SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(mark one)
[XX] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
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 No. 1-4235
AMP INCORPORATED
a Pennsylvania corporation
(Exact name of registrant as specified in charter,
and state of incorporation)
********************************
Employer Identification No. 23-0332575
Harrisburg, Pennsylvania 17105-3608
(Address of principal executive offices of registrant)
(717) 564-0100
(Registrant's telephone number, including area code)
********************************
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 [ ].
The number of shares of AMP Common Stock (without Par Value)
outstanding at November 6, 1995 was 217,599,216. This number includes
several thousand shares of AMP Common Stock that were placed in
reserve for exchange of M/A-COM, Inc. common stock in the registrant's
merger with M/A-COM, Inc. but represent fractional shares that will be
paid in cash and will not be exchanged or outstanding in the future.
Includes an Exhibit Index.
<PAGE>
AMP Incorporated & Subsidiaries
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Consolidated Statements of Income for the three months and
the nine months ended September 30, 1995 and 1994, the Consolidated
Statements of Cash Flows for the nine months ended September 30, 1995
and 1994, and the Consolidated Balance Sheets at September 30, 1995
and December 31, 1994, are presented below. See the notes to these
condensed consolidated financial statements at the end thereof.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands,
except per share data)
For the Three Months
Ended September 30,
1995 1994 (2)
----------- -----------
Net Sales.......................... $ 1,297,413 $ 1,105,175
Cost of Sales...................... 884,128 726,792
----------- -----------
Gross income................... 413,285 378,383
Selling, General and
Administrative Expenses........... 232,984 214,531
----------- -----------
Income from operations......... 180,301 163,852
Interest Expense................... (9,059) (7,238)
Other Income (Deductions), net..... 1,700 (5,930)
----------- -----------
Income before income taxes..... 172,942 150,684
Income Taxes....................... 62,220 55,540
----------- -----------
Net Income......................... $ 110,722 $ 95,144
=========== ===========
(1) Per Share - Net income......... $.51 $.44
Cash dividends......... $.23 $.21
(1) Weighted average number of shares. 217,796,691 216,923,674
=========== ===========
(1) Per share data and weighted average shares for 1994 have been
retroactively restated to reflect the 2-for-1 stock split on
March 2, 1995.
(2) Figures for 1994 have been restated to reflect the pooling of
interests with M/A-COM on June 30, 1995.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands,
except per share data)
For the Nine Months
Ended September 30,
1995(2) 1994 (2)
----------- -----------
Net Sales.......................... $ 3,929,241 $ 3,178,254
Cost of Sales...................... 2,646,703 2,096,628
----------- -----------
Gross income................... 1,282,538 1,081,626
Selling, General and
Administrative Expenses........... 747,794 604,118
----------- -----------
Income from operations......... 534,744 477,508
Interest Expense................... (28,456) (21,060)
Other Deductions, net..... (16,363) (19,906)
----------- -----------
Income before income taxes..... 489,925 436,542
Income Taxes....................... 176,370 164,382
----------- -----------
Net Income......................... $ 313,555 $ 272,160
=========== ===========
(1) Per Share - Net income......... $1.44 $1.25
Cash dividends......... $ .69 $ .63
(1) Weighted average number of shares 217,628,152 216,984,195
=========== ===========
(1) Per share data and weighted average shares for 1994 have been
retroactively restated to reflect the 2-for-1 stock split on
March 2, 1995.
(2) Figures have been restated to reflect the pooling of interests
with M/A-COM on June 30, 1995.
AMP Incorporated & Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and Unaudited)
(dollars in thousands)
For the Nine Months
Ended September 30,
1995 (1) 1994 (1)
--------- ---------
Cash and Cash
Equivalents at January 1.................. $ 244,568 $ 267,702
Operating Activities:
Net income................................ 313,555 272,160
Noncash adjustments -
Depreciation and amortization........... 264,553 228,115
Changes in operating assets
and liabilities........................ (130,102) (85,647)
Other, net.............................. 161,447 22,102
--------- ---------
Cash provided by operating
activities........................... 609,453 436,730
--------- ---------
Investing Activities:
Additions to property, plant
and equipment............................ (516,464) (311,527)
Other, net................................ (35,823) (37,287)
--------- ---------
Cash used for investing
activities........................... (552,287) (348,814)
--------- ---------
Financing Activities:
Changes in short-term debt................ 81,454 (66,127)
Additions to long-term debt............... 29,009 62,170
Reductions of long-term debt.............. (87,968) (9,222)
Purchases of treasury stock............... (112) (5,914)
Dividends paid............................ (146,481) (132,125)
Other Net................................. 12,850 1,192
--------- ---------
Cash used for financing
activities........................... (111,248) (150,026)
--------- ----------
Effect of Exchange Rate Changes
on Cash.................................... 2,450 8,410
--------- ----------
Cash and Cash Equivalents at
September 30................................ $ 192,936 $ 214,002
========= ==========
Changes in Operating Assets and Liabilities:
Receivables............................... $(114,868) $(107,763)
Inventories............................... (80,898) (82,692)
Other current assets...................... (4,564) 2,476
Payables, trade and other................. 4,822 36,888
Accrued payrolls and benefits............. 64,869 31,775
Other accrued liabilities................. 537 33,669
--------- ---------
$(130,102) $ (85,647)
Interest paid during the periods was approximately equal to amounts
charged to expense.
(1) Figures have been restated to reflect the pooling of interests
with M/A-COM on June 30, 1995.
AMP Incorporated & Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Condensed)
(dollars in thousands)
September 30, December 31,
1995 1994 (1)
----------- -----------
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents.......... $ 192,936 $ 244,568
Securities available for sale...... 62,737 156,708
Receivables........................ 1,046,373 908,390
Inventories---
Finished goods and work in
process........................ 397,401 373,094
Purchased and manufactured parts. 263,047 199,493
Raw materials.................... 76,111 69,366
----------- -----------
Total inventories.............. 736,559 641,953
Other current assets............... 248,571 222,681
----------- -----------
Total current assets........... 2,287,176 2,174,300
----------- -----------
Property, Plant and Equipment........ 4,188,728 3,713,660
Less - Accumulated depreciation.... 2,350,144 2,138,978
----------- -----------
Property, plant and equipment,
net........................... 1,838,584 1,574,682
----------- -----------
Investments and Other Assets......... 329,280 343,564
----------- -----------
TOTAL ASSETS......................... $ 4,455,040 $ 4,092,546
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt.................... $ 267,139 $ 182,338
Payables, trade and other.......... 434,195 403,947
Accrued liabilities................ 576,511 520,637
----------- -----------
Total current liabilities........ 1,277,845 1,106,922
Long-Term Debt....................... 223,719 278,843
Other Liabilities and
Deferred Credits................... 236,633 211,026
----------- -----------
Total liabilities................ 1,738,197 1,596,791
Shareholders' Equity................. 2,716,843 2,495,755
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY.............................. $ 4,455,040 $ 4,092,546
=========== ===========
(1) Figures have been restated to reflect the pooling of interests
with M/A-COM on June 30, 1995.
AMP Incorporated & Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(September 30, 1995 Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Company's latest annual report and Form 10-K,
and Form 10-Q as of and for the three months ended March 31, 1995
and as of and for the six months ended June 30, 1995.
The information furnished reflects all adjustments which are, in
the opinion of management, necessary for a fair statement of the
results for the interim periods.
Net Income and Cash Dividends per share - per share amounts were
calculated using the weighted average number of shares outstanding
during each period, adjusted for the impact of the Company's stock
option and restricted stock plans using the Treasury Stock Method when
the effect is dilutive.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Note: Unless otherwise noted, figures have been restated to reflect
the pooling of interests with M/A-COM on June 30, 1995.
THIRD QUARTER 1995
Sales--$1.30 billion, up 17% from year-earlier $1.11 billion, down
slightly from record $1.34 billion in second quarter
Earnings Per Share--51 cents/share, up 16% from year-earlier 44
cents/share
Bookings--$1.34 billion, up 20% year-to-year, seasonally down from
record $1.40 billion in second quarter
Order Backlog--Up $46 million during quarter to record $1.06
billion
Employment--Up 4,000 during quarter to 40,100, primarily due to
inclusion of joint venture and certain contract employees
NINE MONTHS (1)
Sales--Record $3.93 billion, up 24% from $3.18 billion in year-
earlier period
Earnings Per Share--Record $1.62/share before 18 cents reduction
(2 cents first quarter, 16 cents second quarter) from M/A-COM merger
effect; up 27% from $1.28/share in year-earlier period before
inclusion of M/A-COM
Capital Expenditures--Record $516 million
Third quarter sales of $1.30 billion were up 17% from $1.11
billion in the year-earlier period, but down slightly from the
record $1.34 billion in the second quarter because of the usual
seasonal softness and the changes in the value of the U.S. dollar
which reduced third quarter sales $25 million from the second
quarter and increased sales $34 million from the year-earlier
period. Third quarter earnings of 51 cents/share (up 16% year-to-year
from 44 cents) are in line with analyst consensus estimates. Second
quarter earnings were 61 cents before, and 45 cents after, one-time
merger charges and 4% more outstanding shares.
Compared to the second quarter, third quarter earnings were
negatively impacted by the seasonal dip in sales, currency
effects, a charge for consolidating our U.S. military/aerospace
connector operations, inclusion of the full loss of our AMP-AKZO
printed circuit board business because we are acquiring sole
ownership of AMP-AKZO by buying the 50% interest of Akzo Nobel
NV, and a higher effective tax rate (36% vs. 34%). The tax rate
was reduced in the second quarter to achieve a 36% rate for the
entire year. Margins before special charges and inclusion of AMP-
AKZO's full loss are holding steady.
Third quarter sales in the U.S. were up 16%. International
sales were up 13% in local currencies and 19% in U.S. dollars
compared to third quarter 1994.
Nine months worldwide sales were up 24%, with U.S. sales
(43% of the total) up 15%. Strongest sales growth in the U.S. has
been in the automotive, communications, and industrial/commercial
electronics markets. International sales were up 20% in local
currencies and 31% in U.S. dollars. The change in the average
level of the U.S. dollar increased 1995 nine months sales $183
million compared to the year-earlier period.
European sales were up 24% in local currencies and 37% in
U.S. dollars in the first nine months. Sales were strongest in
the automotive, communications, and industrial/commercial
equipment markets. Strongest country growth was in Germany, Great
Britain, The Netherlands, and Spain. Although European car
production has leveled off, we are achieving good growth in this
market because of market share gains and rising electronic and
connector content in vehicles.
Asia/Pacific nine months sales were up 15% in local
currencies and 27% in U.S. dollars. Because of the slow economic
recovery and car production decline, our sales in Japan (over
half of the regional total) were up only 7% in local currencies,
while up 23% in U.S. dollars. Strong, broad-based sales growth
continued in the rest of the region because of robust economic
growth and further migration of manufacturing activities to this
region. Strongest markets were commercial/industrial equipment,
computers, and networking equipment and systems.
Sales in the Americas outside the U.S. were up 16%.
EXPANSION
Capital expenditures were $516 million for the first nine
months and are expected to reach $700 million this year, up
significantly from $473 million last year and $370 million in
1993. About two-thirds of this spending is for machinery and
equipment for capacity additions, productivity improvements, and
tooling for new products. Most of the balance is for approximately
one million more square feet of floor space. In the Harrisburg
area we recently occupied a new 200,000 sq. ft. engineering
facility and will soon complete a significant expansion of the
corporate human resources development center. In Europe, 1995
expansion includes projects in the Czech Republic, Hungary,
Scotland, and Switzerland. Asia/Pacific expansion activity includes
Malaysia, and China.
Employment rose 4,000 primarily because of first-time
inclusion of AMP-AKZO, (formerly a 50/50 joint venture), and a
contract manufacturing operation as wholly owned subsidiaries.
