-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJXsQbD00WGdRTO34xP2wKy7eeL1Ca5q8VdV54c+9QHGKgT3MPqp8BQiApUGphRw 1Has1U+eJQd715YWE/wUxA== 0001047469-98-010566.txt : 19980323 0001047469-98-010566.hdr.sgml : 19980323 ACCESSION NUMBER: 0001047469-98-010566 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 19971228 FILED AS OF DATE: 19980319 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: THOMAS & BETTS CORP CENTRAL INDEX KEY: 0000097854 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 221326940 STATE OF INCORPORATION: TN FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-04682 FILM NUMBER: 98569080 BUSINESS ADDRESS: STREET 1: 8155 T&B BOULEVARD CITY: MEMPHIS STATE: TN ZIP: 38125 BUSINESS PHONE: 9012527766 MAIL ADDRESS: STREET 1: 1555 LYNNFIELD ROAD CITY: MEMPHIS STATE: TN ZIP: 38119 10-K 1 10-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (MARK ONE) /x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 28, 1997. OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _________________ TO _________________. COMMISSION FILE NUMBER 1-4682 THOMAS & BETTS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TENNESSEE 22-1326940 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 8155 T&B BOULEVARD, MEMPHIS, TENNESSEE 38125 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (901) 252-8000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ------------------------------------------ Common Stock, no par value New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), 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 (Section 229.405 of this chapter) 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. / / As of February 13, 1998, 55,121,199 shares of the Registrant's Common Stock were outstanding, and the aggregate market value of the voting stock held by non-affiliates of the Registrant (based on the average bid and asked prices of such stock on the New York Stock Exchange) was $3,004,411,428. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Shareholders for the fiscal year ended December 28, 1997, are incorporated by reference into Parts I, II and IV. Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held May 6, 1998, are incorporated by reference into Part III. - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ---- PART I ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . 3 ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . 9 ITEM 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 11 ITEM 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 13 Executive Officers of the Registrant . . . . . . . . . . . 13 PART II ITEM 5. Market for Registrant's Common Equity and Related Shareholder Matters. . . . . . . . . . . . . . . . . . . . 15 ITEM 6. Selected Financial Data. . . . . . . . . . . . . . . . . . 16 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operation . . . . . . . . . . . . 16 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . 16 ITEM 8. Financial Statements and Supplementary Data. . . . . . . . 16 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . 17 PART III ITEM 10. Directors and Executive Officers of the Registrant . . . . 17 ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . 18 ITEM 12. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . . . 18 ITEM 13. Certain Relationships and Related Transactions . . . . . . 18 PART IV ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . 19 EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
Page 2 of 21 PART I ITEM 1. DESCRIPTION OF BUSINESS Thomas & Betts Corporation (the Corporation) is a leading manufacturer of connectors and components for worldwide electrical and electronics markets. The Corporation operates over 100 manufacturing and distribution facilities in 20 countries. The Corporation was established in 1898 as a sales agency for electrical wires and raceways, was incorporated in New Jersey in 1917 and reincorporated in Tennessee in May 1996. Executive offices are located at 8155 T&B Boulevard, Memphis, Tennessee 38125, and the telephone number is 901-252-8000. The products manufactured and sold by the Corporation are classified into business segments that are organized around market channels: Electrical Construction and Maintenance Components (Electrical), Electronic/OEM Components (Electronics) and Other Products and Components (Other). The Corporation's products are sold worldwide through those channels to electrical, electronic and heating, ventilation and air-conditioning (HVAC) distributors; original equipment manufacturers (OEMs); mass merchandisers; catalog merchandisers; and home centers. No single customer in any one of these market channels accounted for more than 5% of 1997 net sales. In addition to new product development, market penetration, new markets, and joint venture arrangements, the Corporation pursues acquisitions as a means of growth. In 1997, the Corporation completed six acquisitions for total consideration of approximately $62.0 million, consisting of cash and 793,560 shares of common stock. The July 1997 acquisition of Diamond Communications Products, Inc., a manufacturer of hardware for the worldwide communications industry, enhanced the Corporation's offering in the "drop-end" portion of the cable television industry that connects cable service to people's homes. Other 1997 acquisitions increased the breadth of products offered within the Electrical segment. In late 1996, the Corporation acquired Augat Inc., a worldwide manufacturer of electronic connectors and devices for the telecommunications, cable television, automotive and information processing industries. As a result of that acquisition, the Corporation gained a position among the world's five largest electronic connector manufacturers, balanced its electronic and electrical businesses and achieved critical mass in higher-growth markets. Also in 1996, the Corporation acquired Amerace Corporation, a manufacturer of electrical components for utility and industrial markets, and six smaller companies and product lines. ELECTRICAL CONSTRUCTION AND MAINTENANCE COMPONENTS The Corporation's Electrical segment's markets include industrial construction, renovation, maintenance and repair; commercial and residential construction and renovation; project construction; and industrial OEM, primarily in North America. Total sales of the segment were $764.2, $643.4 and $573.6 million, or 36.1%, 32.4% and 33.1% of total sales for 1997, 1996 and 1995, respectively. Page 3 of 21 The Corporation designs, manufactures and markets thousands of different electrical connectors, components and other products for electrical applications. Management believes that the Corporation has a leading position in the market for many of those products. Products include fittings and accessories for electrical raceways; fastening products, such as plastic and metallic ties for bundling wire and flexible tubing; connectors, such as compression and mechanical connectors for high-current power and grounding applications; indoor and outdoor switch and outlet boxes, covers and accessories; floor boxes; metal framing used as structural supports for conduits, cable trays, electrical enclosures and lighting raceways; ground rods and clamps; outdoor security, roadway and hazardous location lighting; circuit breakers, safety switches and meter centers; and other products, including insulation products, wire markers and application tooling products. Products are sold under a variety of the Corporation's brand names. Electrical products are sold through electrical distributors and retail outlets such as home centers and mass merchants. The Corporation has relationships with over 2,000 national, regional and independent distributors and buying groups with locations across North America. The Corporation has strong relationships with its distributors as a result of the breadth and quality of its product line, innovative service programs, product innovation, competitive pricing and brand name recognition among its customers. The Corporation has a network of factory and independent sales representatives who work with distributors, end users and retail outlets to increase demand for its products. The Corporation has thousands of customers, and no single end user, distributor, retailer or group of affiliated distributors accounted for more than 7% of the Electrical segment's 1997 net sales. A small portion of Electrical segment sales is currently realized outside of North America as electrical standards vary by region, and historically the Corporation has emphasized North American standards. The Corporation sees potential to further grow participation in markets outside of North America by developing or acquiring product lines that conform to other regional standards. ELECTRONIC/OEM COMPONENTS The Corporation's electronic components are sold primarily to OEM's in the automotive, information services, office equipment, industrial electronics, telecommunications and broadband communications - including cable television (CATV), test equipment, computer-aided-engineering and manufacturing systems, instrumentation, medical electronics markets, and additional applications in aerospace, businesses and also through electronics, telecommunications and CATV distributors. No single end user or distributor of the Corporation's electronic components accounted for more than 12% of the Electronics segment 1997 net sales. Total Electronics segment sales were $893.9, $903.9 and $834.1 million, or 42.3%, 45.5% and 48.1% of the Corporation's total sales for 1997, 1996 and 1995, respectively. The Corporation's electronic/OEM components include: printed circuit connectors; IDC connectors for mass termination of flat cables; custom-engineered connectors for automotive and professional electronics applications; flexible interconnects, flat cables and assemblies for automotive and other applications; cable ties; terminals; D-subminiature connectors, a broad group of industry standard connectors; custom and standard switches, printed circuit board sockets and terminal blocks; Page 4 of 21 modular voice and data connectors and related components; CATV drop hardware; RF connectors; fiber management systems; and fiber optic connectors and splitters. These components are sold under a variety of the Corporation's brand names. The Corporation manufactures and sells its standard components in North America through electronic distributors and directly to end users, and provides customer-specific components directly to major OEM's. The Corporation sells through national, regional and local distributors serving a large customer base. The Corporation also manufactures and markets its electronic/OEM components internationally, with design, manufacturing and distribution capabilities in Europe and the Far East. In Europe and the Far East, as in North America, electronic/OEM components are sold primarily to automotive, computer, office equipment, test equipment, instrumentation, industrial automation and telecommunications markets, and certain electronic components of the Corporation are developed and manufactured for specific customer applications. OEM customers have shown a trend of reducing the number of their preferred suppliers, focusing on companies that can meet quality and delivery standards and that have a global presence, a broad product package, strong design capability and competitive prices. The Corporation has achieved a preferred supplier designation from many of its most important OEM customers for electronic components, and continues to seek this preferred status from other accounts. OTHER PRODUCTS AND COMPONENTS The Corporation sells its other products and components, comprised of heating products, steel poles and towers, and utility and telecommunications components, through distributors and directly to end-users. No single end-user or distributor accounted for more than 3% of the Corporation's Other Products and Components segment 1997 net sales. Total Other Products and Components sales were $456.7, $437.8 and $325.7 million, or 21.6%, 22.1% and 18.8% of the Corporation's total sales for 1997, 1996 and 1995, respectively. HEATING PRODUCTS The Corporation designs, manufactures and markets heating and ventilation products for commercial and industrial buildings. Products include gas, oil and electric unit heaters, gas-fired duct furnaces, indirect and direct gas-fired make-up air heaters, infrared heaters, and evaporative cooling and heat recovery products for the heating, ventilation and air-conditioning (HVAC) marketplace under the Reznor and E.K. Campbell brand names. Those products are sold through HVAC, mechanical and refrigeration distributors in over 2,000 locations throughout North America and Europe. Page 5 of 21 TRANSMISSION POLES AND TOWERS The Corporation designs, manufactures and markets transmission and distribution poles and towers for North American power and telecommunications companies and for export. Those products are primarily sold to five types of end-users: investor-owned utilities; cooperatives, which purchase power from utilities and manage its distribution to end-users; municipal utilities; cable television operating companies; and telephone companies. The Corporation's products include tubular steel transmission and distribution poles and lattice steel transmission towers. The Corporation manufactures and sells its transmission towers and its transmission and distribution poles under the Lehigh, Meyer and Thomas & Betts brand names. TELECOMMUNICATIONS COMPONENTS The Corporation designs, manufactures and markets aerial, pole, pedestal and buried splice enclosures; connectors; encapsulation and sheath repair systems; cable ties; and specialty devices for cable television companies and telephone operating companies. Components are sold under a variety of the Corporation's brand names both directly to end-users and through distributors. OTHER COMPONENTS The Corporation designs, manufactures and markets flood, roadway and security lighting fixtures and connectors, grounding systems, and fastening and metal framing components for North American power companies and for HVAC, PVF (Pipe, Valve and Fittings) and specialty tool distributors. Those products are primarily sold to four markets: investor-owned utilities, cooperatives, municipal utilities, and HVAC and plumbing distributors. The Corporation's other component products include power connectors and grounding systems; roadway, security and area lighting fixtures; metal framing; cable ties; meter sockets; evaporative cooling and energy recovery equipment; and power connectors. Products are sold under a variety of the Corporation's brand names. MANUFACTURING AND DISTRIBUTION The Corporation employs advanced processes in order to manufacture quality products. The Corporation's manufacturing processes include high-speed stamping, precision molding, machining, plating and automated assembly. The Corporation makes extensive use of computer-aided design and computer-aided manufacturing (CAD/CAM) software and equipment to link product engineering with its factories. The Corporation also utilizes other advanced equipment and techniques in the manufacturing and distribution processes, including computer software for scheduling, material requirements, shop floor control, capacity planning, and the warehousing and shipment of products. Page 6 of 21 The Corporation's products enjoy a reputation for quality in the markets in which they are sold. The Corporation has implemented quality-control processes in its design, manufacturing, delivery and other operations in order to further improve product quality and the service level to customers. These techniques include just-in-time manufacturing programs for more efficient use of machine tools in manufacturing different products, statistical process control, statistical problem solving, and other processes related to the Corporation's SIGNATURE SERVICE/DMI program. From its origin as a delivery guarantee, the SIGNATURE SERVICE/DMI program has evolved into a partnership for profitability that encompasses purchasing incentives, extensive marketing support, training and service discounts. The DMI process is now the benchmark in the electrical component industry for how business, through electronic commerce, should be conducted. In 1997, participation in the DMI program increased 26% over the previous year. The DMI advanced partnership includes customer-cost-reduction processes such as automatic stock replenishment, advanced distributor inventory modeling, automatic receiving, price synchronization, invoice balancing and summary billing. The program also provides rights to return merchandise which are prevalent in the electrical components industry. Combining those business-process redefinitions with a leading effort in electronic commerce, such as extensive use of industry-standard Electronic Data Interchange (EDI), has made the DMI partnership a success for the Corporation as well as for its participating distributors. RAW MATERIALS The Corporation purchases a wide variety of raw materials for the manufacture of its products, including metals such as brass, copper, aluminum, steel plate, steel strip and malleable iron castings, and resins and rubber compounds. The Corporation's sources of raw materials and component parts are well established and are sufficiently numerous to avoid serious interruption of production in the event that certain suppliers are unable to provide raw materials and component parts. RESEARCH AND DEVELOPMENT The Corporation has research, development and engineering capabilities in each of the three regions of the world in which it operates in order to respond locally to its customers' needs and technological requirements. The Corporation has a reputation for innovation based upon its ability to develop quality new and improved products that meet the specific application needs of its customers. The Corporation allocates significant resources to its research and development activities. The Corporation's research, development and engineering expenditures for the creation and application of new and improved products and processes were $51.9, $47.2 and $44.1 million for 1997, 1996 and 1995, respectively. Page 7 of 21 The research and development activities of the Corporation are focused on complementary product areas and specific high-growth markets. Most research and development activity in 1997 took place in the Electronics segment with efforts focused in part on the Metallized Particle Interconnect (MPI-TM-), a next-generation microprocessor socket for high-end computers and workstations. PATENTS AND TRADEMARKS The Corporation owns approximately 2,043 active patent registrations and applications worldwide. The Corporation has over 1,283 active trademark registrations and applications worldwide, including THOMAS & BETTS, T&B, AGASTAT, ALCOSWITCH, AMERICAN ELECTRIC LIGHTING, ANCHOR, ANSLEY, ARMIGER, ASTER, AUGAT, BLACKBURN, BOWERS, BUCHANAN, CANSTRUT, CATAMOUNT, CENTER-LOK, COLOR-KEYED, COMMANDER, DIAMOND, ELASTOMERIC TECHNOLOGIES, EK CAMPBELL, ELASTIMOLD, ELECTROLINE, EPITOME, ELECTROLAY, EVER-LOK, E-Z-CODE, FLEXSTRIP, HAZLUX, HOLMBERG, KINDORF, KOLD-N-CLOSE, LIQUID TITE, LRC, MARR, MARRETTE, MAX-GARD, MEYER, MICROLECTRIC, MPI, NEVADA WESTERN, PHOTON, RDI, REZNOR, RUSSELLSTOLL, SACHS, SIGNATURE SERVICE, SNAP-N-SEAL, STA-KON, STEEL CITY, SUPERSTRUT, TAYLOR, TELZON, TY-FAST, TY-RAP, UNION, VALON and ZINSCO. While the Corporation considers its patents and trademarks (including trade dress) to be valuable assets, it does not believe that its competitive position is dependent solely on patent or trademark protection or that its operations are dependent on any individual patent or trademark. The Corporation does not consider any of its licenses, franchises or concessions to be material to its business. COMPETITION The Corporation encounters competition in all areas of its business, and the methods of competition vary across the Corporation's segments. The Corporation competes primarily on the basis of product quality, technology, price, performance and customer service. Although no single company competes directly with the Corporation in all of its product lines, various companies compete in one or more product lines. There are many companies that manufacture a number of products that compete with those of the Corporation. All of the Corporation's products are in competition with products of other manufacturers, some of which have substantially greater sales and assets than the Corporation. In addition, the Corporation competes with many smaller companies. EMPLOYEES As of December 28, 1997, the Corporation and its subsidiaries had approximately 16,400 full-time employees worldwide. Employees of the Corporation's international subsidiaries in the aggregate comprise approximately 40% of all employees. The Corporation believes its relationship with its employees is excellent. Page 8 of 21 REGULATION The Corporation is subject to federal, state and local environmental laws and regulations which govern the discharge of pollutants into the air, soil and water, as well as the handling and disposal of solid and hazardous wastes. The Corporation believes that it is currently in substantial compliance with all applicable environmental laws and regulations and that the costs of maintaining or coming into compliance with such environmental laws and regulations will not be material to the Corporation's financial statements. FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. DOMESTIC OPERATIONS For information concerning financial results for industry segments and foreign and U.S. domestic operations for the three years ended December 28, 1997, December 29, 1996, and December 31, 1995, refer to Notes 12 and 13, respectively, of Notes to Consolidated Financial Statements contained in the Corporation's 1997 Annual Report to Shareholders, which are incorporated herein by reference. Export sales originating in the U.S. were $29.3, $43.5 and $37.2 million for 1997, 1996 and 1995, respectively. ITEM 2. PROPERTIES The Corporation has total plant, office and distribution space of approximately 10,232,000 sq. ft. in 175 locations in 29 states, the Commonwealth of Puerto Rico and 18 other countries. This space is composed of 6,796,000 sq. ft. of manufacturing space, 2,627,000 sq. ft. of office and distribution space and 809,000 sq. ft. of idle space. Page 9 of 21 The following table lists the Corporation's manufacturing locations by segment as of December 28, 1997:
Approximate Area In Sq. Ft. No. Of ----------------- Segment Location Facilities Leased Owned - ------- -------- ---------- ------ ----- Electrical Construction and Maintenance Components Arkansas 1 246,000 California 2 249,000 Georgia 2 220,000 160,000 Massachusetts 1 116,000 Mississippi 1 237,000 Ohio 1 57,000 Oklahoma 1 108,000 Pennsylvania 1 80,000 Puerto Rico 4 112,000 28,000 Tennessee 2 457,000 Texas 1 36,000 Canada 7 109,000 305,000 Mexico 5 361,000 Electronic/OEM Components Arizona 1 11,000 California 1 120,000 Florida 1 65,000 Maine 1 100,000 Massachusetts 1 53,000 Michigan 4 110,000 230,000 New Jersey 1 65,000 New York 2 389,000 Pennsylvania 2 41,000 South Carolina 3 89,000 Washington 2 120,000 Canada 2 53,000 England 3 37,000 69,000 Hungary 1 62,000 Japan 1 75,000 Luxembourg 2 27,000 43,000 Malaysia 1 24,000 Mexico 2 785,000 Singapore 1 60,000 Switzerland 1 188,000
Page 10 of 21
Approximate Area In Sq. Ft. No. Of ----------------- Segment Location Facilities Leased Owned - ------- -------- ---------- ------ ----- Other Products and Components Kansas 1 43,000 New Jersey 1 168,000 New Mexico 1 100,000 Pennsylvania 1 227,000 South Carolina 1 105,000 Texas 1 136,000 Wisconsin 1 171,000 Belgium 1 13,000 Mexico 1 136,000
The Corporation leases approximately 228,000 sq. ft. of space in Memphis, Tennessee, for its corporate and divisional headquarters. Principal sales offices and distribution facilities are located in 2,399,000 sq. ft. of property; approximately one-half of which is leased. The Corporation has 809,000 sq. ft. of idle manufacturing and office space primarily in Alabama, Arkansas, Florida, Massachusetts, New Jersey, Pennsylvania, and Canada, not included in the above table. ITEM 3. LEGAL PROCEEDINGS Owners and operators of sites containing hazardous substances, as well as generators of hazardous substances, are subject to broad liability under various federal and state environmental laws and regulations, including liability for cleanup costs and damages arising out of past disposal activity. Such liability in many cases may be imposed regardless of fault or the legality of the original disposal activity. The Corporation is the owner or operator or former owner of various manufacturing facilities currently being evaluated by the Corporation for the presence of contamination which may require remediation, including closed facilities in Anniston, Alabama; Elizabeth, New Jersey; Pittsburgh, Pennsylvania; and St. Louis, Missouri; and currently operated facilities in Hager City, Wisconsin; and Lancaster, South Carolina. In addition, the Corporation is evaluating three manufacturing plants which were sold by American Electric prior to its acquisition by the Corporation, which are located in Bainbridge, Georgia; Medora, Indiana; and Monroe, Louisiana and which may require site remediation. All but two of the above facilities (Elizabeth and Lancaster) were purchased by American Electric from other parties between the years 1985 and 1988. With respect to all but one of those former American Electric facilities (Pittsburgh), at the time of those purchases by American Electric, the sellers committed to indemnify American Electric for environmental liabilities that occurred prior to the purchase of the facilities by American Electric. The Corporation believes that the indemnities are reliable; however, there can be no assurances that such indemnities will be honored. Subsequent Page 11 of 21 to the Corporation's acquisition of American Electric, the Corporation entered into agreements with the sellers to cooperate with each other in resolving obligations in connection with the above-mentioned environmental issues. The Corporation has received notifications, from the United States Environmental Protection Agency (EPA) or similar state environmental regulatory agencies or private parties, that the Corporation, along with others, may currently be potentially responsible for the remediation of sites pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (the "Superfund" Act) or similar state environmental statutes. Pursuant to the Asset Purchase Agreement dated June 28, 1985, between American Electric and ITT Corporation (ITT), ITT has to date assumed responsibility for costs associated with contamination prior to June 1985 at four of these sites. The Corporation has assumed responsibility for its share of costs at the remaining eight sites covered by this Agreement. In January 1996, the Corporation acquired Amerace Corporation. Pursuant to the various environmental laws and regulations described above, Amerace is evaluating or remediating, or may have liability associated with, contamination at four facilities formerly owned or operated by Amerace (located in Butler, New Jersey; Richland, Michigan; Tenafly, New Jersey; and Union, New Jersey) and at one facility currently owned and operated by Amerace located in Hackettstown, New Jersey. In addition, Amerace has received notifications from the EPA or from similar state environmental regulatory agencies or private parties that Amerace, along with others, may currently be potentially responsible for its share of the costs relating to the remediation of 10 sites pursuant to the Superfund Act, or similar state environmental statutes. In December 1996, the Corporation acquired Augat Inc. Pursuant to the various environmental laws and regulations described above, Augat is evaluating or remediating, or may have liability associated with, contamination at five facilities currently owned or operated by Augat (located in Canton, Massachusetts; Horseheads, New York; Mashpee, Massachusetts; and at two facilities in Montgomery, Alabama). In addition, Augat has received notifications from the EPA or from similar state environmental regulatory agencies or private parties that Augat, along with others, may currently be potentially responsible for its share of the costs relating to the remediation of five sites pursuant to the Superfund Act or similar state environmental statutes. During 1997, Augat entered into settlements for de minimus amounts with respect to two of these sites, and Augat's designation as a Potential Responsible Party was withdrawn with respect to one of those sites. In July 1997, the Corporation acquired Diamond Communications, Inc. Pursuant to the various environmental laws and regulations described above, Diamond is evaluating, and may have liability associated with, contamination at the Garwood, New Jersey, facility currently owned and operated by Diamond. The Corporation is not able to predict with certainty the extent of its ultimate liability with respect to any pending or future environmental matters. However, the Corporation does not believe that any such liability, with respect to the aforementioned environmental matters, will be material to its financial statements. Page 12 of 21 The Corporation is subject to other legal proceedings and claims which arise in the ordinary course of its business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not materially adversely affect the financial position or results of operations of the Corporation. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 28, 1997. EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding executive officers of the Corporation is as follows (included herein pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K):
Date Assumed Name Position Age Present Position ---- -------- --- ---------------- Clyde R. Moore President and 44 May 1997 Chief Executive Officer Fred R. Jones Vice President-Finance 50 August 1995 and Treasurer (Chief Financial Officer) T. Roy Burton President-Electronics/OEM Group 50 May 1997 Jerry Kronenberg Vice President-General Counsel 63 September 1994 Gregory M. Langston Group President-International 42 February 1998 David D. Myler Vice President-Administration 53 January 1994 W. Neil Parker President-Electrical Components 55 May 1997 Group Gary R. Stevenson Vice President-Operations 45 January 1994
Page 13 of 21 Mr. Moore previously was president and chief operating officer of FL Industries, Inc. (1990 to 1992) and president of its American Electric Division from 1985 until its acquisition by Thomas & Betts Corporation in 1992. He was president-Electrical Division (1992 to 1994) and chief operating officer (1994 to 1997) of the Corporation. He has been president of the Corporation since 1994. Mr. Jones previously was president of ABB Financial Services, Inc. (1990 to 1992) and senior vice president and chief financial officer (1992 to 1995) of Joy Technologies, Inc. (manufacturer of industrial, mining and pollution control equipment). Mr. Burton previously was vice president and general manager of Bendix Connector Operations (1989 to 1992), vice president, Information Technology Operations (1992 to 1993), and vice president, Aerospace Operations (1993 to 1994) of Amphenol Corporation. He was president-Electronics/OEM Division (1994 to 1997). Mr. Kronenberg was previously chairman of the Labor and Employee Relations Committee of the law firm of McBride, Baker & Coles (1990 to 1994). Mr. Langston was previously managing director of Square D Australia (1989 to 1990), managing director of Square D Asia Pacific (1991 to 1992), president of Square D de Mexico (1992) and president of Groupe Schneider Mexico (1992 to 1995). He was president-Utility Division, (1995 to 1997) and president-Utility Group (1997 to February 1998). Mr. Myler was previously vice president, Administration (1991 to 1994) of Thomas & Betts Holdings, Inc. (name changed from FL Industries, Inc. on June 11, 1992). Mr. Parker was previously vice president of General Electric Canada (1983 to 1992), president of Thomas & Betts Limited (1992 to 1996), president-Thomas & Betts Canada (1995 to 1996), president, Electrical Components Division (1996 to 1997) and chief executive officer of Thomas & Betts Limited (1996 to 1998). Mr. Stevenson was previously vice president, Operations of the American Electric Division of FL Industries, Inc. (1989 to 1992) and vice president-Operations (1992 to 1994) of Thomas & Betts Holdings, Inc. (name changed from FL Industries, Inc. on June 11, 1992). Executive officers are elected by, and serve at the discretion of, the Board of Directors for a term of one year, which expires May 6, 1998. There is no arrangement or understanding between any officer and any person, other than a director or an executive officer of the Corporation acting in his official capacity, pursuant to which any officer was selected. There are no family relationships between any executive officer and any other officer or director of the Corporation. There has been no event involving any executive officer under any bankruptcy act, criminal proceeding, judgment or injunction during the past five years. Page 14 of 21 PART II Information for Items 5 through 8 of this Report appears in the Corporation's 1997 Annual Report to Shareholders as indicated in the following table and is incorporated herein by reference. ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Information regarding market information, shareholders and dividends is contained in the Financial Highlights, Quarterly Review and Corporate Information sections of the Corporation's 1997 Annual Report to Shareholders, on pages 1, 30, 36 and 39 and is incorporated herein by reference. Page 15 of 21
PAGE IN ANNUAL REPORT TO SHAREHOLDERS ------------ ITEM 6. SELECTED FINANCIAL DATA Selected Consolidated Financial Data . . . . . . . 37 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. . . . . . . . . . . . . . . . . . . . 17-20 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. . . . . . . . . . . . . . . . 25 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Statements of Earnings. . . . . . . 21 Consolidated Balance Sheets. . . . . . . . . . . 22 Consolidated Statements of Cash Flows. . . . . . 23 Consolidated Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . 24 Notes to Consolidated Financial Statements . . . 24-34
FORWARD-LOOKING STATEMENTS Certain statements in this Form 10-K and in written and oral statements made by the Corporation may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "expect" and "anticipate" and similar expressions identify forward-looking statements. Although these statements reflect the Corporation's current views with respect to future events and financial performance, they are subject to many uncertainties and factors relating to the Corporation's operations and business environment which may cause the actual results of the Corporation to be materially different from any future results expressed or implied by such forward-looking statements. Examples of such uncertainties include, but are not limited to: changes in customer demand for various products of the Corporation that could affect its overall product mix, margins, plant utilization levels and asset valuations; economic slowdown in the U.S. (contrary to the Corporation's expectations of favorable economic conditions throughout 1998) or economic slowdowns in the Corporation's major offshore markets, including Canada, Western Europe (particularly Germany and the U.K.), Japan and Taiwan; effects of significant changes in monetary and fiscal policies in the U.S. Page 16 of 21 and abroad which could result in currency fluctuations, including fluctuations in the Canadian dollar, German mark and Japanese yen; inflationary pressures which could raise interest rates and consequently the Corporation's cost of funds; unforeseen difficulties in completing identified restructuring actions initiated in 1996 in connection with the Augat merger, including disposal of idle facilities, geographic shifts of production locations and closure of redundant administrative facilities; unforeseen problems in the Corporation's computer systems and from third parties with whom the Corporation deals on financial transactions, specifically those related to "Year 2000" date- recognition ability in time-sensitive software; availability and pricing of commodities and materials needed for production of the Corporation's products, including steel, copper, zinc, aluminum and plastic resins; increased downward pressure on selling prices for the Corporation's products; unforeseen difficulties arising from the integration of acquired businesses with the Corporation's operations; changes in financial results and consequently in equity income from the Corporation's equity investments in Taiwan, Japan, Belgium and the U.S.; changes in environmental regulations and policies that could impact projections of remediation expenses; significant changes in governmental policies domestically and abroad that could create trade restrictions, patent enforcement issues, tax-rate changes and changes in tax treatment of such items as tax credits, withholding taxes, transfer pricing and other income and expense recognition for tax purposes, including changes in taxation on income generated in Puerto Rico. The Corporation does not, by making any forward-looking statements, undertake any obligation to update them (whether as a result of new information, future events or otherwise). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES Information for Item 9 of this Report appears on page 20 of the Definitive Proxy Statement for the Corporation's 1998 Annual Meeting of Shareholders to be held on May 6, 1998, and is incorporated herein by reference. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding members of the Corporation's Board of Directors is presented in sections "Security Ownership of Management," "Election of Directors," "The Board of Directors," and "Committees of the Board of Directors" and on pages 2 through 9 of the Definitive Proxy Statement for the Corporation's 1998 Annual Meeting of Shareholders which will be held May 6, 1998, and is incorporated herein by reference. Information regarding executive officers of the Corporation is included above in Part I of this Form 10-K under the caption "Executive Officers of the Registrant" pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K. Page 17 of 21 Information for Items 11 through 13 of this Report appears in the Definitive Proxy Statement for the Corporation's 1998 Annual Meeting of Shareholders to be held on May 6, 1998, as indicated in the following table and is incorporated herein by reference.
PAGE IN PROXY STATEMENT --------- ITEM 11. EXECUTIVE COMPENSATION Executive Compensation . . . . . . . . . . . . . . . . . 10 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Security Ownership of Management . . . . . . . . . . . . 2 Security Ownership of Certain Beneficial Owners. . . . . . . . . . . . . . . . . . . . . . . 3 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Employment Contracts, Termination of Employment and Change-of-Control Arrangements. . . . . . . . . . . 13
Page 18 of 21 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. FINANCIAL STATEMENTS The consolidated financial statements of the Corporation, together with the report thereon of KPMG Peat Marwick LLP, dated February 5, 1998, are presented on pages 21-35 of the Corporation's 1997 Annual Report to Shareholders and are incorporated herein by reference. With the exception of the aforementioned information and the information incorporated by reference in Items 5, 6, 7, 7A and 8 hereof, the Corporation's 1997 Annual Report to Shareholders is not to be deemed as filed as part of this Report. 2. FINANCIAL STATEMENT SCHEDULES All financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements, or the notes thereto, contained in the Corporation's 1997 Annual Report to Shareholders and incorporated herein by reference. 3. EXHIBITS Exhibits 3.1, 3.2, 4.1 through 4.6, 10.1 through 10.14, 12, 13, 21, 23.1, 23.2, 24 and 99 are being filed in connection with this Report and incorporated herein by reference. The Exhibit Index on pages E-1 through E-3 is incorporated herein by reference. (b) REPORTS ON FORM 8-K During the last quarter of the period covered by this Report on Form 10-K, the Corporation filed one Current Report on Form 8-K, dated December 4, 1997, under Items 5 and 7, reporting the adoption of a shareholder rights plan. Page 19 of 21 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Corporation has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized. THOMAS & BETTS CORPORATION (Registrant) BY: /s/ Fred R. Jones ------------------------------------- Fred R. Jones Vice President--Finance and Treasurer (Principal Financial Officer and Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Corporation in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE - --------- -------- ---- /s/CLYDE R. MOORE President, Chief Executive Officer March 19, 1998 - -------------------------- (PRINCIPAL EXECUTIVE OFFICER) and Director Clyde R. Moore /s/FRED R. JONES Vice President--Finance and Treasurer March 19, 1998 - -------------------------- (PRINCIPAL FINANCIAL OFFICER AND Fred R. Jones PRINCIPAL ACCOUNTING OFFICER) /s/T. KEVIN DUNNIGAN* Chairman of the Board and Director - -------------------------- (T. Kevin Dunnigan) /s/JEANANNE K. HAUSWALD* Director - -------------------------- Jeananne K. Hauswald /s/ROBERT A. KENKEL* Director - -------------------------- Robert A. Kenkel /s/JOHN N. LEMASTERS* Director - -------------------------- John N. Lemasters /s/JEAN-PAUL RICHARD* Director - -------------------------- Jean-Paul Richard Page 20 of 21 SIGNATURE CAPACITY DATE - --------- -------- ---- /s/IAN M. ROSS* Director - -------------------------- Ian M. Ross /s/WILLIAM H. WALTRIP* Director - -------------------------- William H. Waltrip *By: /s/ Fred R. Jones March 19, 1998 --------------------- Fred R. Jones As attorney-in-fact for the above-named officers and directors pursuant to powers of attorney duly executed by such persons.
Page 21 of 21 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------ ----------------------- 3.1 Charter of the Corporation, as amended 3.2 By-laws of the Corporation 4.1 Indenture dated as of January 15, 1992, between the Corporation and Morgan Guaranty Trust Company of New York, as Trustee, relating to the Corporation's unsecured debt securities. (Filed as Exhibit 4.5 to the Corporation's Registration Statement on Form 8-B, filed May 2, 1996, and incorporated herein by reference.) 4.2 First Supplemental Indenture dated as of May 2, 1996, between the Corporation and Morgan Guaranty Trust Company of New York. (Filed as Exhibit 4.3 to the Corporation's Registration Statement on Form 8-B, filed May 2, 1996, and incorporated herein by reference.) 4.3 Second Supplemental Indenture dated as of February 10, 1998, between the Corporation and The Chase Manhattan Bank, as Trustee, and form of note relating to the Corporation's Medium-Term Notes; the last of which is due February 13, 2003. (Filed as Exhibits 1, 4.1 and 4.2 to the Corporation's Current Report on Form 8-K dated February 10, 1998, Commission File No. 1-4682, and incorporated herein by reference.) 4.4 Form of 6 1/2% Senior Note due January 15, 2006. (Filed as Exhibit 4.3 to the Corporation's Registration Statement No. 333-893 on Form S-4, and incorporated herein by reference.) 4.5 Form of 8 1/4% Senior Note due January 15, 2004. (Filed as an exhibit to the Corporation's 1991 Annual Report on Form 10-K, Commission File No. 1-4682, and incorporated herein by reference.) 4.6 Rights Agreement dated as of December 3, 1997, between the Corporation and First Chicago Trust Company of New York, as Rights Agent, and form of right certificate. (Filed as Exhibits 1 and 2 to the Corporation's Registration Statement on Form 8-A, filed December 15, 1997, and incorporated herein by reference.) 10.1 Credit Agreement dated March 29, 1995, among the Corporation and Morgan Guaranty Trust Company of New York, individually and as agent, and certain lenders. (Filed as an exhibit to the Corporation's 1995 Annual Report on Form 10-K, Commission File No. 1-4682, and incorporated herein by reference.) 10.2 Amendment No. 1 to Credit Agreement dated December 8, 1995, among the Corporation and Morgan Guaranty Trust Company of New York, individually and as agent, and certain lenders. (Filed as an exhibit to the Corporation's 1995 Annual Report on Form 10-K, Commission File No. 1-4682, and incorporated herein by reference.) E-1 EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 10.3 Amendment No. 2 to Credit Agreement dated May 2, 1996, among the Corporation and Morgan Guaranty Trust Company of New York, individually and as agent, and certain lenders. (Filed as Exhibit 10.1 to the Corporation's Registration Statement on form 8-B, filed May 2, 1996, and incorporated herein by reference.) 10.4 Amendment No. 3 to Credit Agreement dated December 5, 1997, among the Corporation and Morgan Guaranty Trust Company of New York, individually and as agent, and certain lenders. 10.5 1990 Stock Option Plan and Form of Stock Option Agreement pursuant to 1990 Stock Option Plan. (Filed as an exhibit to the Corporation's 1990 Annual Report on Form 10-K, Commission File No. 1-4682, and incorporated herein by reference.) 10.6 1993 Management Stock Ownership Plan, as amended, and forms of grant agreements. 10.7 Executive Incentive Plan. (Description of the executive incentive plan contained in the Definitive Proxy Statement for the Corporation's 1998 Annual Meeting of Shareholders, under the heading "The Human Resources Committee Report on Executive Compensation," is incorporated herein by reference.) 10.8 Pension Restoration Plan. 10.9 Retirement Plan for Nonemployee Directors, as amended. 10.10 Deferred Fee Plan for Nonemployee Directors. 10.11 Form of executive officer employment agreement, as amended. 10.12 Agreement with Kevin Dunnigan dated February 5, 1997. (Filed as an exhibit to the Corporation's 1996 Annual Report on Form 10-K, Commission File No. 1-4682, and incorporated herein by reference.) 10.13 1985 Stock Option Plan. (Filed as an exhibit to the Corporation's 1992 Annual Report on Form 10-K, Commission File No. 1-4682, and incorporated herein by reference.) 10.14 Supplemental Executive Retirement Plan. 12 Statement re Computation of Ratio of Earnings to Fixed Charges. (Filed as Exhibit 12 to the Corporation's Current Report on Form 8-K, dated February 5, 1998, Commission File No. 1-4682, and incorporated herein by reference.) 13 Annual Report to Shareholders for the fiscal year ended December 28, 1997. 21 Subsidiaries of the Corporation. 23.1 Consent of Independent Public Accountants. E-2 EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 23.2 Consent of Independent Public Accountants. 24 Power of Attorney. 99 Independent Auditor's Report on Augat, Inc.
