SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the year ended December 31, 1994
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
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(Exact name of registrant as specified in its charter, and state of
incorporation)
Employer Identification No. 23-0332575
Harrisburg, Pennsylvania 17105-3608
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(Address of principal executive offices of registrant)
(717) 564-0100
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Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Exchange on which Registered
Common Stock (without Par Value) New York
(Outstanding at 3/15/95 - 209,676,073
shares)
Securities registered pursuant to Section 12(g) of the Act:
None
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Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] . No [ ] .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 10, 1995: $7,795,114,575
(207,869,722 shares at $37.50 per share). For purposes of the
foregoing calculation, all directors and members of the Global
Strategic Planning Committee of the registrant have been deemed
to be affiliates, but such assumption should not be construed as
a determination by the registrant that all such individuals are
in fact affiliates of the registrant.
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Documents Incorporated by Reference:
1. Cited portions of the Annual Report to shareholders for
fiscal year ended December 31, 1994 (Parts I, II, IV)
2. Cited portions of the Proxy Statement for the AMP
Incorporated 1995 Annual Shareholders' Meeting,
specifically excluding the Performance Graph and the
Compensation and Management Development Committee
Report on Executive Compensation (Part III)
10-K REPORT FOR YEAR ENDED DECEMBER 31, 1994
PART I.
ITEM 1. BUSINESS
AMP Incorporated designs, manufactures and markets a broad
range of electronic, electrical and electro-optic connection
devices and an expanding number of interconnection systems and
connector-intensive assemblies. The Company's products have
potential uses wherever an electronic, electrical, computer or
telecommunications system is involved, and are becoming
increasingly critical to the performance of these systems as
voice, data and video communications converge. The Company's
customers are as diverse as the products themselves, and include
such differing types of accounts as original equipment
manufacturers (OEMs) and their subcontractors, utilities,
government agencies, distributors, value-added resellers, and
customers who install, maintain and repair equipment. The
industries covered by these accounts include Computer/Office,
Industrial/Commercial, Communications, Consumer Goods,
Transportation (including automotive)/Electrical, Aerospace/
Military, and Construction. The Company markets its products
worldwide primarily through its own direct sales force, but also
through distributors and value-added resellers to respond to
customer buying preferences. Sales and/or manufacturing
operations have been established in 185 Company facilities
located in 37 countries to serve customers in the current and
emerging markets throughout the world. The Company is
positioning itself to be a market-driven, "GLOBE-ABLE"
organization.
The Company was incorporated in 1941 as a New Jersey
corporation under the name Aircraft-Marine Products, Inc. At
that time the focus of the Company's operations was the terminal
business. In 1952 the Company established its first
international operations, located in Canada and France. In 1956
the Company changed its name to AMP Incorporated and became
publicly owned. During the 1960s and 1970s the Company expanded
its focus to varying types of connectors, including those
required in the computer industry. The Company reincorporated in
Pennsylvania in 1989. The world leader in electronic/electrical
connection devices and associated application tools and machines,
the Company is now diversifying into total interconnection
systems, related components, and connector-intensive assemblies.
At the end of 1994 the Company employed approximately 30,400
people worldwide, up 3,500 from year-end 1993.
Markets
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The Company serves over 250,000 customers in over 80
countries, covering many diverse markets. Key financial measures
charting the development of the Company's business during the
past 5 years are set forth in the "Historical Data" table of the
Company's 1994 Annual Report to shareholders, and are also shown
in Item 6, entitled "Selected Financial Data", of this Report.