OUTLOOK
The outlook for continued growth is good. Sales should set a
new high in the fourth quarter. If currency rates remain at
present levels, fourth quarter sales would be increased about $20
million. With higher sales, earnings should be several cents
better in the fourth quarter than the third quarter, and continue
to rise next year. For this year it looks like earnings will be
about $2.15-2.20/share before the reduction of about 19 cents/share
from merger effects, up about 22-25% from $1.76 in 1994 before
restating for inclusion of M/A-COM.
Our planning scenario assumes moderate economic growth
throughout most of the industrialized world, with no recessions
likely in the next year or two, gradual recovery of the Japanese
economy, and continued strong economic growth in the rest of Asia
Pacific. Looking at the markets we serve, we believe we are in a
transition from exceptionally rapid growth for much of this year
in certain markets such as semiconductors and computers, to a
good, but more moderate and sustainable growth rate next year and
beyond.
Growth prospects for our core business of
electrical/electronic connection devices (over 80% of sales) are
good because of our extremely diversified worldwide participation
in all electrical and electronic markets (growing 2 to 3 times
faster than GDP), a steady stream of new products, timely entry
into emerging geographic markets, and business environment trends
which favor globally deployed suppliers who can meet steadily
higher quality, delivery and service requirements. The $25
billion connector industry is projected to grow at a 6-9% annual
growth rate the rest of this decade and we expect to exceed this
rate by continuing to gradually gain market share in each region.
Our overall sales growth rate during the rest of this decade
should be better than the core business rate because of the
increasing contribution from the faster growing M/A-COM wireless
communications components business (about 8% of current sales)
and our Global Interconnect Systems Business Group (about 9% of
current sales). This group includes most of our diversification
into related components, cables, cable and panel assemblies,
electro-optics, networking/premises wiring units, and ATM
communications products and systems. With small shares in a
variety of fast growing markets totaling some $80 billion or
more, this group has good prospects of growing significantly
faster than our core business for the next few years. In
addition, continued use of acquisitions and strategic alliances
as an integral part of our strategy certainly enhances our growth
prospects. They leverage our basic capabilities and speed entry
into new product and market sectors.
Earnings could grow better than sales for the next few years
because of the positive effects of good sales growth,
productivity improvements, M/A-COM's rising margins, attainment
of profitability in our Global Interconnect Systems Business
Group, AMP-AKZO and military/aerospace operations, and perhaps a
slightly better product pricing environment if industry capacity
utilization rates rise.
ORGANIZATIONAL CHANGES
William S. Urkiel, age 49, joined AMP last month and has
been elected Corporate Controller. He has a BA degree from Marist
College and an MBA from Iona University. Mr. Urkiel held various
financial positions at IBM during the last 27 years--most
recently as Vice President-Finance of IBM Japan.
J. Peter Ballantyne, age 49, was appointed divisional Vice
President-Optical Interconnect Systems Group. He received
bachelor and masters degrees in engineering from Carleton
University (Ottawa), and a Ph.D. in engineering from Cambridge.
He held various engineering and manufacturing management
positions at AT&T during the last 23 years--most recently as
Vice President-New Business Development in AT&T's Multimedia
Products and Services Group.
M/A-COM PROGRESS REPORT
M/A-COM was merged into AMP on June 30, 1995 through
issuance of 7.6 million shares of AMP stock. The leading supplier
of components for the wireless communications industry, M/A-COM's
sales have increased each quarter this year and margins improved
in the third quarter--and prospects are quite good for these
trends to continue. The smooth integration with AMP, the rapid
conversion from military to commercial business, and the steady
improvement in performance is beyond our original expectations.
To keep ahead of rising demand, M/A-COM is adding significantly
more production capability--a 40,000 sq. ft. gallium arsenide
facility purchased from Cray Computer in Colorado.
DIVIDEND ACTION
On October 25, 1995, the Board of Directors declared a regular
quarterly dividend of 23 cents/share payable December 1, 1995 to
shareholders of record November 6, 1995. The total 1995 dividend of 92
cents per share is up from 84 cents in 1994, 80 cents in 1993, and 76
cents in 1992--the 42nd consecutive annual increase.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits --
10.A - AMP Management Incentive Plan, as amended
effective January 25, 1995.
10.B - 1993 Long-Term Equity Incentive Plan, as amended
effective January 1, 1995.
10.C - Performance Restricted Share Agreement
27 - Financial Data Schedule
(B) Reports on Form 8-K --
There were no reports on Form 8-K filed for the three
months ended September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: November 13, 1995 AMP INCORPORATED
(Registrant)
By: /s/ Robert Ripp
__________________________________
R. Ripp
Vice President and
Chief Financial Officer
By: /s/ W. S. Urkiel
__________________________________
William S. Urkiel
Corporate Controller
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
10.A - AMP Management Incentive Plan, as amended
effective _____, 1995.
10.B - 1993 Long-Term Equity Incentive Plan, as amended
effective _____, 1995.
10.C - Performance Restricted Share Agreement
27 - Financial Data Schedule
AMP INCORPORATED
HARRISBURG, PA 17105
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AMP INCORPORATED
AMP INCORPORATED
MANAGEMENT INCENTIVE PLAN
Plan Document Effective January 25, 1995
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AMP INCORPORATED
HARRISBURG, PA 17105
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TABLE OF CONTENTS
Section
- -------
A. Plan Summary........................................................1
B. Plan Objectives.....................................................1
C. Plan Administration.................................................1
D. Plan Participation..................................................2
E. Plan Measures and Targets...........................................2
F. Participant Incentive Opportunities.................................3
G. Award Payouts and Timing............................................6
H. Administrative Information..........................................6
APPENDICES
A. PLAN YEAR TOTAL AWARD SCHEDULE
AMP INCORPORATED
HARRISBURG, PA 17055
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AMP INCORPORATED
MANAGEMENT INCENTIVE PLAN
A. PLAN SUMMARY
The AMP Incorporated (AMP) Management Incentive Plan (the "Plan") allows
officers and key senior executives to share in the financial achievements of
AMP on an annual basis. The Plan recognizes and rewards for the achievement
of both financial results, focusing on key objective, financial performance
targets at the corporate and business unit levels, and individual nonfinancial
objectives.
The financial measures of performance, including the corporate-wide and
unit-specific targets, together with the individual nonfinancial objectives
are established at the beginning of each year at the time the participants are
designated. The weighting between corporate, business unit and individual
factors is also predetermined at that time. A range of incentive award levels
is set for each participant at the beginning of each year, with the threshold
award level requiring 90 percent performance of the respective goal and the
maximum award level reached if 120 percent of the performance goal is
attained. The extent to which goals are achieved is certified at the end of
the plan year to determine the actual award for each participant.
B. PLAN OBJECTIVES
The objectives of the Plan are to:
-- Stimulate and reward outstanding performance.
-- Link the business plan process, including the attainment of key
corporate priorities and financial objectives, with the compensation
system.
-- Provide competitive total compensation opportunities to attract and
retain key executives.
C. PLAN ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of the
Board of Directors of AMP composed of two or more directors, each of whom is
an "outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended. No member of the Committee shall be a
current employee of AMP, a former officer of AMP, a former employee of AMP
still receiving compensation for prior services other than benefits under a
tax-qualified retirement plan, or a person receiving direct or indirect
remuneration from AMP in any capacity other than as a director.
The Committee shall have full and final authority in its discretion and
in acccordance with the provisions of the Plan, to: i) interpret the
provisions of the Plan and to decide all questions of fact arising in its
application, and the Committee's interpretation and decisions shall be in all
respects final, conclusive and binding; ii) determine the employees who will
be participants; iii) annually determine the threshold, target and
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-1-
maximum award levels for each participant; iv) establish at the beginning of
each year objective, performance-based corporate-wide and business unit-
specific financial goals, together with the weighting between corporate,
business unit and individual goals for each participant; v) certify in writing
the level of performance of the corporate-wide and unit-specific financial
goals following the end of the plan year; vi) impose such conditions on the
grant of awards or decrease the amount of the payout, as it deems appropriate;
and vii) make all other determinations, rules and regulations necessary or
advisable for the administration of this Plan. No member of the Committee
shall be personally liable for any action or determination in respect to
administration of the Plan if made in good faith.
D. PLAN PARTICIPATION
AMP officers and key senior executives are eligible to participate in the
Plan. The Committee and the Chief Executive Officer and President believe
that AMP's officers and key senior executives are in the best position to make
significant contributions to the success of the Company and its businesses.
Participants for each plan year are designated by the Committee during the
first quarter of the plan year.
E. PLAN MEASURES AND TARGETS
The corporate-wide financial measure(s) are determined in the first
quarter of each year by the Committee based on the financial target(s) best
suited, in the judgment of the Committee in its sole discretion, to provide
the desired direction for AMP during the ensuing year. The goals for the plan
year could be an earnings per share target, a value added goal, or any other
existing or newly devised objective financial performance measure(s), or any
combination thereof.
For each participant directly involved with a business unit of AMP, a
financial target or targets is also established by the Committee for that
business unit in the first quarter of each plan year. These targets are
tailored to each business unit dependent on the nature of its business
operations and the stage of its business development.
Finally, individual nonfinancial objectives are established in the first
quarter of each plan year for each participant. These objectives are based on
the duties and responsibilities of the participant in support of the overall
financial and strategic goals of AMP and, with the exception of the Chairman
of the Board and the Chief Executive Officer and President, are developed in
discussions and agreement between the participant and the participant's
manager. The individual objectives of the Chairman of the Board and the Chief
Executive Officer and President are predetermined by the Committee.
Once the financial goals are determined by the Committee at the beginning
of the plan year, they are not adjusted throughout the plan year absent
extraordinary circumstances beyond the control of AMP. Examples of such
extraordinary circumstances include unanticipated significant currency
fluctuations and tax changes.
When the corporate-wide and unit-specific (if applicable) targets are
set, a performance range is also established around each of these targets.
The range includes a threshold--the minimum level of performance against the
target that must be achieved before any payments are made, and the maximum--
the performance level beyond which no additional awards are earned. The
relationship between the targets, maximums and thresholds (expressed as a
percentage of target) is fixed for plan purposes and is as follows:
THRESHOLD TARGET MAXIMUM
--------- ------ -------
90% 100% 120%
Performance of the individual nonfinancial objectives, expressed as a
percentage, is applied directly to the maximum incentive award level described
in Section F below and is not subject to a threshold-maximum performance
range.
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The relative weighting between corporate, business unit and individual
goals is predetermined by the Committee for each participant in the first
quarter of each plan year. Examples of such weighting for a participant with
corporate-wide, unit-specific and individual performance goals are weighting
all three goals equally at 1/3, or weighting the corporate-wide and unit-
specific bonus calculations at 2/5 each and the individual performance goal at
1/5. A participant with no business unit responsibility may have the
corporate-wide bonus calculation made at 2/3 or 4/5 and the individual
performance at 1/3 or 1/5, respectively, or any other similar combination.
F. PARTICIPANT INCENTIVE OPPORTUNITIES
The incentive award for plan participants is based on the extent to which
financial and individual goals are achieved, and on the target incentive award
profile for each participant, the latter of which varies based on the
participant's level of responsibility. The target incentive award level
(expressed as a percentage of base earnings) and corresponding threshold and
maximum incentive award levels (also expressed as a percentage of base
earnings) are established in the first quarter of each plan year by the
Committee. Actual participant incentive awards may vary from the target
incentive awards dependent on the degree to which corporate-wide, unit-
specific (if applicable) and individual goals are achieved. The annual award
for each participant is the product of the participant's actual calculated
incentive award and his or her base earnings actually earned during the plan
year. In no event may a participant receive more than $1.5 million in any
annual award made under the Plan.