E-3 EX-3.1 2 EXHIBIT 3.1 CHARTER OF THOMAS & BETTS TENNESSEE, INC. ARTICLE I. CORPORATE NAME The name of the corporation is Thomas & Betts Tennessee, Inc. ARTICLE II. INITIAL REGISTERED AGENT AND OFFICE The initial registered agent of the corporation is C T Corporation System, and the initial registered office of the corporation is at 530 Gay Street, Knoxville, County of Knox, Tennessee 37902. ARTICLE III. INITIAL PRINCIPAL OFFICE The initial principal office of the corporation is at 1555 Lynnfield Road Memphis, Tennessee 38119. ARTICLE IV. INCORPORATORS The incorporators are T. Kevin Dunnigan and Clyde R. Moore, 1555 Lynnfield Road, Memphis, Tennessee 38119. ARTICLE V NATURE AND PURPOSES OF CORPORATION The corporation is for profit. The purposes for which this corporation is organized are to engage in and to do any lawful act concerning any or all lawful business for which corporations now or at any time hereafter may be incorporated under the Tennessee Business Corporation Act, as amended from time to time. ARTICLE VI. AUTHORIZED SHARES The corporation is authorized to issue 80,500,000 shares consisting of 80,000,000 shares of Common Stock, no par value, and 500,000 shares of Preferred Stock, no par value. The designations, relative rights, preferences and limitations of the shares of each class, or the manner in which such relative rights, preferences and limitations are determined, are as follows: COMMON STOCK. The Common Stock shall have full voting rights and shall entitle the holders thereof to one vote for each share of Common Stock held. PREFERRED STOCK. Subject to the provisions hereof, the Board of Directors is hereby expressly authorized to determine, in whole or in part, the preferences, limitations and relative rights of the Preferred Stock as a class, and to issue shares of Preferred Stock in series, and to fix from time to time before issuance the number of shares to be included in each series and the designations, relative rights, preferences and limitations of all shares of each series. The authority of the Board of Directors with respect to each series shall include, without limitation, the determination of any or all of the following matters: A. The number of shares constituting such series and the designation thereof to distinguish the shares of such series from the shares of all other series; B. The dividend rate on the shares of such series and whether such dividends shall be cumulative and, if cumulative, the date from which dividends shall accumulate; C. The redemption price or prices for shares of such series, if redeemable, and the terms and conditions of such redemption; D. The preference, if any, of shares of such series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation; E. The voting rights, if any, of shares of such series in addition to the voting rights prescribed by law and the terms of exercise of such voting rights; F. The right, if any, of shares of such series to be converted into shares of any other series or class and the terms and conditions of such conversion; G. The terms or amount of any sinking fund provided for the purchase or redemption of such series; and H. Any other relative rights, preferences and limitations of such series. The shares of each series may vary from the shares of any other series as to any of such matters. ARTICLE VII. MANAGEMENT OF THE CORPORATION The property, affairs, and business of the corporation shall be managed by a Board of Directors which shall exercise all the powers of the corporation without action by the shareholders, except as otherwise expressly provided by statute or by this Charter or by the Bylaws. The Board of Directors may make Bylaws, and, from time to time may alter, amend or repeal any Bylaws; but any Bylaw made, altered or amended by the Board of Directors may be altered, amended or repealed by the shareholders at any annual meeting or at any special meeting provided notice of such proposed alteration, amendment or repeal is included in the notice of meeting. In discharging the duties of a director and in determining what the director reasonably believes to be in the best interests of the corporation, a director may, in addition to considering the effects of any action on shareholders and to the maximum extent permitted by law, consider any relevant factor. Without limiting the generality of the foregoing, the Board of Directors of the corporation may consider the effects a proposed merger, exchange, tender offer or significant disposition of the assets of the corporation or any of the corporation's subsidiaries would have on the corporation's employees, customers, suppliers, and the communities in which the corporation or its subsidiaries operate or are located, and the long-term as well as the short-term interests of the corporation and its shareholders, including the possibility that these interests may best be served by the continued independence of the corporation, in connection with its deliberations concerning, and actions taken with respect to, such merger, exchange, tender offer or significant disposition of assets. ARTICLE III. LIMITATION OF DIRECTOR LIABILITY No person who is or was a director of the corporation, or such person's heirs, executors or administrators, shall be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director; provided, however, that this provision shall not eliminate or limit the liability of any such party (i) for any breach of a director's duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) for unlawful distributions under the Tennessee Business Corporation Act. Any repeal or modification of the provisions of this Article VIII, directly or by the adoption of an inconsistent provision of this Charter, shall not adversely affect any right or protection in favor of a particular individual at the time of such repeal or modification. ARTICLE IX. SPECIAL MEETING OF SHAREHOLDERS A special meeting of shareholders may be called at any time by the Chairman of the Board of Directors or by the President or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the corporation would have at the time of the adoption of such resolution if there were no vacancies, and by no other person or persons. ARTICLE X. REMOVAL OF DIRECTORS AND FILLING OF VACANCIES Any director may be removed, either with or without cause, at any time, by the affirmative vote of at least 50% of the total number of votes entitled to be cast at a special meeting of shareholders called for that purpose. Any director may be removed for cause, at any time, by a majority vote of the entire Board of Directors at a meeting called for that purpose, the notice of meeting for which states that a purpose of the meeting is the removal of a director. Any vacancy in the Board of Directors arising at any time and for any cause, may be filled by the vote of a majority of the directors remaining in office. Any vacancy not filled by the Board of Directors may be filled by the shareholders at an annual meeting or at a special meeting of shareholders called for that purpose. Dated: February 20, 1996 /s/ T. Kevin Dunnigan ---------------------------------- T. Kevin Dunnigan, Incorporator /s/ Clyde R. Moore ---------------------------------- Clyde R. Moore, Incorporator ARTICLES OF MERGER OF THOMAS & BETTS CORPORATION, A NEW JERSEY CORPORATION WITH AND INTO THOMAS & BETTS TENNESSEE, INC., A TENNESSEE CORPORATION To the Secretary of State of the State of Tennessee: Pursuant to the provisions of Section 48-21-102 of the Tennessee Code Annotated, the undersigned corporation adopts the following Articles of Merger for the purpose of merging into a single corporation: 1. The Agreement and Plan of Merger is attached hereto as Appendix "A" and incorporated herein by reference. 2. As to Thomas & Betts Tennessee, Inc., the surviving corporation to the merger, the Agreement and Plan of Merger was duly adopted and approved by the board of directors by unanimous consent effective March 11, 1996 and by its sole shareholder, on April 18, 1996. 3. As to Thomas & Betts Corporation, the Agreement and Plan of Merger and performance of its terms were duly authorized by all action required by the laws under which it was organized and by its certificate of incorporation. The Agreement and Plan of Merger was approved by the board of directors at a meeting duly called and held on February 7, 1996, and by the requisite vote of the shareholders pursuant to the New Jersey Business Corporation Act on May 1, 1996. 4. The merger shall be effective upon the filing of these Articles of Merger with the Secretary of State of the State of Tennessee and the filing of the certificate of merger with the Secretary of State of New Jersey in accordance with the New Jersey Business Corporation Act. 5. Pursuant to the Agreement and Plan of Merger, at the effective time of the merger, the Charter of Thomas & Betts Tennessee, Inc., the surviving corporation, shall be amended to change its name to Thomas & Betts Corporation. IN WITNESS WHEREOF, the undersigned have caused this document to be executed as of the 1st day of May 1996. THOMAS & BETTS CORPORATION THOMAS & BETTS TENNESSEE, INC. By: /s/ T. Kevin Dunnigan By: /s/ T. Kevin Dunnigan -------------------------------- ------------------------------ T. Kevin Dunnigan, Chairman T. Kevin Dunnigan, Chairman and Chief Executive Officer and Chief Executive Officer ARTICLES OF AMENDMENT TO THE CHARTER CORPORATE CONTROL NUMBER: 0307723 PURSUANT TO THE PROVISIONS OF SECTION 48-20-106 OF THE TENNESSEE BUSINESS CORPORATION ACT, THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES OF AMENDMENT TO ITS CHARTER: 1. PLEASE INSERT THE NAME OF THE CORPORATION AS IT APPEARS ON RECORD: Thomas & Betts Corporation IF CHANGING THE NAME, INSERT THE NEW NAME ON THE LINE BELOW: N/A 2. PLEASE INSERT ANY CHANGES THAT APPLY: A. PRINCIPAL ADDRESS: 8155 T&B Boulevard, Memphis, TN 38125 B. REGISTERED AGENT: C. REGISTERED ADDRESS: D. OTHER CHANGES: 3. THE CORPORATION IS FOR PROFIT. 4. THE MANNER (IF NOT SET FORTH IN THE AMENDMENT) FOR IMPLEMENTATION OF ANY EXCHANGE, RECLASSIFICATION, OR CANCELLATION OF ISSUED SHARES IS AS FOLLOWS: See attached resolutions 5. THE AMENDMENT WAS DULY ADOPTED ON December 3, 1997 BY: THOMAS & BETTS CORPORATION /s/ Clyde R. Moore --------------------------------- Clyde R. Moore Signature President and Chief Executive Officer AS OF DECEMBER 3, 1997 RESOLUTION ADOPTING SHAREHOLDER RIGHTS PLAN WHEREAS, the Board of Directors deems it desirable and in the best interests of the Corporation and its shareholders that steps be taken to preserve for shareholders the long-term value of the Corporation in the event of a potential takeover; and WHEREAS, the Board of Directors believes that a dividend to holders of the Corporation's common stock, no par value per share ("Common Shares"), of rights ("Rights") to purchase shares of a newly established and designated series of the Corporation's preferred stock, having the relative rights, preferences and limitations set forth below ("Preferred Shares"), on the terms and subject to the conditions hereinafter provided will contribute to the preservation of the Corporation's long-term value for its shareholders. NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby declares that a dividend of one Right for each Common Share be paid on December 15, 1997 to stockholders of record of the Common Shares issued and outstanding at the close of business on such date, each Right representing the right to purchase 1/200 of a Preferred Share upon the terms and subject to the conditions set forth in the summary of a shareholder rights agreement presented to this meeting. RESOLVED FURTHER, that the exercise price of the Rights shall be $200 per Right and that the redemption price therefor shall be $.005 per Right. RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized in the name and on behalf of the Corporation to execute a rights agreement (the "Rights Agreement"), with such modifications as the officers executing the same, with advice of counsel, shall approve, and to deliver the same to the Rights Agent thereunder, such execution and delivery conclusively to evidence the due authorization and approval thereof by the Corporation. RESOLVED FURTHER, that certificates evidencing the Rights (the "Rights Certificates") shall be substantially in the form set forth in the Rights Agreement and shall be issued and delivered as provided therein. RESOLVED FURTHER, that the Rights Certificates shall be signed by the President and Chief Executive Officer, the Vice President-Finance and Treasurer or any Vice President and shall be attested by the Secretary or the Assistant Secretary of the Corporation, provided that the signature of any of said officers of the Corporation may, but need not be, a facsimile signature imprinted or otherwise reproduced on the Rights Certificates, and that the Corporation hereby adopts for such purpose the facsimile signature of the present or any future President and Chief Executive Officer, Vice President-Finance and Treasurer, Vice President, Secretary or Assistant Secretary of the Corporation, notwithstanding the fact that at the time the Rights Certificates shall be authenticated and delivered or disposed of he or she shall have ceased to be such officer. 1 RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized to execute on behalf of the Corporation Rights Certificates issued to replace lost, stolen, mutilated or destroyed Rights Certificates, and such Rights Certificates as may be required for exchange, substitution or transfer as provided in the Rights Agreement in the manner and form to be required in, or contemplated by, the Rights Agreement. RESOLVED FURTHER, that the Rights Certificates shall be manually countersigned by the Rights Agent and books for the registration and transfer of the Rights Certificates shall be maintained by the Rights Agent at its principal offices. RESOLVED FURTHER, that pursuant to the authority granted to and vested in the Board of Directors of the Corporation in accordance with the provisions of its Charter, the Board of Directors hereby creates a series of Preferred Stock, no par value per share, of the Corporation and hereby states the designation and number of shares, and fixes the relative rights, preferences and limitations thereof (in addition to the provisions set forth in the Charter of the Corporation, which are applicable to the Preferred Stock of all classes and series), as set forth in the Certificate of Designation comprising an exhibit to the Rights Agreement. RESOLVED FURTHER, that 300,000 Preferred Shares be, and they hereby are, initially reserved for issuance upon exercise of the Rights, such number to be subject to adjustment from time to time in accordance with the Rights Agreement. RESOLVED FURTHER, that the First Chicago Trust Company of New York (the "Bank") be, and it hereby is, appointed Rights Agent under the Rights Agreement, and that upon presentation to it of Rights Certificates for exercise in accordance with the Rights Agreement, the Bank is authorized, as Transfer Agent and Registrar for the Preferred Shares, to issue originally, countersign, register and deliver the Preferred Shares issuable upon such exercise. RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized, for and on behalf of the Corporation, to execute personally or by attorney-in-fact and to cause to be filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), for the registration of the Preferred Shares issuable upon exercise of the Rights, and thereafter to execute and cause to be filed any amended registration statement or registration statements and amended prospectus or prospectuses, or amendments or supplements to any of the foregoing, and to cause such registration statement and any amendments thereto to become effective in accordance with the Securities Act and the General Rules and Regulations of the Securities and Exchange Commission thereunder. RESOLVED FURTHER, that the Vice President-General Counsel of the Corporation be, and he hereby is, appointed as agent for service of the Corporation with respect to said registration statement with all the powers and functions specified in the General Rules and Regulations of the Securities and Exchange Commission under the Securities Act. 2 RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized, jointly and severally, in the name and on behalf of the Corporation, to take all such actions and to execute all such documents as they may deem necessary or appropriate in connection with the issuance of the Rights and the Preferred Shares issuable upon exercise of the Rights in order to comply with the Securities Act and the Securities Exchange Act of 1934, as amended. RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized, jointly and severally, in the name and on behalf of the Corporation, to execute and file such application or applications, and amendments and supplements thereto, and take such other action as may be necessary to list the Rights (and, if in the judgment of such officers it is appropriate to do so, the Preferred Shares issuable upon exercise thereof) on the New York Stock Exchange and on any other stock exchanges deemed appropriate by such officers of the Corporation, and that the proper officers of the Corporation be, and each of them hereby is, authorized to appear before the Securities and Exchange Commission and any stock exchanges, and to execute such papers and agreements as may be necessary to conform with the requirements of the Securities and Exchange Commission and any such stock exchanges and to effectuate such listing and registration. RESOLVED FURTHER, that the form of Indemnity Agreement required by the New York Stock Exchange, indemnifying the New York Stock Exchange, and others against loss resulting from reliance on the facsimile signatures of the officers of the Corporation on the Rights (or Preferred Shares issuable upon exercise thereof) be, and it hereby is, approved, and that the proper officers of the Corporation be, and each of them hereby is, authorized to execute and deliver such Indemnity Agreement. RESOLVED FURTHER, that so long as the Rights are attached to the Common Shares as provided in the Rights Agreement, one additional Right shall be delivered with each Common Share that shall become outstanding after December 15, 1997, including but not limited to Common Shares issued upon conversion of any convertible securities of the Corporation and the exercise of options to purchase Common Shares granted by the Corporation. RESOLVED FURTHER, that the Board of Directors deems it desirable and in the best interests of the Corporation that the Preferred Shares issuable upon exercise of the Rights be qualified or registered for sale in various jurisdictions; that the President and Chief Executive Officer, the Vice President-Finance and Treasurer, any Vice President, the Secretary and the Assistant Secretary be, and each of them hereby is, authorized to determine the jurisdictions in which appropriate action shall be taken to qualify or register for sale all or such part of the Preferred Shares issuable upon exercise of the Rights as said officers may deem advisable; that said officers are hereby authorized to perform on behalf of the Corporation any and all such acts as they may deem necessary or advisable in order to comply with the applicable laws of any such jurisdictions, and in connection therewith to execute and file all requisite papers and documents, including, but not limited to, applications, reports, surety bonds, irrevocable consents and appointments of attorneys for service of process; and the execution by such officers of any such papers or documents or the 3 doing by them of any act in connection with the foregoing matters shall conclusively establish their authority therefor and the approval and ratification by the Corporation of the papers and documents so executed and the action so taken. RESOLVED FURTHER, the Board of Directors hereby adopts, as if expressly set forth herein, the form of any resolution required by any authority to be filed in connection with any applications, consents to service, issuer's covenants or other documents if (i) in the opinion of the officers of the Corporation executing the same, the adoption of such resolutions is necessary or desirable and (ii) the Secretary or the Assistant Secretary of the Corporation evidences such adoption by inserting in the minutes of this meeting copies of such resolutions, which will thereupon be deemed to be adopted by the Board of Directors with the same force and effect as if presented at this meeting. RESOLVED FURTHER, that the proper officers of the Corporation be, and each of them hereby is, authorized and directed, jointly and severally, for and on behalf of the Corporation, to execute and deliver any and all certificates, agreements and other documents, take any and all steps and do any and all things which they may deem necessary or advisable, with advice of counsel, in order to effectuate the purposes of each and all of the foregoing resolutions. RESOLVED FURTHER, that any actions taken by such officers prior to the date of this meeting that are within the authority conferred hereby are hereby ratified, confirmed and approved in all respect as the acts and deeds of the Corporation. 4 EX-3.2 3 EXHIBIT 3.2 BYLAWS OF THOMAS & BETTS CORPORATION As Adopted by the Board of Directors on March 11, 1996 and Amended on September 3, 1997 TABLE OF CONTENTS
PAGE ARTICLE 1 MEETINGS OF SHAREHOLDERS Section 1. ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . 1 Section 2. SPECIAL MEETINGS . . . . . . . . . . . . . . . . . . . . 1 Section 3. PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . 1 Section 4. NOTICE OF MEETINGS . . . . . . . . . . . . . . . . . . . 1 Section 5. QUORUM; ADJOURNMENT. . . . . . . . . . . . . . . . . . . 1 Section 6. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . 1 Section 7. VOTING . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 8. SHAREHOLDER LISTS. . . . . . . . . . . . . . . . . . . . 2 Section 9. NOTICE OF BUSINESS AND NOMINATIONS . . . . . . . . . . . 2 A. ANNUAL MEETINGS OF SHAREHOLDERS . . . . . . . . . . 2 B. SPECIAL MEETINGS OF SHAREHOLDERS. . . . . . . . . . 4 C. GENERAL . . . . . . . . . . . . . . . . . . . . . . 4 Section 10. INSPECTORS OF ELECTION; OPENING AND CLOSING THE POLLS. . . . . . . . . . . . . . . . . . . . 5 ARTICLE 2 BOARD OF DIRECTORS Section 1. GENERAL POWERS . . . . . . . . . . . . . . . . . . . . . 5 Section 2. NUMBER, ELECTION AND TERM OF OFFICE. . . . . . . . . . . 5 Section 3. MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 4. PLACE OF MEETING . . . . . . . . . . . . . . . . . . . . 6 Section 5. NOTICE OF MEETINGS . . . . . . . . . . . . . . . . . . . 6 Section 6. QUORUM AND MANNER OF ACTION. . . . . . . . . . . . . . . 6 Section 7. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . 6 Section 8. RESIGNATIONS . . . . . . . . . . . . . . . . . . . . . . 7 Section 9. REMOVAL OF DIRECTORS . . . . . . . . . . . . . . . . . . 7 Section 10. VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . 7 Section 11. COMPENSATION . . . . . . . . . . . . . . . . . . . . . . 7 Section 12. INCREASING NUMBER OF DIRECTORS . . . . . . . . . . . . . 7 ARTICLE 3 EXECUTIVE AND OTHER COMMITTEES Section 1. EXECUTIVE COMMITTEE, GENERAL POWERS AND MEMBERSHIP 8 Section 2. PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . 8 Section 3. OTHER COMMITTEES . . . . . . . . . . . . . . . . . . . . 8
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ARTICLE 4 OFFICERS Section 1. ELECTION, TERM OF OFFICE AND QUALIFICATIONS 9 Section 2. REMOVAL. . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 3. RESIGNATIONS . . . . . . . . . . . . . . . . . . . . . . 9 Section 4. VACANCIES. . . . . . . . . . . . . . . . . . . . . . . . 9 Section 5. CHAIRMAN OF THE BOARD OF DIRECTORS . . . . . . . . . . . 9 Section 6. PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . 10 Section 7. CHIEF EXECUTIVE OFFICER. . . . . . . . . . . . . . . . . 10 Section 8. SECRETARY AND ASSISTANT SECRETARY. . . . . . . . . . . . 10 Section 9. TREASURER. . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE 5 INDEMNIFICATION OF OFFICERS AND DIRECTORS Section 1. RIGHT TO INDEMNIFICATION . . . . . . . . . . . . . . . . 11 Section 2. RIGHT OF CLAIMANT TO BRING SUIT. . . . . . . . . . . . . 11 Section 3. NON-EXCLUSIVITY OF RIGHTS; CONTINUATION OF RIGHTS. . . . 12 Section 4. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE 6 EXECUTION OF INSTRUMENTS, ETC. Section 1. CONTRACTS, ETC.. HOW EXECUTED. . . . . . . . . . . . . . 13 Section 2. DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 3. CHECKS, DRAFTS, ETC. . . . . . . . . . . . . . . . . . . 13 ARTICLE 7 SHARES AND THEIR TRANSFER; SHAREHOLDER RECORDS Section 1. CERTIFICATES OF STOCK. . . . . . . . . . . . . . . . . . 13 Section 2. TRANSFER OF SHARES . . . . . . . . . . . . . . . . . . . 14 Section 3. CLOSING OF TRANSFER BOOKS; RECORD DATE . . . . . . . . . 14 Section 4. LOST AND DESTROYED CERTIFICATES. . . . . . . . . . . . . 14 Section 5. REGULATIONS. . . . . . . . . . . . . . . . . . . . . . . 14 Section 6. EXAMINATION OF SHAREHOLDER LIST. . . . . . . . . . . . . 15 ARTICLE 8 NOTICE Section 1. WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE 9 MISCELLANEOUS Section 1. FISCAL YEAR. . . . . . . . . . . . . . . . . . . . . . . 15 Section 2. SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE 10 AMENDMENTS Section 1.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
iii BYLAWS ARTICLE 1 MEETINGS OF SHAREHOLDERS Section 1. ANNUAL MEETING. The annual meeting of shareholders for the election of directors and for the transaction of such other business as may properly come before said meeting shall be held on a day during the period from April 15 to May 15, or on any other day, and at a time determined by the Board of Directors. Section 2. SPECIAL MEETINGS. Except as otherwise required by law, a special meeting of shareholders may be called at any time by the Chairman of the Board of Directors if he or she is an officer of the Corporation or by the President or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have at the time of the adoption of such resolution if there were no vacancies (the "Whole Board") and by no other person or persons. Section 3. PLACE OF MEETINGS. All meetings of shareholders shall be held at the principal office of the Corporation in the State of Tennessee, or at other places in or outside of such State as may be designated by the Board of Directors and specified in the notice of meeting. Section 4. NOTICE OF MEETINGS. Notice of each meeting stating the purpose or purposes for which the meeting is called and the time when and the place where it is to be held, shall be served upon each shareholder of record entitled to vote at such meeting, either personally or by mailing such notice to him or her, not less than 10 days nor more than two months before the time fixed for such meeting. If mailed, it shall be directed to a shareholder at his or her address as it appears on the shareholder list. Any previously scheduled meeting of the shareholders may be postponed by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of shareholders. Section 5. QUORUM; ADJOURNMENT. Except as otherwise provided by law or by the Charter, at each meeting of shareholders, the holders of record of a majority of the total number of the shares of capital stock entitled to vote must be present in person or by proxy to constitute a quorum for the transaction of business. Whether or not there is a quorum at any meeting, the shareholders present and entitled to cast a majority of the votes thereat or the Chairman of the meeting may adjourn and readjourn the meeting from time to time. At any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Section 6. ORGANIZATION. At every meeting of the shareholders, the Chairman of the Board of Directors, or, in his or her absence, the President, or, in his or her absence, a Vice President designated by the President or, in the absence of such designation, a chairman designated by the Board of Directors, shall act as Chairman. The Secretary or the Assistant Secretary or such officer of the Corporation designated by the chairman shall act as secretary of each meeting of the shareholders. Section 7. VOTING. Each shareholder of record present shall be entitled at each meeting of shareholders to such number of votes as shall be prescribed by the Charter for the shares of capital stock recorded in his or her name in the shareholder records of the Corporation (a) at the record date fixed as provided in Section 3 of Article 7, or (b) if no such record date shall have been fixed, then at the close of business on the eleventh day before the day of such meeting. The voting at any meeting of shareholders need not be by ballot, unless specifically required by law or requested by a qualified voter present in person or by proxy. Except to the extent permitted under the Tennessee Business Corporation Act, shares of the Corporation's capital stock shall not be entitled to vote if such shares are owned, directly or indirectly, by another corporation of which the Corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of such corporation. Notwithstanding, the foregoing shall not limit the power of the Corporation to vote any shares, including its own shares, held by it in a fiduciary capacity. Section 8. SHAREHOLDER LISTS. The Transfer Agent or the Secretary, or such other officer as may be designated by the Board of Directors, shall make a full, true and complete list, in alphabetical order, of all shareholders entitled to vote at each annual or special meeting of shareholders, and the address and the number of shares of capital stock held by each. The Board of Directors shall produce such list at the time and place of the meeting, to remain there during the meeting. Such list shall be the only evidence as to who are the shareholders entitled to vote at the meeting. Section 9. NOTICE OF BUSINESS AND NOMINATIONS. A. ANNUAL MEETINGS OF SHAREHOLDERS. [1] Nominations of persons for election to the Board of Directors of the Corporation and any proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders only (a) pursuant to the 2 Corporation's notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this Section, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section. [2] For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (A) (1) of this Section, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, how-ever, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Such shareholder's notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as such name and address appear in the Corporation's shareholder records, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner. [3] Notwithstanding anything in the second sentence of paragraph (A) (2) of this Section to the contrary, in the event that the number of directors to be elected to the Board 3 of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year's annual meeting, a shareholder's notice required by this Section shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. B. SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the notice of meeting (a) by or at the direction of the Board of Directors or (b) by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Section, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section. Nominations by shareholders of persons for election to the Board of Directors may be made at such a special meeting of shareholders if the shareholder's notice required by paragraph (A) (2) of this Section shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. C. GENERAL. [1] Only such persons who are nominated in accordance with the procedures set forth in this Section shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section and, if any proposed nomination or business is not in compliance with this Section, to declare that such defective proposal or nomination shall be disregarded. [2] For purposes of this Section, "public announce- 4 ment" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15 (d) of the Exchange Act. [3] Notwithstanding the foregoing provisions of this Section, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section. Nothing in this Section shall be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. Section 10. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives of the Corporation, to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of shareholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath or affirmation faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at a meeting. ARTICLE 2 BOARD OF DIRECTORS Section 1. GENERAL POWERS. The business of the Corporation, except as otherwise expressly provided by law or by the Charter, shall be managed by the Board of Directors. Section 2. NUMBER, ELECTION AND TERM OF OFFICE. A Board of Directors of not less than seven nor more than fifteen members as may be determined by the Board of Directors at a meeting held prior to the annual meeting shall be elected at the annual meeting of shareholders. The number of directors to be elected shall be stated in the notice of the meeting. Subject to such limitation, the persons receiving the greatest number of votes shall be the directors and they shall hold office until the next annual meeting 5 and until their successors shall have been elected and qualified, or until death, resignation, disqualification or removal. Each director shall within one month's time of his or her election and so long as he or she shall continue to be a director, be a bona fide holder of at least one share of the Common Stock of the Corporation. Section 3. MEETINGS. The Board of Directors shall hold regular meetings on such days and at such hours as may be fixed by the Board of Directors from time to time, except that a regular meeting shall be held as soon as practicable after the adjournment of the annual meeting of the shareholders at which such Board of Directors shall have been elected, for the purpose of organization, the election of officers and the transaction of such other business as may properly come before the meeting. Special meetings shall be held whenever called by the Chairman of the Board of Directors or by the President or any two directors. Section 4. PLACE OF MEETING. Meetings of the Board of Directors shall be held at the principal office of the Corporation or at such other place as the Board of Directors may from time to time determine. Section 5. NOTICE OF MEETINGS. Notice need not be given for regular Board of Directors meetings, the dates, times, and places of which have been fixed by the Board of Directors in advance for the calendar year. Notice of a special meeting or of a change in the date, time, or place of holding a regular Board of Directors meeting shall be communicated (i) in writing to each director at the director's residence or usual place of business, or at such other address as the director may have designated in a written request filed with the Secretary, at least two days before the day on which the meeting is to be held, or (ii) orally, in person or by telephone, at least 24 hours before the time at which the meeting is to be held. Notice of any meeting of the Board of Directors may be waived in writing by any director either before or after the time of such meeting; and at any meeting at which every director shall be present, even though without any notice, any business may be transacted. Section 6. QUORUM AND MANNER OF ACTING. A majority of the total number of directors shall be present in person or by telephone at any meeting of the Board of Directors in order to constitute a quorum for the transaction of business thereat. Whether or not there is a quorum at any meeting, a majority of the directors who are present may adjourn and readjourn any meeting from time to time to a day and hour certain. Section 7. ORGANIZATION. At every meeting of the Board of Directors, the Chairman of the Board of Directors, or, in his or 6 her absence, the President, or, in his or her absence, a chairman chosen by a majority of the directors present, shall preside. The Secretary of the Corporation shall act as secretary of the meetings of the Board of Directors. At any meeting of the Board of Directors, in the absence of the Secretary, the chairman of such meeting shall appoint a person to act as secretary of the meeting. Section 8. RESIGNATIONS. Any director may resign at any time by giving written notice to the Chairman of the Board of Directors or to the President or to the Secretary of the Corporation or to the Board of Directors. Such resignation shall take effect at the time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 9. REMOVAL OF DIRECTORS. Any director may be removed, either with or without cause, at any time, by the affirmative vote of at least 50% of the total number of votes entitled to be cast at a special meeting of shareholders called for that purpose. Any director may be removed for cause, at any time, by a majority vote of the entire Board of Directors at a meeting called for that purpose, the notice of meeting for which states that a purpose of the meeting is the removal of a director. Section 10. VACANCIES. Any vacancy in the Board of Directors arising at any time and for any cause, may be filled by the vote of a majority of the directors remaining in office. Any vacancy not filled by the Board of Directors may be filled by the shareholders at an annual meeting or at a special meeting of shareholders called for that purpose. Section 11. COMPENSATION. The Board of Directors, by the affirmative vote of a majority of directors in office and irrespective of any personal interest of any of them, shall have the authority to establish reasonable compensation, including reimbursement of expenses, of directors for services to the Corporation as directors, officers or otherwise. Nothing herein contained shall be construed to preclude any director from serving in any other capacity or receiving compensation for such service. Section 12. INCREASING NUMBER OF DIRECTORS. The Board of Directors shall have power at any time when the shareholders as such are not assembled in a meeting, regular or special, to increase the number of directors elected by the shareholders and forthwith to fill such position or positions by the election of one or more directors, to hold office until the next annual meeting of shareholders, and until his, her or their successor or successors are elected and qualified. 7 ARTICLE 3 EXECUTIVE AND OTHER COMMITTEES Section 1. EXECUTIVE COMMITTEE, GENERAL POWERS AND MEMBERSHIP. From time to time, the Board of Directors may, by a majority of the Whole Board, appoint from its members an Executive Committee consisting of at least three members of the Board of Directors, a majority of whom shall not be employees of the Corporation, and the Committee shall meet at the call of the Chairman, or, in the absence of the Chairman, at the call of any member of such committee, to act for the Board of Directors, to the extent permitted by law, in any situation in which action of the Board of Directors is required and it is not practicable to have a meeting of the Board of Directors. The Executive Committee shall have and may exercise all the powers of the Board of Directors except the power to authorize or approve distributions or reacquisition of shares, except according to a formula or method prescribed by the Board of Directors, the power to appoint or remove a member of the Executive Committee or other committee, the power to fill vacancies in the Board of Directors, the power to remove an officer appointed by the Board of Directors, the power to amend or repeal these Bylaws and the power to authorize or approve the issuance or sale or contract for sale of shares, or to determine the designation and relative rights, preferences, and limitations of a class or series of shares, except as authorized by the Board of Directors within limits specifically prescribed by the Board of Directors. All actions of the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action and, insofar as the rights of third parties shall not be affected thereby, shall be subject to revision and alteration by the Board of Directors. All members of the Board of Directors not appointed to the Executive Committee may be authorized by appropriate action of the Board of Directors to attend the meetings of the Executive Committee as observers but without any right to vote at such meetings and shall be entitled to receive such fees as shall be fixed by the Board of Directors. Section 2. PROCEDURE. The Executive Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Board of Directors. The presence in person or by telephone of a majority shall be necessary to constitute a quorum and in every case the affirmative vote of a majority of all members of the committee shall be necessary. Section 3. OTHER COMMITTEES. From time to time, the Board of Directors, by resolution adopted by a majority vote of the Whole Board, may appoint any other committee or committees for any purpose or purposes with such powers as shall be specified in the resolution of appointment and permitted by law. 8 ARTICLE 4 OFFICERS Section 1. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Board of Directors shall elect a President, a Secretary and a Treasurer and it may elect a Chairman of the Board of Directors, who may or may not be designated an officer of the Corporation, one or more Vice Presidents and such other officers as it may deem necessary from time to time, with such authority and such duties as may be prescribed by the Board of Directors from time to time. Subject to the provisions of Section 2 and Section 3 of this Article each elected officer shall hold office until the next annual election and until his or her successor is chosen and qualified. Divisional officers, who shall not be officers of the Corporation, may be appointed by the Chief Executive Officer to perform such duties as may be assigned from time to time by the Chief Executive Officer. The same person, whether an officer of the Corporation or a divisional officer, may hold more than one office, so far as permitted by law, except the offices of president and secretary, and exercise and perform the powers and duties thereof. Section 2. REMOVAL. Any officer may be removed, either with or without cause, at any time, by resolution adopted by a majority of the Whole Board, at any meeting of the Board of Directors, or by any committee or officer upon whom such power of removal shall have been conferred by resolution adopted by a majority of the Whole Board. Section 3. RESIGNATIONS. Any officer may resign at any time by giving written notice to the Chairman of the Board of Directors if he or she is an officer of the Corporation or to the President or to the Secretary or to the Board of Directors. Any such resignation shall take effect at the time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 4. VACANCIES. A vacancy in any office arising from any cause may be filled for the unexpired portion of the term in the manner prescribed in these Bylaws for election to such elective office. Section 5. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors shall preside at all shareholders' meetings and meetings of the Board of Directors. He or she shall perform such additional duties and possess such additional powers as from time to time shall be prescribed for him or her by the Board of Directors. 9 Section 6. PRESIDENT. The President shall perform such duties and possess such powers as from time to time shall be prescribed for him or her by the Board of Directors. In the absence of the Chairman of the Board of Directors he or she shall perform the duties and possess the powers of the Chairman of the Board of Directors. Section 7. CHIEF EXECUTIVE OFFICER. The Board of Directors may from time to time designate either the Chairman of the Board of Directors or the President as the Chief Executive Officer of the Corporation to be in general charge of the business of the Corporation in all its departments. This shall require the affirmative vote of a majority of the Whole Board given at any meeting. Section 8. SECRETARY AND ASSISTANT SECRETARY. The Secretary shall: A. keep the minutes of all meetings of the shareholders and of the Board of Directors, and of any committee of the Board of Directors to which a secretary shall not have been appointed, in books to be kept for the purpose; B. see that all notices are duly given in accordance with these Bylaws or as required by law; C. be custodian of the records (other than financial) and have charge of the seal of the Corporation and see that it is used upon all papers or documents whose execution on behalf of the Corporation under its seal is required by law or duly authorized in accordance with these Bylaws; and D. in general, perform all duties incident to the office of the Secretary, and such other duties as from time to time may be assigned by the Board of Directors or by the Chairman of the Board of Directors if he or she is an officer of the Corporation or by the President or by any committee thereunto authorized. The Assistant Secretary shall, in the absence of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as from time to time may be assigned by the Board of Directors or by the Chairman of the Board of Directors if he or she is an officer of the Corporation or by the President or by any committee thereunto authorized. Section 9. TREASURER. The Treasurer shall: A. have charge and custody of, and be responsible for, all funds and securities of the Corporation; and B. in general, perform all the duties incident to the office of Treasurer, and such other duties as from time to time may be assigned by the Board of Directors or by the Chairman of the Board of Directors if he or she is an officer of the Corporation or by the President or by any committee thereunto authorized. 10 ARTICLE 5 INDEMNIFICATION OF OFFICERS AND DIRECTORS Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized or permitted by the Tennessee Business Corporation Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Section shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Tennessee Business Corporation Act requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1 of this Article is not paid in full by the Corporation within ninety days after a written claim has been received by the Corporation, the claimant may at any time thereaf- 1 ter bring suit against the Corporation to recover the unpaid amount of the claim, and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Tennessee Business Corporation Act for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Tennessee Business Corporation Act, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 3. NON-EXCLUSIVITY OF RIGHTS; CONTINUATION OF RIGHTS. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Charter, Bylaw, agreement, vote of shareholders or disinterested directors or otherwise. All rights to indemnification under this Article shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this Article is in effect. Any repeal or modification of this Article or any repeal or modification of relevant provisions of the Tennessee Business Corporation Act or any other applicable laws shall not in any way diminish any rights to indemnification of such director or officer or the obligations of the Corporation arising hereunder. Section 4. INSURANCE. The Corporation may maintain insurance, at its expense, to protect itself and any director or officer of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Tennessee Business Corporation Act. 12 ARTICLE 6 EXECUTION OF INSTRUMENTS, ETC. Section 1. CONTRACTS, ETC., HOW EXECUTED. All contracts and other corporate instruments shall be executed in the name of and in behalf of the Corporation and delivered by the Chairman of the Board of Directors if he or she is an officer of the Corpora- tion, the President, the President of a division of the Corporation, any Vice President or the Treasurer and may be attested by the Secretary, Assistant Secretary or the Vice President-General Counsel unless the Board of Directors shall specifically direct otherwise. Section 2. DEPOSITS. Funds of the Corporation may be deposited from time to time to the credit of the Corporation with such depositaries as may be selected by the Board of Directors or by any committee or officer or officers, agent or agents of the Corporation to whom such power may be delegated from time to time by the Board of Directors. Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes, acceptances, or other evidences of indebtedness issued in the name of the Corporation shall be signed by the Vice President-Finance and/or the Treasurer or such agent or agents of the Corporation as shall be designated from time to time by the Vice President-Finance and/or Treasurer. Unless otherwise provided by resolution of the Board of Directors, endorsements for deposit to the credit of the Corporation in any of its duly authorized depositaries may be made without counter signature, by the President or any Vice President, or the Treasurer, or by any other officer or agent of the Corporation to whom such power shall have been delegated by the Vice President-Finance and/or Treasurer and may be made by hand-stamped impression in the name of the Corporation. ARTICLE 7 SHARES AND THEIR TRANSFER; SHAREHOLDER RECORDS Section 1. CERTIFICATES OF STOCK. The stock of the Corporation shall be represented by certificates signed by the Chairman of the Board of Directors if he or she is an officer of the Corporation or by the President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation. Such seal may be a facsimile, engraved or printed. Where any such certificate is signed by a Transfer Agent or Assistant Transfer Agent or by a Transfer Clerk and by a Registrar, the signatures of the Chairman of the Board of Directors, President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer and of the Transfer Agent, Assistant Transfer Agent, Transfer Clerk and Registrar upon such certificate may be facsimiles, engraved or printed. 13 Section 2. TRANSFER OF SHARES. Transfers of shares of the capital stock of the Corporation shall be recorded in the shareholder records of the Corporation when duly assigned by the holder of record of such shares or by his or her attorney thereunto duly authorized, and on surrender of the certificate or certificates, for such shares or pursuant to the abandoned property laws of any state of the United States if the shareholder's share interest shall be properly within the jurisdiction of the state and has been deemed abandoned and subject to custodial retention under the laws of such state. Section 3. CLOSING OF TRANSFER BOOKS; RECORD DATE. The Board of Directors may close the stock transfer books for a period not exceeding 60 days preceding the date of any meeting of shareholders or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, in lieu of closing the stock transfer books, as aforesaid the Board of Directors may at its discretion fix in advance a date, not exceeding 60 days preceding the date of any meeting of shareholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of capital stock, and all persons who are holders of record at such time of the class of stock involved, and no others, shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or allotment of rights or exercise of such rights, as the case may be. Section 4. LOST AND DESTROYED CERTIFICATES. The holder of record of any certificate of stock who shall claim that such certificate is lost or destroyed may make an affidavit or affirmation of that fact and advertise the same in such manner as the Board of Directors, the Transfer Agent or the Registrar may require and give a bond, if required to do so, in the form and in such sum as the Board of Directors, the Transfer Agent or the Registrar may direct, sufficient to indemnify the Corporation, the Transfer Agent and the Registrar against any claim that may be made on account of such certificate, whereupon one or more new certificates may be issued of the same tenor and for the same aggregate number of shares as the one alleged to be lost or destroyed. Section 5. REGULATIONS. The Board of Directors may make such rules and regulations as it may deem expedient concerning the issuance, transfer and registration of certificates of stock; it may appoint one or more transfer agents or registrars of transfers or both, and may require all certificates of stock to bear the signature of either or both. 14 Section 6. EXAMINATION OF SHAREHOLDER LIST. Subject to the limitations provided by law, upon the written request of any shareholder, a list containing the names and addresses of all shareholders, and the number of shares of capital stock held by each, shall be available during regular business hours at the registered office of the Corporation or at the office of its principal transfer agent for inspection by any shareholder of record of the Corporation. ARTICLE 8 NOTICE Section 1. WAIVER OF NOTICE. No notice of the time, place or purpose of any meeting of shareholders or directors, or of any committee, or any publication thereof, whether prescribed by law, by the Charter or by these Bylaws, need be given to any person who attends such meeting, or who, in writing, executed either before or after the holding thereof, waives such notice, and such attendance or waiver shall be deemed equivalent to notice. ARTICLE 9 MISCELLANEOUS Section 1. FISCAL YEAR. The fiscal year of the Corporation shall end on the Sunday closest to the end of the calendar year. Section 2. SEAL. The seal of the Corporation shall be a device, circular in form, containing the name of the Corporation, the figures "1996" and the words, "Corporate Seal" and "Tennessee." The corporate seal may be used in printing, engraving, lithographing, stamping or otherwise making, placing or affixing, or causing to be printed, engraved, lithographed, stamped or otherwise made, placed or affixed, upon any paper or document, by any process whatsoever, an impression facsimile, or other reproduction of the corporate seal. The Secretary, Assistant Secretary, Vice President-General Counsel or any other person specifically authorized by the Board of Directors, may use the seal of the Corporation in connection with corporate contracts or instruments. ARTICLE 10 AMENDMENTS Section 1. These Bylaws may be amended or repealed by the shareholders at any annual meeting, or at any special meeting if notice of the proposed amendment or new Bylaws is included in the notice of such meeting. These Bylaws may be amended or repealed by the affirmative vote of a majority of the Whole Board given at any meeting, the notice or waiver of notice whereof mentions such amendment or repeal as one of the purposes of such meeting. 