Sales to trade customers by each of the Company's geographic
segments and sales or transfers between the Company's various
geographic segments during 1992-1994, together with pre-tax and
net profits and identifiable assets attributable to each
geographic segment for those years, are shown in Footnote No. 17
to the Consolidated Financial Statements, found on page 43 of the
Company's 1994 Annual Report to shareholders and incorporated
herein by reference. The Company's diversification of worldwide
sales is evidenced by the following tables:
GEOGRAPHIC SEGMENTS 1994 1993 1992
(percent)
United States 42 43 41
Europe/Middle East/Africa 31 31 35
Asia/Pacific 22 21 20
Americas 5 5 4
MARKETS
(percent)
Aerospace/Military 3 5 5
Industrial/Commercial 16 10 5
Communications 17 10 10
Computer/Office 19 20 25
Consumer Goods 8 10 10
Transportation/Electrical 25 30 30
Distribution, Construction, etc. 12 15 15
CHANNELS TO MARKET
(percent)
Direct 86 86 86
Distribution & Co-op Affiliates 14 14 14
The business in which the Company is engaged is highly
competitive. The number of competitors is estimated at over
1,500 worldwide, and in all products the Company is subject to
active direct and indirect competition. The markets available to
the Company have generally been growing as a whole, although the
10 years ending in 1993 saw slower growth due to recessions,
industry corrections and price erosion. Most of the Company's
products involve technical competence in their development and
manufacture. Generally speaking, the Company competes primarily
through offering high-quality, technical products and associated
application tooling, with an emphasis on product performance,
timely delivery and service, and only secondarily competes
on a price basis. The Company's broad range of products,
worldwide sales and marketing presence, and service innovations
such as the AMP product information center, the automated fax
service, the use of computer disks to communicate engineering and
drawing data, the expedited sample request delivery system,
global account management, and the EDI order system have served
to differentiate the Company from its competitors and allowed the
Company to become a supplier of choice to many customers as they
reduce their supplier lists and seek global sourcing contracts.
The Company is also realigning its organizational structure
to free marketing and sales people from operational ties and
permit them to focus on customers and markets. This will make it
easier for sales people to choose the right products for their
customers from anywhere in the world, and will encourage
industry-driven product solutions and shared responsibility for
innovation across organizational boundaries, without jeopardizing
the established customer interface.
In addition, the Company has distinguished itself by its
development of new and improved products and technologies. The
Company has over 15,200 patents or utility models issued or
pending throughout the world. AMP ranks 25th among U.S.
corporations and 49th among all patentees for U.S. patents
granted during 1994. The Company aggressively enforces its
patents to preserve its proprietary technological advantages.
The Company's backlog of unfilled orders increased in 1994
to $625 million at year-end compared to $493 million at year-end
1993 as the result of the increasingly robust economic recovery
throughout the world and the Company's resulting good sales
growth in each geographic segment and virtually all market
categories. A majority of these orders were for delivery within
the next 90 days, and all were scheduled for delivery within 12
months.
The primary seasonal effect generally experienced by the
Company is in the 3rd quarter when there usually is a temporary
leveling off or modest drop in the rate of new orders and
shipments. This seasonal decline in new orders and shipments is
caused by the softening of customer demand in certain markets
such as appliances, automotive and home entertainment goods
arising from model year changeovers, plant vacations and
closedowns, and other traditional seasonal practices. This
effect is usually most evident in the Company's Europe/Middle
East/Africa and Asia/Pacific regions, compared against sales
results of the 2nd quarter. In 1994, however, that effect was
offset by the further weakening of the U.S. dollar during the 3rd
quarter, which added $26 million to sales, and by the broadening
economic recovery in the Americas, Europe and Japan. In the 1st
quarter the Company usually experiences some seasonal
strengthening in domestic sales and orders as customers resume
operations after the holidays and replenish inventories following
the year-end close.
The Company's normal terms of sale are net 30, and the
average days outstanding for accounts receivable is typically 45
days in the U.S. and 72 days on a global basis. The Company
warrants most of its products against defects in materials and
workmanship under normal use for periods of up to 1 year. The
Company's warranty experience is generally favorable, with a low
rate of product return. An extensive distributor network,
together with the Company's own highly automated regional
distribution center system, is utilized to provide timely
delivery of products to the customers.
Products
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The Company manufactures and sells more than 100,000 types
and sizes of products, including terminals; fiber-optic, printed
circuit board and cable connectors and assemblies; connectorized
printed circuit boards; cable and cabling systems; sensors; wide
and local area network products and systems; and related
application tools and machines. These products represent over
500,000 active part numbers in approximately 235 product
families. Nearly 90% of the Company's business is in
electronic/electrical connection, switching and programming
devices and associated application tools and machines. Included
within this product area is a great variety of types and sizes.