The following two examples illustrate how the achievement of financial
and individual goals impact actual participant incentive awards, using
hypothetical plan participants:
ILLUSTRATIVE ASSUMPTIONS AND CALCULATIONS
-----------------------------------------
GOALS:
-----
Corporate-wide: Earnings Per Share Goal = $3.00
Unit -specific: Executive A is the general manager of Business
Unit A that has an operating income objective of
$2 million;
Executive B is the director of corporate
environmental compliance
Individual: Executive A has four individual nonfinancial
goals;
Executive B has five individual nonfinancial goals
FINANCIAL AND INDIVIDUAL PERFORMANCE RANGE:
-------------------------------------------
Goal Threshold Target Maximum
---- --------- ------ -------
Corporate EPS $2.70 $3.00 $3.60
Business Unit A $1.8 million $2 million $2.4 million
in operating in operating in operating
income income income
Individual M A N A G E M E N T D I S C R E T I O N
PARTICIPANTS' BASE EARNINGS AND INCENTIVE AWARD LEVELS:
-------------------------------------------------------
Executive A:
------------
Base Earnings for Executive A = $100,000
Threshold for Executive A = 10% ($10,000)
Target for Executive A = 35% ($35,000)
Maximum for Executive A = 53% ($53,000)
Weighting = Corporate-wide: 2/5
Unit-specific: 2/5
Individual: 1/5
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Executive B:
------------
Base Earnings for Executive B = $50,000
Threshold for Executive B = 10% ($5,000)
Target for Executive B = 20% ($10,,000)
Maximum for Executive B = 30% ($15,000)
Weighting = Corporate-wide: 2/3
Individual: 1/3
CORRESPONDING INCENTIVE RANGE:
------------------------------
Executive A:
-----------
Incentive Range Based on Achievement of Goals
---------------------------------------------
Below
Threshold Threshold Target Maximum
Goal (weight) Performance Performance Performance Performance
- ------------- ----------- ----------- ----------- -----------
Corporate (2/5) $0 $4,000 $14,000 $21,200
Business Unit A (2/5) $0 $4,000 $14,000 $21,200
Individual (1/5) $0 $2,000 $ 7,000 $10,600
--------- --------- ---------- ---------
Total $0 $10,000 $35,000 $53,000
Executive B:
------------
Incentive Range Based on Achievement of Goals
---------------------------------------------
Below
Threshold Threshold Target Maximum
Goal (weight) Performance Performance Performance Performance
- ------------- ----------- ----------- ----------- -----------
Corporate (2/3) $ 0 $3,333 $6,667 $10,000
Individual (1/3) $ 0 $1,667 $3,333 $ 5,000
--------- --------- --------- ---------
Total $ 0 $5,000 $10,000 $15,000
For financial performance between threshold, target and maximum,
straight-line interpolation is applied. Appendix A summarizes the incentive
levels based on performance scenarios between threshold and maximum for
several of the currently applicable target levels. The incentive levels shown
are applied to each financial goal and weighted appropriately. Because the
applicable target levels are established annually and their relationships with
the corresponding threshold and maximum levels will vary dependent on the
target levels designated, Appendix A may change annually.
The following illustrates how the hypothetical participants' awards are
calculated using Appendix A, based on illustrative performance levels:
ILLUSTRATIVE ACTUAL PERFORMANCE:
- --------------------------------
Executive A:
------------
Actual Percent
Plan Year of Target
Goals Performance Achieved
--------------- ----------- --------
Corporate EPS $2.90 97%(1)
Business Unit A $2.1 million 105%(2)
Individual 4 of 4 goals met N/A(3)
(1) $2.90 (hypothetical actual EPS) divided by $3.00 (hypothetical target)
- ------------------------------------------------------------------------------
-4-
(2) $2.1 million (hypothetical actual operating income) divided by $2.0
million (hypothetical target)
(3) Full attainment of individual goals earns the participant the maximum
available incentive award level. For Executive A, this is 53% before
being weighted
Executive B:
------------
Actual Percent
Plan Year of Target
Goals Performance Achieved
------------- ----------- --------
Corporate EPS $2.90 97%(1)
Individual 4 of 5 goals met N/A(2)
(1) $2.90 (hypothetical actual EPS) divided by $3.00 (hypothetical target)
(2) 4 of 5 individual goals performed represents 80% achievement of the
30% maximum incentive award level for Executive B, or 24% before being
weighted
ILLUSTRATIVE PARTICIPANTS' INCENTIVE CALCULATION:
- -------------------------------------------------
Executive A:
------------
Total Award Based Actual
Goals On Performance(1) Incentive Award(2)
-------------- ----------------- ------------------
Corporate EPS 27.5% 11.0%
Business Unit A 39.5% 15.8%
Individual 53% 10.6%
-----------
Total 37.4%
Total Incentive $37,400(3)
(1) Based on the hypothetical target award level of 35% for Executive A
and derived from Appendix A using the corresponding "Percent of Target
Achieved" calculated above
(2) The Total Award % multiplied by the weighted factor, which is 2/5 for
Corporate EPS, 2/5 for Business Unit profits and 1/5 for individual
goals
(3) The Total Incentive Award as a percentage of the actual earnings for
the plan year, which in the case of hypothetical Executive A is 37.4%
of $100,000
Executive B:
------------
Total Award Based Actual
Goals On Performance(1) Incentive Award(2)
------------- ----------------- ------------------
Corporate EPS 17.0% 11.3%
Individual 24.0% 8.0%
------------
Total 19.3%
Total Incentive $9,650(3)
(1) Based on the hypothetical target award level of 20% for Executive B
and derived from Appendix A using the corresponding "Percent of Target
Achieved" calculated above
(2) The Total Award % multiplied by the weighted factor, which is 2/3 for
Corporate EPS and 1/3 for individual goals
(3) The Total Incentive Award as a percentage of the actual earnings for
the plan year, which in the case of hypothetical Executive B is 19.3% of
$50,000
Performance against corporate, business unit ( if applicable) and
individual goals and the calculation of the earned incentive awards are
certified by the Committee in the first quarter of the year following the
plan year. The Committee has the authority to adjust participant awards
downward, if appropriate.
- ------------------------------------------------------------------------------
-5-
G. AWARD PAYOUTS AND TIMING
Awards are paid in cash, subject to applicable withholding, after AMP's
results have been verified by the Company and certified by the Committee.
Typically, awards are paid before the end of the first quarter of the year
following each plan year.
To receive awards, participants must be active employees in good standing
at AMP on December 31 of the plan year. However, different guidelines apply
for those participants who retire, become disabled or die during the plan
year. See Section H, subsections a) through c) below for details on these
guidelines. The Committee has the authority to make exceptions to these rules
and guidelines.
H. ADMINISTRATIVE INFORMATION
This section contains important information about changes in employment
status, plan provisions for promotions, transfers and new hires, tax
provisions and other administrative matters.
a) Termination Before Year-End For Reasons Other Than Retirement,
Disablement or Death
---------------------------------------------------------------
Participants who leave AMP on or before December 31 of the plan
year forfeit all award opportunities for the current plan year under
this plan. If, however, employment is terminated after the
completion of the plan year, participants are eligible to receive
an award for the prior plan year. The Committee has the authority
to make exceptions to this guideline.
b) Retirement, Disablement and Death
---------------------------------
Participants who retire, become disabled or die during the plan
year are eligible to receive pro rata awards. For retirement and
disablement, awards are paid after that plan year--regardless of
the date of change--to enable the appropriate calculations to be
made. For estate purposes, awards to employees who die are paid as
soon as possible following death and will be based on anticipated
performance. The Committee has the authority to make exceptions
to this guideline.
c) Promotions, Transfers and New Hires
-----------------------------------
Participants who are promoted into the Plan, hired into the Plan,
or transferred into or out of the Plan, are eligible to receive
pro rata awards based on the period of active employment while
under the Plan. For participants who transfer from one eligible
position to another eligible position, awards are prorated and
determined jointly by the former and new managers. The Committee
has the authority to make exceptions to this guideline.
d) Taxes on Awards
---------------
Participant awards are taxed as ordinary income, in keeping with
current U.S. and local tax laws.
e) Amendment
---------
The Committee also has the right to amend, suspend or terminate the
Plan at any time for any reason. Such changes may be necessary if
there are changes in laws, regulations or accounting practices,
mergers, acquisitions, divestitures, or other extraordinary,
unusual or nonrecurring items.
f) Employment
----------
Participation in the Plan does not guarantee continued employment
by AMP.
g) Management, Accounting and Financial Decisions
----------------------------------------------
Nothing in this Plan shall affect the authority of the management
of AMP to make management, business, accounting and financial
decisions concerning the Company.
h) Non-Assignability
-----------------
Prior to its payment in cash, no right or benefit under this Plan
shall be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge the same whether
voluntary, involuntary or by
- ------------------------------------------------------------------------------
-6-
operation of law, shall be void except by will or by the laws of
descent and and distribution or by such other means as the
Committee may approve from time to time. No right or benefit
under the Plan shall in any manner be liable for or subject to the
debts, contracts, liabilities, or torts of the person entitled to
such benefit. If any participant under the Plan should become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge,
encumber or charge any right or benefit under the Plan, then such
right or benefit shall, in the sole discretion of the Committee,
cease and determine, and in such event, AMP may hold or apply the
same or any part thereof for the benefit of the participant, the
participant's spouse, children or other dependents, or any of them,
in such manner and in such proportion as the Committee may
determine.
i) Non-Uniform Determinations
--------------------------
The Committee's determinations under the Plan (including without
limitation determinations of the persons to participate under the
Plan, award levels, objective performanced-based goals, relative
weighting between goals, and the terms of such awards) need not
be uniform and may be made by it selectively among persons who
participate, or are eligible to participate, under the Plan,
whether or not such persons are similarly situated.
j) Effect on Other Plans
---------------------
Nothing in this Plan shall be construed to limit the right of AMP
to establish any other forms of incentives or compensation for
employees of the Company, whether payable in cash or otherwise,
in connection with any proper corporate purpose.
k) Severability
------------
If any provision of the Plan is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction, or as to
any person or award, or would disqualify the Plan or any award
under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws,
or if it cannot be so construed or deemed amended without, in the
determination of the Committee, materially altering the intent of
the Plan or an award, such provision shall be stricken as to such
jurisdiction, person, or award, and the remainder of the Plan and
any such award shall remain in full force and effect.
l) Construction
------------
Wherever any words are used in this Plan in the masculine gender
they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form they shall
be construed as though they were also used in the plural form in
all cases where they would so apply.
m) Headings
--------
Headings are given to the sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
n) Governing Law
-------------
The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance
with the laws of the Commonwealth of Pennsylvania and applicable
Federal law.
January 25, 1995
- ------------------------------------------------------------------------------
-7-
AMP INCORPORATED
HARRISBURG, PA 17105
- ------------------------------------------------------------------------------
APPENDIX A - PLAN YEAR TOTAL AWARD SCHEDULE
(For Use in Converting Percents of Corporate-Wide and Unit-Specific
Financial Target Achievement Into Non-Weighted Incentive
Award Percents)
Percent of
Financial ______________________Incentive Profile__________________________
Target
Achieved 10%-35%-53% 10%-30%-45% 10%-25%-38% 10%-20%-30%
120% 53.0% 45.0% 38.0% 30.0%
119% 52.1% 44.3% 37.4% 29.5%
118% 51.2% 43.5% 36.7% 29.0%
117% 50.3% 42.8% 36.1% 28.5%
116% 49.4% 42.0% 35.4% 28.0%
115% 48.5% 41.3% 34.8% 27.5%
114% 47.6% 40.5% 34.1% 27.0%
113% 46.7% 39.8% 33.5% 26.5%
112% 45.8% 39.0% 32.8% 26.0%
111% 44.9% 38.3% 32.2% 25.5%
110% 44.0% 37.5% 31.5% 25.0%
109% 43.1% 36.8% 30.9% 24.5%
108% 42.2% 36.0% 30.2% 24.0%
107% 41.3% 35.3% 29.6% 23.5%
106% 40.4% 34.5% 28.9% 23.0%
105% 39.5% 33.8% 28.3% 22.5%
104% 38.6% 33.0% 27.6% 22.0%
103% 37.7% 32.3% 27.0% 21.5%
102% 36.8% 31.5% 26.3% 21.0%
101% 35.9% 30.8% 25.7% 20.5%
100% 35.0% 30.0% 25.0% 20.0%
99% 32.5% 28.0% 23.5% 19.0%
98% 30.0% 26.0% 22.0% 18.0%
97% 27.5% 24.0% 20.5% 17.0%
96% 25.0% 22.0% 19.0% 16.0%
95% 22.5% 20.0% 17.5% 15.0%
94% 20.0% 18.0% 16.0% 14.0%
93% 17.5% 16.0% 14.5% 13.0%
92% 15.0% 14.0% 13.0% 12.0%
91% 12.5% 12.0% 11.5% 11.0%
90% 10.0% 10.0% 10.0% 10.0%
Note: After the total award is attained, it is multiplied by the
appropriate financial goal weight.