15 EX-10.4 4 EXHIBIT 10.4 Exhibit 10.4 AMENDMENT NO. 3 TO CREDIT AGREEMENT AMENDMENT dated as of December 5, 1997 among THOMAS & BETTS CORPORATION (the "Borrower"), the BANKS listed on the signature pages hereof (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent'). W I T N E S S E T H : WHEREAS, the parties hereto have heretofore entered into a Credit Agreement dated as of March 29, 1995 (as heretofore amended, the "Agreement"); and WHEREAS, the parties hereto desire to amend the Agreement as specified below; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. DEFINITIONS; REFERENCES. Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement shall have the meaning assigned to such term in the Agreement. Each reference to "hereof," "hereunder," "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Agreement shall from and after the date hereof refer to the Agreement as amended hereby. SECTION 2. AMENDMENT OF DEFINITIONS. The definition of "Consolidated Operating Cash Flow" in Sectiion 1.01 of the Agreement is amended to read as follows: "Consolidated Operating Cash Flow" means, for any fiscal quarter, the sum of the consolidated net income of the Borrower and its Consolidated Subsidiaries for such fiscal quarter plus, to the extent deducted in determining such consolidated net income for such fiscal quarter, depreciation and amortization. SECTION 3. RECEIVABLES SALES. The amount of "$100,000,000" in Section 5.12(b) is changed to "250,000,000." SECTION 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants that as of the date hereof and after giving effect hereto: (a) no Default has occurred and is contuing; and (b) each representation and warranty of the Borrower set forth in the Agreement is true and correct as though made on and as of such date. SECTION 5. GOVERNING LAW. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 6. COUNTERPARTS; EFFECTIVENESS. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Amendment shall become effective as of the date hereof when the Agent shall have received duly executed counterparts hereof signed by the Borrower and the Required banks (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received telegraphic, telex or other written confirmation from such party of execution of a counterpart hereof by such party). IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. THOMAS & BETTS CORPORATION By /s/ Joseph C. Sullivan --------------------------------- Title: Assistant Treasurer MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Jeffrey Hwang -------------------------------- Title: Vice President DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES By /s/ Stephan A. Wiedemann -------------------------------- Title: Director By /s/ Thomas A. Foley -------------------------------- Title: Assistant Vice President WACHOVIA BANK OF GEORGIA, N.A. By /s/ Charles Dee O'Dell II -------------------------------- Title: Senior Vice President ABN AMRO BANK N.V. ATLANTA AGENCY By /s/ Patrick A. Thom -------------------------------- Title: Vice President By /s/ W.T. Fischer -------------------------------- Title: Senior Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ Laurens F. Schaad, Jr. -------------------------------- Title: Vice President THE BANK OF NOVA SCOTIA By /s/ F.C.H. Ashby -------------------------------- Title: Senior Manager Loan Operations CIBC, INC. By /s/ Kathryn W. Sax -------------------------------- Title: Executive Director, CIBC Oppenheimer Corp. as Agent NORTHERN TRUST COMPANY By /s/ John Conway -------------------------------- Title: Vice President PNC BANK, KENTUCKY, INC. By /s/ Ralph A. Phillips -------------------------------- Title: Vice President THE SUMITOMO BANK, LTD. By /s/ Masayuki Fukushima -------------------------------- Title: Joint General Manager FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as successor by merger to FIRST FIDELITY BANK, N.A. By /s/ Mark B. Felker -------------------------------- Title: Senior Vice President THE BANK OF NEW YORK By /s/ Ann Marie Hughes -------------------------------- Title: Assistant Vice President FIRST AMERICAN NATIONAL BANK By /s/ William R. Stutts -------------------------------- Title: Senior Vice President THE CHASE MANHATTAN BANK By /s/ Carol A. Ulmer -------------------------------- Title: Vice President UNION PLANTERS NATIONAL BANK By /s/ Elizabeth Rouse -------------------------------- Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent By /s/ Jeffrey Hwang -------------------------------- Title: Vice President EX-10.6 5 EXHIBIT 10.6 THOMAS & BETTS CORPORATION 1993 MANAGEMENT STOCK OWNERSHIP PLAN (AS AMENDED THROUGH MARCH 5, 1998) 1. PURPOSE. The purpose of the Thomas & Betts Corporation 1993 Management Stock Ownership Plan (the "Plan") is to promote the long-term success of Thomas & Betts Corporation (the "Corporation") by providing its officers and selected employees with incentives for continued service with the Corporation, its subsidiaries and affiliates. Both by encouraging such officers and employees to become owners of the common stock of the Corporation through stock options and by providing actual ownership through share awards, the Plan promotes participants' identification with the Corporation's shareholders. The Corporation believes the Plan will assist in attracting and retaining in its employ outstanding people with the training, experience and ability to lead the Corporation. 2. TERM. The Plan shall be effective as of May 5, 1993 and shall remain in effect until terminated by the Corporation's Board of Directors (the "Board"). After termination of the Plan, no future awards may be granted, but previously granted awards shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of the Plan. 3. PLAN ADMINISTRATION. A committee appointed by the Board (the "Committee") shall be responsible for administering the Plan. The Committee shall be comprised of three or more members of the Board, each of whom meets the definition of an "outside director" as set forth in Internal Revenue Code Section 162(m), paragraph (e)(3) and a "disinterested person" as set forth in Rule 16b-3(c)(i) of the Securities and Exchange Act of 1934 (the "1934 Act"), or any successor rule. The Committee shall have full and exclusive power to interpret the Plan and to adopt such rules, regulations and guidelines for carrying out the Plan as it may deem necessary or proper, all of which power shall be exercised in the best interests of the Corporation and in keeping with the objectives of the Plan. These powers include, but are not limited to, selecting award recipients, establishing terms and conditions of awards, and adopting modifications, amendments, procedures, sub-plans and the like as are necessary to comply with the laws and regulations of other countries in which the corporation operates in order to assure the viability of awards granted under the Plan to participants employed in such other countries. Except for the power to amend this Plan as provided in Section 13, the Committee may delegate to the Chief Executive Officer and/or to other senior officers of the Corporation its duties under the Plan pursuant to such conditions or limitations as the Committee may establish, except that only the Committee may make any awards to or determinations regarding grants to employees who are subject to Section 16 of the 1934 Act. 4. ELIGIBILITY. Any employee of the Corporation, including any entity that is directly or indirectly controlled by the Corporation or any entity in which the Corporation has a significant equity interest, as determined by the Committee, shall be eligible to receive one or more awards under the Plan; provided, however, only employees of the Corporation or a parent or subsidiary of the Corporation shall be eligible to receive an award of an incentive stock option ("ISO"). 5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN. (a) For each calendar year, up to one and one-quarter percent (1-1/4%) of the issued and outstanding common stock of the Corporation, no par value (the "Common Stock") as of the first day of such year shall be available for issuance as grants or awards under the Plan. In addition, the aggregate number of (i) any shares of Common Stock which as of the effective date of the Plan are reserved for issuance under the 1990 Stock Option Plan (the "Prior Plan") and which are not thereafter issued; (ii) any shares available for issuance as grants or awards under the Plan in previous years but not actually issued; (iii) any shares which have been exchanged by a participant as full or partial payment to the Corporation in connection with any award under the Plan; and (iv) any shares subject to any grant or award that is forfeited or terminated without issuance of the shares or other consideration, shall again be available for issuance under the Plan. (b) In no event, however, except as subject to adjustment as provided in Section 6, shall more than 1,500,000 (one million, five hundred thousand) shares of Common Stock be cumulatively available for issuance pursuant to the exercise of ISOs awarded under the Plan. (c) Any award of restricted stock pursuant to Section 7(c) that is not subject to criteria other than continuous service with the Corporation will be counted as two shares for purposes of determining the number of shares available for issuance as grants or awards in any calendar year. (d) In instances where a stock appreciation right ("SAR") or other award is settled in cash or any form other than shares, then the shares covered by these settlements shall not be deemed issued and shall remain available for issuance under the Plan. Further, the payment of cash dividends and dividend equivalents in conjunction with outstanding awards shall not be counted against the shares available for issuance. Any shares that are issued by the Corporation, and any awards that are granted by, or become obligations of, the Corporation through the assumption by the Corporation or an affiliate of, or in substitution for, outstanding awards previously granted by an acquired company shall not, except in the case of awards granted to employees who are subject to Section 16 of the 1934 Act, be counted against the shares available for issuance under the Plan. -2- (e) Any shares issued under the Plan will consist of authorized and unissued shares and no fractional shares shall be issued under the Plan. Cash may be paid in lieu of any fractional shares in settlements of awards under the Plan. (f) Except for a grant that meets all of the requirements for performance-based compensation set forth in Internal Revenue Code Section 162(m), paragraph (e), and subject to adjustment as provided in Section 6, no officer or employee may receive, in any given year, grants of stock options and/or SARs which, singly or in the aggregate, cover more than 200,000 shares of the Common Stock. [Amended by shareholders May 7, 1997.] 6. ADJUSTMENTS AND REORGANIZATIONS. In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of Corporation assets to shareholders, or any other change affecting shares, such proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change shall be made with respect to (i) the aggregate number of shares that may be issued under the Plan; (ii) each outstanding award made under the Plan; and (iii) the price per share for any outstanding stock options, SARs and stock awards under the Plan. In the event that the Corporation undergoes a change of control (as defined below), or is not the surviving company in a merger, consolidation or amalgamation with another company, or in the event of a liquidation or reorganization of the Corporation, all outstanding awards under the Plan shall be immediately vested and the Committee, as constituted before such change of control, in its sole discretion, may provide for appropriate adjustments and settlements of such awards either at the time of the award or at a subsequent date. [Amended by Human Resources Committee June 4, 1997.] For purposes of this Plan, a "change of control" of the Corporation shall mean a change of control of a nature that would be required to be reported in response to Item 1(a) of the Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the 1934 Act; provided that, without limitation, such a "change of control" shall be deemed to have occurred if; (i) a third person, including a "group" as such term is used in Section 13(d)(3) of the 1934 Act, becomes the beneficial owner, directly or indirectly, of 25% or more of the combined voting power of the Corporation's outstanding voting securities ordinarily having the right to vote for the election of directors of the Corporation; or (ii) individuals who, as of the date hereof, constitute the Board of Directors of the Corporation (the "Board" generally and as of the date hereof the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date -3- hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act) shall be, for purposes of this Plan, considered as though such person were a member of the Incumbent Board. 7. AWARDS. The Committee shall determine the type or types of award(s) to be granted to each participant. Awards may be granted singly, in combination or in tandem. Awards may also be made in combination or in tandem with, in replacement of, as alternatives, or in payment for grants or rights under any other employee or compensation plan of the Corporation, including the plan of any acquired entity. (a) STOCK OPTION. This is an award consisting of a right to purchase a specified number of shares of Common Stock during a specified period as determined by the Committee. The purchase price of each option shall be not less than 100% of Fair Market Value (as defined in Section 10) on the date of grant, except that, in the case of a stock option granted retroactively in tandem with or in substitution for another award, the exercise or designated price may be no lower than the Fair Market Value on the date such other award was granted. A stock option may be in the form of an ISO which, in addition to being subject to applicable terms, conditions, and limitations established by the Committee, complies with Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Any ISO granted pursuant to the Plan must be granted within ten years from the date the Plan is approved by the Corporation's shareholders. The price at which shares of Common Stock may be purchased under a stock option shall be paid in full at the time of the exercise in cash or such other method as provided by the Committee at the time of grant, including tendering Common Stock, surrendering a stock award valued at Fair Market Value on the date of surrender, surrendering a cash award, or any combination thereof. If the option price is paid by tendering Common Stock acquired under an ISO, such ISO shall have been granted at least two years prior thereto and the Common Stock shall have been owned by the optionee for at least one year prior to such payment. The Committee may grant stock options that provide for the award of a new option when the exercise price has been paid by tendering shares of Common Stock, such new option to be for the number of shares tendered, with the exercise price set at the Fair Market Value on the date of option exercise. -4- (b) STOCK APPRECIATION RIGHT. This is an award consisting of a right to receive a payment in cash and/or Common Stock equal to the excess of the Fair Market Value of a specified number of shares of Common Stock on the date the SAR is exercised over the Fair Market Value of such shares on the date of grant as set forth in the applicable award agreement except that, in the case of an SAR granted retroactively in tandem with or in substitution for another award, the exercise or designated price may be no lower than the Fair Market Value of the Common Stock on the date such other award was granted. (c) STOCK AWARD. This is an award made in stock or denominated in units of stock. All or part of any stock award may be subject to conditions and restrictions established by the Committee and set forth in the award agreement, which may include, but are not limited to, continuous service with the Corporation, achievement of specific business objectives, and other measurements of individual, business unit or Corporation performance. 8. DIVIDENDS AND DIVIDEND EQUIVALENTS. The Committee may provide that awards under the Plan earn dividends or dividend equivalents. Such dividends or dividend equivalents may be paid currently or may be credited to a participant's account. Any crediting of dividends or dividend equivalents shall be subject to such restrictions and conditions as the Committee may establish, including reinvestment in additional shares or share equivalents. 9. DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of cash, stock, other awards, or in combinations thereof as the Committee shall determine, and with such restrictions as it may impose. The Committee may require, or permit participants to elect, that the issuance of shares or the settlement of cash awards be deferred under such rules and procedures as it may establish. It may also provide that deferred settlements include the payment or crediting of interest on the deferred amounts or the payment or crediting of dividend equivalents on deferred settlements denominated in shares. 10. FAIR MARKET VALUE. "Fair Market Value" for all purposes under the Plan shall mean the average of the high and low prices of Common Stock as reported on the composite tape for securities listed on the New York Stock Exchange for the date in question, or if no sales of Common Stock were made on said Exchange on that date, the average of the high and low prices of Common Stock as reported on said composite tape for the preceding day on which sales of Common Stock were made on said Exchange. 11. TRANSFERABILITY AND EXERCISABILITY. Unless otherwise determined by the Committee with respect to nonqualified stock options, all awards under the Plan shall not be nontransferable and shall not be assignable, alienable, saleable or otherwise transferable by the participant other than by will or the -5- laws of descent and distribution, by designation of a beneficiary after death, or pursuant to a qualified domestic relations order (as defined by the Code). 12. AWARD AGREEMENTS. Awards under the Plan shall be evidenced by agreements that set forth the terms, conditions and limitations for each award which may include the term of an award (except that in no event shall the term of any ISO exceed a period of ten years from the date of its grant), the provisions applicable in the event the participant's employment terminates, and the Corporation's authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind any award. The Committee need not require the execution of any such agreement by the recipient, in which case the delivery of the award to the respective participant will constitute the participant's acceptance and agreement to the terms of the award. 13. PLAN AMENDMENT. The Committee may amend the Plan as it deems necessary or appropriate to better achieve the purpose of the Plan, except that no such amendment shall be made without the approval of the Corporation's shareholders that would increase the number of shares available for issuance in accordance with Sections 5 and 6 of the Plan or otherwise cause the Plan not to comply with Rule 16b-3 or any successor role under the 1934 Act, or any other legal requirement. 14. TAX WITHHOLDING. The Corporation shall have the right to deduct from any settlement of an award made under the Plan, including the delivery or vesting of shares, a sufficient amount to cover withholding of any federal, state or local taxes required by law, or to take such other action as may be necessary to satisfy any such withholding obligations. The Committee may permit a recipient of an award to tender shares of Common Stock to the Corporation to be used to satisfy required tax withholding, and such Common Stock shall be valued at the Fair Market Value as of the settlement date of the applicable award. 15. OTHER CORPORATION BENEFIT AND COMPENSATION PROGRAMS. Unless otherwise specifically determined by the Committee, settlements of awards received by participants under the Plan shall not be deemed a part of a participant's regular, recurring compensation for purposes of calculating payments or benefits from any corporation benefit plan or severance program or the severance pay law of any country. Further, the Corporation may adopt other compensation programs, plans or arrangements as it deems appropriate or necessary. 16. UNFUNDED PLAN. Unless otherwise determined by the Committee, the Plan shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Plan -6- shall not establish any fiduciary relationship between the Corpo- ration and any participant or other person. To the extent any person holds any rights by virtue of a grant awarded under the Plan, such right (unless otherwise determined by the Committee) shall be no greater than the right of an unsecured general creditor of the Corporation. 17. FUTURE RIGHTS. No person shall have any claim or rights to be granted an award under the Plan, and no participant shall have any rights under the Plan to be retained in the employ of the Corporation. 18. GOVERNING LAW. The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of the State of Tennessee and applicable federal law. 19. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors and assigns of a participant, including, without limitation, the estate of such participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the participant's creditors. 20. RIGHTS AS A SHAREHOLDER. Except as otherwise provided in the award agreement, a participant shall have no rights as a shareholder until he or she becomes the holder of record. 21. ANNUAL LIMIT ON ISO GRANTS. The aggregate fair market value (determined on the date the option is granted) of Common Stock subject to ISOs granted to an optionee in any calendar year shall not exceed any limitation imposed by the Code. -7- GRANT AGREEMENT NONQUALIFIED STOCK OPTION Thomas & Betts Corporation (the "Corporation"), for and in consideration of the provisions and conditions as stated herein and in the Corporation's 1993 Management Stock Ownership Plan (the "Plan") and other good and valuable consideration, does hereby grant to the employee (one of the key employees of the Corporation) identified in the attached Notice of Grant of Stock Option (the "Optionee") this option to purchase from the Corporation the number of shares of Common Stock of the Corporation at the price per share set forth in the Notice of Grant of Stock Option, which option is not intended to qualify as an incentive stock option ("ISO") as that term is defined in Section 422A(b) of the Internal Revenue Code of 1986, as amended (the "Code"). The option granted pursuant to this Grant Agreement (the "Option") shall be subject to the following conditions: (1) Subject to the provisions of Paragraph 4, the Option shall become exercisable in three installments in accordance with the following schedule and after the expiration of the following periods of time:
Portion of Period from which Installment Option Granted Option Granted ----------- -------------- ----------------- First One-third 12 months Second One-third 24 months Third One-third 36 months
If the Optionee does not purchase the full number of shares which he has at any time become entitled to purchase, he may purchase all of any part of those shares at any subsequent time during the term of this Option. (2) The Option herein granted to the extent that it is exercisable may be exercised by giving written notice to the Corporate Human Resources Department or other designated person of the Corporation at its principal office no later than the Expiration Date (as defined in Paragraph 3). Such notice shall include a statement of the number of shares with respect to which this Option is being exercised and the exercise date, and shall be accompanied by full tender of the purchase price payable which may be made in whole or in part either in cash or by the exchange of such number of whole shares of Thomas & Betts Corporation Common Stock owned by the Optionee whose fair market value as of the close of the business day immediately preceding the specified Exercise Date does not exceed the purchase price payable; provided, however, that if the shares to be exchanged were acquired by exercise by an ISO, such ISO shall have been granted at least two years prior thereto and the Common Stock shall have been owned by the Optionee for at least one year prior to such payment, and further provided that the Committee shall have the right, upon prior notice to the holders of options, to modify, suspend or cancel the right to pay the purchase price in whole or in part by exchange of shares at any time in the event the Committee determines that there has been a change in tax or accounting consequences to the Corporation or to any Optionee. Nothing in this agreement shall confer upon the Optionee any rights as a stockholder prior to the time of the delivery to the Optionee of a stock certificate for the shares purchased under this agreement. (3) Unless this Option expires earlier in accordance with any provision of Paragraph 4, this Option shall expire on the date which is ten (10) years from the Date of Grant (the "Expiration Date"). (4) If, prior to the Expiration Date, the Optionee (i) becomes totally and permanently disabled as determined by the Corporation in its sole discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or is terminated as an employee of the Corporation, this option shall be exercisable under the circumstances and for the time periods set forth below, but only to the extent such time periods do not extend beyond the Expiration Date: (a) If the Optionee's employment terminates or is terminated for any reason other than (i) retirement, (ii) the Optionee becoming totally and permanently disabled, (iii) death, or (iv) under the circumstances described in Paragraph 4(b), this Option may be exercised within thirty (30) days of the date of such termination to the extent exercisable in accordance with the provisions of Paragraph 1; (b) In the event that (i) the Optionee has an employment agreement with the Corporation which provides for his continued employment following a change in control ("Employment Agreement") and (ii) a "Change in Control," as defined in Section 2 of such Employment Agreement, occurs, this Option shall become fully exercisable upon the "Effective Date," as defined in Section 1(a) of such Employment Agreement, notwithstanding any provision in Paragraph 1 to the contrary; in addition, if such Optionee's employment with the Corporation is thereafter terminated under the circumstances described in Section 7(d) of such Employment Agreement, this Option shall remain exercisable at any time prior to the Expiration Date; (c) If the Optionee retires at his normal or later retirement date or, with the consent of the Corporation, takes early retirement, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date of retirement; (d) If the Optionee becomes totally and permanently disabled, this Option may he exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date the Optionee's service as an employee is terminated within the meaning of the Code by reason of being totally and permanently disabled; (e) If the Optionee dies while he is employed or within three (3) years of his retirement in accordance with subparagraph (c) above, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within three (3) years of the Optionee's date of death by the legal representative of the Optionee or any person who acquires this Option by bequest or inheritance; and (f) For purpose of this Paragraph 4, a sick leave or other bona fide leave of absence granted in accordance with the Corporation's usual procedure which does not operate to interrupt continuous employment for other benefits granted by the Corporation shall not be considered a termination of employment or interruption of continuous employment hereunder and an employee who is granted such a leave of absence shall be considered to be continuously employed during such period of leave; provided, that if the Code or the regulations promulgated thereunder establish a more restrictive rule defining termination of employment applicable to the option granted herein, such rule shall be substituted here for. (5) The Optionee agrees, by the acceptance of this Option, for himself and his executors and administrators, that if a registration statement under the Securities Act of 1933 is not in effect at the time of the exercise of any portion of this Option, with respect to the sale by the Corporation and the resale by the Optionee of the shares issuable upon such exercise, it shall be a condition precedent to the right to purchase such shares that the notice of exercise shall be accompanied by a written representation that the Optionee or his executor or administrator is acquiring such shares for his own or such executor's or administrator's account for investment and not with a view to the distribution thereof. (6) The Corporation shall be not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of this Option until the admission of such shares to listing on any stock exchange on which the Corporation's stock may then be listed and until the Corporation takes such steps as may be required by law and applicable regulations, including rules and regulations of the Securities and Exchange Commission and any stock exchange as above mentioned, or until, in the opinion of counsel for the Corporation, any such listing or registration or other steps are not required. (7) The shares issued may be authorized but unissued stock, or treasury stock, and the number of shares with respect to which this Option may be exercised, and the price payable with respect thereto, shall be properly adjusted if the Corporation shall at any time declare a stock split, issue any stock dividend, or make a reclassification of such stock, so that the Optionee or his executors, administrators, legatees or distributees entitled hereunder shall not be in any way in a better or worse position as to the number of shares acquired and the aggregate amount paid therefore, solely from having exercised this option with respect to any of said shares after, rather than before, such stock split, stock dividend, or reclassification. (8) The granting of this Option shall not constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of its subsidiaries to employ the Optionee for any specified period. The Company continues to retain the absolute right to terminate the employment relationship with the Optionee at any time, with or without good cause. (9) This Option shall be binding upon the Corporation and its successors and assigns, and upon the Optionee and his administrators and executors. (10) Whenever the Corporation is required to issue or transfer shares of its Common Stock to Optionee pursuant hereto, the Corporation shall have the right to require the Optionee to remit to the Corporation an amount sufficient to satisfy all federal, state and local withholding tax requirements, if any. (11) The Optionee agrees, by the acceptance of this Option, to the amendment of this Grant Agreement, the Notice of Grant of Stock Option and the form of exercise of option provided by the Corporation, in any manner requested by the Corporation pursuant to advice from the Securities and Exchange Commission at any time during the term of this Option, and to execute any and all instruments relative thereto when so requested by the Corporation. (12) Throughout this agreement, the masculine gender shall be deemed to include the feminine. (13) This Option is not transferable by the Optionee otherwise than by will or by the laws of descent and distribution and during the lifetime of the Optionee it is exercisable only by the Optionee. GRANT AGREEMENT NONQUALIFIED STOCK OPTION Thomas & Betts Corporation (the "Corporation"), for and in consideration of the provisions and conditions as stated herein and in the Corporation's 1993 Management Stock Ownership Plan (the "Plan") and other good and valuable consideration, does hereby grant to the employee (one of the key employees of the Corporation) identified in the attached Notice of Grant of Stock Option (the "Optionee") this option to purchase from the Corporation the number of shares of Common Stock of the Corporation at the price per share set forth in the Notice of Grant of Stock Option, which option is not intended to qualify as an incentive stock option ("ISO") as that term is defined in Section 422A(b) of the Internal Revenue Code of 1986, as amended (the "Code") The option granted pursuant to this Grant Agreement (the "Option") shall be subject to the following conditions: (1) Subject to the provisions of Paragraph 4, the Option shall become exercisable in three installments in accordance with the following schedule and after the expiration of the following periods of time:
Portion of Period from which Installment Option Grant Option Granted ----------- ------------ ----------------- First One-third 12 months Second One-third 24 months Third One-third 36 months
If the Optionee does not purchase the full number of shares which he has at any time become entitled to purchase, he may purchase all or any part of those shares at any subsequent time during the term of this Option. (2) The Option herein granted to the extent that is exercisable may be exercised by giving written notice to the Corporate Human Resources Department or other designated person of the Corporation at its principal office no later than the Expiration Date (as defined in Paragraph 3). Such notice shall include a statement of the number of shares with respect to which this Option is being exercised and the exercise date, and shall be accompanied by full tender of the purchase price payable which may be made in whole or in part either in cash or by the exchange of such number of whole shares of Thomas & Betts Corporation Common Stock owned by the Optionee whose fair market value as of the close of the business day immediately preceding the specified Exercise Date does not exceed the purchase price payable; provided, however, that if the shares to be exchanged were acquired by exercise of an ISO, such ISO shall have been granted at least two years prior thereto and the Common Stock shall have been owned by the Optionee for at least one year prior to such payment, and further provided that the Committee shall have the right, upon prior notice to the holders of options, to modify, suspend or cancel the right to pay the purchase price in whole or in part by exchange of shares at any time in the event the Committee determines that there has been a change in tax or accounting consequences to the Corporation or to any Optionee. Nothing in this agreement shall confer upon the Optionee any rights as a stockholder prior to the time of the delivery to the Optionee of a stock certificate for the shares purchased under this agreement. (3) Unless this Option expires earlier in accordance with any provision of Paragraph 4, this Option shall expire on the date which is ten (10) years from the Date of Grant (the "Expiration Date"). (4) If, prior to the Expiration Date, the Optionee (i) becomes totally and permanently disabled as determined by the Corporation in its sole discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or is terminated as an employee of the Corporation, this Option shall be exercisable under the circumstances and for the time periods set forth below, but only to the extent such time periods do not extend beyond the Expiration Date: (a) If the Optionee's employment terminates or is terminated for any reason other than (i) retirement, (ii) the Optionee becoming totally and permanently disabled, or (iii) death, this Option may be exercised within thirty (30) days of the date of such termination to the extent exercisable in accordance with the provisions of Paragraph 1. (b) If the Optionee retires at his normal or later retirement date or, with the consent of the Corporation, takes early retirement, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date of retirement; (c) If the Optionee becomes totally and permanently disabled, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date the Optionee's service as an employee is terminated within the meaning of the Code by reason of being totally and permanently disabled; (d) If the Optionee dies while he is employed or within three (3) years of his retirement in accordance with subparagraph (b) above, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within three (3) years of the Optionee's date of death by the legal representative of the Optionee or any person who acquires this Option by bequest or inheritance; and (e) For purpose of this Paragraph 4, a sick leave or other bona fide leave of absence granted in accordance with the Corporation's usual procedure which does not operate to interrupt continuous employment for other benefits granted by the Corporation shall not be considered a termination of employment or an interruption of continuous employment hereunder and an employee who is granted such a leave of absence shall be considered to be continuously employed during such period of leave; provided, that if the Code or the regulations promulgated thereunder establish a more restrictive rule defining termination of employment applicable to the option granted herein, such rule shall be substituted herefor. (5) The Optionee agrees, by the acceptance of this Option, for himself and his executors and administrators, that if a registration statement under the Securities Act of 1933 is not in effect at the time of the exercise of any portion of this Option, with respect to the sale by the Corporation and the resale by the Optionee of the shares issuable upon such exercise, it shall be a condition precedent to the right to purchase such shares that the notice of exercise shall be accompanied by a written representation that the Optionee or his executor or administrator is acquiring such shares for his own or such executor's or administrator's account for investment and not with a view to the distribution thereof. (6) The Corporation shall not he required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of this Option until the admission of such shares to listing on any stock exchange on which the Corporation's stock may then be listed and until the Corporation takes such steps as may be required by law and applicable regulations, including rules and regulations of the Securities and Exchange Commission and any stock exchange as above mentioned, or until, in the opinion of counsel for the Corporation, any such listing or registration or other steps are not required. (7) The shares issued may be authorized but unissued stock, or treasury stock, and the number of shares with respect to which this Option may be exercised, and the price payable with respect thereto, shall be properly adjusted if the Corporation shall at any time declare a stock split, issue any stock dividend, or make a reclassification of such stock, so that the Optionee or his executors, administrators, legatees or distributees entitled hereunder shall not be in any way in a better or worse position as to the number of shares acquired and the aggregate amount paid therefore, solely from having exercised this option with respect to any of said shares after, rather than before, such stock split, stock dividend, or reclassification. (8) The granting of this Option shall not constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of its subsidiaries to employ the Optionee for any specified period. The Company continues to retain the absolute right to terminate the employment relationship with the Optionee at any time, with or without good cause. (9) This Option shall be binding upon the Corporation and its successors and assigns, and upon the Optionee and his administrators and executors. (10) Whenever the Corporation is required to issue or transfer shares of its Common Stock to Optionee pursuant hereto, the Corporation shall have the right to require the Optionee to remit to the Corporation an amount sufficient to satisfy all federal, state and local withholding tax requirements, if any. (11) The Optionee agrees, by the acceptance of this Option, to the amendment of this Grant Agreement, the Notice of Grant of Stock Option and the form of exercise of option provided by the Corporation in any manner requested by the Corporation pursuant to advice from the Securities and Exchange Commission at any time during the term of this Option, and to execute any and all instruments relative thereto when so requested by the Corporation. (12) Throughout this agreement, the masculine gender shall be deemed to include the feminine. (13) This Option is not transferable by the Optionee otherwise than by will or by the laws of descent and distribution and during the lifetime of the Optionee it is exercisable only by the Optionee. GRANT AGREEMENT INCENTIVE STOCK OPTION Thomas & Betts Corporation (the "Corporation"), for and in consideration of the provisions and conditions as stated herein and in the Corporation's 1993 Management Stock Ownership Plan (the "Plan") and other good and valuable consideration, does hereby grant to the employee (one of the key employees of the Corporation) identified in the attached Notice of Grant of Stock Option (the "Optionee") this option to purchase from the Corporation the number of shares of Common Stock of the Corporation at the price per share set forth in the Notice of Grant of Stock Option, which option, except as provided in Paragraph 4, is intended to qualify as an incentive stock option ("ISO") as that term is defined in Section 422A(b) of the Internal Revenue Code of 1986, as amended (the "Code"). The option granted pursuant to this Grant Agreement (the "Option")shall be subject to the following conditions: (1) Subject to the provisions of Paragraph 4, the Option shall become exercisable in three installments in accordance with the following schedule and after the expiration of the following periods of time:
Portion of Period from which Installment Option Grant Option Granted ----------- ------------ ----------------- First One-third 12 months Second One-third 24 months Third One-third 36 months
If the Optionee does not purchase the full number of shares which he has at any time become entitled to purchase, he may purchase all or any part of those shares at any subsequent time during the term of this Option. (2) The Option herein granted to the extent that it is exercisable may be exercised by giving written notice to the Corporate Human Resources Department or other designated person of the Corporation at its principal office no later than the Expiration Date (as defined in Paragraph 3). Such notice shall include a statement of the number of shares with respect to which this Option is being exercised and the exercise date, and shall be accompanied by full tender of the purchase price payable which may be made in whole or in part either in cash or by the exchange of such number of whole shares of Thomas & Betts Corporation Common Stock owned by the Optionee whose fair market value as of the close of the business day immediately preceding the specified Exercise Date does not exceed the purchase price payable; provided, however. that if the shares to be exchanged were acquired under an ISO, such ISO shall have been granted at least two years prior thereto and the Common Stock shall have been owned by the Optionee for at least one year prior to such payment, and further provided that the Committee shall have the right, upon prior notice to the holders of options, to modify, suspend or cancel the right to pay the purchase price in whole or in part by exchange of shares at any time in the event the Committee determines that there has been a change in tax or accounting consequences to the Corporation or to any Optionee. Nothing in this agreement shall confer upon the Optionee any rights as a stockholder prior to the time of the delivery to the Optionee of a stock certificate for the shares purchased under this agreement. (3) Unless this Option expires earlier in accordance with any provision of Paragraph 4, this Option shall expire on the date which is ten (10) years from the Date of Grant (the "Expiration Date"). (4) If, prior to the Expiration Date, the Optionee (i) becomes totally and permanently disabled as determined by the Corporation in its sole discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or is terminated as an employee of the Corporation, this Option shall be exercisable under the circumstances and for the time periods set forth below, but only to the extent such time periods do not extend beyond the Expiration Date: (a) If the Optionee's employment terminates or is terminated for any reason other than (i) retirement, (ii) the Optionee becoming totally and permanently disabled, (iii) death, or (iv) under the circumstances described in Paragraph 4(b), this Option may be exercised within thirty (30) days of the date of such termination to the extent exercisable in accordance with the provisions of Paragraph 1; (b) In the event that (i) the Optionee has an employment agreement with the Corporation which provides for his continued employment following a change in control ("Employment Agreement") and (ii) a "Change in Control," as defined in Section 2 of such Employment Agreement, occurs, this Option shall become fully exercisable upon the "Effective Date," as defined in Section 1(a) of such Employment Agreement, notwithstanding any provision in Paragraph 1 to the contrary, provided, however, that to the extent (if any) that the limitation set forth in Code Section 422(d) is exceeded, the Option shall be treated as a Nonqualified Stock Option; in addition, if such Optionee's employment with the Corporation is thereafter terminated under the circumstances described in Section 7(d) of such Employment Agreement, this Option shall remain exercisable at any time prior to the Expiration Date, provided, however, that if such exercise occurs more than three (3) months after the date of such Optionee's termination of employment, the Option shall be treated as a Nonqualified Stock Option; (c) If the Optionee retires at his normal or later retirement date or, with the consent of the Corporation, takes early retirement, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date of retirement; provided, however, that if such exercise occurs more than three (3) months after the date of such retirement, the Option shall be treated as a Nonqualified Stock Option; (d) If the Optionee becomes totally and permanently disabled, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date the Optionee's service as an employee is terminated within the meaning of the Code by reason of being totally and permanently disabled; provided, however, that if such Exercise occurs more than one (1) year after the date the Optionee's employment is terminated due to such disability, this Option shall be treated as a Nonqualified Stock Option; (e) If the Optionee dies while he is employed or within three (3) years of his retirement in accordance with subparagraph (c) above, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within three (3) years of the Optionee's date of death by the legal representative of the Optionee or any person who acquires this Option by bequest or inheritance; provided, however, if the Optionee's date of death is more than three (3) months from the date of such retirement, this Option shall be treated as a Nonqualified Stock Option, and (f) For purpose of this Paragraph 4, a sick leave or other bona fide leave of absence granted in accordance with the Corporation's usual procedure which does not operate to interrupt continuous employment for other benefits granted by the Corporation shall not be considered a termination of employment or interruption of continuous employment hereunder and an employee who is granted such a leave of absence shall be considered to be continuously employed during such period of leave; provided, that if the Code or the regulations promulgated thereunder establish a more restrictive rule defining termination of employment applicable to the option granted herein, such rule shall be substituted here for. (5) The Optionee agrees, by the acceptance of this Option, for himself and his executors and administrators, that if a registration statement under the Securities Act of 1933 is not in effect at the time of the exercise of any portion of this Option, with respect to the sale by the Corporation and the resale by the Optionee of the shares issuable upon such exercise, it shall be a condition precedent to the right to purchase such shares that the notice of exercise shall be accompanied by a written representation that the Optionee or his executor or administrator is acquiring such shares for his own or such executor's or administrator's account for investment and not with a view to the distribution thereof. (6) The Corporation shall be not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of this Option until the admission of such shares to listing on any stock exchange on which the Corporation's stock may then be listed and until the Corporation takes such steps as may be required by law and applicable regulations, including rules and regulations of the Securities and Exchange Commission and any stock exchange as above mentioned, or until, in the opinion of counsel for the Corporation, any such listing or registration or other steps are not required. (7) The shares issued may be authorized but unissued stock, or treasury stock. and the number of shares with respect to which this Option may be exercised, and the price payable with respect thereto, shall be properly adjusted if the Corporation shall at any time declare a stock split, issue any stock dividend, or make a reclassification of such stock, so that the Optionee or his executors, administrators, legatees or distributees entitled hereunder shall not be in any way in a better or worse position as to the number of shares acquired and the aggregate amount paid therefore, solely from having exercised this option with respect to any of said shares after, rather than before, such stock split, stock dividend, or reclassification. (8) The granting of this Option shall not constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of its subsidiaries to employ the Optionee for any specified period. The Company continues to retain the absolute right to terminate the employment relationship with the Optionee at any time, with or without good cause. (9) This Option shall be binding upon the Corporation and its successors and assigns, and upon the Optionee and his administrators and executors. (10) Whenever the Corporation is required to issue or transfer shares of its Common Stock to Optionee pursuant hereto, the Corporation shall have the right to require the Optionee to remit to the Corporation an amount sufficient to satisfy all federal, state and local withholding tax requirements, if any. (11) The Optionee agrees, by the acceptance of this Option, to the amendment of this Grant Agreement, the Notice of Grant of Stock Option and the form of exercise of option provided by the Corporation, in any manner requested by the Corporation pursuant to advice from the Securities and Exchange Commission at any time during the term of this Option, and to execute any and all instruments relative thereto when so requested by the Corporation. (12) Throughout this agreement, the masculine gender shall be deemed to include the feminine. (13) This Option is not transferable by the Optionee otherwise than by will or by the laws of descent and distribution and during the lifetime of the Optionee it is exercisable only by the Optionee. GRANT AGREEMENT INCENTIVE STOCK OPTION Thomas & Betts Corporation (the "Corporation"), for and in consideration of the provisions and conditions as stated herein and in the Corporation's 1993 Management Stock Ownership Plan (the "Plan") and other good and valuable consideration, does hereby grant to the employee (one of the key employees of the Corporation) identified in the attached Notice of Grant of Stock Option (the "Optionee") this option to purchase from the Corporation the number of shares of Common Stock of the Corporation at the price per share set forth in the Notice of Grant of Stock Option, which option, except as provided in Paragraph 4, is intended to qualify as an incentive stock option ("ISO") as that term is defined in Section 422A(b) of the Internal Revenue Code of 1986, as amended (the "Code"). The option granted pursuant to this Grant Agreement (the "Option")shall be subject to the following conditions: (1) Subject to the provisions of Paragraph 4, the Optionshall become exercisable in three installments in accordance with the following schedule and after the expiration of the following periods of time:
Portion of Period from which Installment Option Grant Option Granted ----------- ------------ -------------- First One-third 12 months Second One-third 24 months Third One-third 36 months
If the Optionee does not purchase the full number of shares which he has at any time become entitled to purchase, he may purchase all or any part of those shares at any subsequent time during the term of this Option. (2) The Option herein granted to the extent that it is exercisable may be exercised by giving written notice to the Corporate Human Resources Department or other designated person of the Corporation at its principal office no later than the Expiration Date (as defined in Paragraph 3). Such notice shall include a statement of the number of shares with respect to which this Option is being exercised and the exercise date, and shall be accompanied by full tender of the purchase price payable which may be made in whole or in part either in cash or by the exchange of such number of whole shares of Thomas & Betts Corporation Common Stock owned by the Optionee whose fair market value as of the close of the business day immediately preceding the specified Exercise Date does not exceed the purchase price payable; provided, however. that if the shares to be exchanged were acquired under an ISO, such ISO shall have been granted at least two years prior thereto and the Common Stock shall have been owned by the Optionee for at least one year prior to such payment, and further provided that the Committee shall have the right, upon prior notice to the holders of options, to modify, suspend or cancel the right to pay the purchase price in whole or in part by exchange of shares at any time in the event the Committee determines that there has been a change in tax or accounting consequences to the Corporation or to any Optionee. Nothing in this agreement shall confer upon the Optionee any rights as a stockholder prior to the time of the delivery to the Optionee of a stock certificate for the shares purchased under this agreement. (3) Unless this Option expires earlier in accordance with any provision of Paragraph 4, this Option shall expire on the date which is ten (10) years from the Date of Grant (the "Expiration Date"). (4) If, prior to the Expiration Date, the Optionee (i) becomes totally and permanently disabled as determined by the Corporation in its sole discretion, (ii) retires, (iii) dies, or (iv) otherwise terminates or is terminated as an employee of the Corporation, this Option shall be exercisable under the circumstances and for the time periods set forth below, but only to the extent such time periods do not extend beyond the Expiration Date: (a) If the Optionee's employment terminates or is terminated for any reason other than (i) retirement, (ii) the Optionee becoming totally and permanently disabled, (iii) death, or (iv) under the circumstances described in Paragraph 4(b), this Option may be exercised within thirty (30) days of the date of such termination to the extent exercisable in accordance with the provisions of Paragraph 1; (b) If the Optionee retires at his normal or later retirement date or, with the consent of the Corporation, takes early retirement, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date of retirement; provided, however, that if such exercise occurs more than three (3) months after the date of such retirement, the Option shall be treated as a Nonqualified Stock Option; (c) If the Optionee becomes totally and permanently disabled, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within six (6) years of the date the Optionee's service as an employee is terminated within the meaning of the Code by reason of being totally and permanently disabled; provided, however, that if such Exercise occurs more than one (1) year after the date the Optionee's employment is terminated due to such disability, this Option shall be treated as a Nonqualified Stock Option; (d) If the Optionee dies while he is employed or within three (3) years of his retirement in accordance with subparagraph (c) above, this Option may be exercised in full, notwithstanding the provisions of Paragraph 1, at any time within three (3) years of the Optionee's date of death by the legal representative of the Optionee or any person who acquires this Option by bequest or inheritance; provided, however, if the Optionee's date of death is more than three (3) months from the date of such retirement, this Option shall be treated as a Nonqualified Stock Option, and (e) For purpose of this Paragraph 4, a sick leave or other bona fide leave of absence granted in accordance with the Corporation's usual procedure which does not operate to interrupt continuous employment for other benefits granted by the Corporation shall not be considered a termination of employment or interruption of continuous employment hereunder and an employee who is granted such a leave of absence shall be considered to be continuously employed during such period of leave; provided, that if the Code or the regulations promulgated thereunder establish a more restrictive rule defining termination of employment applicable to the option granted herein, such rule shall be substituted here for. (5) The Optionee agrees, by the acceptance of this Option, for himself and his executors and administrators, that if a registration statement under the Securities Act of 1933 is not in effect at the time of the exercise of any portion of this Option, with respect to the sale by the Corporation and the resale by the Optionee of the shares issuable upon such exercise, it shall be a condition precedent to the right to purchase such shares that the notice of exercise shall be accompanied by a written representation that the Optionee or his executor or administrator is acquiring such shares for his own or such executor's or administrator's account for investment and not with a view to the distribution thereof. (6) The Corporation shall be not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of this Option until the admission of such shares to listing on any stock exchange on which the Corporation's stock may then be listed and until the Corporation takes such steps as may be required by law and applicable regulations, including rules and regulations of the Securities and Exchange Commission and any stock exchange as above mentioned, or until, in the opinion of counsel for the Corporation, any such listing or registration or other steps are not required. (7) The shares issued may be authorized but unissued stock, or treasury stock. and the number of shares with respect to which this Option may be exercised, and the price payable with respect thereto, shall be properly adjusted if the Corporation shall at any time declare a stock split, issue any stock dividend, or make a reclassification of such stock, so that the Optionee or his executors, administrators, legatees or distributees entitled hereunder shall not be in any way in a better or worse position as to the number of shares acquired and the aggregate amount paid therefore, solely from having exercised this option with respect to any of said shares after, rather than before, such stock split, stock dividend, or reclassification. (8) The granting of this Option shall not constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of its subsidiaries to employ the Optionee for any specified period. The Company continues to retain the absolute right to terminate the employment relationship with the Optionee at any time, with or without good cause. (9) This Option shall be binding upon the Corporation and its successors and assigns, and upon the Optionee and his administrators and executors. (10) Whenever the Corporation is required to issue or transfer shares of its Common Stock to Optionee pursuant hereto, the Corporation shall have the right to require the Optionee to remit to the Corporation an amount sufficient to satisfy all federal, state and local withholding tax requirements, if any. (11) The Optionee agrees, by the acceptance of this Option, to the amendment of this Grant Agreement, the Notice of Grant of Stock Option and the form of exercise of option provided by the Corporation, in any manner requested by the Corporation pursuant to advice from the Securities and Exchange Commission at any time during the term of this Option, and to execute any and all instruments relative thereto when so requested by the Corporation. (12) Throughout this agreement, the masculine gender shall be deemed to include the feminine. (13) This Option is not transferable by the Optionee otherwise than by will or by the laws of descent and distribution and during the lifetime of the Optionee it is exercisable only by the Optionee. EX-10.8 6 EXHIBIT 10.8 Exhibit 10.8 THE THOMAS & BETTS PENSION RESTORATION PLAN (EFFECTIVE JANUARY 1, 1995) Table of Contents
Page ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.1 Applicable Code Limits. . . . . . . . . . . . . . . . . . . . . 2 Section 1.2 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.3 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.4 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.5 Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.6 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.7 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.8 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.9 Employer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.10 Normal Annuity Option. . . . . . . . . . . . . . . . . . . . . 2 Section 1.11 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . 3 Section 1.12 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.13 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.14 Pension Restoration Benefit. . . . . . . . . . . . . . . . . . 3 Section 1.15 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.16 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.17 SEIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.18 Surviving Spouse Benefit . . . . . . . . . . . . . . . . . . . 3 Section 1.19 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE II - PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 2.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 2.2 Former Employees. . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE III - PENSION RESTORATION BENEFIT. . . . . . . . . . . . . . . . . . 4 Section 3.1 Amount of Benefit . . . . . . . . . . . . . . . . . . . . . . . 4 Section 3.2 Form and Time of Payment of Pension Restoration Benefit . . . . 5 Section 3.3 Payment of Small Benefits . . . . . . . . . . . . . . . . . . . 5 Section 3.4 Nonduplication of Benefits. . . . . . . . . . . . . . . . . . . . 5 ARTICLE IV - SURVIVING SPOUSE BENEFIT. . . . . . . . . . . . . . . . . . . . 6 Section 4.1 Amount of Benefit . . . . . . . . . . . . . . . . . . . . . . . 6 Section 4.2 Form and Time of Payment of Surviving Spouse Benefit. . . . . . 6 Section 4.3 Payment of Small Benefits . . . . . . . . . . . . . . . . . . . 6
-i-
Section 4.4 Nonduplication of Benefits. . . . . . . . . . . . . . . . . . . 7 ARTICLE V - OTHER BENEFIT PROVISIONS . . . . . . . . . . . . . . . . . . . . 7 Section 5.1 Vesting; Termination of Employment. . . . . . . . . . . . . . . 7 Section 5.2 Payment to Guardian . . . . . . . . . . . . . . . . . . . . . . 7 Section 5.3 Withholding; Payroll Taxes. . . . . . . . . . . . . . . . . . . 8 Section 5.4 Domestic Relations Orders . . . . . . . . . . . . . . . . . . . 8 Section 5.5 Nonalienation of Benefits . . . . . . . . . . . . . . . . . . . 8 ARTICLE VI - SOURCE OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 6.1 Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE VII - ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 7.1 The Committee . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 7.2 Records and Reports . . . . . . . . . . . . . . . . . . . . . . 9 Section 7.3 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . 10 Section 7.4 Indemnification for Liability . . . . . . . . . . . . . . . . . 10 Section 7.5 Claims Procedure. . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE VIII - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . 12 Section 8.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 8.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 8.3 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE IX - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . 13 Section 9.1 No Contract of Employment . . . . . . . . . . . . . . . . . . . 13 Section 9.2 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 9.3 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 9.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 13 Section 9.5 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-ii- THE THOMAS & BETTS PENSION RESTORATION PLAN (EFFECTIVE JANUARY 1, 1995) WHEREAS, Thomas & Betts Corporation (the "Company") desires to establish a supplemental retirement plan in order to provide certain employees with benefits which they would otherwise lose under The Thomas & Betts Pension Plan (the "Pension Plan") as a result of (i) certain Internal Revenue Code limitations on benefits which may be provided under the Pension Plan and/or (ii) elective deferrals of compensation under The Thomas & Betts Supplemental Executive Investment Plan (the "SEIP"); and WHEREAS, the Company intends that this supplemental retirement plan be unfunded and be maintained "primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees," within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended; NOW, THEREFORE, effective January 1, 1995, the Company hereby establishes The Thomas & Betts Pension Restoration Plan as follows: ARTICLE I DEFINITIONS The following words and phrases, as used herein, shall have the following meanings unless the context clearly indicates otherwise: Section 1.1 APPLICABLE CODE LIMITS: The limitations on benefits contained in Section 401(a)(17) and Section 415 of the Code, including any amendments or modifications of such provisions or any successor provisions of the Code. Section 1.2 BENEFICIARY: The person or persons designated (or deemed to be designated) by a Participant or Beneficiary to receive benefits under the Pension Plan payable upon the death of the Participant or Beneficiary, respectively, as provided under the Pension Plan. Section 1.3 BOARD: The Board of Directors of the Company. Section 1.4 CODE: The Internal Revenue Code of 1986, as amended. Section 1.5 COMMITTEE: The Retirement Plans Committee appointed by the Board. Section 1.6 COMPANY: Thomas & Betts Corporation, or its successor or successors who assume the obligations of the Company under the Plan. Section 1.7 COMPENSATION: An Eligible Employee's compensation from the Employer which is taken into account for purposes of determining his accrued benefit under the Pension Plan. Section 1.8 ELIGIBLE EMPLOYEE: An individual employed by the Employer on or after January 1, 1995 (a) who is a participant in the Pension Plan, and (b) who is eligible to participate in the SEIP and/or whose benefit under the Pension Plan is reduced by the Applicable Code Limits. Section 1.9 EMPLOYER: The Company and any subsidiary of the Company which participates in the Pension Plan. Section 1.10 NORMAL ANNUITY OPTION: An annuity providing monthly payments to the Participant for his lifetime with a guaranteed minimum of 120 monthly payments, as defined in and administered under the Pension Plan. -2- Section 1.11 NORMAL RETIREMENT DATE: The Participant's normal retirement date under the Pension Plan. Section 1.12 PARTICIPANT: An Eligible Employee who is accruing, or who has accrued, a Pension Restoration Benefit under the Plan. Section 1.13 PENSION PLAN: The Thomas & Betts Pension Plan, as amended from time to time. Section 1.14 PENSION RESTORATION BENEFIT: The supplemental retirement benefit described in Article III of the Plan. Section 1.15 PLAN: The Thomas & Betts Pension Restoration Plan, as set forth herein and as amended from time to time. Section 1.16 PLAN YEAR: A period of twelve consecutive months beginning on January 1 and ending on the following December 31. Section 1.17 SEIP: The Thomas & Betts Supplemental Executive Investment Plan, as it presently exists and as it may be amended from time to time. Section 1.18 SURVIVING SPOUSE BENEFIT: The supplemental pre-retirement survivor benefit described in Article IV of the Plan. Section 1.19 GENDER AND NUMBER: The masculine pronoun wherever used shall include the feminine and the singular may include the plural, and vice versa, as the context may require. -3- ARTICLE II PARTICIPATION Section 2.1 PARTICIPATION. An Eligible Employee shall be a Participant if he is accruing, or has accrued, a benefit under the Pension Plan, and if the amount of such benefit is reduced by reason of the Applicable Code Limits and/or because he has elected to defer any of his Compensation under the SEIP. Section 2.2 FORMER EMPLOYEES. An individual shall not be an Eligible Employee or a Participant if his employment with the Employer terminated before January 1, 1995. ARTICLE III PENSION RESTORATION BENEFIT Section 3.1 AMOUNT OF BENEFIT. The amount of the Pension Restoration Benefit payable under the Plan shall be equal to the monthly benefit which would be payable under the Pension Plan to or on behalf of a Participant if: (a) the Applicable Code Limits were inapplicable; and (b) the Participant had not elected to defer any of his Compensation under the SEIP, less the monthly benefit actually payable to or on behalf of the Participant under the Pension Plan. The amounts described in (a) and (b) above shall be expressed as the monthly benefit payable in the form of the Normal Annuity Option commencing at the Participant's Normal Retirement Date, or the date of determination, if later. -4- Section 3.2 FORM AND TIME OF PAYMENT OF PENSION RESTORATION BENEFIT. Except as otherwise provided in Section 3.3, the Pension Restoration Benefit payable to or on behalf of a Participant, as determined under Section 3.1, shall be paid in the same form and at the same time as the benefit paid to or on behalf of the Participant under the Pension Plan, and shall be adjusted by the factors used under the Pension Plan to reflect the payment option chosen by the Participant and the Participant's annuity starting date. Section 3.3 PAYMENT OF SMALL BENEFITS. Notwithstanding the provisions of Section 3.2, if the actuarial equivalent present value of the Pension Restoration Benefit to which a Participant is entitled does not exceed $25,000, such present value shall be distributed to the Participant in a lump sum. For purposes of this Section 3.3, the actuarial equivalent present value of a Participant's Pension Restoration Benefit shall be determined as of the later of (a) February 1 of the calendar year following the year in which he terminates employment with the Employer and all affiliates or (b) November 1, 1997, using the interest and mortality assumptions which would be used under the Pension Plan for purposes of determining lump sum present values as of such determination date. Any lump sum benefit payable under this Section 3.3 shall be paid within 60 days following the applicable determination date. Section 3.4 NONDUPLICATION OF BENEFITS. Notwithstanding any other provision of this Plan, if a Participant is also covered by The Thomas & Betts Executive Retirement Plan, the amount of the Pension Restoration Benefit otherwise payable under this Plan shall be reduced by the value of any benefit which such Participant is entitled to receive under the Executive Retirement Plan. -5- ARTICLE IV SURVIVING SPOUSE BENEFIT Section 4.1 AMOUNT OF BENEFIT. If a Participant who has accrued a Pension Restoration Benefit dies prior to the distribution, or commencement of distribution, of such Pension Restoration Benefit, and if a pre-retirement survivor annuity is payable from the Pension Plan to his surviving spouse, a Surviving Spouse Benefit shall be payable from this Plan. The amount of such Surviving Spouse Benefit shall be equal to the monthly benefit which would be payable under the Pension Plan to the surviving spouse if: (a) the Applicable Code Limits were inapplicable; and (b) the Participant had not elected to defer any of his Compensation under the SEIP, less the monthly benefit actually payable to the surviving spouse under the Pension Plan. The amounts described in (a) and (b) above shall be expressed in the form of the pre-retirement survivor annuity payable under the Pension Plan. Section 4.2 FORM AND TIME OF PAYMENT OF SURVIVING SPOUSE BENEFIT. Except as otherwise provided in Section 4.3, the Surviving Spouse Benefit payable under Section 4.1 shall be paid in the same form and at the same time as the pre-retirement survivor annuity paid to the surviving spouse under the Pension Plan, and shall be adjusted by the factors used under the Pension Plan to reflect the annuity starting date. Section 4.3 PAYMENT OF SMALL BENEFITS. Notwithstanding the provisions of Section 4.2, if the actuarial equivalent present value of the Surviving Spouse Benefit to which a surviving spouse is -6- entitled does not exceed $25,000, such present value shall be distributed to the surviving spouse in a lump sum. For purposes of this Section 4.3, the actuarial equivalent present value of a Surviving Spouse Benefit shall be determined as of the later of (a) February 1 of the calendar year following the year in which the Participant dies or (b) November 1, 1997, using the interest and mortality assumptions which would be used under the Pension Plan for purposes of determining lump sum present values as of such determination date. Any lump sum benefit payable under this Section 4.3 shall be paid within 60 days following the applicable determination date. Section 4.4 NONDUPLICATION OF BENEFITS. Notwithstanding any other provision of this Plan, if a Participant is also covered by The Thomas & Betts Executive Retirement Plan, the amount of the Surviving Spouse Benefit otherwise payable under this Plan upon such Participant's death shall be reduced by the value of any pre-retirement death benefit which such surviving spouse is entitled to receive under the Executive Retirement Plan. ARTICLE V OTHER BENEFIT PROVISIONS Section 5.1 VESTING; TERMINATION OF EMPLOYMENT. No benefit shall be payable under this Plan to, or with respect to, any Participant who has not earned a vested right to his accrued benefit under the Pension Plan. No benefit shall be payable under this Plan to, or with respect to, a Participant prior to his termination of employment with the Employer and all affiliates. Section 5.2 PAYMENT TO GUARDIAN. If an amount is payable under this Plan to a minor, a person declared incompetent or a person incapable of handling the disposition of property, the -7- Committee or its appointed representative may direct the payment of the amount to the guardian, legal representative or person having the care and custody of the minor, incompetent or incapable person. The Committee or its appointed representative may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to the distribution of the amount. The distribution shall completely discharge the Committee and its appointed representative and the Employer from all liability with respect to the amount distributed. Section 5.3 WITHHOLDING; PAYROLL TAXES. The Employer shall withhold from payments made under the Plan any taxes required to be withheld from a Participant's wages for federal, state or local government income or other payroll taxes. Section 5.4 DOMESTIC RELATIONS ORDERS. In the event a Participant's pension benefit under the Pension Plan is subject to a qualified domestic relations order, the Pension Restoration Benefit provided by this Plan shall be paid without regard to the order, unless the order specifically applies to benefits payable under this Plan. Section 5.5 NONALIENATION OF BENEFITS. Except as provided in Section 5.4 with respect to certain domestic relations orders, none of the benefits or rights of a Participant or any Beneficiary under this Plan shall be subject to the claim of any creditor. In particular, to the fullest extent permitted by law, all such benefits and rights shall be free from attachment, garnishment or any other legal or equitable process available to any creditor of the Participant or his Beneficiary. Neither the Participant nor his Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the payments which he may expect to receive, contingently or otherwise, under this Plan. -8- ARTICLE VI SOURCE OF FUNDS Section 6.1 SOURCE OF FUNDS. This Plan shall be unfunded, and payment of benefits hereunder shall be made from the general assets of the Employer. Any asset which may be set aside, earmarked or identified as being intended for the provision of benefits under this Plan, shall remain an asset of the Employer and shall be subject to the claims of its general creditors. Each Participant and Beneficiary shall be a general creditor of the Employer to the extent of the value of his benefit accrued hereunder, and he shall have no right, title or interest in any specific asset that the Employer may set aside or designate as intended to be applied to the payment of benefits under this Plan. The Employer's obligation under the Plan shall be merely an unfunded and unsecured promise to pay money in the future. ARTICLE VII ADMINISTRATION Section 7.1 THE COMMITTEE. This Plan shall be administered by the Retirement Plans Committee appointed by the Board. The Committee and/or its appointed representative shall have sole discretion to construe and interpret the provisions of the Plan and to determine all questions oncerning benefit entitlements, including the power to construe and determine disputed or doubtful terms. To the maximum extent permissible under law, the determinations of the Committee and/or its appointed representative on all such matters shall be final and binding upon all persons involved. Section 7.2 RECORDS AND REPORTS. The Committee or its appointed representative shall keep a record of its proceedings and actions and shall maintain all books of account, records and other data as shall be necessary for the proper administration of the Plan. Such records shall contain all -9- relevant data pertaining to individual Participants and their rights under the Plan. The Committee or its appointed representative shall have the duty to carry into effect all rights or benefits provided hereunder to the extent assets of the Employer are properly available therefor. Section 7.3 PAYMENT OF EXPENSES. The Employer shall pay all expenses of administering the Plan. Such expenses shall include any expenses incident to the functioning of the Committee or its appointed representative. Section 7.4 INDEMNIFICATION FOR LIABILITY. The Employer shall indemnify the members of the Committee, and the employees of the Employer to whom the Committee delegates duties under the Plan, against any and all claims, losses, damages, expenses and liabilities arising from their carrying out of their responsibilities in connection with the Plan, unless the same is determined to be due to gross negligence or willful misconduct. Section 7.5 CLAIMS PROCEDURE. The procedure for presenting claims under the Plan and appealing denials thereof shall be as follows: (a) FILING OF CLAIMS. Any Participant or Beneficiary (the "claimant") may file a written claim for a Plan benefit with the Committee or its appointed representative. (b) NOTICE OF DENIAL OF CLAIM. In the event of a denial of any benefit requested by any claimant, the claimant shall be given a written notification containing specific reasons for the denial. The written notification shall contain specific reference to the pertinent Plan provisions on which the denial is based. In addition, it shall contain a description of any additional material or information necessary for the claimant to perfect a claim and an explanation of why such material or information is necessary. The -10- notification shall also provide appropriate information as to the steps to be taken if the claimant wishes to submit his claim for review. The written notification shall be given to the claimant within 90 days after receipt of his claim by the Committee or its appointed representative unless special circumstances require an extension of time for processing, in which case written notice of the extension shall be furnished to the claimant prior to the termination of the original 90-day period, and such notice shall indicate the special circumstances which make the extension appropriate. In no event shall the extension exceed a total of 180 days from the date of the original receipt of the claim. (c) RIGHT OF REVIEW. In the event of a denial of a claim for benefits, the claimant shall be permitted to review the pertinent documents and to submit to the Committee or its appointed representative issues and comments in writing. In addition, the claimant may make a written request for a review of his claim and its denial by the Committee or its appointed representative. Such written request must be received by the Committee or its appointed representative within 60 days after receipt by the claimant of written notification of the denial of the claim. (d) DECISION ON REVIEW. (1) A decision shall be rendered by the Committee or its appointed representative within 60 days after the receipt of the request for review. However, where special circumstances make a longer period for decision necessary or appropriate, the decision of the Committee or its appointed representative may be postponed on written notice to the claimant (prior to the expiration of the initial 60- -11- day period) for an additional 60 days. In no event shall the decision of the Committee or its appointed representative be rendered more than 120 days after the receipt of the request for review. (2) Any decision by the Committee or its appointed representative shall be furnished to the claimant in writing in a manner calculated to be understood by the claimant and shall set forth the specific reason(s) for the decision and the specific Plan provision(s) on which the decision is based. ARTICLE VIII AMENDMENT AND TERMINATION Section 8.1 AMENDMENT. The Board shall have the right to amend or modify the Plan at any time and for any reason. The Committee shall have such authority to amend the Plan as shall be delegated to it by the Board in the Retirement Plans Committee Charter or by resolution. Section 8.2 TERMINATION. The Board shall have the right to terminate the Plan, in whole or in part, at any time and for any reason. Section 8.3 LIMITATIONS. No amendment or termination of the Plan shall decrease the amount of any Participant's Pension Restoration Benefit accrued or in pay status as of the date of amendment or termination (determined as if the Participant had terminated employment as of such date, or, if earlier, as of his actual date of termination). -12- ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1 NO CONTRACT OF EMPLOYMENT. Nothing contained herein shall be construed as conferring upon any person the right to be employed by the Employer or to continue in the employ of the Employer, and nothing contained herein shall be construed to limit the right of the Employer to terminate the employment of any Eligible Employee. Section 9.2 APPLICABLE LAW. The provisions of this Plan shall be construed and interpreted according to the laws of the State of Tennessee, to the extent not superseded by federal law. Section 9.3 HEADINGS. The headings of the Articles and Sections of the Plan are for reference only. In the event of a conflict between a heading and the contents of an Article or Section, the contents of the Article or Section shall control. Section 9.4 ENTIRE AGREEMENT. This Plan contains the entire agreement by the Employer with respect to the subject matter hereof. No modification or claim of waiver of any of the provisions hereof shall be valid unless in writing and signed by the party against whom such modification or waiver is sought to be enforced. Section 9.5 SUCCESSORS. The provisions of this Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term "successors" as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Employer and successors of any such corporation or other business entity. -13- IN WITNESS WHEREOF, Thomas & Betts Corporation has caused these presents to be duly executed this ______ day of ______________, 1997. Attest: THOMAS & BETTS CORPORATION _________________________ By:___________________________ Secretary Title: -14- EX-10.9 7 EXHIBIT 10.9 THOMAS & BETTS CORPORATION RETIREMENT PLAN FOR NONEMPLOYEE DIRECTORS (as amended December 3, 1997) Effective as of September 6, 1989, THOMAS & BETTS CORPORATION hereby establishes the Thomas & Betts Corporation Retirement Plan for Nonemployee Directors, including Nonemployee Directors that have retired on or after May 1, 1987, a nonqualified deferred compensation plan for the exclusive benefit of its Nonemployee Directors, pursuant to authorization of the Board of Directors of THOMAS & BETTS CORPORATION. ARTICLE I INTRODUCTION Section 1.1 NAME OF PLAN. The name of the plan is the "Thomas & Betts Corporation Retirement Plan for Nonemployee Directors." It is also referred to as the "Plan." Section 1.2 EFFECTIVE DATE. The effective date of the Plan is September 6, 1989. ARTICLE II DEFINITIONS Section 2.1 "Beneficiary" shall mean the person or persons, natural or otherwise, designated by a Participant under Section 4.1 to receive a death benefit payable under Section 3.4. Section 2.2 "Board" shall mean the Board of Directors of Thomas & Betts Corporation. Section 2.3 "Board Service Year" shall mean the interval between two successive Annual Meetings of Shareholders. Any fraction of a year shall be deemed a full Board Service Year. Section 2.4 "Change of Control" shall mean a change of control of a nature that would be required to be reported in response to Item 1(a) of the Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); provided that, without limitation, such a "Change of Control" shall be deemed to have occurred if: (i) a third person, including a "group" as such term is used in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner, directly or indirectly, of 25% or more of the combined voting power of the Company's outstanding voting securities ordinarily having the right to vote for the election of directors of the Company; or (ii) individuals who, as of the date hereof, constitute the Board (the Board generally and as of the date hereof the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Plan, considered as though such person were a member of the Incumbent Board. Section 2.5 "Company" shall mean Thomas & Betts Corporation. Section 2.6 "Committee" shall mean the Corporate Governance Committee of the Board or its delegate. Section 2.7 "Nonemployee Director" shall mean a director serving on the Board of the Company who is not and has never been an employee of the Company or any of its subsidiaries or affiliated business entities. Section 2.8 "Participant" shall mean a person who satisfies or has satisfied all eligibility requirements necessary to receive benefits under this Plan pursuant to Section 3.1. Section 2.9 "Payment Date" shall mean the last business day in April of each calendar year. Section 2.10 "Retainer" shall mean the annual retainer fee in effect at the time that a Participant's service on the Board as a Nonemployee Director is terminated. ARTICLE III BENEFITS UNDER THE PLAN Section 3.1 ELIGIBILITY TO RECEIVE BENEFITS. A Nonemployee Director shall be eligible to receive benefits under this Plan if (1) he or she was elected a member of the Board prior to December 4, 1997, and (2) at the time of termination from service as a Nonemployee Director, such person has completed at least five (5) Board Service Years (whether or not such periods are consecutive) as a Nonemployee Director or there has been a Change of Control. Section 3.2 VESTING OF BENEFITS. No Participant shall be vested in any benefits under this Plan until such Participant completes five (5) Board Service Years (whether or not such periods are consecutive) as a Nonemployee Director. After completion of five (5) Board Service Years (whether or not such periods are consecutive) as a Nonemployee Director, a Participant shall be vested fifty percent (50%) in the benefits provided under the Plan. For each additional Board Service Year as a Nonemployee Director thereafter, a Participant shall vest an additional ten percent (10%) until such Participant is fully vested. In the case of any break in service, all Board Service Years shall be aggregated to measure the total period of service. Notwithstanding any provision in this Section 3.2, in the event of a Change of Control, a Participant shall be one hundred percent (100%) vested in the benefits provided under this Plan. Section 3.3 AMOUNT OF ANNUAL BENEFIT PAYABLE. A participant who is eligible to receive benefits under this Plan shall be entitled to receive an annual benefit of an amount equal to the Participant's vested percentage (calculated in accordance with Section 3.2) of the Retainer (the "Annual Benefit"). Section 3.4 TIME AND DURATION OF PAYMENTS. The Annual Benefit shall be paid to the Participant or his or her Beneficiary on each Payment Date, beginning with the Payment Date immediately following the Participant's termination from service as a Nonemployee Director (the "First Payment Date"). The Annual Benefit shall be paid for a number of Payment Dates (which includes the First Payment Date) not to exceed the lesser of: (a) The Participant's number of Board Service Years as a Nonemployee Director; or (b) 10 payment dates. In the event of the death of a Participant, any benefit under the plan that remains unpaid shall be paid to his or her Beneficiary at the same time and in the same manner that the benefit would have been paid to the Participant. However, a Participant may elect to defer the commencement date for the payment of benefits under this Plan from the First Payment Date to the Payment Date immediately following the date on which such Participant attains age 70. Such election must be in writing and delivered to the committee prior to the date that such Participant terminates service as a Nonemployee Director. In the case of an election pursuant to this Section 3.4, the amount of the Annual Benefit for each year provided by Section 3.3 shall be increased annually, until such Annual Benefit is paid, by interest in an amount equal to the rate of interest that the Company could obtain for an investment in a one-year Certificate of Deposit on the Payment Date. Section 3.5 NON-ASSIGNABILITY OF INTERESTS. The interests herein and the right to receive benefits hereunder may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process, and if any attempt is made to do so, or a Participant becomes bankrupt, the interests under the Plan of the person affected may be terminated by the Committee, which, in its sole discretion, may cause the same to be held or applied for the benefit of one or more of the dependents of such person or make any other disposition of such interests as it deems appropriate. Section 3.6 UNFUNDED AND UNSECURED PROMISE TO PAY. Any benefit under this Plan shall be an unfunded and unsecured promise to pay and any payments made by the Company pursuant to this Plan shall be made from the general assets of the Company. However, the Company may in its discretion set aside assets or purchase annuity or life insurance contracts to discharge all or a part of its obligation under this Plan. Any such assets shall remain the property of the Company, subject to creditors of or claims against the Company. However, nothing contained in this Plan shall be construed as the creation by the Company of an escrow account or trust fund or any other form of asset segregation. The rights of a Participant or his or her Beneficiary shall be only those of an unsecured creditor and such persons shall not have any right, title or interest in any assets of the Company. The only right of the Participant or his or her Beneficiary shall be the right to receive the benefits provided by this Plan. Section 3.7 FORFEITURE OF BENEFITS. All benefits not yet paid for which a Nonemployee Director would be otherwise eligible under this Plan shall be forfeited in the event that the Committee determines that any of the following circumstances has occurred: (a) The Nonemployee Director has engaged in knowing and willful misconduct in connection with his or her service as a director; or (b) The Nonemployee Director, without the consent of the Board at any time during or after his or her period of service as a Nonemployee Director, is employed by, becomes associated with, renders service (as a director or otherwise) to, or owns an interest (other than as a shareholder with a nonsubstantial interest) in, any business which is competitive with, or which controls a business which is competitive with the Company or any affiliates of the Company. ARTICLE IV BENEFICIARIES Section 4.1 DESIGNATION OF BENEFICIARY. Each Participant may designate from time to time any person or persons, natural or otherwise, as his or her Beneficiary or Beneficiaries to whom benefits under Section 3.4 are to be paid. Each Beneficiary designation shall be made on a form prescribed by the Committee and shall be effective only if one executed copy thereof is mailed, filed or otherwise delivered to the Committee during the Participant's lifetime. Each executed Beneficiary designation mailed, filed or otherwise delivered during the Participant's lifetime to the Committee shall revoke all Beneficiary designations previously made by the Participant. If no beneficiary designation is on file with the Committee at the time of the Participant's death, or if the person or persons designated as Beneficiary shall have predeceased the Participant, or if there is a dispute as to the Participant's legal beneficiary, the benefits under Section 3.4 shall be paid to the Participant's estate. ARTICLE V PLAN ADMINISTRATION Section 5.1 ADMINISTRATION. This Plan shall be administered by the Committee. The Committee shall have the authority to interpret this Plan and any such interpretation shall be final and binding on all parties. The Committee shall have the authority to delegate to others the duties and responsibilities of maintaining records and making distributions hereunder. The Board, or if specifically delegated, its delegate, may amend or terminate this Plan at any time, provided that no such amendment or termination shall adversely affect the amounts payable under the Plan before the time of such amendment or termination unless the Participant becomes entitled to a benefit at least equal in value to such amount under another plan or practice adopted by the Company, and provided, further, that after a Change of Control this Plan may not be amended with respect to the amount or treatment of benefits already accrued under this Plan without the written consent of a majority of Participants determined as of the day before such Change of Control. The Company will pay for all distributions made pursuant to this Plan and for all costs, charges and expenses relating to the administration of this Plan. Section 5.2 APPLICABLE LAW. All questions pertaining to the construction, validity and effect of this Plan shall be determined in accordance with the laws of the State of Tennessee. EX-10.10 8 EXHIBIT 10.10 EXHIBIT 10.10 THOMAS & BETTS CORPORATION DEFERRED FEE PLAN FOR NONEMPLOYEE DIRECTORS (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1998) ARTICLE 1 INTRODUCTION 1.1 RECITALS. (a) Effective January 1, 1986, the Board of Directors (the "Board") of Thomas & Betts Corporation (the "Corporation") approved and adopted the Thomas & Betts Deferred Fee Plan for Nonemployee Directors for the purpose of providing nonemployee directors with the opportunity to defer receipt of compensation earned as a director to a date following termination of such service and to aid the Corporation in attracting and retaining as members of its Board of Directors persons whose abilities, experience and judgment can contribute to the well being of the Corporation. (b) The Thomas & Betts Deferred Fee Plan for Nonemployee Directors was amended and restated effective November 3, 1993, as the Deferred Fee Plan for Nonemployee Directors of Thomas & Betts Corporation (the "Plan"). (c) The Board, desiring to amend the Plan to provide nonemployee directors with nonelective deferred fees in the form of stock credits, to add alternative reference funds as an additional mode of elective fee deferral, and to make certain other changes, hereby amends and restates the Deferred Fee Plan for Nonemployee Directors of Thomas & Betts Corporation in its entirety to read as set forth herein, effective January 1, 1998. 1.2 NAME AND PURPOSE. The name of this Plan is the "Deferred Fee Plan for Nonemployee Directors of Thomas & Betts Corporation." The purpose of the Plan is as stated in Section 1.1 above. 1.3 DEFINITIONS. Whenever used in the Plan, the following terms shall have the meaning set forth or referenced below: (a) "Account" means a Stock Account, a Mutual Fund Account, or a pre-1998 Cash Account. (b) "Board" has the meaning set forth in Section 1.1(a) above. (c) "Board Year" means a year beginning with the day on which the annual meeting of the shareholders of the Corporation (the "Shareholders' Meeting") is held, and ending on the day prior to the annual Shareholders' Meeting in the next calendar year. (d) "Business Day" means a day except for a Saturday, Sunday or a legal holiday. (e) "Cash Account" means a bookkeeping account which reflects the Compensation deferred by a Participant for a Plan Year prior to 1998 pursuant to the provisions of the Plan then in effect. (f) "Cash Credit" means a credit to a pre-1998 Cash Account, expressed in whole dollars and fractions thereof. (g) "Closing Price" means the closing price of the Common Stock as reported in the New York Stock Exchange Composite Tape. (h) "Committee" means, unless otherwise determined by the Board, the Corporate Governance Committee of the Board, or a committee consisting of at least two Nonemployee Directors who shall be appointed by the Board. If the Board does not appoint a committee, then references to Committee in the Plan shall be deemed to be references to the Board. (i) "Common Stock" means (i) the common stock, no par value, of the Corporation, adjusted as provided in Section 4.8, or (ii) if there is a merger or consolidation and the Corporation is not the surviving corporation thereof, the capital stock of the surviving corporation given in exchange for such common stock of the Corporation. (j) "Compensation" means retainer fees for service on, and fees for attendance at meetings of, the Board and any committees thereof, which are payable to a Nonemployee Director during a Plan Year. (k) "Corporation" has the meaning set forth in Section 1.1(a) above. (l) "Deferred Compensation Account" means a bookkeeping account established for a Participant under the Thomas & Betts Deferred Fee Plan for Nonemployee Directors before November 3, 1993, which was converted to a Cash Account or a Stock Account on or prior to December 31, 1993. (m) "Fair Market Value" means the average of the high and the low sales prices of the Common Stock as reported in the New York Stock Exchange Composite Tape. (n) "Mutual Fund Account" means a bookkeeping account which reflects the Compensation deferred by a Participant pursuant to Section 2.5. -2- (o) "Mutual Fund Credit" means a credit to the Mutual Fund Account, expressed in units or shares. (p) "Nonemployee Director" means any individual serving on the Board who is not an employee of the Corporation or any of its subsidiaries or affiliates. (q) "Participant" means: (i) A Nonemployee Director who has filed an election to participate in the Plan under Section 2.2 of the Plan with regard to any Plan Year, or who has deferred Compensation to an Account; and (ii) Any Nonemployee Director who is eligible to receive Stock Credits under Article 3. (r) "Plan" has the meaning set forth in Section 1.1(b) above. (s) "Plan Year" means the calendar year. (t) "Stock Account" means a bookkeeping account which reflects: (i) the Compensation deferred by a Participant pursuant to Section 2.4; and (ii) the Deferred Fees credited pursuant to Article 3. (u) "Stock Credit" means a credit to a Stock Account, calculated pursuant to Section 2.4 or Article 3. ARTICLE 2 ELECTIVE FEE DEFERRALS 2.1 ELIGIBILITY. Any Nonemployee Director may participate in the Plan by making an election to defer Compensation pursuant to Section 2.2. 2.2 ELECTION TO PARTICIPATE. (a) Each Nonemployee Director, and each first-time nominee for director who is not an employee of the Corporation or any of its subsidiaries or affiliates, may elect to defer payment of all or any portion of his or her Compensation that is payable during any Plan Year. Such election must be made prior to the date that services are rendered in the Plan Year in which such Compensation otherwise would be paid. -3- (b) An election to defer any Compensation under Section 2.2(a) above shall be: (i) in writing; (ii) delivered to the Committee or to the Secretary of the Corporation; and (iii) irrevocable with respect to a current Plan Year. If a director does not elect to defer Compensation payable to him or her during a Plan Year, all such Compensation shall be paid directly to such Nonemployee Director in accordance with resolutions adopted by the Board from time to time. 2.3 MODE OF DEFERRAL. (a) For Plan Years commencing on or after January 1, 1998, a Participant may elect to defer all or a portion of his or her Compensation for a Plan Year to a Stock Account, a Mutual Fund Account or a combination of such Accounts. Any such election shall be specified in the writing referred to in Section 2.2(b) above that is delivered by the Nonemployee Director to the Committee. A separate Stock Account and Mutual Fund Account, as appropriate, shall be established for a Participant for each such Plan Year in which he or she participates in the Plan under this Article 2 or Article 3. (b) For Plan Years commencing on or after January 1, 1994 and before January 1, 1998, a Participant could elect to defer all or a portion of his or her Compensation for a Plan Year to a Cash Account, a Stock Account or a combination of such Accounts. A separate Cash Account and Stock Account, as appropriate, was established for a Participant for each such Plan Year in which he or she participated in the Plan. Separate Cash Accounts and Stock Accounts were also established for the conversion of Participants' Deferred Compensation Accounts on or prior to December 31, 1993. (c) The Committee shall maintain such Accounts in the name of the Participant. Compensation deferred to a Stock Account, a Mutual Fund Account, or a pre-1998 Cash Account shall result in Stock Credits, or Mutual Fund Credits, or Cash Credits, respectively. 2.4 STOCK ACCOUNT. The Stock Account of a Participant established with respect to a Plan Year shall be credited, as of the day of such Plan Year on which the deferred Compensation otherwise would have been payable to such Participant, with Stock Credits equal to the number of shares of Common Stock (including fractions of a share) that are equal in value to the amount of such deferred Compensation, using the Fair Market Value of shares of Common Stock on the day on which such Stock Account is so credited. The Stock Account of a Participant who is eligible to participate under Article 3 shall also be credited with the Stock Credits described in Article 3. As of the date any dividend is paid to holders of shares of Common Stock, such Stock Account shall be credited with additional Stock Credits equal to the number of shares of Common Stock (including fractions of a share) that are equal in value, using the Fair Market Value of shares of Common Stock on the dividend payment date, to the amount which would have been paid as dividends on that number of shares (including fractions of a share) of Common Stock which is equal to the number of Stock Credits attributed to such Stock Account as of the record date for the -4- dividend payment. In the case of dividends paid in property other than cash, the amount of the dividend shall be deemed to be the fair market value of the property at the time of the payment of the dividend, as determined in good faith by the Committee. 