These product families generally involve the same or very similar
basic technology, materials, production processes and marketing
approaches. The common manufacturing capabilities, which have
become core competencies of the Company, include high speed metal
stamping, precision metal plating, plastic molding, and automated
assembly of small metal and plastic parts. Over 50% of the
Company's sales are of products provided in strip form on reels and
applied by customers with special application machines, and an
additional 8% are of products that are applied with special tools.
The balance of sales is of pre-assembled devices and other products
that do not require application tools or machines. Over 90% of sales
are of products in just three Standard Industrial Classification (SIC)
4-digit codes: Electronic Connectors; Electronic Components -
NEC; and Current Carrying Wiring Devices.
Application tooling has been and remains an integral part of
the Company's sales strategy and growth. The Company has
provided nearly 100,000 machines to customers on either a lease
or purchase basis, and millions of manual and power tools have
been sold to customers, to apply the Company's products to wires,
cables, printed circuit boards, and flexible circuitry. In the
past decade the Company has introduced over 150 new types of
machines and tools, ranging from hand tools for maintenance and
repair to computer-controlled machines that make thousands of
connections per hour and continuously monitor the quality of the
connections as they are being made. The Company has always
marketed products on the basis of total installed cost -- not
product price alone -- and the Company's concentration on
providing fast and reliable application methods should give the
Company an advantage as concerns for productivity, quality and
system performance continue to rise. Several hundred field
service engineers throughout the world install this
applicating equipment, train customer personnel to operate,
maintain and service it, and provide emergency service.
While the Company is seeking to widen its leadership in the
terminal and connector product area, it is also steadily
diversifying into total interconnection systems and higher value
assemblies. This is increasing the potential markets being
addressed by the Company from approximately $20 billion to around
$80 billion. Part of this new breadth of potential business will
come from cables, fiber-optic and signal conditioning products,
and flexible circuitry based connectors and sensors that expand
the Company's connector and interconnection technology. Another
source for expansion is into interconnection solutions, such as
cable and board assemblies, that are logically related to those
connector and interconnection competencies. The final thrust
toward new opportunities for growth addresses needs for home
automation, PC cards, microwave technologies, and
networking/premise wiring hardware, software and related
services.
The Company is accomplishing this growth by new product
development as well as numerous small, strategic acquisitions,
minority investments, joint ventures and other strategic
alliances. While to date these acquisitions and alliances,
individually or in the aggregate, have not represented a material
amount of assets, they are technologies that are key to entering
or enhancing the Company's participation in the respective
markets and will form a cornerstone for the Company's expansion
of its potential business. New products continue to represent
15-20% of current sales, and in 1994 the Company added about 15
new product families and over 2,100 new product part numbers. In
total, over 82,000 new part numbers were added in 1994,
representing both new product part numbers and part numbers for
extensions of existing products. Much of this growth, whether by
new product development or acquisitions and alliances, focuses on
the fastest growing sectors and major trends in the electronic
and electrical markets -- such as miniaturization, high speed
circuitry, networking, wireless transmission, electro-optics,
conversion to digital, software integration with hardware, and
the convergence of computer and communications technologies. On
March 10, 1995 the Company announced that it had entered into an
Agreement and Plan of Merger with M/A-Com, Inc., a Massachusetts
corporation, pursuant to which a subsidiary of the Company will,
subject to approval of the shareholders of M/A-Com, Inc. and the
satisfaction of certain other conditions, merge into M/A-Com,
Inc. M/A-Com, Inc., as a wholly-owned subsidiary of the Company,
would enhance the Company's strategic presence in the high-growth
market for advanced wireless components. M/A-Com, Inc. is a
world leader in the design and manufacture of microwave,
millimeter wave, wireless telephone and radio frequency
interconnection components to the wireless data and
telecommunications industries.