January 25, 1995
AMP INCORPORATED
----------------
1993 LONG-TERM EQUITY INCENTIVE PLAN
------------------------------------
(As Amended and Restated Effective January 1, 1995)
1993 LONG-TERM EQUITY INCENTIVE PLAN
------------------------------------
January 1995 2
- ------------------------------------------------------------------------------
1. PURPOSE. The purposes of the AMP Incorporated 1993 Long-Term Equity
Incentive Plan (the "Plan") are to encourage selected employees of AMP
Incorporated (the "Company") to acquire a proprietary interest in the
Common Stock of the Company, thereby aligning their interests with the
interests of the shareholders; to generate an increased incentive to
contribute to the Company's future growth and profitability, thus
enhancing the value of the Company for the benefit of its shareholders;
and to strengthen the ability of the Company to attract and retain
exceptionally qualified individuals upon whom the sustained progress,
growth and profitability of the Company depend.
2. DEFINITIONS. As used in the Plan, the following terms shall have the
meanings set forth below:
a) "Agreement" shall mean any agreement, contract, certificate or
other instrument or document that is in writing and evidences any
Award granted under the Plan.
b) "Award" shall mean any Option, Stock Bonus Unit, Supplemental Cash
Bonus, Performance Restricted Share or other grant made under the
Plan.
c) "Award Date" shall mean the date on which an Award is made under
the Plan.
d) "Board" shall mean the board of directors of the Company.
January 1995 3
- ------------------------------------------------------------------------------
e) "Bonus Computation Date" shall mean the Award anniversaries for
payment of a portion of Stock Bonus Unit and/or Supplemental Cash
Bonus as described in Section 8 a).
f) "Change in Control" shall mean those events and conditions that
may occasion a change in control in the Company as defined in
Section 12.
g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
h) "Committee" shall mean a committee of the Board designated by such
Board to administer the Plan and composed of two or more directors,
each of whom is a "disinterested person" within the meaning of
Rule 16b-3. No member of the Committee shall be a current or former
employee of the Company or shall have received an Award under the
Plan within a one-year period prior to his or her appointment to
the Committee. No member of the Committee shall participate in
any decisions of the Committee that will or could affect their own
distributions or other participation under the Plan.
i) "Common Stock" shall mean the Common Stock of the Company, no par
value.
j) "Company" or "Corporation" shall mean AMP Incorporated, a
corporation organized under the laws of the Commonwealth of
Pennsylvania, and any of its subsidiaries, partnerships and joint
ventures.
January 1995 4
- ------------------------------------------------------------------------------
k) "Competing Business" shall mean, as applied to a particular period
of time, a business that at such time is engaged in the
manufacture, sale or other disposition of a product or products
that is in competition with a product or products of the Company.
l) "Designated Value" shall mean the amount designated by the
Committee with respect to a Stock Bonus Unit as defined in
Section 8 b).
m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
n) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities),
the fair market value of such property determined by such methods
or procedures as set forth in Sections 7 a), 7 d), 8 b), and 8 c)
or otherwise established from time to time by the Committee.
o) "Incentive Stock Option" (ISO) shall mean an option granted under
Section 7 of the Plan that is intended to meet the requirements
of Section 422 of the Code, or any successor provision thereto.
p) "Nonqualified Stock Option" (NQSO) shall mean an option granted
under Section 7 of the Plan that is not intended to be an
Incentive Stock Option or does not qualify as an Incentive Stock
Option.
January 1995 5
- ------------------------------------------------------------------------------
q) "Option" shall be a right to purchase a specified number of Shares
at a given price within a specified period of time, and shall be
either an Incentive Stock Option or a Nonqualified Stock Option.
r) "Participant" shall mean those officers and other key employees
designated to be granted an Award under the Plan as defined in
Section 5.
s) "Performance Restricted Share" shall mean a restricted Share
granted under Section 10 of the Plan that will either become an
unrestricted Share or be forfeited based on Company performance
during the Performance Vesting Period.
t) "Performance Vesting Period" shall mean a period of three or more
consecutive fiscal years of the Company specified by the Committee
in conjunction with an Award of Performance Restricted Shares under
Section 10 of the Plan.
u) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated
organization, or government or political subdivision thereof.
v) "Plan" shall mean the AMP Incorporated 1993 Long-Term Equity
Incentive Plan.
January 1995 6
- ------------------------------------------------------------------------------
w) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934,
as amended, or any successor rule or regulation thereto.
x) "Securities Act" means the Securities Act of 1933, as amended.
y) "Share" or "Shares" shall mean the shares of Common Stock.
z) "Stock Bonus Unit" shall mean any Award granted subject and
pursuant to Section 8.
aa) "Supplemental Cash Bonus" shall mean any Award granted under
Section 9 in conjunction with a Stock Bonus Unit.
3. Administration. The Plan shall be administered by the Committee in
accordance with its provisions.
The Committee shall have full and final authority in its discretion to:
i) interpret the provisions of the Plan and to decide all questions of
fact arising in its application, and its interpretation and decisions
shall be in all respects final, conclusive and binding; ii) determine
the employees who will be Participants; iii) determine the type of
Award to be made and the amount, size and terms of each such Award;
iv) determine the time when Awards will be granted; v) impose such
conditions on the grant of Awards as it deems appropriate; and
vi) make all other determinations, rules and regulations necessary or
advisable for the administration of this Plan.
January 1995 7
- ------------------------------------------------------------------------------
No member of the Committee shall be personally liable for any action
or determination in respect to the administration of the Plan if made
in good faith.
4. Shares Subject to Plan. The shares of stock subject to Options, Stock
Bonus Units and Performance Restricted Shares shall be the Shares.
Subject to the below-noted provisions, the maximum number of Shares
that may be awarded under the Plan during its term shall be 5,000,000
Shares, subject to adjustment in accordance with Section 20 hereof.
Such Shares may, in whole or part, be authorized and unissued shares or
issued Shares reacquired by the Company. In addition to this number of
Shares that may be awarded under the Plan during its term, to the
extent permitted by Rule 16b-3 promulgated under the Exchange Act and
any interpretations of the Securities and Exchange Commission Staff
thereunder: i) if the total available Shares in any year are not
awarded, the remaining balance of Shares shall be available for use in
ensuing years; ii) similarly, if Awards which have been made under the
Plan for any reason expire, terminate or are forfeited with all or any
portion thereof remaining unexercised or unpaid, then the Shares
corresponding to such unexercised or unpaid Awards will again be
available for award under the Plan; and iii) to the extent Awards of
Stock Bonus Units are paid in cash rather than Shares, or are paid in
Shares and the number of Shares distributed is less than the number of
Stock Bonus Units awarded, the remaining balance of Shares will be
available for future awards under the Plan.
5. Participants. Persons eligible to receive Awards under the Plan shall
be limited to those officers and other key employees of the Company
who, in the opinion of the
January 1995 8
- ------------------------------------------------------------------------------
Committee, are in positions in which their decisions, actions, and
counsel significantly impact upon the growth and financial success of
the Company. The Committee's decisions with respect to participation
shall be final and binding.
6. Awards Under the Plan. Awards under the Plan may be in the form of
Options (both Nonqualified Stock Options and Incentive Stock Options),
Stock Bonus Units with or without Supplemental Cash Bonuses,
Performance Restricted Shares, or any combination of the above. Awards
shall be made in such frequency and on such date as the Committee shall
determine for each Participant. Effective for awards made beginning in
1995, no more than 2 percent of the 5,000,000 shares of Common Stock
approved for distribution under the Plan during its term may be made
subject to awards made to any one participant under the Plan in a given
year.
7. Options. Options shall be evidenced by Option Agreements in such form
and containing such terms and conditions as the Committee shall approve
from time to time, consistent with this Plan. Option Agreements shall
contain in substance, but not be limited to, the following terms and
conditions:
a) Option Price. The Option exercise price for each Share shall be
equal to 100% of the Fair Market Value of a Share on the Award
Date, as determined by the closing sale price reported on the
New York Stock Exchange Composite Tape or such higher price as
may be determined by the Committee in respect to any Option.
January 1995 9
- ------------------------------------------------------------------------------
b) Number of Shares. Each Option Agreement shall state the number
of Shares covered by each Option Award.
c) Exercise of Option. Each Option Agreement shall state the period
or periods of time, as may be determined by the Committee, within
which the Option may be exercised by the Participant, in whole or
in part, provided that, subject to the provisions of the next
sentence, the Option may not vest or be exercised earlier than
twelve months after the Award Date of the Option nor later than
ten years after the Award Date of the Option. Notwithstanding
the previous sentence, the Committee shall have the power to
permit, in its discretion, an acceleration of the previously
determined exercise terms, subject to the terms of this Plan,
under such circumstances and upon such terms and conditions as
it deems appropriate. Each Option Agreement shall state the
minimum number of Options that can be exercised in the event a
Participant chooses to exercise fewer than the total number of
Options that are exercisable, and the procedures and methods that
must be followed in order to exercise an Option. During the life
of a Participant, Options shall be exercisable only by such
person or, if disabled, by such person's guardian or legal
representative. After the death of a Participant, Options may
be exercised, subject to the terms of the Plan, by the
Participant's personal representative or by any person empowered
to do so by will or by the laws of descent and distribution.
d) Payment for Shares. Shares purchased pursuant to an Option
Agreement shall be paid for in full at the time of exercise,
either in the form of cash,
January 1995 10
- ------------------------------------------------------------------------------
Common Stock (whether by previously owned Shares or by having
the Company withhold a portion of the Shares to be received)
valued at Fair Market Value on the date of payment as determined
by the closing sales price of the New York Stock Exchange
Composite Tape, or in a combination thereof, as the Committee
may determine.
e) Rights upon Termination of Employment. In the event that a
Participant ceases to be an employee of the Company for any
cause, all Options will terminate immediately or as the
Committee may determine in its sole discretion. Furthermore,
if the Committee in its sole discretion so determines, the
period within which an Option may be exercised may be extended
beyond the date of termination of employment if a Participant
continues to perform services for the Company or a subsidiary
thereof on either a full or part time basis either as an
independent contractor or on a consulting basis or otherwise.
In no event may the Committee continue the term of the Option
beyond its term as stipulated in the Option Agreement.