2.5 MUTUAL FUND ACCOUNT. For Plan Years commencing on or after January 1, 1998, the Mutual Fund Account of a Participant established with respect to a Plan Year shall be credited, as of a date which is no later than ten Business Days after the day of such Plan Year on which the deferred Compensation otherwise would have been payable to such Participant, with Mutual Fund Credits determined in accordance with the following. A Participant's Mutual Fund Account may consist of any one or more of the investment funds or vehicles made available by the Corporation from time to time under the Thomas & Betts Corporation Supplemental Executive Investment Plan (hereinafter referred to as "Reference Funds"). A Participant who has elected to defer all or a portion of his or her Compensation for a Plan Year to a Mutual Fund Account shall further elect which one or more of the Reference Funds shall be used for purposes of crediting hypothetical investment gains (or losses) to such Mutual Fund Account. The number of Mutual Fund Credits credited to a Participant's Mutual Fund Account, if any, shall be based on the Participant's investment election, the amount of Compensation deferred, and standard recordkeeping practices of the Reference Funds selected by the Participant. The Mutual Fund Credits shall be deemed, for bookkeeping purposes only, to increase or decrease to reflect the hypothetical earnings and the hypothetical realized and unrealized gains and losses of the Reference Funds selected by the Participant. Quarterly Participant investment elections with respect to Reference Funds shall apply to past or current contributions to the Participant's Mutual Fund Account(s), as elected by the Participant. 2.6 CASH ACCOUNT. The Cash Account of a Participant established with respect to a Plan Year ending prior to January 1, 1998 shall continue to be credited as of the last day of each month, or as of the date the Cash Account is distributed, if earlier, with Cash Credits in an amount equal to the product of (a) the daily average balance in such Cash Account during such month and (b) the ratio of the number of days in the month to 365 days, multiplied by the rate of interest that the Corporation, on the first business day of each January, could obtain for an investment in a one-year Certificate of Deposit, as determined by the Committee. ARTICLE 3 NONELECTIVE FEE DEFERRALS 3.1 ELIGIBILITY. Effective May 6, 1998, each Nonemployee Director shall be eligible to participate in the Plan pursuant to this Article 3, unless he or she is in one of the following excluded categories: (a) A Nonemployee Director who is a participant in the Thomas & Betts Corporation Retirement Plan for Nonemployee Directors (the "Retirement Plan"), and who elects to continue to participate in the Retirement Plan, as described in Section 3.2; or -5- (b) A Nonemployee Director who has an individual compensation agreement with the Corporation, unless such agreement expressly provides for participation under this Article 3. 3.2 ELECTION RE RETIREMENT PLAN. On or before May 6, 1998, each Nonemployee Director who is a participant in the Retirement Plan shall elect, in writing, one of the following alternatives: (a) To continue to participate in the Retirement Plan, in which event he or she shall not be eligible to receive any Stock Credits under this Article 3; or (b) To cease to participate in the Retirement Plan, to participate in the Plan pursuant to this Article 3, and to have his or her accrued benefit under the Retirement Plan converted to initial Stock Credits to his or her Stock Account established with respect to the 1998 Plan Year, as described in this Section 3.2. A Nonemployee Director who makes this election shall thereby waive all rights and benefits under the Retirement Plan. If a Nonemployee Director makes the election described in paragraph (b) above, his or her Stock Account with respect to the 1998 Plan Year shall be credited with initial Stock Credits under this Article 3 equal to the number of shares of Common Stock (including fractions of a share) that are equal in value to the lump sum present value of his or her accrued benefit under the Retirement Plan, using the Fair Market Value of shares of Common Stock on May 5, 1998. The lump sum present value of the Nonemployee Director's accrued benefit under the Retirement Plan shall be determined as of May 5, 1998, assuming solely for purposes of such determination (i) full vesting, (ii) retirement at age 70, or current age, if later, and (iii) an interest rate equal to the interest assumption used by the Corporation for 1998 for financial reporting purposes for qualified retirement plans. 3.3 ANNUAL GRANT OF STOCK CREDITS. Effective for Board Years beginning on and after May 6, 1998, each Participant under this Article 3 who serves as a director for a Board Year shall be entitled to have his or her Stock Account for the Plan Year in which such Board Year ends credited with Stock Credits as herein described. If the Participant serves as a director for the full Board Year, his or her applicable Stock Account shall be credited as of the close of such Board Year with Stock Credits equal to the number of shares of Common Stock (including fractions of a share) that are equal in value to $7,500, using the Fair Market Value of shares of Common Stock on the last Business Day of such Board Year. The applicable Stock Account of a Participant under this Article 3 who serves for less than a full Board Year shall be credited as of the close of the Board Year with pro-rata Stock Credits. Additional Stock Credits attributable to dividends on Common Stock shall be credited to the applicable Stock Accounts of Participants pursuant to Section 2.4. -6- ARTICLE 4 DISTRIBUTION OF ACCOUNTS. 4.1 ELECTION OF TIME AND METHOD OF PAYMENT. (a) Distribution of each Stock Account, Mutual Fund Account or pre-1998 Cash Account of a Participant shall commence, in accordance with such Participant's irrevocable election with respect to such Account, as of (i) one month following such Participant's termination of service as a director, (ii) January 15 of the Plan Year following the Plan Year in which such Participant's service as a director ceases, or (iii) January 15 of a Plan Year prior to the Plan Year in which the Participant is scheduled to retire as a director, as specified by such Participant at the time of his or her election; PROVIDED, HOWEVER, that distribution of a Stock Account may not commence within six months of the date a deferral election was made under Article 2 to defer Compensation to such Account, and FURTHER PROVIDED that the distribution of any Stock Account or Cash Account created by conversion of the balance of a Deferred Compensation Account on or prior to December 31, 1993 shall be made pursuant to the election or elections in effect prior to November 3, 1993, with respect to such Deferred Compensation Account. If the date elected by a Participant for commencement of such distribution is not a Business Day, such distribution shall commence as of the next succeeding Business Day. (b) Distribution of each Stock Account, Mutual Fund Account and pre-1998 Cash Account shall be made, in accordance with the Participant's irrevocable election with respect to such Account, in a lump sum or in a number of annual installments (not to exceed 10). If no such election is made, distribution shall be made in a lump sum. Such payment or payments shall be in amounts determined pursuant to Section 4.3 below, and shall be made as of the date specified pursuant to Section 4.1(a) above, and such date of each succeeding Plan Year as applicable. (c) A Participant's irrevocable elections pursuant to Section 4.1(a) and (b) above must be in writing and be delivered to the Committee with such Participant's election to participate in the Plan for the applicable Plan Year. 4.2 DISTRIBUTION IN CASH. Distribution of a Participant's Stock Accounts, Mutual Fund Accounts, or pre-1998 Cash Accounts shall be made only in cash. 4.3 INSTALLMENT AMOUNT. (a) STOCK ACCOUNT. The amount of each installment with respect to a Stock Account of a Participant shall be equal to the product of the number of Stock Credits attributable to such installment and the average of the Closing Prices of shares of Common Stock on each Business Day during the Corporation's fiscal month immediately preceding -7- the day on which such installment is to be paid, except as otherwise specified in the Plan. The number of Stock Credits attributable to an installment with respect to such Stock Account (unless otherwise specified in the Plan) shall be equal to the product of the current number of Stock Credits attributed to such Stock Account and a fraction, the numerator of which is one and the denominator of which is the number of installments yet to be paid. (b) MUTUAL FUND ACCOUNT. The amount of each installment with respect to a Mutual Fund Account of a Participant shall be equal to the product of the total current value of the Participant's Mutual Fund Account and a fraction, the numerator of which is one and the denominator of which is the number of installments yet to be paid. Such installment payments shall be deemed to be made pro-rata from the Reference Funds in which such Mutual Fund Account is hypothetically invested. (c) CASH ACCOUNT. The amount of each installment with respect to a pre-1998 Cash Account of a Participant shall be equal to the product of the current balance in such Cash Account and a fraction, the numerator of which is one and the denominator of which is the number of installments yet to be paid. 4.4 SEVERE FINANCIAL HARDSHIP. Notwithstanding any other Section of this Article 4, at the written request of a Participant or a Participant's legal representative, the Committee, in its sole discretion upon a finding that continued deferral will result in severe financial hardship to the Participant, may authorize (i) the payment of all or a part of a Participant's Stock Account(s), Mutual Fund Account(s), and pre-1998 Cash Account(s) in a single installment prior to the distribution commencement date(s) for such Account(s) elected by the Participant pursuant to Section 4.1(a), or (ii) the acceleration of payment of any multiple installments thereof. 4.5 CONVERSIONS. (a) A Participant who is no longer serving as a director of the Corporation may elect to convert all or any portion of his or her Stock Accounts for any Plan Years to Mutual Fund Accounts for such Plan Years. The amount to be credited to such Participant's Mutual Fund Account for any Plan Year shall be equal to the product of the number of Stock Credits then credited to the Stock Account for such Plan Year as to which such election has been made and the average of the Closing Prices of shares of Common Stock on each Business Day during the Corporation's fiscal month immediately preceding or ending on the day before the effective date of the conversion. A dividend earned on the number of Stock Credits that are credited to the Stock Account as of a record date that occurs prior to the effective date of the conversion shall be credited before making such conversion, or, if the dividend payment date is after the effective date of the conversion, the dividend amount shall be credited on the dividend payment date as a Mutual Fund Credit to the Mutual Fund Account. -8- (b) A Participant shall not be permitted to convert any portion of his or her Mutual Fund Account(s) to a Stock Account, or to convert any portion of his or her pre-1998 Cash Account(s) to a Stock Account or a Mutual Fund Account. (c) Any election by a Participant under this Section 4.5 shall be irrevocable, and to be effective shall be in a writing delivered to the Committee prior to the end of any Corporation fiscal quarter. 4.6 DISTRIBUTION UPON DEATH. Notwithstanding any other provision of this Plan, upon the death of a Participant, the Committee shall pay all of such Participant's Stock Accounts, Mutual Fund Accounts, and pre-1998 Cash Accounts in a single installment to such person or persons or the survivors thereof, including corporations, unincorporated associations or trusts, as the Participant may have designated. All such designations shall be made in writing and delivered to the Committee. A Participant may from time to time revoke or change any such designation by written notice to the Committee. If there is no designation on file with the Committee at the time of the Participant's death, or if the person or persons designated therein shall have all predeceased the Participant or otherwise ceased to exist, or if there is a dispute among designees of a Participant, such distributions shall be made to the executor or administrator of the Participant's estate. Any distribution under this Section 4.6 shall be made as soon as practicable after the Committee is notified of the Participant's death or is satisfied as to the identity of the appropriate payee, whichever is later. The amount payable under this Section 4.6 with respect to a Participant's Stock Accounts shall be equal to the product of the number of Stock Credits with which such Stock Accounts then are credited and the average of the Closing Prices of shares of Common Stock on each Business Day during the Corporation's fiscal month immediately preceding or ending on the day of such Participant's death. 4.7 WITHHOLDING TAXES. The Corporation shall deduct from all distributions under the Plan any taxes required to be withheld by federal, state, or local governments. 4.8 ADJUSTMENT OF STOCK ACCOUNTS. If at any time the number of outstanding shares of Common Stock shall be increased as the result of any stock dividend, stock split, subdivision or reclassification of shares, the number of Stock Credits with which each Stock Account of a Participant is credited shall be increased in the same proportion as the outstanding number of shares of Common Stock is increased. If the number of outstanding shares of Common Stock shall at any time be decreased as the result of any combination, reverse stock split or reclassification of shares, the number of Stock Credits with which each Stock Account of a Participant is credited shall be decreased in the same proportion as the outstanding number of shares of Common Stock is decreased. In the event the Corporation shall at any time be consolidated with or merged into any other corporation and holders of shares of Common Stock receive shares of the capital stock of the resulting or surviving corporation (or any consideration other than shares of capital stock), there shall be credited to each Stock Account of a Participant, in place of the Stock Credits then credited thereto, new Stock Credits in an amount equal to the product of the number of shares of capital stock (or consideration other than shares of capital stock) exchanged for one share of Common Stock upon -9- such consolidation or merger and the number of Stock Credits with which such Account then is credited. ARTICLE 5 THE COMMITTEE 5.1 AUTHORITY. The Committee shall have full power and authority to administer the Plan, including the power to (a) promulgate forms to be used with respect to the Plan, (b) promulgate rules of Plan administration, (c) settle any disputes as to rights or benefits arising from the Plan, (d) interpret and construe the terms of the Plan, including, but not limited to, determining entitlement to benefits and the amount of such benefits, and (e) make such decisions or take such action as the Committee, in its sole discretion, deems necessary or advisable to aid in the proper administration of the Plan. Any decision made by the Committee shall be final and binding on the Corporation, Participants and their heirs or successors. The Committee may delegate its power and authority to administer the Plan to officers and employees of the Corporation. 5.2 OPERATION. The Committee may act (a) by majority vote of its members meeting in person or by telephone, or (b) by consent in writing signed by all of the members of the Committee. Two members of the Committee shall constitute a quorum for the transaction of business at a meeting. 5.3 ELECTIONS, NOTICES. All elections and notices required to be provided to the Committee under the Plan must be in such form or forms prescribed by, and contain such information as is required by, the Committee. ARTICLE 6 MISCELLANEOUS 6.1 FUNDING. All amounts payable under the Plan shall constitute a general unsecured obligation of the Corporation. The Board may, however, in the event of a change of control of the Corporation or for administrative reasons, fully fund the Plan by means of a contribution to the Thomas & Betts Corporation Agreement and Plans Trust dated May 20, 1988 (the "Rabbi Trust"), as amended, or other "rabbi" trust selected by the Committee. 6.2 NON-ALIENATION OF BENEFITS. No benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void. No such benefit, prior to receipt thereof pursuant to the provisions of the Plan, shall be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the Participant. -10- 6.3 GOVERNING LAW. This Plan shall be governed by the laws of the State of Tennessee. 6.4 AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Board at any time may terminate and in any respect amend or modify the Plan; PROVIDED, HOWEVER, that no such termination, amendment or modification shall adversely affect the rights of any Participant or beneficiary, including his or her rights with respect to Stock Credits, Mutual Fund Credits, and Cash Credits credited prior to such termination, amendment or modification, without his or her consent. 6.5 SUCCESSORS AND HEIRS. The Plan and any properly executed elections hereunder shall be binding upon the Corporation and Participants, and upon any assignee or successor in interest to the Corporation and upon the heirs, legal representatives and beneficiaries of any Participant. 6.6 STATUS OF PARTICIPANTS. Stock Credits are not, and do not constitute, shares of Common Stock; and Mutual Fund Credits are not, and do not constitute, shares of a mutual fund. No right as a holder of shares of Common Stock or a mutual fund shall devolve upon a Participant by reason of his or her participation in the Plan. 6.7 STATEMENT OF ACCOUNTS. In February of each Plan Year, each Participant in the Plan during the immediately preceding Plan Year shall receive a statement of his or her Accounts under the Plan as of December 31 of such preceding Plan Year. Such statement shall be in a form and contain such information as is deemed appropriate by the Committee. -11- EX-10.11 9 EXHIBIT 10.11 110797 EMPLOYMENT AGREEMENT AGREEMENT between THOMAS & BETTS CORPORATION, a Tennessee corporation (the "Corporation"), and __________________________ (the "Executive"), dated as of the ______ day of ____________, 199__. The Corporation, on behalf of itself and its shareholders, wishes to continue to attract and retain well-qualified executive and key personnel who are an integral part of the management of the Corporation, such as Executive, and to assure both itself of continuity of management and Executive of continued employment in the event of any Change of Control (as defined in Section 2 of this Agreement) of the Corporation; IT IS, THEREFORE, AGREED: 1. OPERATION OF AGREEMENT. (a) The "Effective Date" shall be the date during the "Change-of-Control Period" (as defined in Section 1(b)) on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with the Corporation is terminated prior to the date on which a Change of Control occurs, and the Executive can reasonably demonstrate that such termination (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination. (b) The "Change-of-Control Period" is the period commencing on the date hereof and ending on the second anniversary of such date; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof is hereinafter referred to as the "Renewal Date"), the Change-of-Control Period shall be automatically extended so as to terminate two years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Corporation shall give notice that the Change-of-Control Period shall not be so extended. 2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of Control" shall mean a change of control during the Change-of-Control Period of a nature that would be required to be reported in response to Item 1(a) of the Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); provided that, without limitation, such a "Change of Control" shall be deemed to have occurred if: (i) a third person, including a "group" as such term is used in Section 13(d)(3) of the Exchange Act, becomes the beneficial owner, -2- directly or indirectly, of 25% or more of the combined voting power of the Corporation's outstanding voting securities ordinarily having the right to vote for the election of directors of the Corporation; or (ii) individuals who, as of the date hereof, constitute the Board of Directors of the Corporation (the "Board" generally and as of the date hereof the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the incumbent Board. 3. EMPLOYMENT PERIOD. The Corporation hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Corporation, for the period commencing on the Effective Date and ending on the third anniversary of such date (the "Employment Period"). -3- 4. POSITION AND DUTIES. (a) During the Employment Period, (i) the Executive's position (including status, offices, titles and reporting relationships), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date, and (ii) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than thirty-five (35) miles from such location. Such position, authority, duties and responsibilities shall be regarded as not commensurate if, as a result of a Change of Control, (i) the Corporation becomes a direct or indirect subsidiary of another corporation or corporations or becomes controlled, directly or indirectly, by one or more unincorporated entities (such other corporation or unincorporated entity owning or controlling, directly or indirectly, the greatest amount of equity (by vote) of the Corporation is hereinafter referred to as a "Parent Company"), or (ii) all or substantially all of the assets of the Corporation are acquired by another corporation or unincorporated entity or group of corporations or unincorporated entities owned or controlled, directly or indirectly, by another corporation or unincorporated entity (such other acquiring or controlling corporation or unincorporated entity is hereinafter referred to as a "Successor"), unless, in each case, (x) Section -4- 13(c) of this Agreement shall have been complied with and (y) the Executive shall have assumed a position with such Parent Company or Successor, as the case may be, and the Executive's position, authority, duties and responsibilities with such Parent Company or Successor, as the case may be, are at least commensurate in all material respects with the most significant of those held, exercised and assigned with the Corporation at any time during the 90-day period immediately preceding the Effective Date, or (iii) more than one unrelated corporation or unincorporated entity acquires a significant portion of the assets of the Corporation. (b) During the Employment Period, excluding periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Corporation and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. The Executive may (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities. It is expressly understood and agreed that to the extent that any such -5- activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Corporation. 5. COMPENSATION. (a) BASE SALARY. During the Employment Period, the Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the highest monthly base salary paid to the Executive by the Corporation, together with any of its affiliate companies, during the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be consistent with increases in base salary awarded in the ordinary course of business to other key executives. Any increase in the Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The Base Salary shall not be reduced after any such increase. As used in this Agreement, the term "affiliated companies" includes any company controlling, controlled by or under common control with the Corporation. (b) ANNUAL BONUS. In addition to the Base Salary, the Executive shall be awarded, for each fiscal year of the -6- Corporation ("Fiscal Year") during the Employment Period, an annual bonus (an "Annual Bonus") (either pursuant to a bonus, profit-sharing or incentive plan or program of the Corporation or otherwise) in cash at least equal to the average bonus paid or payable to the Executive in respect of each of the Fiscal Years (annualized with respect to any such Fiscal Year for which the Executive has been employed only during a portion thereof) during the three Fiscal Years immediately prior to the Fiscal Year in which the Effective Date occurs. Each such Annual Bonus shall be paid no later than March 15 of the Fiscal Year next following the Fiscal Year for which the Annual Bonus is awarded, unless the Executive shall otherwise elect to defer the receipt of such Annual Bonus. (c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. In addition to the Base Salary and Annual Bonus payable as hereinabove provided, the Executive shall be entitled to participate, during the Employment Period, in all incentive, savings and retirement plans and programs applicable to other key executives (including the Corporation's restricted stock and stock option plans), but in no event shall such plans and programs, in the aggregate, provide the Executive with compensation, benefits and reward opportunities less favorable than the most favorable of those provided by the Corporation and its affiliated companies for the Executive under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date -7- or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. (d) WELFARE BENEFIT PLANS. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under each welfare benefit plan of the Corporation, including, without limitation, all medical, prescription, dental, disability, salary continuance, group life, accidental death and travel accident insurance plans and programs of the Corporation and its affiliated companies, in each case comparable to those in effect at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (e) EXPENSES. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable to the Executive of the policies and procedures of the Corporation in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. -8- (f) FRINGE BENEFITS. During the Employment Period, the Executive shall be entitled to fringe benefits, including use of an automobile and payment of related expenses, in accordance with the most favorable to the Executive of the policies of the Corporation in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (g) OFFICE AND SUPPORT STAFF. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to those provided to the Executive at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. (h) VACATION. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable to the Executive of the policies of the Corporation in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. -9- (i) RESTRICTED STOCK; STOCK OPTIONS. On the Effective Date, restricted stock held by the Executive shall become immediately vested and non-forfeitable, and all of the Executive's stock options shall become immediately exercisable. 6. TERMINATION OF EMPLOYMENT. (a) DISABILITY. During the Employment Period, the Corporation may terminate the Executive's employment, after having established the Executive's Disability (pursuant to the definition of "Disability" set forth below), by giving to the Executive written notice of its intention so to terminate the Executive's employment. In such a case, the Executive's employment with the Corporation shall terminate effective on the 180th day after receipt of such notice (the "Disability Effective Date"), provided that, within 180 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means disability which, after the expiration of 26 weeks or more after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement to acceptability not to be withheld unreasonably). (b) CAUSE. During the Employment Period, the Corporation may terminate the Executive's employment for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of -10- dishonesty taken by the Executive and intended to result in substantial personal enrichment of the Executive, (ii) repeated violations by the Executive of the Executive's obligations under Section 4(b) of this Agreement which are demonstrably willful and deliberate on the Executive's part or (iii) the conviction of the Executive of a felony. (c) GOOD REASON. During the Employment Period, the Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" means (i) (A) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting relationships), authority, duties or responsibilities as contemplated by Section 4 of this Agreement or (B) any other action by the Corporation which results in a diminution in such position, authority, duties or responsibilities, other than an insubstantial and inadvertent action which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Corporation to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial and inadvertent failure which is -11- remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (iii) the Corporation's requiring the Executive to be based at any office or location other than as described in Section 4(a)(ii) hereof, except for travel reasonably required in the performance of the Executive's responsibilities; (iv) any purported termination by the Corporation of the Executive's employment otherwise than as permitted by this Agreement, it being understood that any such purported termination shall not be effective for any purpose of this Agreement; or (v) any failure by the Corporation to comply with and satisfy Section 13(c) of this Agreement. For purposes of this Section 6(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) NOTICE OF TERMINATION. Any termination by the Corporation for Cause under Section 6(b) or by the Executive for Good Reason under Section 6(c) shall be communicated by Notice of Termination to the other party hereto given in accordance with -12- Section 14(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 15 days after the giving of such notice). (e) DATE OF TERMINATION. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be. If the Executive's employment is terminated by the Corporation during the Employment Period other than for Cause or Disability, the Date of Termination shall be the date on which the Executive receives notice of such termination. 7. OBLIGATIONS OF THE CORPORATION UPON TERMINATION OF EMPLOYMENT. (a) DEATH. If, during the Employment Period, the Executive's employment is terminated by reason of the Executive's death, the Corporation shall not have any further obligations to the Executive's legal representatives under this Agreement, other than those obligations accrued hereunder at the date of the Executive's death, and except as provided in this Section 7(a). The Executive's family shall be entitled to receive benefits at -13- least equal to the most favorable benefits provided by the Corporation to surviving families of executives of the Corporation under such plans, programs, and policies relating to family death benefits, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other key executives and their families. (b) DISABILITY. If, during the Employment Period, the Executive's employment is terminated by reason of the Executive's Disability (as defined in Section 6(a)), the Executive shall be entitled after the Disability Effective Date to receive disability and other benefits at least equal to the most favorable of those provided by the Corporation to disabled employees and/or their families in accordance with such plans, programs and policies relating to disability, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other key executives and their families. (c) CAUSE. If, during the Employment Period, the Executive's employment shall be terminated for Cause (as defined in Section 6(b)), the Corporation shall pay the Executive his full Base Salary through the Date of Termination at the rate in -14- effect at the time Notice of Termination is given and shall have no further obligations to the Executive under this Agreement. (d) GOOD REASON; OTHER THAN FOR CAUSE OR BY REASON OF DEATH OR DISABILITY. If, during the Employment Period, the Executive's employment is terminated other than for Cause or by reason of Death or Disability, or the employment of the Executive shall be terminated by the Executive for Good Reason: (i) the Corporation shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts: (A) to the extent not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate in effect on the Date of Termination or, if higher, at the highest rate in effect at any time within the 90-day period preceding the Effective Date; and (B) the product of (x) the Annual Bonus paid to the Executive for the last Fiscal Year ending prior to the Date of Termination and (y) a fraction the numerator of which is the number of days in the period extending from the beginning of the Fiscal Year in which the Date of Termination -15- occurs up to the Date of Termination and the denominator of which is 365; and (C) except as otherwise provided under the Corporation's Supplemental Executive Investment Plan, any undistributed amounts relating to compensation previously deferred by the Executive; and (D) the product of (x) the Executive's Base Salary at the monthly rate in effect on the Date of Termination or, if higher, at the highest rate in effect at any time within the 90-day period preceding the Effective Date and (y) the number of months in the period extending from the Termination Date to the end of the Employment Period (hereinafter the "Remainder of the Employment Period"); and (E) the product of (x) one-twelfth of the greater of (1) the greatest annual bonus paid to the Executive for any of the last five Fiscal Years ending prior to the Date of Termination or (2) the highest midpoint of the Executive's bonus range for any of such Fiscal Years and (y) the number of months in the Remainder of the Employment Period; -16- (ii) the Corporation shall continue benefits for the Remainder of the Employment Period to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs and policies described in Sections 5(d) and 5(f) of this Agreement if the Executive's employment had not been terminated, including health insurance, life insurance and use of a leased car, if and as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives and their families; provided, however, that any amounts paid or benefits provided under this Section shall not duplicate any similar benefits earned by the Executive as of result of employment by another employer; (iii) the Executive shall be entitled to receive retirement benefits under the change-of-control provisions of the Corporation's Executive Retirement Plan; and (iv) the Corporation shall provide for standard outplacement services by any one qualified outplacement -17- agency selected by the Executive and reasonably satisfactory to the Corporation. Anything in this Agreement to the contrary notwithstanding, immediately prior to the Effective Date, the Corporation shall transfer funds to the Thomas & Betts Agreement & Plans Trust in an amount which it shall in good faith estimate to be sufficient to make the payments that would be required under this Section 7(d) and under Section 11 if the Executive's employment were terminated under Section 7(d) immediately following the Effective Date. If the Corporation subsequently determines that the amount so transferred is inadequate, it shall transfer additional funds to said Trust in order to provide sufficient funds to make such payments. In addition, at any time prior to the Effective Date, upon the request of the Executive, the Corporation may offer to extend the exercise period of any stock option previously granted to the Executive by the Corporation. If so requested, the Corporation may offer the Executive the opportunity to extend until the expiration date the exercise period of any or all of such stock options in the event that the Executive's employment is terminated during the Employment Period under the circumstances described in Section 7(d). If the Corporation makes such an offer, it shall not be effective unless accepted by the Executive. -18- 8. NO DUTY TO MITIGATE. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced, except as otherwise specifically provided herein, by any compensation earned by the Executive as a result of employment by another employer. 9. NON-EXCLUSIVITY OF RIGHTS. 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 Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. Anything herein to the contrary notwithstanding, if the Executive becomes entitled to payments pursuant to paragraph 7(d) hereof, such Executive agrees to waive payments under any severance plan or program of the Corporation. -19- 10. FULL SETTLEMENT. The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or others. The Corporation agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under, any provision of this Agreement (including Section 11) or any guarantee of performance thereof, plus in each case interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Internal Revenue Code (the "Code"). 11. TAX PAYMENT. (a) WITHHOLDINGS AND DEDUCTIONS. Any payment made pursuant to Section 7(d) shall be paid, less standard withholdings and other deductions authorized by Executive or required by law. (b) GROSS-UP FOR CERTAIN TAXES. All determinations required to be made under this Section 11 shall be made by KPMG Peat Marwick LLP, or other comparable national accounting firm selected in good faith by the Corporation (the "Accounting Firm") which shall provide detailed supporting calculations both to the -20- Corporation and the Executive within 15 (fifteen) business days of the Date of Termination or such earlier time as is requested by the Corporation. If it is determined by the Accounting Firm that any benefit received or deemed received by the Executive from the Corporation pursuant to this Agreement or otherwise (collectively, the "Payments") is or will become subject to any excise tax under Section 4999 of the Code or any similar tax payable under any United States federal, state, local or other law (such excise tax and all such similar taxes collectively, "Excise Taxes"), then the Corporation shall, immediately after such determination, pay the Executive an amount ("the Gross-up Payment") such that the net amount retained by the Executive, after the deduction of any Excise Taxes (including any applicable interest and penalties) on the Payments, and any federal, state, and local income tax, and any Excise Tax (including any applicable interest and penalties on all such taxes), upon such Gross-up Payment, shall be equal to the amount of the Payments in the absence of the imposition of such Excise Tax and the Gross-up Payment. For purposes of determining the amount of the Gross-up Payment, the Executive shall be deemed to pay income taxes at the highest marginal rates of the applicable federal, state and local income taxation in the calendar year in which the Gross-up Payment is to be made. -21- (c) DETERMINATION BY THE EXECUTIVE. If at any time following determination of the Gross-up Payment by the Accounting Firm, the Executive disputes the amount of the Gross-up Payment, the Executive may elect to demand payment of the amount which the Executive, in accordance with an opinion of counsel to the Executive ("Executive Counsel Opinion"), determines to be the Gross-up Payment. Any such demand by the Executive shall be made by delivery to the Corporation of a written notice which specifies the Gross-up Payment determined by the Executive and an Executive Counsel Opinion regarding such Gross-up Payment (such written notice and opinion collectively, the "Executive's Determination"). Within 14 days after delivery of the Executive's Determination to the Corporation, the Corporation shall either (i) pay the Executive the Gross-up Payment set forth in the Executive's Determination (less the portion of such amount, if any, previously paid to the Executive by the Corporation) or (ii) deliver to the Executive a certificate specifying the Gross-up Payment determined by the Accounting Firm, together with an opinion of the Corporation's counsel ("Corporation Counsel Opinion"), and pay the Executive the Gross-up Payment specified in such certificate. If for any reason the Corporation fails to comply with clause (ii) of the preceding sentence, the Gross-up Payment specified in the Executive's Determination shall be controlling for all purposes. -22- (d) OPINION OF COUNSEL. "Executive Counsel Opinion" means a legal opinion of a nationally recognized executive compensation counsel that there is a reasonable basis to support a conclusion that the Gross-up Payment determined by the Executive has been calculated in accordance with this Section and applicable law. "Corporation Counsel Opinion" means a legal opinion of a nationally recognized executive compensation counsel that (i) there is a reasonable basis to support a conclusion that the Gross-up Payment set forth by the Accounting Firm has been calculated in accordance with this Section and applicable law, and (ii) there is no reasonable basis for the calculation of the Gross-up Payment determined by the Executive. (e) ADDITIONAL GROSS-UP AMOUNTS. If, despite the initial conclusion of the Corporation and/or the Executive that certain Payments are neither subject to Excise Taxes nor to be counted in determining whether other Payments are subject to Excise Taxes (any such item, a "Non-Parachute Item"), it is later determined (pursuant to the subsequently-enacted provisions of the Code, final regulations or published rulings of the IRS, final judgment of a court of competent jurisdiction or the Accounting Firm) that any of the Non-Parachute Items are subject to Excise Taxes, or are to be counted in determining whether any Payments are subject to Excise Taxes, with the result that the amount of Excise Taxes payable by the Executive is greater than the amount determined by the Corporation or the Executive pursuant to this Section, as -23- applicable, then the Corporation shall pay the Executive an additional Gross-up Payment in order to compensate the Executive for (i) such additional Excise Taxes, any interest, fines, penalties, expenses or other costs incurred by the Executive as a result of having taken a position in accordance with a determination made pursuant to Section 11(b, and (ii) any federal, state, and local income tax, and any Excise Tax upon such additional Gross-up Payments, calculated in the manner described in Section 11(b). (f) AMOUNT INCREASED OR CONTESTED. The Executive shall notify the Corporation in writing of any claim by the IRS or other taxing authority that, if successful, would require the payment by the Corporation of a Gross-up Payment. Such notice shall include the nature of such claim and the date on which such claim is due to be paid. The Executive shall give such notice as soon as practicable, but no later than 10 business days, after the Executive first obtains actual knowledge of such claim; provided, however, that any failure to give or delay in giving such notice shall affect the Corporation's obligations under this Section only if and to the extent that such failure results in actual prejudice to the Corporation. The Executive shall not pay such claim less than 30 days after the Executive gives such notice to the Corporation (or, if sooner, the date on which payment of such claim is due). If the Corporation notifies the -24- Executive in writing before the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Corporation any information that it reasonably requests relating to such claim, (ii) take such action in connection with contesting such claim as the Corporation reasonably requests in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation, (iii) cooperate with the Corporation in good faith to contest such claim, and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including related interest and penalties, imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing, the -25- Corporation shall control all proceedings in connection with such contest and, at its sole option, may pursue or forego 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. 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 Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify the Executive, on an after-tax basis, for any Excise Tax or income tax, including related interest or penalties, imposed with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. The Corporation's control of the contest shall be limited to issues with respect to which a Gross-up Payment would be payable. The Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the IRS or other taxing authority. -26- (g) REFUNDS. If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 11(f), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Corporation's complying with the requirements of Section 11(f)) promptly pay the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 11(f), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such determination before the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-up Payment required to be paid. Any contest of a denial of refund shall be controlled by Section 11(f). 12. CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Corporation or any of its affiliated companies and which shall not be public -27- knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 12 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 13. SUCCESSORS. (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. (c) The Corporation will require any Successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent -28- that the Corporation would be required to perform it if no such succession had taken place. As used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore defined and any Successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 14. MISCELLANEOUS. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by a courier service such as Federal Express addressed as follows: IF TO THE EXECUTIVE: name/address -29- IF TO THE CORPORATION: 8155 T&B Boulevard Memphis, TN 38125 Attention: Vice President-General Counsel, or to the then current address of the Corporation's principal executive offices, or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Corporation may withhold from any amounts payable under this Agreement such federal, state, or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) This Agreement contains the entire understanding between the Corporation and the Executive with respect to the subject matter hereof and supersedes and nullifies any previous change-of-control employment agreement between the parties. (f) The Executive and the Corporation acknowledge that the employment of the Executive by the Corporation is "at will," and, -30- prior to the Effective Date, may be terminated by either the Executive or the Corporation at any time. Upon a termination of the Executive's employment or upon the Executive's ceasing to be an officer of the Corporation, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Executive has hereunto set his or her hand and, pursuant to the authorization from its Board of Directors, the Corporation has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. --------------------------------------- NAME THOMAS & BETTS CORPORATION By ------------------------------------- Clyde R. Moore President and Chief Executive Officer Attest: ----------------------------------- Janice H. Way, Secretary -31- EX-10.14 10 EXHIBIT 10.14 THOMAS & BETTS CORPORATION EXECUTIVE RETIREMENT PLAN (AS AMENDED FEBRUARY 5, 1997) THOMAS & BETTS CORPORATION EXECUTIVE RETIREMENT PLAN INTRODUCTION Thomas & Bett Corporation (the "Company") has adopted this Executive Retirement Plan effective as of September 2, 1992, and as amended on December 16, 1993 and February 5, 1997, to provide additional retirement income and death benefit protection to certain officers of the Company in recognition of their contribution to the Company in carrying out senior management responsibilities. The terms and conditions of participation and benefits under this Executive Retirement Plan are set out in this document. All benefits payable under this Plan, which is intended to constitute a non-qualified, unfunded deferred compensation plan for a select group of management employees under Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), shall be paid out of the general assets of the Company. THOMAS & BETTS CORPORATION EXECUTIVE RETIREMENT PLAN AS AMENDED 02/05/97 ARTICLE 1. DEFINITIONS 1.01 "ACTUARIAL EQUIVALENT" shall mean the equivalent value when computed based on the UP-84 Mortality Table and an interest rate equal to 100 percent of the interest rate which would be used by the Pension Benefit Guaranty Corporation (under the pre-11/1/93 methodology) for valuing immediate annuities for single employer plans that terminate on the first day of the month in which the Eligible Employee's Benefit payments commence (the "PBGC Interest Rate"). 1.02 "AFFILIATED COMPANY" shall mean any company not participating in the Plan which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which also includes as a member of the Company; any trade or business under common control (as defined in Section 414(c) of the Code) with the Company; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes the Company; and any other entity required to be aggregated with the Company pursuant to regulations under Section 414(o) of the Code. 1.03 "AVERAGE MONTHLY COMPENSATION" shall mean the average monthly compensation of an Eligible Employee during any sixty (60) consecutive months during his employment with the Company or an Affiliated Company affording the highest such average. 1.04 "BENEFICIARY" shall mean the person or persons designated by an Eligible Employee as beneficiary in a time and manner determined by the Committee. If the Eligible Employee fails to designate a Beneficiary or if the Beneficiary predeceases the Eligible Employee, the Eligible Employee's spouse shall be the Beneficiary or if no spouse survives the Eligible Employee, the Eligible Employee's estate shall be the Beneficiary. An Eligible Employee may change his designated Beneficiary in a time and manner determined by the Committee. 1.05 "BENEFIT" shall mean the payments payable under Article 2 of this Plan. 1.06 "BOARD OF DIRECTORS" shall mean the Board of Directors of Thomas & Betts Corporation. 1.07 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time. 1.08 "COMMITTEE" shall mean the Company's Human Resources Committee of the Board of Directors, any successor or substitute committee thereto, or, during any period of time when no such committee is in existence, the Company's entire Board of Directors. 1.09 "COMPANY" shall mean the Thomas & Betts Corporation or any successor by merger, purchase or otherwise, with respect to its employees and such affiliated companies authorized by the Board of Directors, on such terms and conditions as the Board may determine, to participate in the Plan. 1.10 "COMPENSATION" shall mean the base cash compensation paid to an Eligible Employee in respect of each month for services rendered to the Company by such Eligible Employee (in respect of each month for services rendered to the Company by such Eligible Employee), plus the amount paid pursuant to the provisions of the Officer Profit Sharing Plan and the Management Incentive Plan or such substitute or similar plans, determined prior to any pre-tax contributions under a "qualified cash or deferred arrangement" (as defined under Section 401(k) of the Code and its applicable regulations) or under a "cafeteria plan" (as defined under Section 125 of the Code and its applicable regulations). l.11 "CREDITED SERVICE" shall mean, with respect to an Eligible Employee, service determined pursuant to the provisions of Section 2.9 of the Retirement Plan. Notwithstanding the foregoing, an Eligible Employee may, subject to the approval by the Board of Directors, be granted additional months or years of age or of Credited Service for purposes of determining the amount of Benefits under the Plan or for purposes of satisfying the service eligibility requirements necessary for Benefits under the Plan, or both. The number of additional months or years of age or of Credited Service so granted, if any, shall be set forth in Appendix A. 1.12 "EFFECTIVE DATE" shall mean September 2, 1992. 1.13 "ELIGIBLE EMPLOYEE" mean an employee who occupies a position of senior management with the Company who has been approved by the Committee and who is listed on Appendix A, as amended from time to time. No employee who is a party to a Supplemental Executive Retirement Contract (the "SERC") shall be so approved by the Committee unless such employee has executed, in form satisfactory to the Committee, a written agreement terminating all of the obligations of the Company under the SERC and canceling any entitlements thereunder in respect of such employee. 