Operations
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While the Company's principal offices are located in
Harrisburg, Pennsylvania, the Company is realigning its
operations into a seamless global organization that lends
regional governance and support to horizontally interdependent
businesses that act locally but think globally. The regions
are identified as the Americas, Asia/Pacific and Europe/Middle
East/Africa (EMEA), and the current businesses are the terminal
and connector business and the Global Interconnection Systems
businesses. The terminal and connector business constitutes the
Company's more traditional lines of products. The Global
Interconnection Systems businesses embrace the Company's
efforts to broaden its market opportunities into subsystems,
electro-optic products and complete interconnection systems and
services for OEMs and end-use customers. During 1994 the Global
Interconnection Systems businesses began to align regionally,
paralleling the global structure of the Company's terminal and
connector business and positioning to benefit by the regional
support organization.
The Company's efforts to integrate both regionally and
globally should allow it to capitalize on the regionalization of
the customers' production operations and trade that is being seen
to one degree or another in all three geographic regions.
Regional strategies within each business have been
developed to gain market share and improve profitability,
involving a decoupling of sales and marketing into a market-
driven function that profitably satisfies customers and
anticipates their needs, and a comprehensive integration of all
aspects of operations and business administration to better
support sales and marketing. At the same time the
organizational realignment should enable the Company to quickly
and effectively assimilate its geographic expansion into newly
emerging markets. The Company has been aggressively locating
manufacturing and sales operations where customers' operations
and local market opportunities coincide to make it a positive
investment climate. Since 1990 the Company has either
finalized plans for or actually started sales or manufacturing
operations in India, China, Hungary, the Philippines, Thailand,
the Czech Republic, Poland, Turkey, Ireland and Slovenia, and
marketing activities have been extended into Indonesia, Vietnam,
Pakistan, Eastern Europe, South Africa and the Middle East.
Broadened capabilities are being developed around the world for
the telecommunications, power utility and transportation markets
to augment regional efforts to provide products that support
infrastructure advances in developing nations.
The Company's Journey to Excellence is a comprehensive
program seeking continuous improvement in all phases of its
business. It uses techniques such as "process mapping," "value
analysis," "successfully demonstrated practices" and extensive
"benchmarking," and has become an integral part of the fabric of
the Company's operations. Goals include increased flexibility in
global programs to adapt to changing business dynamics, and the
program is being updated to incorporate growth and profitability
issues such as the anticipation of customer needs. This program
continues to raise the standard of performance in terms of
quality, productivity, delivery, service, engineering skills and
many other key aspects of the Company's business, and is being
tailored to fit into each region's strategies for the future.
Extensive efforts are also being undertaken to maximize the
utilization of the Company's human resources. Training,
development, education, empowerment through the delegation of
more authority and responsibility, employee teams, performance-
linked pay, centralized recruiting, and programs to encourage
recognition of outstanding achievements are being promoted to
increase the involvement and effectiveness of employees. A
broad-based program for improving leadership quality and
diversity includes succession planning and expatriate, executive
and organizational development programs. The employees also are
being provided with the computers, communication systems,
business machines and scientific/engineering equipment necessary
for them to realize their full potential. The Company is
implementing a global wide area network, expanding electronic
mail and video conferencing capabilities worldwide, and
instituting a business enterprise information system to support
global decision making. Regional training centers are in
the process of being established to facilitate the distribution
of these learning and awareness methods throughout the world.
For better leveraging of the Company's basic manufacturing
capabilities into all areas of production, certain business units
and subsidiaries have also been designated as "Regional Centers
of Competency" in specific product/market categories.
The Company is nearing the culmination of a 5-year effort to
certify its quality management systems to the rigorous
International Organization for Standardization (ISO) 9000
standard. Worldwide, the quality management systems of 36
business units and their associated facilities, representing
virtually all of the Company's operations, have either received
or have been recommended for ISO certification. Qualification to
this common standard should help ensure that the Company's
products and services will be of uniformly high quality wherever
they are manufactured, sold or provided throughout the world.
The Company is also aggressively pursuing the certification of
its locations to the more rigorous Manufacturing Requirement
Planning (MRP) II, Class A standards for manufacturing
requirements planning systems. Manufacturing employment
increased by over 2,000 in 1994 to more than 16,000 people
utilizing 6.2 million sq. ft. in 93 plants in 20 countries.