Notwithstanding the foregoing, any extension of the term of an
Option beyond the date of termination of employment shall be
contingent on such conditions as the Committee, in its sole
discretion, may determine, including but not limited to the
requirement that the Participant shall not, whether full time
or part time, as an employee, independent contractor, consultant,
advisor or otherwise, engage in or perform any services prior to
the exercise and payment of such Option for a business that is a
Competing Business, or otherwise act in a manner that is inimical
or contrary to the best interests of
January 1995 11
- ------------------------------------------------------------------------------
the Company. In the event that any of such conditions shall not
be fulfilled, the extension of the term of the Option and the
obligations of the Company under this Section 7 shall forthwith
terminate and the Participant's rights hereunder shall be
canceled.
f) Individual Limitations. Option Agreements evidencing Incentive
Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as Incentive Stock Options,
including but not limited to the following:
i) Notwithstanding anything herein to the contrary, the
aggregate Fair Market Value (determined as of the time the
Option(s) is granted) of the Shares that may become first
exercisable in any calendar year with an Incentive Stock
Option shall not exceed $100,000 for each Participant;
options exercised in excess of $100,000 in a given year
shall be treated as Nonqualified Stock Options.
ii) Notwithstanding anything herein to the contrary, no
Incentive Stock Option shall be granted to any individual if
at the time the Option is to be granted the individual owns
stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company unless
at the time such Option is granted the Option price is at
least 110 percent of the Fair Market Value of
January 1995 12
- ------------------------------------------------------------------------------
the Shares subject to Option and such Option by its terms
is not exercisable after the expiration of five years from
the Award Date.
iii) The Committee may require Participants to give the Company
prompt notice of any disposition of Shares acquired by
exercise of an Incentive Stock Option if such disposition
occurs within 2 years from the Award Date of such Option or
1 year from the date of transfer of such Shares to
Participant. These requirements to give prompt notice of
disposition may be referred to in legends contained on the
certificates evidencing such Shares.
g) Other Terms. Each Incentive Stock Option Agreement shall
contain such other terms, conditions and provisions as the
Committee may determine to be necessary or desirable in order to
qualify such Option as a tax-favored Option within the meaning of
Section 422 of the Code, or any amendment thereof, substitute
therefor, or regulation thereunder. No Incentive Stock Option
shall be granted unless such Option, when granted, qualifies as
an Incentive Stock Option. Subject to the limitations of
Section 22 below, the Committee shall have the power to amend
the terms of any Option.
8. Stock Bonus Units. Stock Bonus Units granted under the Plan shall be
evidenced by Agreements in such form and containing such terms and
conditions as the Committee shall approve from time to time, consistent
with this Plan. The Agreements shall specify, but not be limited to,
the number of Stock Bonus Units
January 1995 13
- ------------------------------------------------------------------------------
awarded to a Participant, the Designated Value of the Shares as of the
Award Date, and the Bonus Computation Dates:
a) Bonus Computation Dates. At the time of the Award of Stock Bonus
Units, the Committee shall establish with respect to each such
Award, Bonus Computation Dates that are the fourth, fifth and
sixth anniversaries of the Award Date and at which time one-third
of the Stock Bonus Units shall be calculated and paid.
b) Designated Value. The Designated Value shall be an amount
designated by the Committee on the Award Date, but in no event
less than 95% of the Fair Market Value as determined by the
average closing sales price as reflected on the New York Stock
Exchange Composite Tape for the 10 trading days immediately prior
to such Award Date.
c) Payment Determination. The amount of payment, if any, shall be
determined on each of the specified Bonus Computation Dates by
subtracting the Designated Value from the Fair Market Value as
determined by the average closing sales price as reflected on the
New York Stock Exchange Composite Tape for the 10 trading days
immediately prior to such Bonus Computation Date, and multiplying
such difference by the number of Stock Bonus Units maturing on the
Bonus Computation Date.
d) Form of Payment. Subject to the provisions of the next sentence,
Awards shall be paid in Shares with the exception that fractional
Shares shall be paid
January 1995 14
- ------------------------------------------------------------------------------
in cash. The Committee, in its sole discretion, may
determine that Awards or any portion thereof may be paid in cash.
e) Time of Payment . Awards shall be paid as of each Bonus
Computation Date, or as soon thereafter as practical, taking into
consideration effects of any short-swing profit liability imposed
by Section 16 of the Exchange Act in a manner determined by the
Committee. Payments may, in the sole discretion of the Committee,
be made in lump sum distributions and/or installments.
Notwithstanding the foregoing, the Committee may, in its sole
discretion at any time or times after the first anniversary of
the Award Date, accelerate the date that is the Bonus
Computation Date under such circumstances and upon such terms and
conditions as it deems appropriate.
f) Termination Prior to Award Being Fully Earned. Unless the
Committee, in its sole discretion, determines otherwise, an Award
granted to a Participant shall terminate for all purposes when a
Participant terminates employment with the Company except in the
case of death, disability, or retirement. A Participant, or the
estate of a Participant, whose employment was terminated due to
death, disability or retirement occurring more than one year
after the Award Date shall be eligible to receive a pro rata
portion of the payment of his or her Award based upon the portion
of the performance period during which the Participant was
employed, in such amount and manner and with such conditions as
the Committee shall determine.
January 1995 15
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If the Committee in its sole discretion so determines,
employment shall not be considered as terminated for the purposes
of this Section 8 f) so long as a Participant continues to
perform services for the Company or a subsidiary thereof on either
a full or part time basis either as an independent contractor or
on a consulting basis or otherwise, provided, however, that
Participant during such period does not, whether full time or
part time, engage in or perform any services as an employee,
independent contractor, consultant, advisor or otherwise, for a
Competing Business.
9. Supplemental Cash Bonus Awards. The Committee may, in its sole
discretion, grant Supplemental Cash Bonus Awards to Participants in
conjunction with payments with respect to Stock Bonus Units. The
Supplemental Cash Bonus Award shall be paid in cash and shall be a
percentage no greater than that calculated to provide an Award
sufficient to pay the anticipated United States Federal income tax at
a maximum rate for the highest taxable bracket with respect to both
the payment for Stock Bonus Units and the Supplemental Cash Bonus
Award rounded up to the next highest whole percentage point. Payment
of the Supplemental Cash Bonus shall be made at the same time as
payment of the Stock Bonus Units.
10. Performance Restricted Shares. Performance Restricted Shares awarded
under the Plan shall be evidenced by Share certificates issued to the
Participant at the time of the Award that bear such legend or legends
as the Company deems necessary or appropriate. These Performance
Restricted Shares shall be
January 1995 16
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governed by Agreements in such form and containing such terms and
conditions as the Committee shall approve from time to time,
consistent with the Plan. These Agreements shall also contain in
substance, but not be limited to, the following terms and conditions:
a) Performance Vesting Period. At the time of an Award of
Performance Restricted Shares, the Committee shall establish
with respect to such Award a Performance Vesting Period equal to
three or more consecutive fiscal years of the Company. Awards of
Performance Restricted Shares applicable to a Performance Vesting
Period shall be made by the Committee no later than the end of
the first calendar quarter of the first fiscal year in the
Performance Vesting Period.
b) Terms of an Award. In making an Award of Performance Restricted
Shares, the Committee shall specify i) a number of Performance
Restricted Shares covered by the Award, ii) the applicable
Performance Vesting Period, iii) the minimum average annual ROE
to be attained by the Company over the Performance Vesting Period
as a pre-condition to any of the Performance Restricted Shares
becoming vested at the end of the Performance Vesting Period,
iv) a target average annualized earnings growth rate to be
attained by the Company over the Performance Vesting Period,
v) and a super-target average annualized earnings growth rate to
be attained by the Company over the Performance Vesting Period.
For purposes hereof, 1) average annual ROE for a Performance
Vesting Period shall be the arithmetic average of the annual
ROE numbers
January 1995 17
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reported for each fiscal year in the Performance Vesting Period,
and 2) the average annualized earnings growth rate for a
Performance Vesting Period shall be the constant rate of year-to-
year earnings growth that, were it to occur consistently over the
Performance Vesting Period, would generate the actual aggregate
earnings realized during the Performance Vesting Period.
c) Vesting of Performance Restricted Shares. At the end of a
Performance Vesting Period, all Performance Restricted Shares
awarded with respect to the Performance Vesting Period shall be
forfeited, canceled and returned to the Company if the minimum
average annual ROE target applicable to the Performance Vesting
Period has not been attained. If the ROE target has been
attained or exceeded at such point in time, the number of
Performance Restricted Shares awarded to a Participant at the
outset of the Performance Vesting Period that become vested will
be determined by the actual average annualized earnings growth
rate attained over the Performance Vesting Period, as follows:
i) If the actual average annualized earnings growth rate over
the Performance Vesting Period is 0% or less, all
Performance Restricted Shares awarded with respect to the
Performance Vesting Period shall be forfeited, canceled,
and returned to the Company.
ii) If the actual average annualized earnings growth rate over
the Performance Vesting Period is between 0% earnings growth
and
January 1995 18
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the target average annualized earnings growth rate
applicable to the Performance Vesting Period, the actual
growth rate stated as a percentage of the target growth rate
will determine the percentage of the Performance Restricted
Shares of each Participant that will be vested, with the
balance of the Performance Restricted Shares to be
forfeited, canceled and returned to the Company.
iii) If the actual average annualized earnings growth rate over
the Performance Vesting Period is between the target level
and the super-target level of average annualized earnings
growth applicable to the Performance Vesting Period, the
Participant will be vested in between 100% and 200% of the
Performance Restricted Shares awarded at the outset of the
Performance Vesting Period, with the applicable vesting
percentage determined using direct proportions (e.g., if
the earnings growth rate is 1/4 of the spread between the
target and the super-target, the vesting percentage would be
125%; if the earnings growth rate is 8/10 of the spread
between the target and the super-target, the vesting
percentage would be 180%).
iv) If the actual average annualized earnings growth rate over
the Performance Vesting Period is at or above the super-
target level, the Participant will be vested in 200% of the
Performance Restricted Shares awarded at the outset of the
Performance Vesting Period.
January 1995 19
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d) Voting of Performance Restricted Shares. During the Performance
Vesting Period applicable to an Award of Performance Restricted
Shares, all voting rights appurtenant to the Performance
Restricted Shares shall be fully exercisable by the Participant
notwithstanding the performance vesting restrictions. However,
during the Performance Vesting Period, no voting rights shall
exist or be exercisable with respect to Performance Restricted
Shares credited to the dividend reinvestment account described
in Section 10 e) below.
e) Dividends. All dividends (cash or stock) payable on non-vested
Performance Restricted Shares during the Performance Vesting
Period applicable to such Award shall be held by the Company in a
phantom dividend reinvestment account. Cash dividends will be
deemed to have been invested in further Performance Restricted
Shares using the closing price on the New York Stock Exchange on
the dividend payment date. Dividends that would be payable on
such dividend reinvestment account Performance Restricted Shares
will also be credited to the account and deemed invested in
further Performance Restricted Shares. At the end of the
Performance Vesting Period, the Participant shall be vested in
the same percentage of the balance of the Performance Restricted
Shares credited to the dividend reinvestment account as the
percentage the Participant is vested, in accordance with the
terms of the Plan, for the Award of the Performance Restricted
Shares applicable to the Performance Vesting Period. The
Participant's vested Performance Restricted Shares under the
dividend reinvestment account shall be paid
January 1995 20
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out to the Participant in actual Shares, without further
restriction, plus cash for any fractional Share.
f) Form and Time of Payment. As soon as practical after the end of
a Performance Vesting Period, the Company shall issue to each
Participant with Performance Restricted Shares that vested with
respect to the Performance Vesting Period a certificate for the
number of such vested Shares plus the related number of vested
Shares attributable to the dividend reinvestment account. The
Company shall concurrently cancel the Share certificate issued at
the outset of the Performance Vesting Period to evidence the
Performance Restricted Share Award.
g) Termination Prior to Award Being Fully Earned. Unless the
Committee, in its sole discretion, determines otherwise, an
Award granted to a Participant shall terminate for all purposes
when a Participant terminates employment with the Company except
in the case of death, disability, or retirement. A Participant,
or the estate of a Participant, whose employment was terminated
due to death, disability or retirement occurring more than one
year after the Award Date shall be eligible to receive a pro rata
portion of the payment of his or her Award based upon the portion
of the Performance Vesting Period during which the Participant
was employed, in such amount and manner and with such conditions
as the Committee shall determine.