1.14 "INVESTMENT PLAN" shall mean the Thomas & Betts Corporation Employees' Investment Plan. 1.15 "NORMAL RETIREMENT DATE" shall mean the first day of the calendar month following an Eligible Employee's 65th birthday. 1.16 "PLAN" shall mean the Thomas & Betts Corporation Executive Retirement Plan, as amended from time to time. 1.17 "RETIREE" shall mean an Eligible Employee (i) who has attained age 55 and completed 20 or more years of Credited Service or (ii) whose combined years of age and Credited Service (each completed to the nearest full month with any fractional part of a month of less than 15 days disregarded) equals 70 or more as of the Effective Date, and in each case, who either voluntarily or upon the Company's request or demand terminates employment with the Company and all Affiliated Companies after the Effective Date. 1.18 "RETIREMENT PLAN" shall mean The Thomas & Betts Pension Plan, as amended from time to time. 1.19 "SOCIAL SECURITY BENEFIT" shall mean the annual old-age Insurance benefit which the Eligible Employee is entitled to receive under Title II of the Social Security Act as in effect on his Normal Retirement Date or which he would be entitled to receive on his Normal Retirement Date if he did not disqualify himself from receiving Social Security Benefits by entering into covered employment or for any other reason. 1.20 "10 YEAR CERTAIN AND LIFE ANNUITY" shall mean an annuity which provides a benefit payable during the Retiree's life and, if such Retiree dies during the 10 year period after the date such benefit began, a lump-sum payment shall be made to the Retiree's Beneficiary in respect of the balance of the payments for such 10 year period. ARTICLE 2. AMOUNT OF PAYMENT OF BENEFITS 2.01 Payment of Benefit Except as otherwise provided in Section 2.07 hereof, Benefits shall be payable by the Company only with respect to an Eligible Employee who becomes a Retiree, subject to the provisions of Section 3.07. Such benefits shall be payable from the general assets of the Company. 2.02 Amount of Benefit The monthly amount of the Benefit payable in the form of 10 Year Certain and Life Annuity shall be equal to: (A) the greater of (i) or (ii) where (i) equals 2.5 percent of the Eligible Employee's Average Monthly Compensation multiplied by the first 20 years of his Credited Service plus 1.5 percent of the Eligible Employee's Average Monthly Compensation multiplied by the next 15 years of his Credited Service, and (ii) equals 50 percent of the Eligible Employee's Average Monthly Compensation MINUS (b) The sum of(i), (ii), (iii) and (iv) where (i) equals the monthly amount of benefit which is or would be payable to the Eligible Employee, assuming such benefit commenced on his date of termination of employment pursuant to the provisions of the Retirement Plan in the form of a 100% Joint and Survivor Annuity (an Eligible Employee who is unmarried at the time the Benefit is determined shall be deemed, for purposes of the Plan, to have a survivor annuitant born on the same date as the Eligible Employee), (ii) equals the monthly amount of benefit to which the Eligible Employee would be entitled if his Company Contribution Account under the Investment Plan determined as of his date of termination of employment plus the amount of each withdrawal made from such Company Contribution Account on and after July 1, 1992 accumulated with interest at a rate of 8 percent, compounded annually from the date of each withdrawal to the Eligible Employee's termination of employment, was used to purchase a 100% Joint and Survivor Annuity based on the interest and mortality assumptions used to determine Actuarial Equivalent as defined in Section 1.01 (an Eligible Employee who is unmarried at the time the Benefit is determined shall be deemed, for the purposes of the Plan, to have a survivor annuitant born on the same date as the Eligible Employee), (iii) equals 50 percent of the Eligible Employee's monthly Social Security Benefit, and (iv) equals the monthly amount of benefit payable under a prior employer's retirement program as set forth in Appendix A. Notwithstanding the foregoing, the offset of the Eligible Employee's monthly Social Security Benefit as described in Section 2.02(b)(iii) shall not, in the case of any Benefit payable in the forms described in Sections 2.03(a) and (b) be made until the Eligible Employee reaches his Normal Retirement Date. In the case of a Benefit paid in the form described in Section 2.03(c), the Committee shall, in good faith, determine the appropriate amount of offset under Section 2.02(b)(iii) to be used in calculating such Benefit, consistent with the preceding sentence and information available to the Committee at such time. In addition, the Committee shall determine, in good faith, the appropriate amount of offset under Section 2.02(b)(iv) to be used in calculating any Benefit under this Plan (including. without limitation, converting such monthly benefit under Section 2.02(b)(iv) an appropriate benefit form) and each Eligible Employee shall cooperate with the Committee by providing any information (certifiable or otherwise) necessary to make such determination. 2.03 Form of Payment (a) Unless a Retiree has elected an optional form of benefit, as provided herein, the automatic form of payment under this Plan deemed to have been elected by such Retiree upon becoming an Eligible Employee shall be a 10 Year Certain and Life Annuity, providing for monthly payments to the Retiree for his lifetime with a guaranteed minimum of one hundred twenty (120) monthly payments and if the Retiree dies prior to receiving the full one hundred twenty (120) monthly payments, the remainder of guaranteed payments shall be commuted and paid in one lump sum to the named Beneficiary in full discharge of the obligation of the Plan. In the absence of a named Beneficiary the commuted value of the remaining guaranteed payments will be paid to the Retiree's estate. (b) Any Eligible Employee may, upon becoming an Eligible Employee, elect in writing that his Benefit be paid in the form of a 100% Joint and Survivor Annuity of Actuarial Equivalent value to the Benefit otherwise payable under Section 2.03(a) above, providing for a reduced monthly benefit during his lifetime with 100% of such reduced monthly benefit continuing to his surviving spouse to whom he was married on the date his Benefit payments commenced for the remainder of such spouse's lifetime. If the Retiree and the spouse to whom he was married on the date his Benefit payments commenced dies before receiving one hundred twenty (120) monthly payments, the remainder of the one hundred twenty (120) guaranteed payments will be commuted and paid in one lump sum to the named beneficiary of the last surviving annuitant in full discharge of the obligation of the Plan. This optional form of benefit shall become effective on the first day of the month for which the Retiree's Benefit is first payable. If the Retiree's spouse dies before the first day of the month for which the Retiree's Benefit is first payable, this optional form of payment shall be revoked and payments shall be made pursuant to the provisions of Section 2.03(a) above. (c) Any Eligible Employee may, upon becoming an Eligible Employee, elect in writing that his Benefit be paid to him (or his Beneficiary if he dies prior to payment under paragraph (d) below) in one single payment of Actuarial Equivalent value to the Benefit otherwise payable under Section 2.03(a) above. (d) Payments shall commence as of the first day of the month following the Eligible Employee's termination of employment or as soon as administratively practicable thereafter. (e) Any Eligible Employee may change his payment form election by making a new payment form election at any time; provided, however, that no such election shall be effective unless it shall have been made and submitted to the Committee prior to the last day of the calendar year prior to the calendar year in which the Eligible Employee terminates employment with the Company and each Affiliated Company. 2.04 Commencement of Benefit on or after Normal Retirement Date A Retiree who terminates employment on or after his Normal Retirement Date shall receive his Benefit commencing on the first day of the month following his termination of employment, subject to the provisions of Section 3.07. In that case, his Benefit shall be equal to the Benefit determined pursuant to the provisions of Section 2.02 on the basis of his Average Monthly Compensation and Credited Service on the date of his termination of employment. 2.05 Commencement of Benefit Before Normal Retirement Date (a) Unless the provisions of Section 2.05(b) below are applicable a Retiree whose employment terminates for any reason prior to his Normal Retirement Date shall receive a Benefit commencing on the first day of the month following his termination of employment, subject to the provisions of Section 3.07. In such case, his Benefit shall be equal to the Benefit determined under the provisions of Section 2.02 on the basis of his Average Monthly Compensation and Credited Service on the date of his termination of employment; provided, however, the portion of his Benefit determined under the provisions of Section 2.02(a) shall be reduced by 3.6% for each year and 1/12 of 3.6% for each month of a fractional year by which the date the Retiree's Benefit begins prior to the 60th anniversary of his birth. (b) A Retiree who terminates employment at the Company's request prior to his Normal Retirement Date shall, subject to the approval of the Committee and the provisions of Section 3.07, receive a special early Benefit commencing on the first day of the month following his termination of employment. The special early Benefit shall be equal to: (i) his Benefit determined pursuant to the provisions of Section 2.02 on the basis of his Average Monthly Compensation and Credited Service on his date of termination of employment; provided, however, the portion of his Benefit determined under the provisions of Section 2.02(a)(i) shall be calculated on the basis of the Credited Service he accrued to his date of termination of employment plus any additional service he would have accrued pursuant to the provisions of Section 1.11 after his termination of employment if he had remained in the employ of the Company until his 60th birthday; increased by (ii) (A) in the case of any Benefit payable in the form described in Sections 2.03(a) or (b), the Social Security cost of living percentage increase granted on Social Security benefits paid in the year of such Retiree's termination of employment and on each anniversary of such Retiree's termination of employment occurring prior to his Normal Retirement Date, the Benefit determined under the provisions of Section 2.02(a) and paragraph (b) of this Section 2.05 shall be increased by the Social Security cost of living percentage increase granted on Social Security benefits paid in such calendar year; provided, however, the total number of such cost of living increases applied to a Retiree's Benefit under this subparagraph (ii) shall not exceed five, and the cost of living increase percentage applied to a Retiree's Benefit under this subparagraph (ii) each year shall not exceed 5%; or (B) in the case of any Benefit payable in the form described in Section 2.03(c), a projected and compounded deemed Social Security cost of living percentage increase equal to 5% of such Benefit for the year of such Retiree's termination and 5% of such Benefit as cumulatively increased, for each anniversary of such Retiree's termination occurring prior to his Normal Retirement Date; provided, however, the total number of such deemed cost of living increases applied to a Retiree's Benefit under this subparagraph (ii)(B) shall not exceed five. 2.06 Disability Benefit An Eligible Employee who has not reached his Normal Retirement Date and who ceases to be employed by the Company and each Affiliate Company on account of disability shall continue to be credited with Credited Service if (i) as of the Effective Date, such Eligible Employee's combined years of age and Credited Service (computed in the same manner described in Section 1.17) equals 70 or more, (ii) such Eligible Employee has reached his 55th birthday and completed 20 years of Credited Service (computed in the same manner described in Section 1.17), or (iii) such employment cessation occurs after the date specified in Appendix A with respect to such Eligible Employee; PROVIDED, HOWEVER, such Credited Service shall only continue if such Eligible Employee is eligible for and is continuously receiving disability benefits under the Company's long-term disability program. There shall also be included in his Credited Service any applicable waiting period for disability benefits under the Company's long-term disability plan; provided that after expiration of such period the Eligible Employee becomes entitled to such disability benefits. Upon reaching age 65, such disabled Eligible Employee shall be entitled to a disability Benefit in an amount determined under Section 2.02, based on his Average Monthly Compensation at the time he ceased employment on account of disability and his Credited Service based on Section 1.11 and the preceding provisions of this Section 2.06. 2.07 Pre-Retirement Death Benefit (a) If (i) an Eligible Employee whose combined years of age and Credited Service (computed in the same manner described in Section 1.17) equals 70 or more as of the Effective Date dies prior to his termination of employment, (ii) prior to his employment termination, an Eligible Employee dies after he has reached his 55th birthday and completed 20 or more years of Credited Service, (iii) an Eligible Employee dies prior to his termination of employment, hut after the date specified in Appendix A with respect to such Eligible Employee, or (iv) an Eligible Employee dies while accruing Credit Service under Section 2.06, a spouse's Benefit shall be payable to his surviving spouse. Such spouse's Benefit shall be a lump sum payment which is Actuarial Equivalent to the amount of monthly benefit the spouse would have received if the Benefit which the Eligible Employee would have received under Section 2.02 of this Plan, reduced pursuant to the provision of Section 2.05(a) of this Plan, had commenced on the Eligible Employee's date of death in the form of a 100% joint and survivor annuity and the Eligible Employee had died immediately thereafter. Such spouse's benefit shall be paid as soon as practicable following such Eligible Employee's date of death. 2.08 Restoration of Service If an Eligible Employee who retired or otherwise terminated employment is restored to employment with the Company or an Affiliated Company, the monthly payments under the Plan shall he discontinued and, upon subsequent retirement or termination of employment with the Company or any Affiliated Company, the Eligible Employee's Benefit shall be computed in accordance with the provisions of this Article 2, as applicable, and shall be reduced by the actuarial equivalent value of the Benefit payments he received prior to his subsequent retirement. 2.09 Designation of Beneficiary For purposes of Sections 2.03 and 2.07, each Eligible Employee shall file a written designation of Beneficiary with the Committee upon qualifying for participation hereunder. Such designation shall remain in force until revoked by the Eligible Employee by filing a new beneficiary form with the Committee. 2.10 Receipt of Single-Sum Payment If any Retiree has received a single sum payment under Section 2.03(c) above, such Retiree's Beneficiary shall have no further interest in the Plan or any benefits payable thereunder. ARTICLE 3. GENERAL PROVISIONS 3.01 Administration The administration of the Plan, the exclusive power to interpret it, and the responsibility for carrying out its provisions are vested in the Committee. The Committee shall have full discretionary authority to interpret the Plan and resolve all matters arising in connection with the Plan. The Committee may adopt procedural rules and may employ and rely on such legal counsel, actuaries, accountants and agents as it may deem advisable to assist in the administration of the Plan. Decisions of the Committee shall be conclusive and binding on all persons. The expenses of the Committee attributable to the administration of this Plan shall be paid directly by the Company. 3.02 Funding (a) All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Company. Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Company, unless the provisions of paragraph (b) below are applicable. (b) The Board of Directors may, for administrative reasons, establish a grantor trust for the benefit of Eligible Employees in the Plan. The assets of said trust will be held separate and apart from other Company funds and shall be used exclusively for the purposes set forth in the Plan and the applicable trust agreement, subject to the following conditions: (i) the creation of said trust shall not cause the Plan to be other than "unfunded" for purposes of Title I of ERISA; (ii) the Company shall be treated as the "grantor" of said trust for purposes of Sections 671 and 677 of the Internal Revenue Code; and (iii) said trust agreement shall provide that its assets may be used to satisfy claims of the Company's general creditors, provided that the rights of such general creditors are enforceable under federal and state law. 3.03 No Contract of Employment The establishment of the Plan shall not be construed as conferring any legal right upon any person for a continuation of employment, nor shall it interfere with the right of the Company to discharge any employee. 3.04 Competency If the Committee shall find that any person to whom any amount is or was payable hereunder is unable to care for his affairs because of illness or accident, or has died, then the Company, if it so elects, may direct that any payment due him or his estate (unless a prior claim therefore has been made by a duly appointed legal representative) or any part thereof be paid or applied for the benefit of such person or for the benefit of his spouse, children or other dependents, an institution maintaining or having custody of such person, any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment, or any of them, in such manner and proportion as the Company may deem proper. Any such payment shall be in complete discharge of the liability of the Company therefor. 3.05 Withholding Taxes The Company shall have the right to deduct from each payment to be made under the Plan any required withholding taxes. 3.06 Nonalienation Except insofar as may otherwise be required by law, no amount payable at any time under the Plan shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind nor in any manner be subject to the debts or liabilities of any person and any attempt to so alienate or subject any such amount, whether presently or thereafter payable, shall be void. If any person shall attempt to, or shall, alienate, sell, transfer, assign, pledge, attach, charge or otherwise encumber any amount payable under the Plan, or any part thereof, or if by reason of his bankruptcy or other event happening at any such time such amount would be made subject to his debts or liabilities or would otherwise not be enjoyed by him, then the Committee, if it so elects, may direct that such amount be withheld and that the same or any part thereof be paid or applied to or for the benefit of such person, his spouse, children or other dependents, or any of them, in such manner and proportion as the Committee may deem proper. 3.07 Forfeiture for Cause In the event that an Eligible Employee or Retiree shall at any time be convicted for a crime involving dishonesty or fraud on the part of such Eligible Employee or Retiree in his relationship with the Company or an Affiliated Company, all benefits that would otherwise be payable to him under the Plan shall be forfeited. If a Retiree shall at any time be under indictment for any such crime any Benefit amounts payable to such Retiree shall be suspended pending conviction, dismissal or acquittal in respect thereof. If the Retiree is not convicted, the suspended amounts shall be paid to him (with simple interest accruing at the PBGC Interest Rate) within thirty days after the date of the dismissal or acquittal. For this purpose. any so-called ALFORD plea or plea of NOLO CONTENDERE shall be deemed to constitute an acquittal. 3.08 Mergers/Transfers This Plan shall be binding upon and inure to the benefit of the Company and its successors and assignees and the Eligible Employee, his designees and his estate. Nothing in this Plan shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation which assumes this Plan and all obligations of the Company hereunder. Upon such a consolidation. merger or transfer of assets and assumption, the term "Company" shall refer to such other corporation and this Plan shall continue in full force and effect. 3.09 Calculations Whenever, under this Plan, it is necessary to determine whether one benefit is less than, equal to, or larger than another, whether or not such benefits are provided under this Plan, such determination shall be made by the Company's independent consulting actuary, using mortality and interest (unless otherwise specified in this Plan) and any other assumptions normally used at the time by such actuary in determining actuarial equivalents under the Retirement Plan. 3.10 Elections All elections, designations, requests, notices, instructions, and other communications from an Eligible Employee, Retiree, or other person to the Committee required or permitted under the Plan shall be in such form as is prescribed from time to time by the Committee, shall be mailed by Certified or Registered mail, Return Receipt Requested, or personally delivered to the principal offices of the Corporation, and shall be deemed to have been given and delivered only upon actual receipt thereof at such location. 3.11 Acceleration of Payment Notwithstanding any other provision of the Plan to the contrary, the Company shall make payments hereunder to a Retiree or Beneficiary before such payments are otherwise due if the Committee determines, based on a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, a decision by a court of competent jurisdiction involving an Eligible Employee, Retiree or Beneficiary, or a closing agreement made under Code Section 7121 that is approved by the Internal Revenue Service and involves an Eligible Employee, Retiree or Beneficiary, that an Eligible Employee, Retiree or Beneficiary has recognized or will recognize income for federal income tax purposes with respect to amounts that are or will be payable to him under the Plans before they are paid to him. In such cases, any such Retiree or Beneficiary so affected shall receive the remaining Benefit payments payable to him and, where appropriate his Beneficiary in one single payment of Actuarial Equivalent value to such remaining payments. Upon receipt of such accelerated payment the provisions of Section 2.10 shall apply to any Beneficiary of such Retiree. 3.12 Construction (a) The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated employees and therefore exempt from the requirements or Sections 201, 301 and 401 of ERISA. All rights hereunder shall be governed by and construed in accordance with the laws of the State of Tennessee and, except to the extent otherwise herein provided, in accordance with the provisions of the Retirement Plan. (b) The masculine pronoun shall mean the feminine wherever appropriate. (c) The captions preceding the sections and articles hereof have been inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provisions of the Plan. 3.13 Insurance Products The Company may require each Eligible Employee to assist it in obtaining life insurance policies on the lives of each Eligible Employee, which policies would be owned by, and be payable to, the Company. The Eligible Employee may be required to complete an application for life insurance, furnish underwriting information including medical examinations by a life insurance company-approved examiner, and authorize release of medical history to the life insurance company's underwriter, as designated by the Company. An Eligible Employee shall have no right or interest in such policies or the proceeds thereof. 3.14 Nature of Obligation No Eligible Employee, Retiree or Beneficiary shall have any interest in any specific asset of the Company or any Affiliated Company as a result of the Plan. Nothing contained herein shall be deemed to create a trust of any kind or any fiduciary relationship between the Company (or any Affiliated Company) and any Eligible Employee, Retiree or Beneficiary. Any right to receive any Benefit under the Plan shall only be the right of a general unsecured creditor. 3.15 Legal Fees In the event that any claim by an Eligible Employee for payment of any benefit under the Plan is disputed by the Company or the trustee of any "rabbi" trust created in connection therewith, or any other dispute in respect of the Plan or any such trust arises between any Eligible Employee, the Company and/or such trustee, any such Eligible Employee shall be promptly reimbursed for all reasonable attorney fees and expenses, after satisfaction by the Eligible Employee of a lifetime deductible equal to $25,000, incurred by any such Eligible Employee (i) in pursuing any such claim, or (ii) in connection with any such other dispute. ARTICLE 4. AMENDMENT, TERMINATION, OR PARTICIPANT REMOVAL The Board of Directors reserves the right to modify or to amend, in whole or in part, or to terminate this Plan at any time. However, no modification, amendment or termination of the Plan shall reduce the Benefit being paid to a Retiree as of the date of any such amendment or termination. In respect of any Eligible Employee, no modification or amendment shall adversely affect such Eligible Employee, unless such Eligible Employee consents to such modification or amendment in writing, and, if the Plan is terminated by the Company, each Eligible Employee shall be entitled to a Benefit calculated under Article 2 above, based on such Eligible Employee's service and compensation to the date of such plan termination. Also, with respect to an Eligible Employee who is not a Retiree pursuant to Section 1.17 of the Plan, if such Eligible Employee is removed as a participant from the Plan by the Committee, then such former Eligible Employee shall have no rights to any Benefits under the Plan, but rather such former Eligible Employee shall only have those rights that are available to such former Eligible Employee under the Company's other benefit plans. EX-13.AR 11 EXHIBIT 13 AR FINANCIAL HIGHLIGHTS THOMAS & BETTS CORPORATION AND SUBSIDIARIES - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
In thousands (except per share data) 1997 1996 - ------------------------------------------------------ ---------- ---------- Net sales............................................. $2,114,718 $1,985,145 Special charges(1).................................... $ -- $ 97,067 Net earnings (after special charges).................. $ 154,861 $ 59,868 Net earnings per common share: Basic............................................... $ 2.83 $ 1.13 Diluted............................................. $ 2.81 $ 1.12 Average shares outstanding: Basic............................................... 54,717 53,059 Diluted............................................. 55,090 53,512 Cash dividends declared per common share.............. $ 1.12 $ 1.12 Shareholders' equity.................................. $ 977,381 $ 868,382 Capital expenditures.................................. $ 116,719 $ 107,807 Employees............................................. 16,400 14,700 Shareholders of record................................ 5,039 5,611 - ------------------------------------------------------ ---------- ---------- - ------------------------------------------------------ ---------- ----------
[CHART] (1) Special charges of $97.1 million pretax in 1996 consisted of merger costs, restructuring costs and other charges. Excluding those charges, earnings per share would have been $2.36 basic and $2.34 diluted in 1996. (2) Special charges in 1996 reduced net sales, net earnings, diluted earnings per share and return on average shareholders' equity as shown. 1 FINANCIAL REVIEW RESULTS OF OPERATIONS THOMAS & BETTS CORPORATION (THOMAS & BETTS OR THE CORPORATION) ACHIEVED RECORD SALES AND EARNINGS IN 1997. Net sales for 1997 increased to $2,114.7 million, 7% above 1996 sales of $1,985.1 million, reflecting strong volume gains and business acquisitions made during 1997 and 1996. Negative currency translations effectively reduced 1997 reported sales by approximately one percentage point. As in the two prior years, about one-quarter of Thomas & Betts sales came from sales outside the U.S. Net sales for 1996 increased 15%, or $251.8 million, from 1995. Sales growth from expanding the Corporation's existing businesses, coupled with acquisitions, accounted for the majority of the growth. Particularly significant was the acquisition of Amerace Corporation (Amerace) in January 1996, accounted for as a purchase. The acquisition of Augat Inc. in December 1996, the largest acquisition in the Corporation's history, was accounted for as a pooling of interests and resulted in financial results of Augat being combined with those of the Corporation for all periods presented. Electrical Construction and Maintenance Components (Electrical) segment sales grew to $764.2 million, or 19% from 1996, following an increase of 12% in 1996, compared with 1995. Solid economic conditions in North America and greater market penetration of the segment's product offering resulted in strong volume increases in that segment in both 1997 and 1996. Volume gains accounted for over one-half of the segment's growth in those years. Several product-line acquisitions and favorable pricing also contributed to the improvements. Sales in the Electronic/OEM Components (Electronics) segment were $893.9 million in 1997, or 1% lower than 1996, following an 8% increase in 1996 over 1995. Weaker foreign currencies throughout 1997 negatively impacted Electronics sales by 3%. Volume increases in a number of product lines in 1997 were offset by anticipated declines in certain product lines, primarily automotive-related. Pricing in the segment declined slightly in 1997 from 1996, and acquisitions contributed a small increase to sales. The 8% gain in 1996 over 1995 was primarily volume-driven, reflecting increased penetration of the domestic professional electronics market, acquisitions and new products for original equipment manufacturers (OEMs). At year-end 1997, Thomas & Betts contributed assets, which generated 1997 sales of $85.9 million, to a joint venture, Exemplar/Thomas & Betts Electrical Systems, LLC (ET&B). Under terms of the joint venture agreement, Thomas & Betts owns a 49% interest in ET&B, and has a 100% income interest in the results generated by its contributed net assets plus a 49% interest in income generated by jointly developed future business. The Corporation's investment in ET&B will be accounted for using the equity method. The use of that accounting method will not affect net results but will reduce net sales, costs and expenses by the amounts previously attributable to the contributed assets. Other Products and Components sales of $456.7 million were 4% higher than 1996 after having risen 34% in 1996 over 1995. In 1997, gains in heating and utility component product lines and increased marketing leverage, from acquisitions of both the Elastimold utility component product lines acquired with Amerace and the Reznor Europe heating product lines, more than offset the negative effect of planned phase-outs of low-margin contract-manufacturing volumes related to divested product lines. The pronounced sales increase from 1995 to 1996 was primarily due to the addition of Elastimold. CONSOLIDATED GROSS MARGIN IMPROVED TO 31.9%, compared with 29.6% and 29.5% in 1996 and 1995, respectively. Excluding the special charges of $13.8 million in 1996 and $2.5 million in 1995, gross margin improved from 30.4% in 1996 and 29.7% in 1995. The 1997 gross margin reflected the positive impact of restructuring efforts, including the assimilation of Augat operations. 17 Marketing, general and administrative (MG&A) expense was 16.4% of sales in 1997. Excluding special charges of $19.7 million in 1996 and $1.8 million in 1995, those expenses were 16.1% and 16.3% of sales in the two earlier years, respectively. The higher level of MG&A in 1997 was due to increased marketing expense from a change in the electrical-components channel U.S.-sales structure, somewhat offset by lower administrative expense realized from integration of acquired businesses. The Corporation spent 2.5% of sales on research and development (R&D) during 1997, versus 2.4% in 1996 and 2.5% in 1995. Most R&D activity took place in the Electronics segment with efforts in 1997 focused in part on the Metallized Particle Interconnect (MPI-TM), a next-generation microprocessor socket for high-end computers and workstations. Amortization expense rose in both years due to additional amortization of goodwill related to acquisitions. Thomas & Betts recorded $97.1 million in special charges in 1996, primarily related to the acquisition and assimilation of Augat. (See footnotes 3 and 4 to the financial statements.) Included in those charges were merger expenses, resulting from legal and financial advisory fees and change-of-control payments, and provisions for restructured operations related to the integration of Augat and initiatives to optimize operations and improve future profitability. The 1995 provision for restructured operations was recorded at Augat for closing redundant or excess facilities, abandoning excess equipment, discontinuing inventory in low-margin product lines and paying employee severance costs. EARNINGS FROM OPERATIONS IN 1997 INCREASED 17% from 1996 (excluding special charges) and 25% in 1996 versus 1995 (excluding restructuring charges). Earnings from operations of Electrical, excluding special charges, rose 24% in 1997 over 1996, and 17% in 1996 over 1995, due to higher sales volumes and wider operating margins resulting from restructuring programs. Earnings from operations of Electronics improved 10% and 9% year over year for 1997 and 1996, respectively, if special charges are excluded. The 1997 improvement reflected the benefits of restructuring and the Augat integration, while the increase in 1996 was attributed to higher sales. Other Products and Components earnings from operations declined 8% in 1997 versus 1996, compared with a 54% increase in 1996 versus 1995, excluding special charges. Volume declines in certain markets impacted the 1997 gross margin in that segment, while 1996 results reflected the acquisition of Amerace, higher sales volume, favorable sales mix and lower commodity costs. Other expense-net for 1997 decreased from 1996's level due to the absence of special charges related to the Augat merger. Excluding the special charges of $6.1 million, other expense in 1997 rose $1.3 million, compared with 1996. The increase was primarily due to greater interest expense resulting from higher-average net-debt levels that offset increased equity income. Other expense-net in 1996 rose $14.5 million from 1995 as a result of the special charges and higher interest expense on increased debt from the acquisition of Amerace, offset in part by higher equity income. The effective income tax rate for 1997 of 31.0% was 3.1 points below the rate for 1996 and 0.4 points lower than the 1995 rate. The higher 1996 rate was due to non-deductible, merger-related special charges associated with the Augat acquisition. Thomas & Betts has been able to maintain a tax rate below the statutory rate because of tax benefits derived from operations in Puerto Rico and other proactive tax initiatives. NET EARNINGS IN 1997 OF $154.9 MILLION WERE THEIR HIGHEST EVER, significantly greater than the 1996 and 1995 levels of $59.9 million and $88.5 million, respectively, primarily due to the special charges recorded in each of those years, as well as higher volumes and wider margins. Net earnings in 1996 included special charges of $97.1 million ($65.6 million after tax, $1.23 per share), while 1995 included a $23.0 million ($15.3 million after tax, $0.29 per share) restructuring charge recorded by Augat. Excluding the impact of those charges, net earnings in those 18 years would have been $125.5 million in 1996 and $103.8 million in 1995. Comparing year-to-year results, excluding the impact of charges, 1997 net earnings were 23% higher than those in 1996, and 1996 net earnings were 21% above those in 1995. Effective for 1997, Thomas & Betts began reporting earnings per share (EPS) on both basic and diluted bases in compliance with Statement of Financial Accounting Standard No. 128. Previously, in accordance with the earlier accounting standard, the Corporation reported "simple" EPS. The impact of adopting the new accounting standard was minimal for all years restated, with no change to basic EPS and only a 1 CENTS or 2 CENTS decrease from simple EPS to diluted EPS, reflecting slight dilutive effects from assumed employee-stock-option conversions. Excluding the effects of the special charges discussed above, EPS (both on basic and diluted bases) increased 20% in 1997 over 1996, and 19% in 1996 over 1995. Including the special charges, the changes were 151% and (33%), respectively. In 1997, the Financial Accounting Standards Board issued Statements No. 130, "Reporting Comprehensive Income," and No. 131, "Disclosures about Segments of an Enterprise and Related Information." Both statements are effective in 1998, and both will require additional interim or annual financial disclosure without changing the overall financial results of the Corporation. Although Thomas & Betts has not concluded what presentation changes will be required, if any, it does not currently believe that adoption of those standards will significantly affect the characterization of its business. LIQUIDITY AND FINANCIAL RESOURCES CASH PROVIDED BY OPERATING ACTIVITIES INCREASED IN 1997 due to higher net earnings for the year and the sale of $145.2 million of trade accounts receivable under an asset-securitization program commenced in December 1997. Those sources funded capital expenditures, dividends, restructuring expenditures provided for predominantly in 1996 and net working-capital levels required to support higher sales. CAPITAL SPENDING OF $116.7 MILLION IN 1997 ROSE 8% FROM 1996'S LEVEL, but spending in 1996 decreased 18% from 1995, a year in which the Corporation undertook a major spending program on distribution facilities. Projects in 1997 included restructuring-related spending to consolidate the operations of recent acquisitions, expansion of production capabilities, efficiency-related improvements and new systems software. Projects in 1996 included completion of the central distribution center, continued expansion of Mexican operations and restructuring-related spending at Augat. Projects in 1995 included spending on three state-of-the-art distribution facilities, expansion of production capabilities, equipment and efficiency-related improvements. Management expects capital expenditures to be slightly higher in 1998 than the normal run rate as the Corporation undertakes numerous information technology projects. THE CORPORATION IS ACTIVELY ENGAGED IN A CORPORATE-WIDE PROGRAM TO ENSURE ITS COMPUTER SYSTEMS ARE YEAR 2000 COMPLIANT. That effort included a comprehensive review of automated systems in use throughout the Corporation. In several significant areas, the Corporation is currently installing new systems with greatly enhanced functionality that also solve potential Year 2000 problems in those areas. Other actions have or will include software-release upgrades and modifications to coding in software that will not be replaced. A significant portion of the cost of the new systems will be capitalized. Management does not expect the total amounts, to be expended over the next two years for both enhanced functionality and Year 2000 compliance, to be material to its financial position or results of operations. Virtually all systems are expected to be Year 2000 compliant by year-end 1998. THOMAS & BETTS COMPLETED SIX ACQUISITIONS DURING 1997 for total consideration of approximately $62 million, consisting of cash and 793,560 shares of the Corporation's common stock. Those acquisitions were: in January, Taylor Wiring Duct, a major supplier 19 of wiring duct and accessories to the industrial OEM market; in March, Marr Group Limited, a manufacturer of twist-on electrical-wire connectors, plastic electrical- outlet boxes and box connectors; in April, the assets of Electro-Resources Corporation of Texas, which sold under the name TANCO-Registered Trademark-, a supplier of electrical enclosures; in June, Electroline Manufacturing Company, a manufacturer of electrical conduit fittings; in July, Patriot Products, Inc., a maker of in-floor duct systems; and, also in July, Diamond Communication Products, Inc., a manufacturer of drop hardware for the worldwide communications industry. The Taylor, Marr, Tanco and Patriot acquisitions were accounted for using the purchase method of accounting. The acquisitions of Electroline and Diamond were accounted for as immaterial poolings of interests. Those six acquisitions represented $57.6 million of 1997 sales. Thomas & Betts closed eight acquisitions in 1996, the two largest of which were Augat and Amerace. In December 1996, approximately 12.8 million shares of the Corporation's common stock were exchanged for all of the outstanding common stock of Augat in a transaction valued at approximately $570 million. In January 1996, the Corporation acquired all the outstanding stock of Amerace for $212.5 million in cash. Thomas & Betts makes selective acquisitions to broaden its business worldwide. The Corporation currently is evaluating several acquisition possibilities and expects to do so from time to time in the future. The Corporation may finance any such acquisitions that it consummates through the issuance of private or public debt or equity, internally generated funds or a combination of those sources. DEBT DECLINED $176.1 MILLION IN 1997 FROM 1996'S LEVEL, reflecting the application of cash generated from operations and proceeds from the sale of accounts receivable. Debt increased by $277.3 million in 1996 from 1995's level due to the issuance of debt in early 1996 to finance the Amerace acquisition. Pretax interest coverage grew from 3.6 times in 1996 (excluding special charges) to 4.0 times in 1997. In June 1997, Thomas & Betts initiated a commercial paper program, which is backed by a $500.0 million revolving-credit agreement. At year-end, $79.9 million of commercial paper was outstanding. Management believes that its external financial resources and internally generated funds are sufficient to meet the Corporation's capital needs for the foreseeable future. CASH AND SHORT-TERM INVESTMENTS DECLINED $66.0 MILLION in 1997 primarily due to repatriation of funds on a tax-effective basis. Thomas & Betts maintains a portfolio of marketable securities and cash equivalents in Puerto Rico, which at year-end 1997 was valued at $77.7 million. Although those investments represent currently available funds, they remain invested so that the Corporation can obtain favorable, partially tax-exempt status on earnings generated in Puerto Rico. OTHER MATTERS Thomas & Betts is committed to complying with all applicable laws and to pursuing actions and practices that promote a safer, healthier environment. The Corporation expended approximately $3.0 million, $2.0 million and $1.5 million for environmental remediation and corrective matters for years 1997, 1996 and 1995, respectively, with payments for Superfund-related sites being less than $0.7 million in any year. FORWARD-LOOKING STATEMENTS Statements in this financial review or made by management of the Corporation that contain more than historical information may be considered to be "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995), which are subject to many risks and uncertainties. Actual results may vary materially from those expressed in the forward-looking statements because of uncertainties identified in the Corporation's latest Annual Report on Form 10-K filed with the Securities and Exchange Commission. 20 CONSOLIDATED STATEMENTS OF EARNINGS THOMAS & BETTS CORPORATION AND SUBSIDIARIES - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
In thousands (except per share data) 1997 1996 1995 - ------------------------------------------ ---------- ---------- ---------- NET SALES................................. $2,114,718 $1,985,145 $1,733,368 ---------- ---------- ---------- COSTS AND EXPENSES Cost of sales............................. 1,440,303 1,398,031 1,221,463 Marketing, general and administrative..... 346,046 339,124 283,861 Research and development.................. 51,896 47,229 44,083 Amortization of intangibles............... 17,355 15,323 11,314 Merger expense............................ -- 30,558 -- Provision for restructured operations..... -- 24,501 18,700 ---------- ---------- ---------- 1,855,600 1,854,766 1,579,421 ---------- ---------- ---------- Earnings from operations.................. 259,118 130,379 153,947 Other expense -- net...................... 34,682 39,501 25,017 ---------- ---------- ---------- Earnings before income taxes.............. 224,436 90,878 128,930 Income taxes.............................. 69,575 31,010 40,428 ---------- ---------- ---------- NET EARNINGS.............................. $ 154,861 $ 59,868 $88,502 ---------- ---------- ---------- NET EARNINGS PER COMMON SHARE: Basic................................... $ 2.83 $ 1.13 $ 1.69 Diluted................................. $ 2.81 $ 1.12 $ 1.68 Average shares outstanding: Basic................................... 54,717 53,059 52,494 Diluted................................. 55,090 53,512 52,722 Cash dividends declared per share......... $ 1.12 $ 1.12 $ 1.12 - ------------------------------------------ ---------- ---------- ---------- - ------------------------------------------ ---------- ---------- ----------
See Notes to Consolidated Financial Statements. 21 CONSOLIDATED BALANCE SHEETS THOMAS & BETTS CORPORATION AND SUBSIDIARIES - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
December 28, December 29, In thousands 1997 1996 - -------------------------------------------- ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents.................... $ 43,872 $ 126,355 Marketable securities........................ 52,382 35,940 Receivables -- net........................... 273,565 361,511 Inventories.................................. 373,977 363,306 Deferred income taxes........................ 43,452 62,121 Prepaid expenses............................. 8,902 7,818 ---------- ---------- Total Current Assets......................... 796,150 957,051 PROPERTY, PLANT AND EQUIPMENT Land......................................... 21,670 16,944 Buildings.................................... 219,381 217,792 Machinery and equipment...................... 833,540 765,240 ---------- ---------- 1,074,591 999,976 Less accumulated depreciation................ 504,829 460,032 ---------- ---------- 569,762 539,944 INTANGIBLE ASSETS -- NET..................... 505,225 519,276 INVESTMENTS IN UNCONSOLIDATED COMPANIES...... 127,703 76,368 OTHER ASSETS................................. 39,835 38,598 ---------- ---------- TOTAL ASSETS................................. $2,038,675 $2,131,237 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable................................ $ 25,997 $ 49,365 Current maturities of long-term debt......... 5,256 15,690 Accounts payable............................. 208,056 190,184 Accrued liabilities.......................... 140,584 189,961 Income taxes................................. 44,514 35,372 Dividends payable............................ 15,401 11,328 ---------- ---------- Total Current Liabilities.................... 439,808 491,900 LONG-TERM LIABILITIES Long-term debt............................... 502,813 645,096 Other long-term liabilities.................. 92,206 100,676 Deferred income taxes........................ 26,467 25,183 SHAREHOLDERS' EQUITY Common stock................................. 316,922 284,639 Retained earnings............................ 668,189 569,869 Cumulative translation adjustment............ (3,523) 15,084 Other........................................ (4,207) (1,210) ---------- ---------- Total Shareholders' Equity................... 977,381 868,382 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY... $2,038,675 $2,131,237 - --------------------------------------------- ---------- ---------- - --------------------------------------------- ---------- ----------
See Notes to Consolidated Financial Statements. 22 CONSOLIDATED STATEMENTS OF CASH FLOWS THOMAS & BETTS CORPORATION AND SUBSIDIARIES
- ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- In thousands 1997 1996 1995 - ------------ --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings............................................ $ 154,861 $ 59,868 $ 88,502 Adjustments: Depreciation and amortization......................... 95,324 91,581 76,495 Provision for restructured operations................. -- 24,501 18,700 Accrued merger and other special charges.............. -- 51,145 4,300 Deferred income taxes................................. 19,771 (26,728) 7,782 Changes in operating assets and liabilities, net: Receivables......................................... 79,066 (63,147) (10,980) Inventories......................................... (17,900) (29,159) (16,984) Accounts payable.................................... 21,471 22,386 (7,118) Accrued liabilities................................. (60,866) (30,847) (26,977) Income taxes payable................................ 9,316 20,789 (5,681) Other................................................. (11,231) 492 (5,615) --------- --------- --------- Net cash provided by operating activities............... 289,812 120,881 122,424 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of and investments in businesses.............. (19,326) (256,390) (19,983) Purchases of property, plant and equipment.............. (116,719) (107,807) (131,442) Proceeds from sale of property, plant and equipment..... 6,098 37,535 4,993 Marketable securities acquired.......................... (81,365) (26,636) (50,925) Proceeds from matured marketable securities............. 64,807 51,387 49,500 Other................................................... -- -- 4,502 --------- --------- --------- Net cash used in investing activities................... (146,505) (301,911) (143,355) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in borrowings with original maturities less than 90 days.......................... (6,850) (16,798) 46,938 Proceeds from long-term debt and other borrowings....... 170,412 386,437 24,789 Repayment of long-term debt and other borrowings........ (354,394) (95,137) (31,658) Stock options exercised................................. 25,945 12,812 10,194 Cash dividends paid..................................... (56,898) (48,305) (47,138) --------- --------- --------- Net cash provided by (used in) financing activities..... (221,785) 239,009 3,125 --------- --------- --------- EFFECT OF EXCHANGE-RATE CHANGES ON CASH................. (4,005) (6,779) 2,755 --------- --------- --------- Net increase (decrease) in cash and cash equivalents.... (82,483) 51,200 (15,051) Cash and cash equivalents -- beginning of year.......... 126,355 75,155 90,206 --------- --------- --------- Cash and cash equivalents -- end of year................ $ 43,872 $126,355 $ 75,155 - -------------------------------------------------------- --------- --------- --------- - -------------------------------------------------------- --------- --------- --------- Cash payments for interest............................. $ 54,185 $ 37,359 $ 32,176 Cash payments for taxes................................ $ 40,480 $ 29,066 $ 36,699
See Notes to Consolidated Financial Statements. 23 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY THOMAS & BETTS CORPORATION AND SUBSIDIARIES - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