Product standards are playing an increasingly important role
in the development and marketing of new products and the shaping
of new markets. The Company takes an active role in the
development of industry standards that affect its products and
development activities. A capable corporate group of standards
professionals and a global network of Company employees in over
450 industry associations and standards-setting bodies are
involved in laying the groundwork for the acceptance of the
Company's products under applicable standards. The Company has
developed a unique training course that has gained significant
customer and national recognition, and that is becoming the basis
for a national program by the American National Standards
Institute.
The Company has a corporate-wide program for managing
current and emerging environmental issues. Sound environment
practices are promoted by adoption and implementation of strict
internal standards that meet or exceed known and anticipated
regulatory, industry and customer-driven environmental
requirements worldwide. These practices include compliance
audits and environmental assessments conducted for new and
existing properties, engineering support provided to operations
staff to minimize wastes and other regulatory impacts, training
programs, recycling programs, maintenance of a mainframe-based
computer data base, and resources to provide support to
operations staff in achieving environmental compliance generally.
Measures were instituted in 1994 to regionalize these
capabilities and establish a uniform global environmental
management system.
The Company is not aware of any material claims against its
assets relating to environmental matters, based on current
information. The costs to the Company of compliance with known
and anticipated legal, regulatory, industry and corporate
environmental requirements are not expected to have a
material effect on capital expenditures, earnings and the
competitive position of the Company. However, the Company is
potentially liable for investigative and environmental clean-up
costs at a number of sites. The Company has been identified as a
Potentially Responsible Party at 4 National Priorities List
sites in the U.S. pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"). The Company
has spent a total of approximately $2.2 million to date at these
sites, and future costs could total $8 million or more. In
addition, the Company is considered a minor contributor in 4
other hazardous site cleanup actions in the U.S. where costs
were minimal in 1994, and at several additional sites where the
Company is still assessing its involvement and potential
liability. During 1994 the Company's participation in cleanup
activities at two sites where it previously was identified as a
de minimus contributor was terminated at no cost to the Company.
The Company also has spent approximately $13.5 million since
1984, and may spend up to an additional $2 million annually for
the next several years to voluntarily investigate and remediate
16 of its current or former U.S. facilities.
The Company believes it has adequate sources of supply and
does not expect the cost or availability of raw materials to have
a significant overall effect on its total current operations.
Availability of remittances to the parent Company by its
subsidiaries is subject to exchange controls and other
restrictions of the various countries in which the subsidiaries
are located. Presently, there are no foreign exchange or
currency restrictions in the various countries that would
significantly affect the remittance of funds to the Company. In
view of the significant portion of the Company's customer sales
that originate outside of the U.S. (approximately 60%),
fluctuations in the exchange value of the U.S. dollar have an
impact on sales and earnings.
Product Development
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The Company is committed to an ongoing program of new
product development and a continual expansion of its technical
capabilities. This broadening of products and capabilities is
made possible through both internal development efforts and
external strategic relationships such as acquisitions, minority
equity investment positions, joint ventures, alliances, research
contracts, teaming arrangements, licensing and the like with
dozens of customers, suppliers, consortiums, universities and
research institutes. In recent years advanced development
centers have been established in Europe and Japan in addition to
those already existing in the U.S. A new, more powerful
worldwide CAD/CAM/CAE computer workstation network system is also
being installed to assist the nearly 4,400 engineers, scientists
and technicians employed by the Company.
Research and development expenditures for the creation and
application of new and improved products and processes were $265
million in 1994, $258 million in 1993 and $272 million in 1992.
Total spending on research, development and engineering (RD&E)
was $456 million, $406 million and $389 million in 1994, 1993 and
1992, respectively, representing 11.3%, 11.8% and 11.7%,
respectively, of consolidated net sales. This strong financial
commitment to reinvestment into technology has resulted in a
steady stream of new products, patents and new product sales.