If the Committee in its sole discretion so determines, employment
shall not be considered as terminated for the purposes of this
Section 10 g) so
January 1995 21
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long as a Participant continues to perform services for the
Company or a subsidiary thereof on either a full or part time
basis either as an independent contractor or on a consulting
basis or otherwise, provided, however, that Participant during
such period does not, whether full time or part time, engage in
or perform any services as an employee, independent contractor,
consultant, advisor or otherwise, for a Competing Business, or
otherwise act in a manner that is inimical or contrary to the
best interests of the Company.
11. Non-Registration. In the event the Shares to be issued hereunder have
not been registered under the Securities Act or a registration is not
then currently effective with respect to such Shares, the Committee
shall require, as a condition to the exercise of any Option and the
award or vesting of any Performance Restricted Shares under this Plan,
that the Participant deliver to the Company at the time of such
exercise, award or vesting a bona fide written representation and
agreement, in a form satisfactory to the Committee, signed by the
Participant or other person then entitled to exercise such Option or
receive vested Performance Restricted Shares, stating that the
Shares are being acquired for his or her own account, for investment
and without any present intention of distribution or reselling said
Shares, or any of them, except as may be permitted under the
Securities Act and then applicable rules and regulations thereunder,
and that the Participant or other person then entitled to exercise
such Option or receive vested Performance Restricted Shares will
indemnify the Company against and hold it free and harmless from any
loss, damages, expense or liability resulting to the Company if any
sale or distribution of the Shares by such person is contrary to the
January 1995 22
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representation and agreement referred to above. The Committee may
take whatever additional actions it reasonably deems appropriate to
ensure the observance and performance of such representation and
agreement and to effect compliance with the Securities Act and any
other Federal or state securities laws or regulations, including but
not limited to Rule 144 promulgated under the Securities Act. Without
limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent
transfer of Shares acquired on an Option exercise or upon vesting of
Performance Restricted Shares does not violate the Securities Act, and
may issue stop-transfer orders covering such Shares. Share
certificates evidencing Shares issued on exercise of such Option or
vesting of such Performance Restricted Shares shall bear an
appropriate legend referring to the provisions of this Section 11 and
the agreements herein.
12. Change in Control. For the purposes of this Section, "Change in
Control" shall mean the first to occur of any one of four events
described below:
a) The acquisition of beneficial ownership (other than from the
Company) by any person, entity or "group" within the meaning of
Section 13 d) 3) or Section 14 d) 2) of the Exchange Act
excluding, for this purpose, the Company or its subsidiaries, or
any employee benefit plan of the Company or its subsidiaries that
acquires beneficial ownership of voting securities of the Company
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act), of 30% or more of either the then outstanding shares of
Common Stock or the combined voting power of the Company's then
January 1995 23
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outstanding voting securities entitled to vote generally in the
election of directors; or
b) A change in the persons constituting the Board as it existed in
the immediately preceding calendar year (the "Incumbent Board")
such that the directors of the Incumbent Board no longer
constitute a majority of the Board; provided that any person
becoming a director in a subsequent year whose election, or
nomination for election, by the Company's shareholders was
approved by a vote of at least a majority of the directors then
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 the Plan, considered
as though such person were a member of the Incumbent Board; or
c) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case with respect to which
persons who were the shareholders of the Company immediately prior
to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of the
reorganized, merged or consolidated corporation's then outstanding
voting securities; or
January 1995 24
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d) A liquidation or dissolution of the Company or the sale of all or
substantially all of the assets of the Company.
Notwithstanding the provisions of Sections 7, 8, 9, and 10 hereof and
the terms of each Agreement, upon the occurrence of a Change of
Control as defined above, all Options that are unexercised and
unexpired shall become immediately and automatically vested for the
period of their remaining terms, and all Stock Bonus Units,
Supplemental Cash Bonus Awards, Performance Restricted Shares and
other applicable Awards granted under the Plan that are unvested and
unpaid shall automatically become immediately vested and payable,
without any further action by the Committee.
13. General Restrictions. The Plan and each Award under the Plan shall be
subject to the condition that, if at any time the Committee shall
determine that the Plan, an Award under the Plan or the issuance or
purchase of Shares in connection therewith requires or it is desirable
that it has i) the listing, registration or qualification of the
Shares subject or related to the Plan upon any securities exchange or
under any state or Federal law or under the rules and regulations of
the Securities and Exchange Commission or any other governmental
regulatory body, or ii) the consent or approval of any government
regulatory body, or iii) an Agreement by the recipient of an Award
with respect to the disposition of Shares, then such Plan will not
be effective and the Award may not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or
agreement shall have been effected or obtained free of any conditions
not acceptable to the Committee.
January 1995 25
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14. Rights of a Shareholder. The recipient of any Award under the Plan
shall not be, nor have any of the rights of, a shareholder with
respect thereto unless and until certificates for Shares are issued to
such Participant.
15. Rights to Terminate Employment. Nothing in the Plan or in any
Agreement entered into pursuant to the Plan shall confer upon any
Participant the right to continue in the employment of the Company or
affect any right that the Company may have to terminate the
employment of such Participant for any reason whatsoever, with or
without good cause.
16. Management, Accounting and Financial Decisions. Nothing in this Plan
shall affect the authority of the management of the Company to make
management, business, accounting and financial decisions concerning
the Company.
17. Withholding of Taxes; Withholding of Shares.
a) Whenever the Company proposes or is required to issue or transfer
Shares under the Plan, the Company shall have the right to require
the recipient to remit to the Company an amount sufficient to
satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or
certificates for such Shares. Withholding requirements may be
satisfied by cash payments or, at the election of a Participant,
by having the Company withhold a portion of the Shares or
Supplemental Cash Bonus to be received, or by delivering
previously owned Shares, having a value equal
January 1995 26
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to the amount to be withheld (or such portion thereof as the
Participant may elect).
b) Any election to have Shares withheld under this Section or, if so
determined by the Committee, under Section 7 d), may be subject,
in the Committee's discretion, to one or more of the following
restrictions in accordance with Section 16(b) of the Exchange Act:
i) the election shall be irrevocable;
ii) the election shall be subject, in whole or in part, to the
approval of the Committee and to such rules as it may adopt;
iii) the Option that may be part of the transaction must not be
exercised within six months following the election; and
iv) the election shall be made during the time period specified
in Rule 16b-3(e) promulgated under the Exchange Act.
Whenever payments under the Plan are to be made in cash, such payments
shall be net of an amount sufficient to satisfy any Federal, state
and/or local withholding tax requirements.
18. Non-Assignability. Prior to its settlement in the form of cash or
fully vested Shares, no right or benefit under this Plan shall be
subject to anticipation, alienation, sale,
January 1995 27
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assignment, pledge, encumbrance or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber or charge the
same whether voluntary, involuntary or by operation of law, shall be
void except by will or by the laws of descent and distribution or by
such other means as the Committee may approve from time to time.
No right or benefit under the Plan shall in any manner be liable for
or subject to the debts, contracts, liabilities, or torts of the person
entitled to such benefit. If any Participant under the Plan should
become bankrupt or attempt to anticipate, alienate, sell, assign,
pledge, encumber or charge any right or benefit under the Plan, then
such right or benefit shall, in the sole discretion of the Committee,
cease and determine, and in such event, the Company may hold or apply
the same or any part thereof for the benefit of the Participant,
Participant's spouse, children or other dependents, or any of them, in
such manner and in such proportion as the Committee may determine.
The Committee may impose such restrictions on the transferability of
the Shares as it deems appropriate. Any such restrictions shall be set
forth in the respective Agreement and may be referred to in legends
contained on the certificates evidencing such Shares.
19. Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms
and provisions of such Awards and the Agreements evidencing same, and
the establishment of values and performance targets) need not be
uniform and may be made by it selectively
January 1995 28
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among persons who receive, or are eligible to receive, Awards under
the Plan, whether or not such persons are similarly situated.
20. Adjustments. In the event of any change in the outstanding Shares of
the Company by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like, the Committee shall adjust the
maximum number of Shares that may be issued under the Plan and shall
provide for an equitable adjustment of any outstanding and unexercised
Award or any Shares issuable pursuant to an outstanding and
unexercised Award under this Plan, to the end that after such event
the Participant's proportionate interest shall be maintained as before
the occurrence of such event.
21. Delegation. The Committee may delegate to one or more officers or
managers of the Company, or a committee of such officers or managers,
the authority, subject to such terms and limitations as the Committee
shall determine, to: i) grant Awards to Participants; ii) cancel,
modify, waive rights with respect to Participants; or iii) alter,
discontinue, suspend, or terminate Awards held by Participants;
provided, however, that no such Participants shall be an officer,
director or ten percent shareholder of the Company within the meaning
of those terms under Section 16 of the Exchange Act.
22. Amendment. The Board may amend, suspend or terminate the Plan at any
time or from time to time, except that no amendment shall be effective
without shareholder approval if shareholder approval of such
amendment, suspension or termination would be required in order to
ensure that the Plan, as amended, would continue to
January 1995 29
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meet the requirements of Rule 16b-3 promulgated under the Exchange
Act. Except as may be provided in any Agreement, the termination or
any modification or amendment of the Plan shall not, without the
consent of a Participant, affect a Participant's rights under an Award
previously granted.
23. Effect on Other Plans. Nothing in this Plan shall be construed to
limit the right of the Company to establish any other forms of
incentives or compensation for employees of the Company, or to grant
or assume Options or restricted stock otherwise than under this Plan
in connection with any proper corporate purpose.
24. Duration of the Plan. The Plan shall remain in effect until all
Awards under the Plan either have been satisfied by the issuance of
Shares or the payment of cash, or have expired or been forfeited by
their terms, but no Award shall be granted more than ten years after
the date the Plan is adopted by the Board or the date the Plan
receives shareholder approval, whichever is earlier.
25. Funding of the Plan. This Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund or to make
any other segregation of assets to assure the payment of any Award
under this Plan and payment of Awards shall be subordinate to the
claims of the Company's general creditors.
26. Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction, or as to any Person or Award, or would disqualify the
Plan or any Award under any law deemed
January 1995 30
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applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction,
Person, or Award, and the remainder of the Plan and any such Award
shall remain in full force and effect.
27. Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used
in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form they shall be
construed as though they were also used in the plural form in all
cases where they would so apply.
28. Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof.
29. Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the Commonwealth of Pennsylvania and
applicable Federal law.
January 1995 31
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30. Effective Date. The Plan was duly approved by the stockholders of
the Company at the 1993 Annual Meeting of Stockholders and was
effective on July 1, 1993. Subject to the provisions of Section 31,
this amendment and restatement of the Plan as amended shall be
effective on January 1, 1995.
31. Approval of Stockholders. Notwithstanding anything herein to the
contrary, the Plan as amended and restated herein shall be effective
only if it is approved by holders of a majority of the outstanding
Shares entitled to vote and either present in person or represented by
proxy at an Annual Meeting of Stockholders to be held in 1995.
AMP Incorporated
PERFORMANCE RESTRICTED SHARE AGREEMENT
For the purpose of (a) encouraging key employees to acquire a
proprietary interest in the Common Stock of AMP Incorporated (the
"Corporation"), thereby aligning their interests with the interests of the
shareholders, (b) providing added incentive to key employees to contribute to
the future growth and profitability of the Corporation, and (c) attracting and
retaining exceptionally qualified employees, the Corporation, pursuant to the
terms and conditions of the AMP Incorporated 1993 Long-Term Equity Incentive
Plan (as amended and restated effective January 1, 1995) (the "Plan"), will
award Performance Restricted Shares of Common Stock to certain participants.
This Agreement, entered into pursuant to the terms of the Plan, is to
evidence that effective as of July 25, 1995 the Committee has designated
James E. Marley ("Participant") as a participant under the Plan, has awarded
20,000 Performance Restricted Shares to Participant, has designated January 1,
1995 to December 31, 1997 as the Performance Vesting Period for such
Performance Restricted Shares, has designated 16% as the minimum average
annual return on equity ("ROE") to be attained by the Corporation over the
Performance Vesting Period, has designated 15% as the target average
annualized earnings growth rate to be attained by the Corporation over the
Performance Vesting Period, and has designated 18% as the super-target
average annualized earnings growth rate to be attained by the Corporation over
the Performance Vesting Period.
