and addressed, in the case of the Company, to the
Company at:
Hubbell Incorporated
584 Derby Milford Road
Orange, Connecticut 06477-4024
Attention: General Counsel
and in the case of the Executive, to the Executive at the address set forth on
the execution page at the end hereof.
Either party may designate a different address by giving notice of
change of address in the manner provided above, except that notices of change of
address shall be effective only upon receipt.
<PAGE> 13
13
12. Confidentiality. The Executive shall retain in
confidence any and all confidential information concerning the Company and its
respective business which is now known or hereafter becomes known to the
Executive, except as otherwise required by law and except information (i)
ascertainable or obtained from public information, (ii) received by the
Executive at any time after the Executive's employment by the Company shall have
terminated, from a third party not employed by or otherwise affiliated with the
Company or (iii) which is or becomes known to the public by any means other than
a breach of this Section 12. Upon the Termination of employment, the Executive
will not take or keep any proprietary or confidential information or
documentation belonging to the Company.
13. Miscellaneous. No provision of this Agreement may be
amended, altered, modified, waived or discharged unless such amendment,
alteration, modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer of the Company as shall be specifically
designated by the Committee or by the Board of Directors of the Company. No
waiver by either party, at any time, of any breach by the other party of, or of
compliance by the other party with, any condition or provision of this Agreement
to be performed or complied with by such other party shall be deemed a waiver of
any similar or dissimilar provision or condition of this Agreement or any other
breach of or failure to comply with the same condition or provision at the same
time or at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
14. Severability. If any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby. To the extent permitted by applicable
law, each party hereto waives any provision of law which renders any provision
of this Agreement invalid, illegal or unenforceable in any respect.
15. Governing Law; Venue. The validity, interpretation,
construction and performance of this Agreement shall be governed on a
non-exclusive basis by the laws of the State of Connecticut without giving
effect to its conflict of laws rules. For purposes of jurisdiction and venue,
the Company and each Employer hereby consents to jurisdiction and venue in any
suit, action or proceeding with respect to this Agreement in any court of
competent jurisdiction in the state in which Executive resides at the
commencement of such suit, action or proceeding and waives any objection,
challenge or dispute as to such jurisdiction or venue being proper.
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original and all of which shall
be deemed to constitute one and the same instrument.
<PAGE> 14
14
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
HUBBELL INCORPORATED
By:
---------------------------------
Title:
-----------------------------
------------------------------------
Executive
------------------------------------
------------------------------------
Address
<PAGE> 15
15
EXHIBIT A
ASSUMPTIONS
The assumptions to be used are those specified under Section 417(e) of the
Internal Revenue Code of 186, as amended, which assumptions are the minimum lump
sum factors permitted to be used for calculating pension benefits under
qualified defined benefit plans.
Benefit: Lump sum payment of unreduced benefit deferred to age 55,
increased to reflect the 50% joint and survivor form.
Mortality Rates: The 1983 Group Annuity Mortality (1983 GAM) blend of 50% male
and 50% female rates.
Interest Rate: 10-year treasury rate on the first day of the fourth quarter
of the calendar year immediately prior to the date on which
the Executive retires or otherwise separates from Service.
Other: 3% annual Social Security wage base increase.
2.5% annual CPI increase.
5% annual salary increase.
Qualified Plan
Offset: mount actually payable at age 55 (or, if higher, the
participants actual age as of the date of termination of
employment).
<PAGE> 1
Page 55
Exhibit 21
HUBBELL INCORPORATED
AND SUBSIDIARIES
LISTING OF SIGNIFICANT SUBSIDIARIES
State or Other Percentage
Jurisdiction of Owned By
Incorporation Registrant
------------- ----------
Anderson Electrical Products, Inc. Delaware 100%
Haefely Test AG Switzerland 100%
Hubbell, Ltd. England 100%
Hubbell Canada Inc. Canada 100%
The Ohio Brass Company Delaware 100%
Hubbell Incorporated (Delaware) Delaware 100%
Hubbell Industrial Controls, Inc. Delaware 100%
Gleason Reel Corp. Delaware 100%
Harvey Hubbell Caribe, Inc. Delaware 100%
Hubbell Lighting, Inc. Connecticut 100%
Pulse Communications, Inc. Virginia 100%
Hipotronics, Inc. Delaware 100%
A. B. Chance Industries, Inc. Delaware 100%
Fargo Mfg. Company, Inc. New York 100%
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 24,047
<SECURITIES> 0
<RECEIVABLES> 282,606
<ALLOWANCES> 4,091
<INVENTORY> 278,515
<CURRENT-ASSETS> 552,840
<PP&E> 605,914
<DEPRECIATION> 296,975
<TOTAL-ASSETS> 1,399,239
<CURRENT-LIABILITIES> 343,418
<BONDS> 99,644
0
0
<COMMON> 716
<OTHER-SE> 855,036
<TOTAL-LIABILITY-AND-EQUITY> 1,399,239
<SALES> 1,451,778
<TOTAL-REVENUES> 1,451,778
<CGS> 1,042,811
<TOTAL-COSTS> 1,042,811
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 718
<INTEREST-EXPENSE> 15,858
<INCOME-PRETAX> 196,995
<INCOME-TAX> 51,218
<INCOME-CONTINUING> 145,777
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 145,777
<EPS-BASIC> 2.24
<EPS-DILUTED> 2.21
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