Common Stock Additional Cumulative ------------------ Paid-in Retained Translation Treasury In thousands Shares Amount Capital Earnings Adjustment Stock - ---------------------------------------- ------ -------- --------- -------- ----------- -------- Balance at January 1, 1995 51,673 $ 25,837 $ 230,953 $516,537 $ 19,749 $(2,719) ------ -------- --------- -------- -------- ------- Immaterial poolings of interests........ 656 328 1,616 2,309 -- -- Net earnings............................ -- -- -- 88,502 -- -- Dividends declared...................... -- -- -- (47,380) -- -- Stock options and incentive awards...... 436 218 10,879 -- -- (685) Translation adjustments................. -- - -- -- 4,506 -- - ---------------------------------------- ------ -------- --------- -------- ----------- -------- Balance at December 31, 1995............ 52,765 26,383 243,448 559,968 24,255 (3,404) - ---------------------------------------- ------ -------- --------- -------- ----------- -------- Reincorporation......................... (107) 240,044 (243,448) -- -- 3,404 Net earnings............................ -- -- -- 59,868 -- -- Dividends declared...................... -- -- -- (48,412) -- -- Stock options and incentive awards...... 587 16,263 -- -- -- -- Business acquisitions and investments... 58 1,949 -- (39) -- -- Change in subsidiaries' year-end........ -- -- -- (1,516) -- -- Translation adjustments................. -- -- -- -- (9,171) -- - ---------------------------------------- ------ -------- --------- -------- ----------- -------- Balance at December 29, 1996............ 53,303 284,639 -- 569,869 15,084 -- - ---------------------------------------- ------ -------- --------- -------- ----------- -------- Immaterial poolings of interests........ 731 2,728 -- 4,430 -- -- Net earnings............................ -- -- -- 154,861 -- -- Dividends declared...................... -- -- -- (60,971) -- -- Stock options and incentive awards...... 910 25,945 -- -- -- -- Business acquisitions and investments... 62 3,610 -- -- -- -- Translation adjustments................. -- -- -- -- (18,607) -- - ---------------------------------------- ------ -------- --------- -------- ----------- -------- Balance at December 28, 1997............ 55,006 $316,922 $ -- $668,189 $(3,523) $ -- - ---------------------------------------- ------ -------- --------- -------- ----------- -------- - ---------------------------------------- ------ -------- --------- -------- ----------- --------
Preferred Stock: Authorized 500,000 shares, no par value. None issued to date, but 300,000 shares are reserved for the Corporation's Shareholder Rights Plan. Common Stock: Authorized 80,000,000 shares, no par value. - ------------------------------------------------------------------------------- See Notes to Consolidated Financial Statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 NATURE OF OPERATIONS Thomas & Betts Corporation (the Corporation) is a leading manufacturer of connectors and components for worldwide electrical and electronics markets. With international headquarters in Memphis, Tenn., the Corporation operates more than 100 manufacturing and distribution facilities in 20 countries around the globe. The Corporation designs, manufactures and sells components that allow others to assemble electrical and electronic systems. The Corporation's products include: electromechanical components and subsystems that provide solutions for information processing, communications and automotive industries in North America, Europe and Asia; electrical connectors and accessories for industrial, commercial, utility, residential and project construction, renovation and maintenance applications primarily in North America; transmission poles, towers and industrial lighting products for domestic and international customers; and heating units and accessories for mechanical and refrigeration markets in North America and Europe. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Corporation and its wholly owned domestic and foreign subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Corporation uses the equity method of accounting for its investments in 20-to-50-percent-owned companies. Under generally accepted accounting principles (GAAP), there is a presumption that the equity method should be used to account for those investments. If the Corporation were to determine that it no longer 24 had the ability to exercise significant influence over the operating and financial policies of those companies, GAAP would require the Corporation to use the cost method rather than the equity method to account for those investments. The Corporation regularly monitors its relationships with those companies. USE OF ESTIMATES The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. FISCAL YEAR The Corporation's fiscal year ends on the Sunday closest to the end of the calendar year. Results for 1997, 1996 and 1995 are for the 52 weeks ended December 28, 1997, December 29, 1996 and December 31, 1995, respectively. In 1996, the Corporation's Augat Inc. (Augat) subsidiary changed the fiscal year of its European and Far Eastern subsidiaries from November 30 to the Corporation's fiscal year-end, thus eliminating a one-month reporting lag. That change resulted in a charge against retained earnings of $1.5 million. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK When deemed appropriate, the Corporation enters into forward foreign-exchange contracts to hedge foreign-currency-transaction exposures for periods consistent with those committed exposures. Those contracts are with major financial institutions and may at times be concentrated with certain counterparties. The creditworthiness of counterparties is subject to continuing review, and full performance by those counterparties is anticipated. Foreign-exchange contracts generally have maturities that do not exceed one year. Currency hedging reduces the impact of foreign-exchange-rate movements on the Corporation's operating results, as gains and losses on contracts are offset by losses and gains on any assets, liabilities and transactions being hedged. A high correlation is maintained between the transactions and the hedges to minimize currency risk. In most cases, both the exposed transactions and the hedging contracts are marked to market monthly with gains and losses included in earnings as other income or expense. Gains and losses on certain contracts that hedge specific foreign-currency denominated commitments are deferred and recognized in the period in which the transaction is completed. Unrealized gains are reported as prepaid expenses, and unrealized losses are reported as accrued liabilities. As of December 28, 1997, and December 29, 1996, the Corporation had outstanding contracts, all maturing within 240 days, to buy $22.5 million and sell $10.7 million, respectively, of principally Canadian, Japanese and European currencies for U.S. dollars. Deferred contract gains and losses at December 28, 1997, and December 29, 1996, were not significant. The Corporation is exposed to risk from fluctuating prices for commodities used to manufacture its products, primarily copper, zinc, aluminum, gold and resins. Some of that risk is hedged through the use of futures and swap contracts that fix the price the Corporation will pay for the commodity. Cost of sales reflects the commodity cost, including the effects of the commodity hedge. The total quantity of commodity contracts purchased is kept at least 20% below the actual quantity of commodities expected to be purchased for production. As of December 28, 1997, the Corporation had $22.3 million of those contracts outstanding, maturing through December 1998. The maturity of the contracts highly correlates with the actual purchases of the commodity. The amounts paid or received are calculated based on the notional amounts under the contracts. The use of such commodity contracts effectively protects the Corporation against changes in the price of the commodity to the extent of the notional amount under the contract. As of December 28, 1997, the net unrealized loss on those commodity contracts was $1.7 million. That value will change as commodity prices change and will be recorded only at the time the underlying commodity is actually purchased. Credit risk, with respect to trade receivables, is limited due to the large number of customers comprising the Corporation's customer base and their dispersion across many different industries and geographic areas. The Corporation will, on occasion, enter into interest-rate swaps to reduce the impact of changes in interest rates on portions of its floating-rate debt. The rate differential paid or received under those agreements is accrued monthly, consistent with the terms of the agreements and market interest rates. Those agreements are with financial institutions having at least a single-A credit rating, which minimizes non-performance risk. As of December 28, 1997, the Corporation had no outstanding interest-rate swaps. RECEIVABLES Receivables are stated net of allowance for doubtful accounts and cash discounts of $11.4 million at December 28, 1997, and $8.7 million at December 29, 1996. In December 1997, the Corporation entered into an asset-securitization agreement. The agreement permits the Corporation to continually sell accounts receivable through December 19, 2002, to a maximum purchasers' investment of $150.0 million. 25 That maximum investment is subject to decrease based on the level of eligible accounts receivable and restrictions on concentrations of receivables. In December 1997, the Corporation sold a fractional ownership interest in a defined pool of trade accounts receivable for approximately $145.2 million. That transaction has been accounted for as a sale of assets under the provisions of Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." The sold accounts receivable are reflected as a reduction of receivables in the accompanying consolidated balance sheet. The discount rate on the receivables sold in December 1997 was approximately 6.10%. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for approximately 60% of the Corporation's inventories, and the first-in, first-out (FIFO) method for the remainder of inventories. The LIFO value of inventories held at December 28, 1997, approximated their current cost. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Expenditures for maintenance and repair are charged to expense as incurred. Significant renewals and betterments that extend the lives of assets are capitalized. Depreciation is computed principally on the straight-line method over the estimated useful lives of the assets, which range principally from 10 to 25 years for land improvements, 5 to 45 years for buildings, and 3 to 15 years for machinery and equipment. INTANGIBLE ASSETS Intangible assets consist principally of the excess of cost over the fair value of net assets (goodwill) acquired in business combinations accounted for as purchases. Those assets are being amortized on a straight-line basis over various periods not exceeding 40 years. Goodwill is reevaluated when business events and circumstances indicate that the carrying amount may not be recoverable. Reevaluation is based on projections of related, undiscounted, future cash flows. As of December 28, 1997, and December 29, 1996, accumulated amortization of intangible assets was $93.6 and $71.6 million, respectively. INCOME TAXES The Corporation uses the asset and liability method of accounting for income taxes. That method recognizes the expected future tax consequences of temporary differences between the book and tax bases of assets and liabilities, and provides a valuation allowance based on a "more-likely-than-not" standard. Undistributed earnings of foreign subsidiaries held for reinvestment in overseas operations amounted to $83.1 million at December 28, 1997. Additional U.S. income taxes may be due upon remittance of those earnings (net of foreign tax credits resulting from the distribution), but determining the amount of any such additional taxes is impractical. SHAREHOLDERS' EQUITY In May 1996, the Corporation's state of incorporation was changed from New Jersey to Tennessee. The reincorporation resulted in each outstanding share of the Corporation's common stock, par value of $0.50, being converted into one share of common stock, no par value. Tennessee law requires shares repurchased by a corporation to be returned to the status of authorized but unissued shares; accordingly, the shares of common stock previously held in treasury were canceled. There was no change in total shareholders' equity as a result of the elimination of par value and treasury stock. Shareholders' equity included increases of $0.7 million at December 28, 1997, and $0.8 million at both December 29, 1996, and December 31, 1995, which related to unrealized gains on marketable securities and decreases of $4.9 million, $2.0 million and $0.5 million at December 28, 1997, December 29, 1996, and December 31, 1995, respectively, related to non-vested restricted stock awards. Compensation expense, related to the restricted stock awards, is recognized over the vesting period. STOCK PURCHASE RIGHTS On December 3, 1997, the Corporation's board of directors declared a dividend of one preferred-share purchase right for each outstanding share of common stock of the Corporation. The dividend was payable to shareholders of record as of December 15, 1997. The rights are attached to and automatically trade with the outstanding shares of the Corporation's common stock. The rights will become exercisable only in the event that any person or group of affiliated persons becomes a holder of 15% or more of the Corporation's outstanding common stock, or commences a tender exchange offer, which, if consummated, would result in that person's or affiliated persons' owning at least 15% of the Corporation's outstanding common stock. Once the rights become exercisable, they entitle all shareholders, other than an acquiring person, to purchase one two-hundredths of a share of preferred stock, which entitles the holder to purchase, for $200, a number of shares of common stock having a market value of twice the exercise price. In addition, at any time after any person has become an acquiring person, but before any person becomes the beneficial owner of 50% or more of the outstanding common stock, the board of directors may exchange all or part of the rights (other than rights beneficially owned by an acquiring person and certain affiliated persons) for shares of common stock at an exchange ratio of one share of common stock per right. The rights may be redeemed at a price of $.005 per right at any time prior to their expiration on December 15, 2000. 26 EARNINGS PER SHARE During the fourth quarter of 1997, the Corporation adopted SFAS No. 128, "Earnings Per Share." The earnings-per-share (EPS) information in prior periods has been restated to conform to such presentation. Basic EPS is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the year. Diluted EPS is computed by dividing net earnings by the sum of (1) the weighted-average number of shares of common stock outstanding during the period and (2) the dilutive effect of the assumed exercise of stock options using the treasury stock method. The following is a reconciliation of the numerators and denominators of the per share computations: - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
In thousands (except per share data) 1997 1996 1995 - ----------------------- -------- ------- ------- Net earnings $154,861 $59,868 $88,502 - ----------------------- -------- ------- ------- Basic -- Average shares outstanding 54,717 53,059 52,494 Basic EPS $ 2.83 $ 1.13 $ 1.69 - ----------------------- -------- ------- ------- - ----------------------- -------- ------- ------- Diluted -- Average shares outstanding 54,717 53,059 52,494 - ----------------------- -------- ------- ------- Plus assumed exercise of stock options 373 453 228 - ----------------------- -------- ------- ------- 55,090 53,512 52,722 - ----------------------- -------- ------- ------- Diluted EPS $ 2.81 $ 1.12 $ 1.68 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------
ENVIRONMENTAL COSTS Environmental expenditures that relate to current operations are expensed or capitalized, as appropriate. Remediation costs that relate to an existing condition caused by past operations are accrued, on an undiscounted basis, when it is probable that those costs will be incurred and can be reasonably estimated based on evaluations of currently available facts related to each site. CASH FLOW INFORMATION Cash equivalents consist of investments, with maturities at date of purchase of less than 90 days, that have a low risk of change in value due to interest rate changes. Foreign-currency cash flows have been converted to U.S. dollars at appropriately weighted-average exchange rates or the exchange rates in effect at the time of the cash flows, where determinable. 3 MERGERS, ACQUISITIONS AND DIVESTITURES AUGAT INC. On December 11, 1996, the Corporation acquired all of the outstanding common stock of Augat Inc. in exchange for 12,821,337 shares of the Corporation's common stock. In addition, options to acquire Augat common stock were converted to options to acquire 791,400 shares of the Corporation's common stock. The acquisition was accounted for as a pooling of interests, and the Corporation's financial statements were restated to include the results of Augat for all periods presented, except for dividends per share, which reflect the Corporation's historical per share amount. In the fourth quarter of 1996, the Corporation recorded special charges totaling $97.1 million. The charges provided for merger expenses, including legal and financial advisory fees and change-of-control payments; restructuring expenses related to both the Corporation's existing operations and the operations of Augat (see Note 4); adjustments to accounting estimates of Augat's liabilities, primarily environmental, litigation, warranty and employee-benefit accruals, and provisions for inventory obsolescence; the cost of index-put options purchased and held through the merger's stock-pricing period; and other one-time expenses, including certain termination benefits related to the Corporation's executive retirement plan and previously idled facility charges. The charges were recorded in the statement of earnings as follows: net sales, $2.4 million; cost of sales, $13.8 million; marketing, general and administrative, $19.7 million; merger expense, $30.6 million; provision for restructured operations, $24.5 million; and other expense, $6.1 million. AMERACE CORPORATION On January 2, 1996, the Corporation acquired all of the outstanding stock of Amerace Corporation for $212.5 million in cash. That acquisition was accounted for using the purchase method. The aggregate purchase price was allocated to the acquired assets of Amerace based on their respective fair values, with the excess of approximately $150 million allocated to goodwill. Results of operations of Amerace after the acquisition date are included in the Consolidated Statements of Earnings. If the acquisition and its financing had occurred on January 2, 1995, management estimates that on an unaudited pro-forma basis, net sales, net earnings and net earnings per share would have been $1,890.4 million, $93.9 million and $1.79 per share, respectively, for the year-ended December 31, 1995. Those pro-forma results have been prepared for comparative purposes only and are not necessarily indicative of the combined results of operations that would have resulted had the acquisition taken place on January 2, 1995, nor are they necessarily indicative of results of operations for any future period. On May 14, 1996, the Corporation sold most of the assets of the Hendrix Wire and Cable business of Amerace Corporation. No gain or loss was incurred as a result of that sale. OTHER The Corporation completed six acquisitions during 1997 for total consideration of $62.0 million, consisting of cash and 793,560 shares of the Corporation's common stock. Two of those acquisitions were accounted for as immaterial poolings of interests, and 27 the results of those acquisitions have been included in the Corporation's results as of the beginning of 1997 without restating prior years' results. The remaining four acquisitions were accounted for under the purchase method of accounting. The six acquisitions represented approximately $57.6 million of sales reported by the Corporation in 1997. The excess of the purchase price over the fair value of the acquired assets in the purchase acquisitions was approximately $14.6 million and has been recorded as goodwill. On December 28, 1997, the Corporation completed the creation of a joint venture with Exemplar Manufacturing Company, a privately owned business based in Ypsilanti, Michigan, to manufacture and sell power distribution, battery cable and wiring systems to the U.S. automotive industry. In exchange for a 49% interest in the ownership of the joint venture, the Corporation contributed net assets with a carrying value of approximately $41.0 million; no gain or loss was recognized as a result of that transaction. The joint-venture agreement provides that each venturer retains a 100% income interest in earnings generated by its respective contributed business; income from jointly developed business will be allocated in accordance with the ownership percentages. Sales generated in 1997 by the assets contributed by the Corporation to that joint venture were $85.9 million. The Corporation completed six acquisitions during 1996, in addition to Augat and Amerace, for a total of approximately $46.0 million, consisting of cash and 57,714 shares of the Corporation's common stock. All were accounted for using the purchase method of accounting, and represented approximately $37.0 million of sales reported by the Corporation in 1996. The excesses of the purchase prices over the fair values of the acquired assets in the above acquisitions were approximately $26.0 million, recorded as goodwill. In 1995, the Corporation completed five acquisitions for approximately $48.0 million, consisting of cash and 657,810 shares of the Corporation's common stock. Three acquisitions were accounted for using the purchase method of accounting, and two acquisitions were accounted for as immaterial poolings of interests without restating prior years' results. Businesses acquired in 1995 represented approximately $39.0 million of sales reported by the Corporation in 1995. On August 10, 1994, the Corporation completed the purchase of a minority interest (29.1% of the outstanding common stock representing 23.55% of the voting common stock) in Leviton Manufacturing Co., Inc., a leading U.S. manufacturer of wiring devices, for approximately $51.0 million in cash and common stock. Leviton's chief executive officer opposed the Corporation's acquisition of the stock. The chief executive officer, with his wife, owns approximately 50.5% of Leviton's outstanding common stock (76.45% of Leviton's voting common stock) through a voting trust (a majority sufficient for the approval of all corporate actions that Leviton might undertake; however, the majority is not sufficient to permit either federal-income-tax consolidation or pooling-of-interests accounting treatment in a merger). The remainder of the outstanding common stock, all of which is non-voting, is owned by approximately 19 other Leviton family members. The opposition of the chief executive officer to the Corporation's investment has resulted in litigation between Leviton and the Corporation, consisting of the Corporation's proceeding in Delaware in February 1995 to compel Leviton to make additional financial and other information available to the Corporation, and of Leviton's subsequent action against the Corporation and other parties in New York seeking damages and other relief in connection with the transaction in which the Corporation acquired its Leviton investment. The Corporation does not have and has not sought representation on Leviton's board of directors, which would be opposed by Leviton's chief executive officer, and does not receive copies of Leviton's board minutes. Notwithstanding the existence of an adversarial relationship with the controlling shareholder of Leviton, the Corporation has developed relationships with certain key members of Leviton management and believes that those relationships and other factors support management's conclusion that the Corporation has the ability to exercise significant influence over Leviton's financial and operating policies. The Corporation owns more than 20% of Leviton's voting stock, and there are no restrictions on the Corporation's ability to exercise the attributes of ownership (situations have not arisen to date in which the Corporation has had an opportunity to vote its Leviton shares in a matter that would demonstrate significant influence over Leviton's financial and operating policies). In addition, because the Corporation is a non-family shareholder, the Corporation believes that it has a greater ability than other shareholders to challenge actions by Leviton management that the Corporation considers adverse to shareholders' interests. Senior management responsible for Leviton's day-to-day operations and operating and financial policies has engaged in an ongoing dialogue over the past 20 months with the Corporation and has acknowledged that the Corporation's presence as a Leviton shareholder has influenced the manner in which Leviton conducts business. Further, Leviton has taken certain actions, following discussions with the Corporation, which have been consistent with the Corporation's requests and suggestions. The Corporation's equity in the earnings of Leviton has been typically less than 5% and, of late, never more than 7% of the Corporation's net income before special charges and typically less than 7% and, of late, never more than 9% of the Corporation's net income after special charges. Should the Corporation 28 determine that it no longer has the ability to influence the operating and financial policies of Leviton, the Corporation, in compliance with GAAP, will adopt the cost method on a prospective basis. 4 RESTRUCTURING During the fourth quarter of 1996, the Corporation recorded a restructuring charge of $24.5 million relating to the integration of Augat and initiatives affecting Augat's and other of the Corporation's operations. Restructuring initiatives included the closure of Augat's corporate-headquarters facility in Mansfield, Mass., and redundant non-U.S. administrative facilities, as well as the rationalization of the combined sales forces and manufacturing operations. With respect to that restructuring charge, the Corporation has expended $14.6 million for cash severance and other employee-benefit costs and $0.7 million for other non-cash losses through December 1997, with $3.3 million remaining for cash-related activities and $5.9 million remaining for non-cash losses due to the disposal of property and equipment associated with closed facilities. Those restructuring actions are expected to be completed by the end of the third quarter of 1998. In the fourth quarter of 1995, Augat recorded a restructuring charge of $18.7 million for redundant or excess facilities and equipment being closed or abandoned, inventory in low-margin product lines to be discontinued and employee-severance and benefit costs. Management believes that reserves established by the 1996 and 1995 restructuring charges are adequate for the purposes for which they were established. 5 INCOME TAXES The components of earnings before income taxes were as follows:
- --------------------------------------------------------------------- - --------------------------------------------------------------------- In thousands 1997 1996 1995 - --------------------------------------------------------------------- Domestic $179,192 $45,330 $ 83,875 Foreign 45,244 45,548 45,055 - --------------------------------------------------------------------- Total $224,436 $90,878 $128,930 - --------------------------------------------------------------------- - ---------------------------------------------------------------------
The components of income tax expense were as follows:
- --------------------------------------------------------------------- In thousands 1997 1996 1995 - --------------------------------------------------------------------- Current Federal $32,892 $33,923 $14,250 Foreign 16,217 17,112 15,023 State and local 513 4,982 2,263 - --------------------------------------------------------------------- Total current 49,622 56,017 31,536 - --------------------------------------------------------------------- Deferred Domestic 19,341 (23,682) 7,333 Foreign 612 (1,325) 1,559 - --------------------------------------------------------------------- Total deferred 19,953 (25,007) 8,892 - --------------------------------------------------------------------- Income taxes $69,575 $31,010 $40,428 - --------------------------------------------------------------------- - ---------------------------------------------------------------------
The reconciliation between the federal statutory tax rate and the Corporation's effective tax rate was as follows:
- -------------------------------------------------------------------------- - -------------------------------------------------------------------------- 1997 1996 1995 - -------------------------------------------------------------------------- Federal statutory tax rate 35.0% 35.0% 35.0% Increase (reduction) resulting from: State tax -- net of federal tax benefit 0.4 2.3 1.3 Partially tax-exempt income (6.3) (9.4) (4.8) Goodwill 2.0 4.5 2.4 Merger expenses -- 5.6 -- Change in valuation allowance (1.9) (5.0) (1.4) Other 1.8 1.1 (1.1) - -------------------------------------------------------------------------- Effective tax rate 31.0% 34.1% 31.4% - -------------------------------------------------------------------------- - --------------------------------------------------------------------------
The components of the Corporation's net deferred tax asset were as follows:
DECEMBER 28, December 29, In thousands 1997 1996 - -------------------------------------------------------------------------- Deferred tax assets Special-charge-related reserves $ 16,596 $ 33,773 Accrued employee benefits 10,146 10,333 Other accruals 19,504 24,197 Asset reserves 14,845 10,289 Foreign tax-credit and loss carryforwards 7,644 11,087 Pension benefits 6,569 7,470 Other 4,611 11,206 Valuation allowance (3,373) (10,825) - -------------------------------------------------------------------------- Net deferred tax assets 76,542 97,530 - -------------------------------------------------------------------------- Deferred tax liabilities Property, plant and equipment (36,885) (42,044) Other (22,672) (18,548) - -------------------------------------------------------------------------- Total deferred tax liabilities (59,557) (60,592) - -------------------------------------------------------------------------- Net deferred tax asset $16,985 $36,938 - -------------------------------------------------------------------------- - --------------------------------------------------------------------------
The valuation allowance for deferred tax assets was decreased by $7.4 million in 1997, $4.3 million due to utilization and $3.1 million due to expiration of foreign net operating-loss and foreign-tax credit carryforwards. The remaining valuation allowance at December 28, 1997, related to foreign net operating loss carryforwards. 6 FAIR VALUE OF FINANCIAL INSTRUMENTS The Corporation's financial instruments include cash and cash equivalents, marketable securities, short-term borrowings, long-term debt, commodity swaps and foreign-currency contracts. The carrying amounts of those financial instruments generally approximated their fair values at December 28, 1997, and at December 29, 1996, except that, based on the borrowing rates currently available to the Corporation, the fair value of long-term debt was approximately $519.4 and $664.9 million at December 28, 1997, and at December 29, 1996, respectively. 29 The cost basis and fair market value of marketable securities at December 28, 1997, and at December 29, 1996, were as follows:
- ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- Amortized Gross Gross Fair Cost Unrealized Unrealized Market In thousands Basis Gains Losses Value - ----------------------------------------------------------------------------- DECEMBER 28, 1997 Certificates of deposit $27,447 $ -- $ -- $27,447 Mortgage-backed 22,588 1,281 (213) 23,656 Equity and other 1,074 234 (29) 1,279 - ----------------------------------------------------------------------------- Total $51,109 $1,515 $(242) $52,382 - ----------------------------------------------------------------------------- December 29, 1996 Mortgage-backed $33,477 $1,442 $(583) $34,336 Equity and other 1,074 530 -- 1,604 - ----------------------------------------------------------------------------- Total $34,551 $1,972 $(583) $35,940 - ----------------------------------------------------------------------------- - -----------------------------------------------------------------------------
There were no sales of available-for-sale securities during the year. The mortgage-backed securities held at December 28, 1997, have expected maturities ranging from one to 22 years. 7 LONG-TERM DEBT
- -------------------------------------------------------------------- - -------------------------------------------------------------------- DECEMBER 28, December 29, In thousands 1997 1996 - -------------------------------------------------------------------- Revolving-credit facility $ -- $205,000 Notes payable with a weighted- average interest rate at December 28, 1997, of 7.3%, due through 2006 273,478 353,821 Other bank borrowings with a weighted-average interest rate at December 28, 1997, of 5.70% 104,573 44,419 Commercial paper with a weighted-average interest rate at December 28, 1997, of 5.83% 79,907 -- Non-U.S. borrowings with a weighted-average interest rate of 4.03% at December 28, 1997, due through 2002 20,352 25,094 Industrial revenue bonds with a weighted-average interest rate at December 28, 1997, of 3.93%, due through 2010 19,855 23,900 Other 9,904 8,552 - -------------------------------------------------------------------- 508,069 660,786 Less current portion 5,256 15,690 - -------------------------------------------------------------------- Long-term debt $502,813 $645,096 - -------------------------------------------------------------------- - --------------------------------------------------------------------
Principal payments on long-term debt, including capital leases in each of the five years subsequent to December 28, 1997, are $5.3, $8.3, $189.9, $12.0 and $15.5 million, respectively. The Corporation has a revolving-credit facility with a group of banks that provides for a commitment of $500.0 million through March 29, 2000. The Corporation has the option, at the time of drawing funds under that facility, of selecting an interest rate based on a number of benchmarks, including LIBOR, the certificate of deposit rate and the prime rate of the agent bank. The credit facility includes covenants, among which are limitations on the amount of future indebtedness that are based on certain financial ratios. Dividends are permitted to continue at the current rate per share and may be increased, provided the annual payout does not exceed 50% of net earnings. In June 1997, the Corporation initiated a commercial paper program, which is backed by the $500.0-million revolving-credit facility. The Corporation has a number of committed and uncommitted credit facilities to provide funding for its international operations. In the normal course of its business activities, the Corporation is required under certain contracts to provide letters of credit that may be drawn upon in the event the Corporation fails to perform under the contracts. Outstanding letters of credit, or similar financial instruments, amounted to $49.9 million at December 28, 1997. Credit facility and commercial paper borrowings are classified as long-term based on the Corporation's ability and intent to refinance such borrowings. 8 STOCK OPTION AND INCENTIVE PLANS The Corporation has stock-incentive plans that provide for awards of stock options and restricted stock to its key employees. At December 28, 1997, a total of 2,491,911 shares was reserved for issuance under those plans. The following is a summary of the option transactions for the years 1997, 1996 and 1995:
- ---------------------------------------------------------------------- - ---------------------------------------------------------------------- Average Per Share Shares Option Price - ---------------------------------------------------------------------- Balance at January 1, 1995 2,319,516 $28.07 - ---------------------------------------------------------------------- Granted 660,128 27.08 Exercised (380,210) 23.26 Terminated (189,310) 29.66 - ---------------------------------------------------------------------- Balance at December 31, 1995 2,410,124 28.45 - ---------------------------------------------------------------------- Granted 375,063 37.36 Exercised (502,420) 23.90 Terminated (116,535) 31.85 - ---------------------------------------------------------------------- Balance at December 29, 1996 2,166,232 30.71 - ---------------------------------------------------------------------- Granted 545,237 45.70 Exercised (801,132) 27.11 Terminated (61,592) 35.87 - ---------------------------------------------------------------------- BALANCE AT DECEMBER 28, 1997 1,848,745 $36.53 - ---------------------------------------------------------------------- Exercisable at December 31, 1995 1,111,612 $27.48 Exercisable at December 29, 1996 1,536,214 $28.95 EXERCISABLE AT DECEMBER 28, 1997 1,074,759 $32.02 - ---------------------------------------------------------------------- - ----------------------------------------------------------------------
30 The following is a summary of options outstanding at December 28, 1997:
- ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Options Outstanding Options Exercisable --------------------------------------------------- -------------------------------- Range Weighted-Average of Number Remaining Weighted-Average Number Weighted-Average Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price - ---------------------------------------------------------------------------------------------------------- $18.49 - $32.38 677,702 4.8 years $30.08 614,377 $29.88 $32.65 - $38.59 633,494 6.7 $35.77 453,283 $34.77 $39.50 - $45.75 537,549 9.1 $45.55 7,099 $42.01 - ---------------------------------------------------------------------------------------------------------- $18.49 - $45.75 1,848,745 6.7 $38.53 1,074,759 $32.02 - ----------------------------------------------------------------------------------------------------------
The 1993 Management Stock Ownership Plan provides that, for each calendar year, up to 1.25% of the outstanding common stock of the Corporation will be available for issuance as grants or awards. That plan provides for granting stock options at a price not less than the fair market value on the date of grant with a term not to exceed 10 years. The plan also provides for the issuance of restricted stock awards as incentive compensation to key employees. The awards are subject to certain restrictions, including full vesting if the recipient remains in the employ of the Corporation for three years after receipt of the award. The value of the awards is recorded as compensation expense. Restricted shares, plus cash payments for federal and state taxes awarded under that plan, amounted to 127,641 shares awarded in 1997; 63,844 shares, plus $0.5 million, awarded in 1996; and 41,748 shares, plus $0.6 million, awarded in 1995. The Corporation has a restricted stock plan for nonemployee directors under which each director receives 200 restricted shares of common stock annually for a full year of service. Those shares remain restricted during the director's tenure. Shares issued under that plan were 2,000 in 1997; 2,162 in 1996; and 1,850 in 1995. The Corporation continues to account for its stock-based employee-compensation plans in accordance with Accounting Principals Board Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, no compensation cost has been recognized for fixed stock-option plans. In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," a valuation using the fair-value-based accounting method has been made for stock options issued in 1997, 1996 and 1995. That valuation was performed using the Black-Scholes option-pricing model. The Corporation's 10-year term options were valued assuming risk-free interest rates of 6.25%, 5.25% and 7.5% on their respective issuance dates in 1997, 1996 and 1995; a dividend yield of 2.5%; an average expected-option life of five years; and volatility of 20%. The valuation determined a per share weighted-average fair value for 10-year options granted during 1997, 1996 and 1995 of $10.36, $8.03 and $8.20, respectively. Had those options been accounted for using the fair-value method, they would have resulted in additional compensation cost of $2.4 million, $1.1 million and $0.6 million, net of taxes for 1997, 1996 and 1995, respectively. Since the fair-value method amortizes the estimated value of those options over their three-year vesting period, the full pro-forma effect of the method is only evident in 1997. The Corporation also has five-year term options outstanding that were issued in exchange for outstanding options of Augat. Those options were valued using an assumed risk-free interest rate of 5.4% on their original issuance date in 1995, a dividend yield of 2.5%, an average expected-option life of 2.5 years and volatility of 20%. The value of five-year options issued in 1996 was not significant, and no options were granted subsequent to 1996. The valuation resulted in a per share weighted-average fair value for those five-year options of $11.91. Under the fair-value method, the entire value of those options would have been recorded as additional compensation cost of $3.2 million net of taxes in 1996 due to accelerated vesting of those options upon change of control of Augat. Had the Corporation adopted the fair-value-based accounting method for stock options effective January 2, 1995, net earnings would have been $152.3 million ($2.78 basic earnings per share; $2.76 diluted earnings per share) in 1997; $55.6 million ($1.05 basic earnings per share; $1.04 diluted earnings per share) in 1996; and $87.9 million ($1.67 basic earnings per share; $1.66 diluted earnings per share) in 1995. 9 POSTRETIREMENT BENEFITS PENSION PLANS The Corporation and its subsidiaries have several noncontributory pension plans covering most employees. Those plans generally provide pension benefits that are based on compensation levels and 31 years of service. Annual contributions to the plans are made according to the established laws and regulations of the applicable countries. Plan assets are primarily invested in equity securities, fixed-income securities and cash equivalents. Net periodic pension costs for 1997, 1996 and 1995 for the Corporation's defined benefit pension plans included the following components:
- --------------------------------------------------------------------- - --------------------------------------------------------------------- In thousands 1997 1996 1995 - --------------------------------------------------------------------- Service cost -- benefits earned during the period $ 8,279 $ 7,773 $ 6,344 Interest cost on projected benefit obligation 14,657 13,110 11,670 Actual return on assets (23,341) (22,848) (18,308) Net amortization and deferral 5,099 6,136 4,087 - --------------------------------------------------------------------- Net periodic pension cost $ 4,694 $ 4,171 $ 3,793 - --------------------------------------------------------------------- - ---------------------------------------------------------------------
Assumptions used in developing the net periodic pension costs were as follows:
- --------------------------------------------------------------------- - --------------------------------------------------------------------- U.S. Plans Non-U.S. Plans ---------------------------------------- 1997 1996 1995 1997 1996 1995 - --------------------------------------------------------------------- Discount rate 7.8% 7.5% 7.9% 6.3% 7.2% 7.4% Rate of increase in compensation level 4.5% 4.5% 5.5% 4.2% 4.8% 5.0% Expected long-term rate of return on plan assets 9.0% 9.0% 8.5% 7.7% 8.6% 8.5% - --------------------------------------------------------------------- - ---------------------------------------------------------------------
Rates are weighted averages. The following table sets forth the funded status of the Corporation's defined benefit plans and amounts recognized in the Corporation's balance sheet:
- --------------------------------------------------------------------- - --------------------------------------------------------------------- DECEMBER 28, December 29, 1997 1996 - --------------------------------------------------------------------- Actuarial present value of projected benefits based on employment service to date and present pay levels: Vested employees $197,160 $162,557 Non-vested employees 6,853 5,372 - --------------------------------------------------------------------- Accumulated benefit obligation 204,013 167,929 Additional amounts related to projected pay increases 16,832 12,061 - --------------------------------------------------------------------- Projected benefit obligation 220,845 179,990 Plan assets at fair value 210,832 192,849 - --------------------------------------------------------------------- Plan assets in excess of (less than) projected benefit obligation (10,013) 12,859 Unrecognized transition assets (4,818) (6,407) Unrecognized net (gain) loss 7,024 (11,461) Unrecognized prior service cost 1,873 2,338 - --------------------------------------------------------------------- Accrued pension cost $ (5,934) $ (2,671) - --------------------------------------------------------------------- - ---------------------------------------------------------------------
The present value of projected benefits for U.S. plans recorded at December 28, 1997, and at December 29, 1996, was determined using discount rates of 7.25% and 7.75%, respectively, and an assumed rate of increase in compensation of 4.5% for both years. The Corporation maintains certain other non-U.S. pension plans. Pension expense related to those non-U.S. plans in 1997, 1996 and 1995 was $2.0, $1.5 and $0.9 million, respectively. The Corporation maintains a non-qualified supplemental pension plan covering certain key executives, which provides for benefit payments that exceed the limit for deductibility imposed by income tax regulations, and a retirement plan for non-employee directors (closed effective December 1997), which provides benefits based on compensation and years of service. The projected benefit obligation relating to those unfunded plans was $12.3 million at December 28, 1997, and $18.5 million at December 29, 1996. Pension expense for those plans was $2.2, $10.7 and $2.4 million in 1997, 1996 and 1995, respectively. The 1996 pension expense includes $7.9 million for early retirement of certain executives. OTHER POSTRETIREMENT BENEFIT PLANS The Corporation sponsors defined contribution 401(k) savings plans for its U.S. employees not represented by a labor organization for which the Corporation's contributions are based on a percentage of employee contributions. The cost of those plans was $5.0, $4.5 and $3.5 million in 1997, 1996 and 1995, respectively. The Corporation provides certain health-care and life-insurance benefits to certain retired employees and certain active employees who meet age and length-of-service requirements. The Corporation is recognizing the estimated liability for those benefits over the estimated lives of the individuals covered. The Corporation is not funding that liability. The Plan has been closed to new entrants. 32 The net periodic cost for postretirement health-care and life-insurance benefits in 1997, 1996 and 1995 included the following components:
- --------------------------------------------------------------------- - --------------------------------------------------------------------- In thousands 1997 1996 1995 - --------------------------------------------------------------------- Service cost -- benefits earned during the period $ 37 $ 89 $ 108 Interest cost on accumulated benefits 1,888 2,430 1,377 Net amortization (1,111) 829 590 - --------------------------------------------------------------------- Net periodic postretirement cost $ 814 $3,348 $2,075 - --------------------------------------------------------------------- - ---------------------------------------------------------------------
The following table shows the Corporation's accumulated postretirement benefit obligations and the amounts recognized in the Corporation's balance sheet:
- --------------------------------------------------------------------- - --------------------------------------------------------------------- DECEMBER 28, December 29, In thousands 1997 1996 - --------------------------------------------------------------------- Retirees $ 24,885 $ 30,332 Fully eligible active participants 587 624 Other active participants 861 1,775 - --------------------------------------------------------------------- Total accumulated postretirement benefit obligation 26,333 32,731 - --------------------------------------------------------------------- Unrecognized transition liability (14,918) (15,927) Unrecognized net gain 7,478 4,643 Unrecognized prior-service cost (121) (162) - --------------------------------------------------------------------- Accrued postretirement benefit $ 18,772 $ 21,285 - --------------------------------------------------------------------- - ---------------------------------------------------------------------
The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.25% in 1997 and 7.5% in 1996. An increase in the cost of covered health-care benefits of 8.9% was assumed for 1998 and was graded down annually to 5.5% for 2005 and future years. A 1% increase in the health-care-cost trend rate would increase the accumulated postretirement benefit obligation by $1.4 million at December 28, 1997, and the net periodic cost by $0.1 million for the year then ended. 10 COMMITMENTS The Corporation and its subsidiaries are parties to various leases relating to plants, distribution facilities, office facilities, automobiles and other equipment. Related real estate taxes and insurance and maintenance expenses are normally obligations of the Corporation. It is expected that in the normal course of business, the majority of the leases will be renewed or replaced by other leases. Capitalized leases are not significant. Future minimum payments under noncancelable operating leases consisted of the following at December 28, 1997:
- ---------------------------------------------------- - ---------------------------------------------------- Future Minimum In thousands Payments - ---------------------------------------------------- 1998 $ 27,780 1999 15,339 2000 12,190 2001 10,315 2002 9,052 Thereafter 48,747 - ---------------------------------------------------- Total minimum operating lease payments $123,423 - ---------------------------------------------------- - ----------------------------------------------------
Rent expense for operating leases was $34.8, $34.2 and $32.3 million in 1997, 1996 and 1995, respectively. 11 OTHER FINANCIAL DATA Other expense -- net consisted of the following:
- -------------------------------------------------------------------- - -------------------------------------------------------------------- In thousands 1997 1996 1995 - -------------------------------------------------------------------- Investment income $ 7,246 $ 8,716 $ 7,197 Interest expense (51,623) (48,689) (31,775) Index put options -- (5,452) -- Income from equity investees 13,909 7,920 2,149 Foreign currency losses (3,759) (2,065) (100) Foreign-exchange contract gains (losses) 2,071 1,077 (658) Other (2,526) (1,008) (1,830) - -------------------------------------------------------------------- Other expense -- net $(34,682) $(39,501) $(25,017) - -------------------------------------------------------------------- - --------------------------------------------------------------------
Interest-rate swaps increased interest expense by $0.1 million in 1997 and 1996, while reducing interest expense by $0.2 million in 1995. The Corporation expenses the cost of advertising as it is incurred. Total advertising expense was $21.9 million in 1997, $18.0 million in 1996, and $17.3 million in 1995. Accrued liabilities, including salaries, fringe benefits and other compensation, amounted to $47.7 and $37.4 million in 1997 and 1996, respectively. Inventories consisted of the following:
- --------------------------------------------------------------------- - --------------------------------------------------------------------- DECEMBER 28, December 29, In thousands 1997 1996 - --------------------------------------------------------------------- Finished goods $157,095 $153,067 Work in process 66,726 64,979 Raw materials 150,156 145,260 - --------------------------------------------------------------------- Total inventories $373,977 $363,306 - --------------------------------------------------------------------- - ---------------------------------------------------------------------
33 12 BUSINESS SEGMENTS The Corporation operates in three business segments: Electrical Construction and Maintenance Components (Electrical), Electronic/OEM Components (Electronic), and Other Products and Components (Other). Net sales are comprised of sales to unaffiliated customers. Segment earnings from operations consist of net sales less the cost of sales and operating expenses. General corporate expenses have not been allocated to segments. General corporate assets not allocated to segments are principally cash and investments.