The grant, holding, and vesting of such Performance Restricted Shares
shall be subject to the terms and conditions of the Plan and the following:
Article I. Definitions.
1.1. "Agreement" means this "Performance Restricted Share Agreement"
between the Corporation and Participant.
1.2. "Award" shall mean any grant of Performance Restricted Shares made
to Participant under the Plan and this Agreement.
1.3. "Award Date" means the date designated by the Committee as of
which Performance Restricted Shares are awarded to Participant under the Plan.
1.4. "Board" shall mean the Board of Directors of the Corporation.
1.5. "Change in Control" shall have the meaning set forth in Section 12
of the Plan.
1.6. "Committee" means the committee of the Board as described in
Section 2(h) of the Plan.
1.7. "Common Stock" means common stock of the Corporation, no par
value.
1.8. "Competing Business" means, as applied to a particular period of
time, a business that at such time is engaged in the manufacture, sale or
other disposition of a product or products that is in competition to a product
or products of the Corporation or its subsidiaries, partnerships or joint
ventures.
1.9. "Corporation" shall have the meaning set forth in the first
paragraph of this Agreement.
1.10. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.11. "Fair Market Value" means the closing sales price of a Share as
reflected on the New York Stock Exchange Composite Tape for the relevant date.
1.12. "Participant" shall have the meaning set forth in the second
paragraph of this Agreement.
1.13. "Performance Restricted Share" shall mean a restricted Share
granted under the Plan that will either become an unrestricted Share or be
forfeited based on the Corporation's financial performance during the
Performance Vesting Period.
1.14. "Performance Vesting Period" shall mean a period of three or more
consecutive fiscal years of the Corporation established by the Committee in
conjunction with an Award of Performance Restricted Shares under the Plan and
specified in the second paragraph of this Agreement.
1.15. "Plan" shall have the meaning set forth in the first paragraph of
this Agreement.
1.16. "ROE" shall have the meaning set forth in the second paragraph of
this Agreement.
1.17. "Securities Act" means the Securities Act of 1933, as amended.
1.18. "Share" or "Shares" means a share or shares of Common Stock.
1.19. "Termination of Employment" means the termination of employment by
the Corporation or by a subsidiary, but not the transfer of employment from
the Corporation to a subsidiary of the Corporation or vice versa or from one
subsidiary of the Corporation to another such subsidiary. If the Committee in
its sole discretion so determines, employment shall not be considered as
terminated for the purposes of Section 3.1 so long as Participant continues to
perform services for the Corporation or a subsidiary thereof on either a full
or part time basis as an independent contractor or on a consulting basis or
otherwise, provided, however, that Participant during such period does not,
whether full time or part time, engage in or perform any services as an
employee, independent contractor, consultant, advisor, or otherwise for a
Competing Business.
Article II. Awards of Performance Restricted Shares.
2.1. "Performance Restricted Shares": Performance Restricted Shares
awarded under the Plan shall be evidenced by Share certificates issued in the
name of Participant at the time of the Award. These Performance Restricted
Shares shall be subject to terms and conditions specified in this Agreement
and in the Plan, and shall bear such legend or legends as the Corporation
deems necessary or appropriate, including but not necessarily limited to the
following:
(a) "The registered holder of the shares represented by this
certificate may, at the time of issuance thereof, be deemed an affiliate
of the issuer under the Securities Act of 1933, as amended".
(b) "The shares represented by this certificate are subject to,
and may not be transferred except in compliance with, a Performance Restricted
Share Agreement dated [enter the date of the underlying Agreement] between AMP
Incorporated and [enter the name of Participant]. These shares are subject to
forfeiture in the event of a breach of the terms and conditions of said
Performance Restricted Share Agreement. A copy of the Agreement is available
without cost from AMP Incorporated, Harrisburg, Pennsylvania".
2.2. "Performance Criteria": The second paragraph of this Agreement
specifies the performance criteria that will govern the vesting of the
Performance Restricted Shares awarded to Participant hereunder. Vesting will
depend on the following performance criteria over the Performance Vesting
Period: (a) the minimum average annual ROE to be attained by the Corporation
over the Performance Vesting Period as a pre-condition to any of the
Performance Restricted Shares becoming vested at the end of the Performance
Vesting Period, (b) a target average annualized earnings growth rate to be
attained by the Corporation over the Performance Vesting Period, and (c) a
super-target average annualized earnings growth rate to be attained by the
Corporation over the Performance Vesting Period. For purposes hereof, average
annual ROE for a Performance Vesting Period shall be the arithmetic average of
the annual ROE numbers reported for each fiscal year in the Performance
Vesting Period, and the average annualized earnings growth rate for a
Performance Vesting Period shall be the constant rate of year-to-year earnings
growth that, were it to occur consistently over the Performance Vesting
Period, would generate the actual aggregate earnings realized during the
Performance Vesting Period.
2.3. "Vesting of Performance Restricted Shares": At the end of the
Performance Vesting Period, all Performance Restricted Shares awarded with
respect to the Performance Vesting Period shall be forfeited, canceled, and
returned to the Corporation if the minimum average annual ROE target
designated in the second paragraph of this Agreement has not been attained.
If the ROE target has been attained or exceeded, the number of Performance
Restricted Shares awarded to Participant hereunder that become vested will be
determined by the actual average annualized earnings growth rate attained over
the Performance Vesting Period, as follows:
(a) If the actual average annualized earnings growth rate over the
Performance Vesting Period is 0% or less, all Performance Restricted Shares
awarded with respect to the Performance Vesting Period shall be forfeited,
canceled, and returned to the Corporation.
(b) If the actual average annualized earnings growth rate over the
Performance Vesting Period is between 0% earnings growth and the target
average annualized earnings growth rate specified in the second paragraph of
this Agreement, the actual growth rate stated as a percentage of the target
growth rate will determine the percentage of the Performance Restricted Shares
of Participant that will be vested, with the balance of the Performance
Restricted Shares to be forfeited, canceled and returned to the Corporation.
(c) If the actual average annualized earnings growth rate over the
Performance Vesting Period is between the target level and the super-target
level of average annualized earnings growth applicable to the Performance
Vesting Period, Participant will be vested in between 100% and 200% of the
Performance Restricted Shares awarded hereunder, with the applicable vesting
percentage determined using direct proportions (e.g., if the earnings growth
rate is 1/4 of the spread between the target and the super-target, the vesting
percentage would be 125%; if the earnings growth rate is 8/10 of the spread
between the target and the super-target, the vesting percentage would be
180%).
(d) If the actual average annualized earnings growth rate over the
Performance Vesting Period is at or above the super-target level, Participant
will be vested in 200% of the Performance Restricted Shares awarded hereunder.
2.4. "Stock Power": Upon request of the Corporation from time to time,
Participant agrees to execute and deliver to the Corporation one or more stock
powers in such form as may be specified by the Corporate Secretary of the
Corporation, authorizing the transfer of the Performance Restricted Shares to
the Corporation. After the Performance Vesting Period has ended and the
number of Performance Restricted Shares that vested, if any, is known, these
executed stock power forms will be used to transfer back to the Corporation
the certificate that evidences the Performance Restricted Shares and is held
in safekeeping by the Corporation. Thereafter a new certificate will be
issued and delivered to Participant representing the vested Shares.
2.5. "Voting of Performance Restricted Shares": During the Performance
Vesting Period, all voting rights appurtenant to the Performance Restricted
Shares shall be fully exercisable by Participant notwithstanding the
performance vesting restrictions. However, during the Performance Vesting
Period, no voting rights shall exist or be exercisable with respect to
Performance Restricted Shares credited to the dividend reinvestment account
described in Section 2.6.
2.6. "Dividends": All dividends (cash or stock) payable on non-vested
Performance Restricted Shares during the Performance Vesting Period shall be
held by the Corporation in a phantom dividend reinvestment account. Cash
dividends will be deemed to have been invested in further Performance
Restricted Shares based on the Fair Market Value of Shares on the dividend
payment date. Dividends that would be payable on such dividend reinvestment
account Performance Restricted Shares will also be credited to the account and
similarly deemed invested in further Performance Restricted Shares. At the
end of the Performance Vesting Period, Participant shall be vested in the same
percentage of the balance of the Performance Restricted Shares credited to the
dividend reinvestment account as the percentage the Participant is vested, in
accordance with the terms of the Plan, in the Performance Restricted Shares
awarded hereunder. Participant's vested Performance Restricted Shares under
the dividend reinvestment account shall be paid out to Participant in actual
Shares, without further restriction, plus cash for any fractional Share.
2.7. "Form and Time of Payment": As soon as practical after the end of
a Performance Vesting Period, the Corporation shall issue to Participant a
certificate for the number of Shares, if any, representing the number of
Performance Restricted Shares that vested with respect to the Performance
Vesting Period plus the number of vested Shares attributable to the related
dividend reinvestment account. The Corporation shall concurrently cancel the
Share certificate issued at the outset of the Performance Vesting Period to
evidence the Performance Restricted Share Award.
2.8. "Non-Registration": In the event the Performance Restricted
Shares to be issued hereunder in connection with an Award or the Shares to be
issued in connection with the vesting of Performance Restricted Shares have
not been registered under the Securities Act or a registration is not then
currently effective with respect to such Performance Restricted Shares or
Shares, the Participant shall deliver to the Corporation, as a condition to
the award and vesting of the Performance Restricted Shares under this
Agreement, at the time of such award or vesting, a bona fide written
representation and agreement, in a form satisfactory to the Committee, signed
by Participant or other person then entitled to such Shares, stating that the
Shares are being acquired for his or her own account, for investment and
without any present intention of distribution or reselling said Shares, or any
of them, except as may be permitted under the Securities Act and then
applicable rules and regulations thereunder, and that Participant or other
person then entitled to such Shares will indemnify the Corporation against and
hold it free and harmless from any loss, damages, expense or liability
resulting to the Corporation if any sale or distribution of the Shares by such
person is contrary to the representation and agreement referred to above. The
Committee may take whatever additional actions it reasonably deems appropriate
to ensure the observance and performance of such representation and agreement
and to effect compliance with the Securities Act and any other Federal or
state securities laws or regulations, including but not limited to Rule 144
promulgated under the Securities Act. Without limiting the generality of the
foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of Shares acquired under the Plan does
not violate the Securities Act, and may issue stop-transfer orders covering
such Shares. Share certificates evidencing Shares issued under the Plan shall
bear an appropriate legend referring to the provisions of this Section and the
agreements herein. None of the provisions of this Agreement shall relieve
Participant of his or her obligations to comply with applicable Federal and
state securities laws in connection with the Performance Restricted Shares,
the Shares, and transactions related thereto.
2.9. "Certificate In Safekeeping": The certificate(s) evidencing the
Performance Restricted Shares shall be retained by the Corporation until the
Performance Restricted Shares either vest or are forfeited, canceled and
returned to the Corporation as provided for in this Agreement.
Article III. Termination of Employment.
3.1. "Rights Upon Termination of Employment": In the event that
Participant experiences a Termination of Employment for any reason other than
death, disability, or retirement more than one year after the Award Date, all
unvested Performance Restricted Shares then held hereunder will terminate
immediately or as the Committee may determine in its sole discretion. If
Participant's employment is terminated due to death, disability, or retirement
more than one year afer the Award Date, then Participant, or the estate of
Participant, shall be eligible to receive a pro rata portion of his or her
Performance Restricted Shares based on the portion of the Performance Vesting
Period during which Participant was employed, in such amount or manner and
with such conditions as the Committee shall determine.