ITEM 2. PROPERTIES
The Company has approximately 10.8 million sq. ft. of
utilized floor space in 185 facilities located in the United
States and 36 other countries. Facilities were enlarged or added
in over a dozen countries in 1994, representing an increase of
approximately 700,000 sq. ft. During 1994, construction started
on a new 180,000 sq. ft. engineering building in the Harrisburg,
Pennsylvania area; operations began in a 200,000 sq. ft.
manufacturing plant in Greensboro, North Carolina to serve the
U.S. automotive market, and in a new panel assembly plant in
Austin, Texas; construction of a second plant in South Korea was
completed primarily to serve a rapidly growing automotive market;
a second plant in India commenced operations; plans were prepared
for an additional plant in China and for additional space in
Japan; a new facility opened in Hungary, the Company's first
facility in Eastern Europe; and work has been completed on
the new plant near Dublin, Ireland and production of connector
panel assemblies for the European market is under way.
Facilities are being added in North Carolina for greater
production capacity in cable and cable assemblies, and operations
in Tower City and Williamstown, Pennsylvania will be consolidated
in a large manufacturing plant to be built northeast of
Harrisburg, Pennsylvania to support the Company's growth in the
consumer goods market. Also planned for 1995 are a new warehouse
in Japan, a modernized training and communications facility in
the Harrisburg, Pennsylvania area, and various plant additions
and sales offices throughout the world. Over a dozen facilities
are being built or enlarged in Europe, and the Company expects
to start construction of a manufacturing plant in the Czech
Republic later this year.
Reflecting the Company's efforts to consolidate into more
efficient integrated production operations, total floor space in
terms of sq. ft. decreased from 9 million in 1985 to 8.9 million
in 1986 and remained in the 8.9 - 9.2 million range until 1992.
Since 1992 floor space has increased from 9.5 million sq. ft. to
10.1 million sq. ft. in 1993 and 10.8 million sq. ft. in 1994.
These increases are the result of increased production to support
higher sales, together with efforts to insource work from outside
vendors in order to lower cost and improve delivery. Increases
in floor space have been moderated, however, by a movement toward
a maximization of multi-shift operations where required and
feasible and, more recently, a closer regional management of the
deployment of manufacturing resources.
Worldwide, approximately 6.2 million sq. ft. of floor space
in 93 plants located in 20 countries is devoted to manufacturing
operations, and an additional 1.5 million sq. ft. in 39 plants
located in 25 countries is utilized for engineers, scientists,
technicians and support personnel. U.S. manufacturing,
warehousing and administrative facilities are located in
Pennsylvania (51), North Carolina (21), California (17), Texas
(6), Virginia (4), Florida (3), Massachusetts (2), Connecticut
(2), Oregon (2), Arizona (1), Delaware (1), Georgia (1), Illinois
(1) and New Jersey (1). Nearly half of these facilities are
manufacturing plants. The Company's operations in the 36
countries other than the U.S. involve 33 major facilities located
throughout the world, 19 of which perform manufacturing
and 14 of which have marketing/warehousing/engineering functions.
The Company's facilities are generally modern, well
maintained and diversified geographically within regions, with
the typical size of major facilities in the 70,000 to 100,000 sq.
ft. range. No single facility is material to the Company's
business. The Company owns over 85% of its floor space, free of
encumbrances, and leases the balance. The Company owns most of
its major facilities. Most of the leases on the other major
manufacturing and administrative facilities provide the right to
renew or purchase.
Capital expenditures were $457 million in 1994, up from $330
million in 1993 and $313 million in both 1992 and 1991. Capital
expenditures are expected to reach $550 million or more in 1995
as the Company continues to provide for additional production
capability to meet anticipated increased demand. Over two-thirds
of the 1994 capital expenditures were for machinery, equipment
and systems to add capacity on many existing products, tool up
new products, and improve quality, productivity and delivery.
The current rate of capacity utilization is estimated at 70-75%
in the Americas, 85-90% in EMEA and 80% in Asia/Pacific.
Increased manufacturing capacity has generally kept pace with
increased use of the available capacity, particularly in the
U.S., although greater use of multi-shift operations and
regionalized coordination of production resources has tended to
increase utilization in EMEA and Asia/Pacific.