- ---------------------------------------------------------------------- - ---------------------------------------------------------------------- In thousands 1997 1996(a)(b) 1995(a)(b) - ---------------------------------------------------------------------- NET SALES Electrical $ 764,161 $ 643,376 $ 573,580 Electronic 893,904 903,942 834,123 Other 456,653 437,827 325,665 - ---------------------------------------------------------------------- Total $2,114,718 $1,985,145 $1,733,368 - ---------------------------------------------------------------------- EARNINGS FROM OPERATIONS Electrical $ 131,303 $ 104,556 $ 90,541 Electronic 109,205 32,061 68,309 Other 50,454 51,452 35,734 General Corporate (31,844) (57,690) (40,637) - ---------------------------------------------------------------------- Total $ 259,118 $ 130,379 $ 153,947 - ---------------------------------------------------------------------- IDENTIFIABLE ASSETS Electrical $ 563,414 $ 546,723 $ 516,171 Electronic 702,994 728,621 615,086 Other 521,881 577,236 331,356 General Corporate 250,386 278,657 204,245 - ---------------------------------------------------------------------- Total $2,038,675 $2,131,237 $1,666,858 - ---------------------------------------------------------------------- CAPITAL EXPENDITURES Electrical $ 47,538 $ 32,164 $ 55,762 Electronic 44,454 60,553 59,747 Other 22,313 14,837 15,727 General Corporate 2,414 253 206 - ---------------------------------------------------------------------- Total $ 116,719 $ 107,807 $ 131,442 - ---------------------------------------------------------------------- DEPRECIATION AND AMORTIZATION Electrical $ 33,152 $ 28,728 $ 26,401 Electronic 39,113 40,868 36,961 Other 22,388 21,804 12,919 General Corporate 671 181 214 - ---------------------------------------------------------------------- Total $ 95,324 $ 91,581 $ 76,495 - ---------------------------------------------------------------------- - ----------------------------------------------------------------------
- ------------------------------ (a) 1996 included special charges of $1.5 million in Electrical, $67.1 million in Electronic, $3.5 million in Other and $18.9 million in General Corporate. 1995 included special charges of $23.0 million in Electronic. See Notes 3 and 4. (b) Certain prior-year amounts have been reclassified to conform to the current-year presentation. 13 FINANCIAL INFORMATION RELATING TO OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS The Corporation operates in three principal areas: U.S., Europe and other locations (primarily Canada, Mexico and the Far East). Transfers between geographic areas were priced on a basis that yielded an appropriate rate of return based on assets employed, risk and other factors. General corporate expenses have not been allocated to geographic areas. General corporate assets not allocated to geographic areas are principally cash and investments.
- ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- In thousands 1997 1996(a) 1995(a) - ----------------------------------------------------------------------------- SALES TO UNAFFILIATED CUSTOMERS U.S. $1,621,946 $1,504,210 $1,306,458 Europe 204,238 201,853 202,153 Other 288,534 279,082 224,757 - ----------------------------------------------------------------------------- Total $2,114,718 $1,985,145 $1,733,368 - ----------------------------------------------------------------------------- SALES OR TRANSFERS BETWEEN GEOGRAPHIC AREAS U.S. $ 115,251 $ 101,272 $ 87,425 Europe 8,825 12,787 15,432 Other 60,564 49,452 32,198 - ----------------------------------------------------------------------------- Total $ 184,640 $ 163,511 $ 135,055 - ----------------------------------------------------------------------------- EARNINGS BEFORE INCOME TAXES U.S. $ 218,333 $ 125,517 $ 131,209 Europe 20,974 23,052 27,658 Other 46,820 39,700 35,717 General Corporate (27,009) (57,890) (40,637) - ----------------------------------------------------------------------------- Earnings from operations 259,118 130,379 153,947 Other expense -- net (34,682) (39,501) (25,017) - ----------------------------------------------------------------------------- Total $ 224,436 $ 90,878 $ 128,930 - ----------------------------------------------------------------------------- IDENTIFIABLE ASSETS U.S. $1,265,174 $1,397,562 $1,088,188 Europe 167,607 209,066 160,732 Other 278,838 230,963 200,980 General Corporate 328,328 294,912 221,551 Adjustments and eliminations (1,272) (1,266) (4,593) - ----------------------------------------------------------------------------- Total $2,038,675 $2,131,237 $1,666,858 - ----------------------------------------------------------------------------- - -----------------------------------------------------------------------------
(a) 1996 included charges of $61.9 million in U.S., $6.7 million in Europe, $3.5 million in Other, $18.9 million in General Corporate and $6.1 million in Other expense. 1995 included charges of $19.9 million in U.S., $1.0 million in Europe and $2.1 million in Other. See Notes 3 and 4. 34 COMPANY REPORT ON FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF THOMAS & BETTS CORPORATION: The accompanying financial statements, as well as all financial data in this annual report, have been prepared by the Corporation in accordance with generally accepted accounting principles consistently applied. As such, they include certain amounts that are based on the Corporation's estimates and judgments. The Corporation has systems of internal control that are designed to provide reasonable assurance that the financial records are reliable for preparing financial statements and maintaining accountability for assets, and that assets are safeguarded against loss from unauthorized use or disposition. Those systems are augmented by the positive attitude of management in maintaining a sound control environment, communication of established written policies and procedures, the maintenance of a qualified internal auditing group, the selection and training of qualified personnel and an organizational structure that provides appropriate delegation of authority, segregation of duties and regular review of financial performance by management. To complement the systems of internal control, additional safeguards are provided by the independent auditors and the Audit Committee of the Board of Directors. The independent auditors, whose report is set forth opposite, perform an objective, independent audit of the Corporation's financial statements taken as a whole. The Audit Committee, composed entirely of outside directors, meets periodically with the independent auditors, director of internal audit and members of management to review matters relating to the quality of financial reporting and internal-accounting control and the nature, extent and results of audit efforts. INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THOMAS & BETTS CORPORATION: We have audited the accompanying consolidated balance sheets of Thomas & Betts Corporation and subsidiaries as of December 28, 1997 and December 29, 1996, and the related consolidated statements of earnings, cash flows, and shareholders' equity for each of the years in the three-year period ended December 28, 1997. These consolidated financial statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of Augat Inc. (a wholly owned subsidiary) as of December 29, 1996 and for each of the years in the two year period then ended, which statements reflect total assets constituting 20 percent as of December 29, 1996 and total revenues constituting 29 percent and 31 percent for each of the years in the two-year period ended December 29, 1996, respectively, of the related consolidated totals. Those statements were audited by other auditors whose unqualified report, dated February 6, 1997, has been furnished to us, and our opinion, insofar as it relates to the amounts included for Augat Inc., is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Thomas & Betts Corporation and subsidiaries at December 28, 1997 and December 29, 1996 and the results of their operations and their cash flows for each of the years in the three-year period ended December 28, 1997, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Memphis, Tennessee February 5, 1998 35 QUARTERLY REVIEW THOMAS & BETTS CORPORATION AND SUBSIDIARIES
- --------------------------------------------------------- -------------- ------------ - --------------------------------------------------------- -------------- ------------ In thousands (except per share data) 1997 1996(a) 1995(b) - --------------------------------------------------------- -------------- ------------ FIRST QUARTER Net sales.................................$ 515,919 $ 486,733 $ 435,062 Gross profit.............................. 159,021 143,298 125,050 Net earnings.............................. 30,334 26,080 22,788 Earnings per common share Basic................................. .56 .49 .44 Diluted............................... .56 .49 .43 Cash dividends declared per share......... .28 .28 .28 Market price range........................$ 471/2-421/2 $391/2-3515/16 $343/8-323/8 SECOND QUARTER Net sales.................................$ 545,847 $ 499,780 $ 428,707 Gross profit.............................. 172,064 151,276 130,061 Net earnings.............................. 38,344 30,965 26,419 Earnings per common share Basic................................. .70 .58 .50 Diluted............................... .69 .58 .50 Cash dividends declared per share......... .28 .28 .28 Market price range........................$ 553/8-41 $ 401/4-37 $341/4-313/8 THIRD QUARTER Net sales.................................$ 520,395 $ 497,046 $ 430,165 Gross profit.............................. 165,266 150,894 126,954 Net earnings.............................. 40,253 33,622 25,473 Earnings per common share Basic................................. .73 .63 .49 Diluted .............................. .73 .63 .48 Cash dividends declared per share......... .28 .28 .28 Market price range........................$ 5811/16-519/16 $ 391/2-343/4 $351/8-321/4 FOURTH QUARTER Net sales.................................$ 532,557 $ 501,586 $ 439,434 Gross profit.............................. 178,063 141,646 129,840 Net earnings (loss)....................... 45,930 (30,799) 13,822 Earnings (loss) per common share Basic................................. .84 (.57) .26 Diluted............................... .83 (.57) .26 Cash dividends declared per share......... .28 .28 .28 Market price range........................$5513/16-4315/16 $ 457/8-377/8 $375/8-311/4 - --------------------------------------------------------- -------------- ------------ - --------------------------------------------------------- -------------- ------------
Restated to include the results of Augat Inc., acquired December 11, 1996, and accounted for as a pooling of interests. Includes the results of Amerace Corporation from January 2, 1996. Basic per share amounts are based on average shares outstanding in each quarter. Diluted per share amounts also reflect potential dilution from stock options. (a) 1996 included special charges of $97.1 million pretax ($1.23 basic and $1.22 diluted per share). (b) 1995 included special charges of $23.0 million pretax ($0.29 basic and diluted per share). 36 SIX-YEAR SUMMARY OF SELECTED FINANCIAL DATA THOMAS & BETTS CORPORATION AND SUBSIDIARIES
- ------------------------------------------------------- ------------------------------------------------------- - ------------------------------------------------------- ------------------------------------------------------- Dollars and shares in thousands (except per share data) 1997 1996 1995 1994 1993 1992 - ------------------------------------------------------- --------------------------------------------------------------------- OPERATIONAL DATA Net sales.................................. $ 2,114,718 $ 1,985,145 $ 1,733,368 $ 1,573,602 $1,349,446 $ 1,273,080 ----------- --------------------------------------------------------------------- Costs and expenses Cost of sales.......................... 1,440,303 1,398,031 1,221,463 1,118,224 945,102 880,326 Marketing, general and administrative.. 346,046 339,124 283,861 255,073 239,231 227,027 Research and development............... 51,896 47,229 44,083 40,543 37,176 36,346 Amortization of intangibles............ 17,355 15,323 11,314 12,345 13,072 14,760 Merger expense......................... -- 30,558 -- -- -- -- Provision for restructured operations.. -- 24,501 18,700 79,011 -- 15,000 ----------- --------------------------------------------------------------------- 1,855,600 1,854,766 1,579,421 1,505,196 1,234,581 1,173,459 ----------- --------------------------------------------------------------------- Earnings from operations................... 259,118 130,379 153,947 68,406 114,865 99,621 Other expense--net......................... (34,682) (39,501) (25,071) (28,212) (31,323) (36,883) Earnings from continuing operations before income taxes.................... 224,436 90,878 128,930 40,194 83,542 62,738 Income taxes............................... 69,575 31,010 40,428 12,107 24,353 15,572 ----------- --------------------------------------------------------------------- Earnings from continuing operations before cumulative effect of change in accounting for income taxes......... 154,861 59,868 88,502 28,087 59,189 47,166 ----------- --------------------------------------------------------------------- Net earnings(a)............................ $ 154,861 $ 59,868 $ 88,502 $ 94,020 $ 72,139 $ 57,509 ----------- --------------------------------------------------------------------- Net return on sales........................ 7.3% 3.0% 5.1% 6.0% 5.3% 4.5% Return on average shareholders' equity..... 16.8% 7.0% 10.8% 12.8% 10.9% 9.7% FINANCIAL POSITION (AT YEAR-END) Current assets............................. $ 796,150 $ 957,051 $ 750,386 $ 732,453 $ 665,599 $ 621,104 Current liabilities ....................... $ 439,808 $ 491,900 $ 402,874 $ 353,987 $ 263,045 $ 249,426 Working capital ........................... $ 356,342 $ 465,151 $ 347,512 $ 378,466 $ 402,554 $ 371,678 Current ratio ............................. 1.8 to 1 1.9 to 1 1.9 to 1 2.1 to 1 2.5 to 1 2.5 to 1 Property, plant and equipment-net.......... $ 569,762 $ 539,944 $ 472,833 $ 396,364 $ 396,003 $ 394,400 Long-term debt............................. $ 502,813 $ 645,096 $ 353,666 $ 354,552 $ 439,299 $ 477,284 Shareholders' equity ...................... $ 977,381 $ 868,382 $ 850,312 $ 790,564 $ 682,443 $ 644,543 Total assets............................... $ 2,038,675 $ 2,131,237 $ 1,666,858 $ 1,566,170 $1,451,042 $ 1,412,511 COMMON STOCK DATA Average shares outstanding: Basic.................................. 54,717 53,059 52,494 50,862 49,616 49,110 Diluted................................ 55,090 53,512 52,722 51,160 50,027 49,732 Cash dividends declared ................... $ 60,971 $ 48,412 $ 47,380 $ 44,958 $ 42,220 $ 41,948 Percent of net earnings................ 39% 81% 54% 48% 59% 73% Per share Earnings from continuing operations Basic .............................. $ 2.83 $ 1.13 $ 1.69 $ 0.55 $ 1.19 $ 0.96 Diluted ............................ $ 2.81 $ 1.12 $ 1.68 $ 0.55 $ 1.18 $ 0.95 Net earnings Basic .............................. $ 2.83 $ 1.13 $ 1.69 $ 1.85 $ 1.45 $ 1.17 Diluted ............................ $ 2.81 $ 1.12 $ 1.68 $ 1.84 $ 1.44 $ 1.16 Cash dividends declared ............... $ 1.12 $ 1.12 $ 1.12 $ 1.12 $ 1.12 $ 1.12 Shareholders' equity .................. $ 17.77 $ 16.29 $ 16.15 $ 15.33 $ 13.69 $ 13.09 Market price range..................... $5811/16-41 $457/8-343/4 $375/8-311/4 $355/8-291/8 $ 36-281/2 $341/2-273/8 OTHER DATA Capital expenditures ...................... $ 116,719 $ 107,807 $ 131,442 $ 98,358 $ 58,932 $ 61,929 Depreciation............................... $ 77,969 $ 76,258 $ 65,181 $ 63,674 $ 60,592 $ 56,011 Employees at year-end...................... 16,400 14,700 12,600 11,800 12,300 11,500 - ------------------------------------------------------- ------------------------------------------------------- - ------------------------------------------------------- -------------------------------------------------------
Restated to include the results of Augat Inc., acquired December 11, 1996, and accounted for as a pooling of interests. Includes the results of Amerace Corporation from January 2, 1996, and American Electric from January 2, 1992. (a) Net earnings for 1996 included special charges of $97.1 million pretax ($1.23 basic and $1.22 diluted per share). Net earnings for 1995 included special charges of $23.0 million pretax ($0.29 basic and diluted per share). Net earnings in 1994, 1993 and 1992 included after-tax earnings from discontinued operations (Vitramon, Inc.), of $7.4 million, $11.3 million and $10.3 million, respectively. Net earnings in 1994 also included a pretax gain from the sale of Vitramon of $99.1 million, a pretax restructuring charge of $79.0 million and a pretax operating write-down of $10.6 million for previously vacated facilities. Those items offset each other on an after-tax basis. Net earnings in 1993 also included a positive impact from a cumulative effect of change in accounting for income taxes of $1.6 million ($0.03 basic and diluted per share). 37 DIRECTORS ERNEST H. DREW FORMER CHIEF EXECUTIVE OFFICER, INDUSTRIES AND TECHNOLOGY GROUP, WESTINGHOUSE ELECTRIC CORPORATION DIRECTOR SINCE 1989(2)(3) T. KEVIN DUNNIGAN CHAIRMAN OF THE BOARD OF THE CORPORATION DIRECTOR SINCE 1975(2)(3) JEANANNE K. HAUSWALD FORMER VICE PRESIDENT AND TREASURER, THE SEAGRAM COMPANY LTD. DIRECTOR SINCE 1993(4) THOMAS W. JONES VICE CHAIRMAN, TRAVELERS GROUP, INC., AND CHAIRMAN AND CHIEF EXECUTIVE OFFICER, SMITH BARNEY ASSET MANAGEMENT DIVISION OF TRAVELERS GROUP, INC. (FINANCIAL SERVICES) DIRECTOR SINCE 1992(1) ROBERT A. KENKEL FORMER CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND CHIEF OPERATING OFFICER, THE PULLMAN CO. DIRECTOR SINCE 1994(3)(4) JOHN N. LEMASTERS FORMER CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER, AUGAT INC. DIRECTOR SINCE 1996(4) (1)AUDIT COMMITTEE (2)CORPORATE GOVERNANCE COMMITTEE (3)EXECUTIVE COMMITTEE (4)HUMAN RESOURCES COMMITTEE KENNETH R. MASTERSON EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, FDX CORPORATION (TRANSPORTATION SERVICES) DIRECTOR SINCE 1995(2) THOMAS C. MCDERMOTT PROPRIETOR, FORBES PRODUCTS, L.L.C. (CUSTOM VINYL BUSINESS PRODUCTS) DIRECTOR SINCE 1996(1) CLYDE R. MOORE PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE CORPORATION DIRECTOR SINCE 1993(2)(3) JEAN-PAUL RICHARD PRIVATE INVESTOR; FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER, AGCO CORPORATION DIRECTOR SINCE 1996(1) IAN M. ROSS PRESIDENT EMERITUS, AT&T BELL LABORATORIES DIRECTOR SINCE 1980(1) WILLIAM H. WALTRIP CHAIRMAN OF THE BOARD, BAUSCH & LOMB INCORPORATED (OPTICAL PRODUCTS), AND CHAIRMAN OF THE BOARD, TECHNOLOGY SOLUTIONS COMPANY (COMPUTER TECHNOLOGY SERVICES) DIRECTOR SINCE 1983(3)(4) OFFICERS CLYDE R. MOORE PRESIDENT AND CHIEF EXECUTIVE OFFICER T. ROY BURTON PRESIDENT -- ELECTRONICS/OEM GROUP GREGORY M. LANGSTON GROUP PRESIDENT -- INTERNATIONAL W. NEIL PARKER PRESIDENT -- ELECTRICAL COMPONENTS GROUP JOHN R. JANULIS VICE PRESIDENT -- CONTROLLER FRED R. JONES VICE PRESIDENT -- FINANCE AND TREASURER JERRY KRONENBERG VICE PRESIDENT -- GENERAL COUNSEL DAVID D. MYLER VICE PRESIDENT -- ADMINISTRATION GARY R. STEVENSON VICE PRESIDENT -- OPERATIONS JANICE H. WAY CORPORATE SECRETARY 38 CORPORATE INFORMATION ANNUAL MEETING The annual meeting of shareholders will be held on Wednesday, May 6, 1998, at 10:00 a.m. at the Winegardner Auditorium, The Dixon Gallery and Gardens, 4339 Park Avenue, Memphis, Tennessee. ANNUAL REPORT ON FORM 10-K A copy of the Corporation's Annual Report on Form 10-K (excluding exhibits), filed with the Securities and Exchange Commission, is available free of charge by writing to Renee Johansen, Director - Investor Relations, at Corporate Headquarters. Our Form 10-K, and other documents filed electronically with the SEC, may be accessed from our website at www.tnb.com. TRANSFER AGENT, REGISTRAR, AND DIVIDEND DISBURSING AGENT First Chicago Trust Company of New York P.O. Box 2534, Suite 4692 Jersey City, New Jersey 07303-2534 Fax (201) 222-4129 Telephone Response Center (800) 446-2617 (24 hours a day, 7 days a week) Fax (201) 222-4892. TDD Service (201) 222-4955 Correspondence concerning change of address, dividends, lost stock certificates and stock transfer requirements should be directed to the address above. Inquiries regarding the Dividend Reinvestment Plan should be directed to the address below. DIVIDEND REINVESTMENT PLAN First Chicago Trust Company of New York Dividend Reinvestment Plan P.O. Box 2598 Jersey City, New Jersey 07303-2598 Internet address: www.fctc.com LISTED NEW YORK STOCK EXCHANGE Trading symbol: TNB CORPORATE HEADQUARTERS Thomas & Betts Corporation 8155 T&B Boulevard Memphis, Tennessee 38125 (901) 252-8000 INVESTOR INQUIRIES Inquiries should be directed to the Investor Relations Department at Corporate Headquarters. Investor information is also available on our website. VISIT US ON THE WORLD WIDE WEB AT WWW.TNB.COM FOR INVESTOR INFORMATION, TECHNICAL PRODUCT BACKGROUND OR A GENERAL OVERVIEW OF THOMAS & BETTS. This entire report is printed on recycled paper. EX-21 12 EXHIBIT 21 EXHIBIT 21 SUBSIDIARIES OF REGISTRANT Place of Incorporation Name Or Organization ------ ------------------------- Thomas & Betts Corporation Tennessee DCP Holding Corp. Delaware Diamond Communication Products, Inc. Delaware Electroline Manufacturing Company Ohio FL Amelec, Inc. Texas American Electric de Mexico, S.A. de C.V. Mexico Thomas & Betts Monterrey S.A. de C.V. Mexico Thomas & Betts Export, Inc. Barbados Thomas & Betts International, Inc. Delaware Amerace Corporation Delaware Augat Inc. Massachusetts Augat Communication Products Inc. Washington Augat Europe, Inc. Delaware Augat Pty. Limited Australia Augat Realty, Inc. Massachusetts Augat, SA de CV Mexico Augat Wiring Systems Inc. Alabama Elastomeric Technologies Inc. Pennsylvania LRC Electronics, Inc. New York Dutch L.P., Inc. Delaware Thomas & Betts A Ltd. Israel Thomas & Betts Asia Investments Japan Thomas & Betts Caribe, Inc. Delaware Thomas & Betts Europe, Inc. Delaware Thomas & Betts Europe C.V. The Netherlands Thomas & Betts Netherlands B.V. The Netherlands Augat A.G. Switzerland Augat GmbH Germany Augat Components GmbH Germany Reznor Lufttechnik GmbH Germany Thomas & Betts GmbH Germany Augat Mfg. SA Switzerland Augat Srl Italy Reznor Europe N.V. Belgium Thomas & Betts AB Sweden Thomas & Betts Benelux B.V.B.A. Belgium Thomas & Betts Euro Distribution S.A. Belgium Thomas & Betts Euro Service Centre B.V.B.A. Belgium EX-21-1 EXHIBIT 21 SUBSIDIARIES OF REGISTRANT (continued) Place of Incorporation Name Or Organization Thomas & Betts European Centre B.V.B.A. Belgium Thomas & Betts France France Augat S.A. France Thomas & Betts Holdings (U.K.) Limited United Kingdom Augat Limited United Kingdom Augat AB Sweden Reznor Limited United Kingdom Thomas & Betts Limited United Kingdom Thomas & Betts Hungary Kft. Hungary Thomas & Betts (Luxembourg) S.A. Luxembourg Thomas & Betts S.p.A. Italy Thomas & Betts Hong Kong, Limited Hong Kong Thomas & Betts Investments Ltd. Canada Thomas & Betts Japan, Ltd. Japan Thomas & Betts (Malaysia) Sdn. Bhd. Malaysia Thomas y Betts de Mexico S. de R.L. de C.V. Mexico Thomas & Betts Pty. Limited Australia Thomas & Betts (S.E. Asia) Pte Ltd. Singapore Augat Pte Limited Singapore Thomas & Betts, Limited Canada T&B Commander Electrical Materials Inc. Canada Thomas & Betts (Ontario) Ltd. Canada Thomas & Betts-Photon Systems Inc. Canada Thomas & Betts Puerto Rico Corporation Delaware All subsidiaries are included in the consolidated financial statements. EX-21-2 EX-23.1 13 EXHIBIT 23.1 EXHIBIT 23.1 ACCOUNTANTS' CONSENT The Shareholders and Board of Directors Thomas & Betts Corporation: We consent to incorporation by reference in the Registration Statements (No. 33-1403, No. 33-35297, No. 33-56789 and No. 33-68370) on Form S-8, in the Registration Statements (No. 33-44153 and No. 333-34567) on Form S-3 and in the Registration Statements (No. 33-15729 and No. 333-893) on Form S-4 of Thomas & Betts Corporation of our report dated February 5, 1998, relating to the consolidated balance sheets of Thomas & Betts Corporation and subsidiaries as of December 28, 1997 and December 29, 1996 and the related consolidated statements of earnings, cash flows and shareholders' equity for each of the years in the three-year period ended December 28, 1997, which report appears or is incorporated by reference in the December 28, 1997 annual report on Form 10-K of Thomas & Betts Corporation. Our report contains a reference to our reliance on the report of other auditors who performed the audit of Augat Inc., a wholly owned subsidiary, as of December 29, 1996 and for each of the years in the two-year period then ended. KPMG Peat Marwick LLP Memphis, Tennessee March 12, 1998 EX-23.1 EX-23.2 14 EXHIBIT 23.2 EXHIBIT 23.2 ACCOUNTANTS' CONSENT The Shareholders and Board of Directors Thomas & Betts Corporation: We consent to incorporation by reference in the Registration Statement Nos. 33-1403, 33-35297, 33-56789 and 33-68370 of Thomas & Betts Corporation on Form S-8, Registration Statement Nos. 33-44153 and 333-34567 of Thomas & Betts Corporation on Form S-3 and Registration Statement Nos. 33-14950, 333-893, and 333-15729 of Thomas & Betts Corporation on Form S-4 of our report dated February 6, 1997 (relating to the consolidated financial statements of Augat Inc. {a subsidiary of Thomas & Betts Corporation since December 11, 1996} and subsidiaries, not presented separately herein) appearing as Exhibit 99 in the Annual Report on Form 10-K of Thomas & Betts Corporation for the year ended December 28, 1997. DELOITTE & TOUCHE LLP Boston, Massachusetts March 12, 1998 EX-23.2 EX-24 15 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Clyde R. Moore, Jerry Kronenberg, Fred R. Jones, and each of them, his or her true and lawful attorney and agent, with full power of substitution and resubstitution, for him or her and in his or her name, to sign the Annual Report on Form 10-K of Thomas & Betts Corporation for the year 1997, and any and all amendments and exhibits thereto, and to file the same and any other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act necessary to be done as fully to all intents and purposes as he or she could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. SIGNATURE TITLE DATE --------- ----- ---- /s/ CLYDE R. MOORE President, Chief Executive March 4, 1997 Clyde R. Moore Officer and Director /s/ FRED R. JONES Vice President-Finance and March 4, 1997 Fred R. Jones Treasurer /s/ JERRY KRONENBERG Vice President-General Counsel March 4, 1997 Jerry Kronenberg /s/ T. KEVIN DUNNIGAN Chairman of the Board March 4, 1997 T. Kevin Dunnigan _____________________ Director Ernest H. Drew /s/ JEANANNE K. HAUSWALD Director March 4, 1997 Jeananne K. Hauswald _____________________ Director Thomas W. Jones /s/ ROBERT A. KENKEL Director March 4, 1997 Robert A. Kenkel /s/ JOHN N. LEMASTERS Director March 4, 1997 John N. Lemasters _____________________ Director Kenneth R. Masterson _____________________ Director Thomas C. McDermott /s/ JEAN-PAUL RICHARD Director March 4, 1997 Jean-Paul Richard /s/ IAN M. ROSS Director March 4, 1997 Ian M. Ross /s/ WILLIAM H. WALTRIP Director March 4, 1997 William H. Waltrip EX-27.1 16 EXHIBIT 27.1
5 1,000 12-MOS DEC-28-1997 DEC-29-1996 DEC-28-1997 43,872 52,382 304,598 (31,032) 373,977 796,150 1,074,591 (504,829) 2,038,675 439,808 502,813 0 0 316,922 660,459 2,038,675 2,114,718 2,114,718 1,440,303 415,297 (16,942) 0 51,623 224,436 69,575 154,861 0 0 0 154,861 2.83 2.81
EX-27.2 17 EXHIBIT 27.2
5 1,000 12-MOS 12-MOS DEC-29-1996 DEC-31-1995 DEC-31-1995 JAN-01-1995 DEC-29-1996 DEC-31-1995 126,355 75,155 35,940 60,638 370,205 279,619 (8,694) (7,147) 363,306 304,989 957,051 750,386 999,976 891,904 (460,032) (419,071) 2,131,237 1,666,858 491,900 402,874 645,096 353,666 0 0 0 0 284,639 26,383 583,743 823,929 2,131,237 1,666,858 1,985,145 1,733,368 1,985,145 1,733,368 1,398,031 1,221,463 456,735 357,958 (472) 439 0 0 39,973 24,578 90,878 128,930 31,010 40,428 59,868 88,502 0 0 0 0 0 0 59,868 88,502 1.13 1.69 1.12 1.68
EX-27.3 18 EXHIBIT 27.3
5 1,000 3-MOS 6-MOS 9-MOS DEC-28-1997 DEC-28-1997 DEC-28-1997 DEC-29-1996 DEC-29-1996 DEC-29-1996 MAR-30-1997 JUL-05-1997 OCT-04-1997 96,999 143,715 76,084 31,868 31,689 69,460 396,440 435,279 453,467 (22,296) (24,606) (22,647) 379,176 377,336 375,838 949,590 1,034,205 1,005,064 1,019,540 1,049,216 1,073,114 (472,270) (489,727) (504,285) 2,155,515 2,233,701 2,221,925 463,608 488,186 424,137 679,508 702,361 730,295 0 0 0 0 0 0 299,916 308,681 316,188 593,374 616,289 634,901 2,155,515 2,233,701 2,221,925 515,919 1,061,766 1,582,161 515,919 1,061,766 1,582,161 356,898 730,681 1,085,810 105,457 212,045 311,494 (4,200) (8,073) (12,242) 0 0 0 12,701 25,649 38,213 45,063 101,464 158,886 14,729 32,786 49,955 30,334 68,678 108,931 0 0 0 0 0 0 0 0 0 30,334 68,678 108,931 0.56 1.26 1.99 0.56 1.25 1.98
EX-27.4 19 EXHIBIT 27.4
5 1,000 3-MOS 6-MOS 9-MOS DEC-29-1996 DEC-29-1996 DEC-29-1996 DEC-31-1995 DEC-31-1995 DEC-31-1995 MAR-31-1996 JUN-30-1996 SEP-29-1996 78,639 96,610 105,378 62,353 81,543 72,083 330,251 350,877 378,492 (7,183) (7,545) (7,575) 355,859 359,455 359,353 864,344 926,997 941,430 969,221 984,219 986,493 (420,083) (429,913) (439,601) 2,050,434 2,096,621 2,102,488 451,093 423,983 419,165 630,047 671,302 660,866 0 0 0 0 0 0 26,475 199,444 200,269 840,508 689,102 714,629 2,050,434 2,096,621 2,102,488 486,733 986,513 1,483,559 486,733 986,513 1,483,559 343,435 691,939 1,038,091 95,456 192,065 285,135 (1,298) (4,290) (5,698) 0 0 0 9,255 19,700 29,605 39,885 87,099 136,426 13,805 30,054 45,759 26,080 57,045 90,667 0 0 0 0 0 0 0 0 0 26,080 57,045 90,667 0.49 1.07 1.70 0.49 1.07 1.70
EX-99 20 EXHIBIT 99 EXHIBIT 99 INDEPENDENT AUDITORS' REPORT To the Directors and Shareholders of Augat Inc.: We have audited the consolidated balance sheets of Augat Inc. (a wholly owned subsidiary of Thomas & Betts Corporation since December 11, 1996) and its subsidiaries as of December 29, 1996, and the related consolidated statements of income, shareholders' equity and cash flows for each of the two years in the period ended December 29, 1996, not presented separately herein. 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 in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Augat Inc. and its subsidiaries at December 29, 1996, and the results of their operations and their cash flows for each of the two years in the period ended December 29, 1996, in conformity with generally accepted accounting principles. Deloitte & Touche LLP February 6, 1997 -----END PRIVACY-ENHANCED MESSAGE-----