3.2. "Fulfillment of Conditions": Any extension by the Committee of an
Award beyond the date of a Termination of Employment shall be contingent on
such conditions as the Committee, in its sole discretion, may determine,
including but not limited to the fulfillment of the conditions that:
(a) Participant shall not, whether full time or part time, as an
employee, on a consulting or advisory basis or otherwise, engage in or perform
any services during the period between the date of Participant's Termination
of Employment and the end of the Performance Vesting Period for a business
that at such time shall be a Competing Business, nor shall Participant at any
time (i) disclose information relative to the business of the Corporation and
its subsidiaries that is confidential or (ii) otherwise act or conduct himself
or herself in a manner that is inimical or contrary to the best interest of
the Corporation and its subsidiaries.
(b) The Participant shall be available during the period between
the date of Participant's Termination of Employment and the end of the
Performance Vesting Period for such consulting and advisory services as the
Corporation or its subsidiaries may reasonably request, taking fairly into
consideration the age, health, residence and individual circumstances of
Participant and the total value of the Award held by Participant under the
Plan during the Performance Vesting Period.
In the event that any of such conditions shall not be fulfilled, the
obligations of the Corporation hereunder shall forthwith terminate, as shall
the continuation of the Performance Vesting Period beyond Termination of
Employment hereunder; provided that any such cancellation shall be in addition
to and not in lieu of any of the rights or remedies available to the
Corporation or its subsidiaries arising out of Participant's breach of any
provision of this Agreement or the Plan. Ownership as a passive investor of
not more than five percent (5%) of the outstanding shares of the stock of any
company listed on a national securities exchange or having at least one
hundred (100) shareholders of record shall not in itself be deemed a
nonfulfillment of the conditions herein set forth.
Article IV. Administration of Plan.
4.1. "Committee": The Committee shall administer the Plan and this
Agreement in accordance with their provisions and shall have full and final
authority in its discretion to (a) interpret the provisions of the Plan and
this Agreement and decide all questions of fact arising in their application,
and its interpretations and decisions shall be in all respects final,
conclusive and binding; and (b) make all other determinations, rules and
regulations necessary or advisable for the administration of the Plan and this
Agreement. No member of the Committee shall be personally liable for any
action or determination in respect to the administration of the Plan and this
Agreement if made in good faith.
Article V. Miscellaneous.
5.1. "Withholding of Taxes": Whenever the Corporation proposes or is
required to issue or transfer Shares under the Plan and this Agreement, the
Corporation shall have the right to require Participant to remit to the
Corporation an amount sufficient to satisfy any Federal, state and/or local
withholding tax requirements prior to the delivery of any certificate or
certificates for such Shares. Withholding requirements may be satisfied by
cash payments or, at the election of Participant, by having the Corporation
withhold a portion of the Shares to be received, or by delivering previously
owned Shares, having a value equal to the amount to be withheld (or such
portion thereof as Participant may elect). Any election to have Shares
withheld under this Section may be subject, in the Committee's discretion, to
such restrictions as the Committee may determine, including but not limited to
one or more of the following restrictions in accordance with Section 16(b) of
the Exchange Act: (a) the election shall be irrevocable; (b) the election
shall be subject, in whole or in part, to the approval of the Committee and to
such rules as it may adopt; (c) the election must be made at least six months
prior to the transfer of Shares under the Plan and this Agreement; and (d) the
election shall be made during the time period specified in Rule 16b-3(e)
promulgated under the Exchange Act, or any successor rule or regulation
thereto.
5.2. "Non-Alienation of Benefits": Prior to its settlement in the form
of Shares, no right or benefit under the Plan and this Agreement shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber or charge the same whether voluntary, involuntary or by operation of
law, shall be void except by will or by the laws of descent and distribution
or by such other means as the Committee may approve from time to time. No
right or benefit under the Plan and this Agreement shall in any manner be
liable for or subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit. If Participant should become bankrupt or
attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any
right or benefit under the Plan and this Agreement, then such right or benefit
shall, in the sole discretion of the Committee, cease and terminate, and in
such event, the Corporation may hold or apply the same or any part thereof for
the benefit of Participant, the Participant's spouse, children or other
dependents, or any of them, in such manner and in such proportion as the
Committee may determine. Any restrictions on transferability of the Shares
either described above or otherwise provided for in this Agreement may be
referred to in legends contained on the certificates evidencing such Shares.
5.3. "Legal Holiday": If and when the date on which a computation or
distribution is to be made or other action is to be taken under the Plan or
this Agreement falls on a Saturday, Sunday, or a legal holiday, such
computation or distribution shall be made or such other action taken on the
next succeeding business day.
5.4. "Change in Control": Notwithstanding any provisions hereof to the
contrary, upon the occurrence of a Change in Control, all Performance
Restricted Shares granted under the Plan and this Agreement that are then
unvested shall become immediately and automatically vested and payable,
without any further action by the Committee.
5.5. "General Restrictions": The Plan and each Award under the Plan
and this Agreement and the issuance or purchase of Shares in connection
therewith shall be subject to the condition that, if at any time the Committee
shall determine that the Plan, this Agreement, an Award under the Plan and
this Agreement or the issuance or purchase of Shares in connection therewith
requires or it is desirable that it has (a) the listing, registration or
qualification of the Shares subject or related to the Plan upon any securities
exchange or under any state or Federal law or under the rules and regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, or (b) the consent or approval of any government regulatory body, or (c)
an agreement by Participant with respect to the disposition of Shares, then
the Plan and this Agreement will not be effective and the Award may not be
consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
5.6. "Rights of a Shareholder": Participant, and any person claiming
under or through Participant or under the Plan or this Agreement, shall not
be, nor have any of the rights of, a shareholder with respect thereto, nor
shall they have any right or interest in any cash or other property, unless
and until certificates for Shares are issued to Participant after compliance
with all the terms and conditions of the Plan and this Agreement. Participant
shall only have those rights provided for under the terms and conditions of
the Plan and this Agreement.
5.7. "Rights to Terminate Employment": Nothing in the Plan or this
Agreement shall confer upon Participant the right to continue in the
employment of the Corporation, or to continue in any position or at any level
of remuneration, or affect any right that the Corporation may have to
terminate the employment of Participant for any reason whatsoever, with or
without good cause.
5.8. "Management, Accounting and Financial Decisions": Nothing in the
Plan or this Agreement shall affect the authority of the management of the
Corporation to make management, business, accounting and financial decisions
concerning the Corporation.
5.9. "Non-Uniform Determinations": The Committee's determinations
under the Plan (including without limitation determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same, and the
establishment of values and performance targets) need not be uniform and may
be made by the Committee selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
5.10. "Adjustments": In the event of any change in the outstanding
Shares by reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like,
the Committee shall adjust the maximum number of Shares that may be issued
under the Plan and
shall provide for an equitable adjustment of any outstanding and unexercised
Award or any Shares issuable pursuant to an outstanding and unexercised Award
under the Plan and this Agreement, to the end that after such event
Participant's proportionate interest shall be maintained as before the
occurrence of such event. The decision of the Committee with respect to the
nature and amount of the adjustment(s) shall be conclusive and binding upon
Participant and all persons claiming under or through Participant or under the
Plan or this Agreement.
5.11. "Delegation": The Committee may delegate to one or more officers
or managers of the Corporation, or a committee of such officers or managers,
the authority, subject to such terms and limitations as the Committee shall
determine, to: (a) grant Awards to participants under the Plan; (b) cancel,
modify, or waive rights with respect to participants under the Plan; or (c)
alter, discontinue, suspend, or terminate Awards held by participants under
the Plan; provided, however, that no such participant shall be an officer,
director or ten percent shareholder of the Corporation within the meaning of
those terms under Section 16 of the Exchange Act.
5.12. "Amendment": The Board may amend, suspend or terminate the Plan
at any time or from time to time, except that no amendment shall be effective
without shareholder approval if shareholder approval of such amendment,
suspension or termination would be required in order to ensure that the Plan,
as amended, would continue to meet the requirements of Rule 16b-3 promulgated
under the Exchange Act, or any successor rule or regulation thereto. Except
as may be provided in this Agreement, the termination or any modification or
amendment of the Plan shall not, without the consent of Participant, affect
Participant's rights under an Award previously granted.
5.13. "Effect on Other Plans": Nothing in the Plan or this Agreement
shall be construed to limit the right of the Corporation to establish any
other forms of incentives or compensation for employees of the Corporation or
to grant or assume options otherwise than under the Plan or this Agreement in
connection with any proper corporate purpose.
5.14. "Duration of the Agreement": This Agreement shall remain in
effect until all Awards under this Agreement either have been satisfied by the
issuance of Shares or have expired or been forfeited by their terms.
5.15. "Funding of the Plan": The Plan shall be unfunded. The
Corporation shall not be required to establish any special or separate fund or
to make any other segregation of assets to assure the payment of any Award
under the Plan or this Agreement, and payment of Awards shall be subordinate
to the claims of the Corporation's general creditors.
5.16. "Severability": If any provision of the Plan or this Agreement or
any Award is or becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction, or as to any person or Award, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws,
or if it cannot be so construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, person,
or Award, and the remainder of the Plan and this Agreement and any such Award
shall remain in full force and effect.
5.17. "Construction": Wherever any words are used in the Plan or this
Agreement in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply, and
wherever any words are used herein in the singular form they shall be
construed as though they were also used in the plural form in all cases where
they would so apply.
5.18. "Headings": Headings are given to the Sections and subsections of
the Plan and this Agreement solely as a convenience to facilitate reference.
Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or this Agreement or any provision
thereof.
5.19. "Governing Law": The validity, construction and effect of the
Plan and this Agreement and any rules and regulations relating to the Plan and
this Agreement shall be determined in accordance with the laws of the
Commonwealth of Pennsylvania and applicable Federal law.
AMP Incorporated
Dated____________________________ By /s/ D F Henschel
-----------------------------
Corporate Secretary
Participant hereby acknowledges receipt of a copy of the Plan and this
Agreement, accepts his or her designation as a Participant under and subject
to all the terms and conditions set forth herein and in the Plan, and agrees
to all such terms and conditions.
Dated____________________________ /s/ J E Marley
-------------------------
Participant
restrst/agreemt
08/23/95
---------------------------------------------
AMP Incorporated
General Offices
Harrisburg, Pennsylvania
-------------------- <> --------------------
PERFORMANCE RESTRICTED
SHARE AGREEMENT
Issued to
JAMES E. MARLEY
Participant
Dated JULY 25, 1995
SCHEDULE 1
The following individuals entered into Restricted Stock Agreements with AMP
that are substantially identical in all material respects, except as to the
parties and the number of restricted shares awarded, as set forth in this
Schedule. All Restricted Stock Agreements have an effective date of July 25,
1995.
Name Restricted Shares Awarded
J. E. Marley 20,000
W. J. Hudson 25,000
R. Ripp 9,100
D. Horowitz 9,100
J. Gurski 7,400
H. Cole 7.400
J. Hassan 9,100
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS
CONTAINED IN THE COMPANY'S 1995
SECOND QUARTER REPORT TO
SHAREHOLDERS AND IS QUALIFIED
BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 192,936
<SECURITIES> 62,737
<RECEIVABLES> 1,046,373
<ALLOWANCES> 0
<INVENTORY> 736,559
<CURRENT-ASSETS> 2,287,176
<PP&E> 4,188,728
<DEPRECIATION> 2,350,144
<TOTAL-ASSETS> 4,455,040
<CURRENT-LIABILITIES> 1,277,845
<BONDS> 0
<COMMON> 79,523
0
0
<OTHER-SE> 2,637,320
<TOTAL-LIABILITY-AND-EQUITY> 4,455,040
<SALES> 3,929,241
<TOTAL-REVENUES> 3,929,241
<CGS> 2,646,703
<TOTAL-COSTS> 2,646,703
<OTHER-EXPENSES> 48,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,456
<INCOME-PRETAX> 489,925
<INCOME-TAX> 176,370
<INCOME-CONTINUING> 313,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 313,555
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
</TABLE>