ITEM 3. LEGAL PROCEEDINGS
In the opinion of management of the Company, there are no
material legal proceedings pending other than ordinary routine
litigation incident to the kind of business conducted by the
Company, and no such proceedings are known to be contemplated by
governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the executive officers of the Company and
their respective ages as of March 15, 1995 and positions held
with the Company. All executive officers are elected to serve in
their current office for one year or until their successors have
been duly elected and qualified. All such officers with the
exception of Messrs. Horowitz and Ripp have been employed by
the Company for more than 7 years. Messrs. Marley, Hudson,
Dalrymple, Goonrey, Guarneschelli, Gurski and Hassan have been
executive officers for more than the past 5 years.
Name Age Office
---- --- ------
James E. Marley *.......... 59 Chairman of the Board since 1993.
Mr. Marley was a divisional Vice
President and group director from
1970 to 1979, divisional Vice
President, Manufacturing Resource
Planning from 1979 to 1980,
divisional Vice President,
Manufacturing from 1980 to 1981,
Vice President, Manufacturing
from 1981 to 1983, Vice
President, Operations from 1983
to 1986, President from 1986 to
1990, and President and Chief
Operating Officer from 1990 to
1993.
William J. Hudson, Jr. *... 60 Chief Executive Officer and
President since 1993, and a
Director.
Mr. Hudson was divisional Vice
President, Connector and
Electronic Products in 1982,
divisional Vice President, Far
East Operations from 1983 to
1989, Vice President, Far East
Operations in 1989, Vice
President, Asia/Pacific
Operations from 1990 to 1991, and
Executive Vice President,
International from 1991 to 1993.
Robert Ripp .............. 53 Vice President and Chief
Financial Officer since 1994.
Mr. Ripp joined the Company in
1994 in the position of Vice
President, Finance.
Herbert M. Cole............ 58 Vice President, Asia/Pacific
since 1995.
Mr. Cole was divisional Vice
President, Communications and
Assemblies Group from 1984 to
1987, divisional Vice President,
Operations, Automotive/Consumer
Business Group from 1987 to 1988,
divisional Vice President, Group
Director, Integrated Circuit
Connector Group from 1988 to
1991, divisional Vice President,
Capital Goods Business Group from
1991 to 1994, and Vice President,
Business Planning, Asia/Pacific
from 1994 to 1995.
Ted L. Dalrymple........... 62 Vice President, Global Marketing
since 1987.
Mr. Dalrymple was divisional Vice
President, International Sales
from 1980 to 1987.
Charles W. Goonrey........ 58 Vice President, General Legal
Counsel since 1992.
Mr. Goonrey was Assistant
Secretary from 1983 to 1986,
Assistant Secretary and General
Legal Counsel from 1986 to 1989,
and divisional Vice President and
General Legal Counsel from 1989
to 1992.
Jean Gorjat............... 64 Vice President since 1995.
Mr. Gorjat was divisional Vice
President, Latin America
Operations from 1986 to 1991,
divisional Vice President,
Asia/Pacific from 1991 to 1992,
and Vice President, Asia/Pacific
from 1992 to 1995.
Philip Guarneschelli...... 62 Vice President, Global Human
Resources since 1989.
Mr. Guarneschelli was divisional
Vice President, Industrial
Relations from 1980 to 1989.
John E. Gurski............ 54 Vice President, Europe since
1993.
Mr. Gurski was divisional Vice
President, Connector &
Electronics Products Group from
1985 to 1987, divisional Vice
President, Interconnection and
Component Products Group in 1987,
divisional Vice President,
Operations from 1987 to 1989,
Vice President, Operations
in 1989, Vice President, Capital
Goods Sector from 1989 to 1992,
and Vice President, Business
and Operations Planning,
International from 1992 to 1993.
Javad K. Hassan........... 54 Vice President, Global
Interconnection Systems
Businesses since 1992.
Mr. Hassan was divisional Vice
President, Technology from 1989
to 1992, and Vice President,
Technology and Strategic Products
in 1992.
Dennis Horowitz........... 48 Vice President, Americas since
1994 when he first joined the
Company.
David C. Cornelius........ 51 Controller since 1991.
Mr. Cornelius was Assistant
Controller from 1979 to 1991.
David F. Henschel......... 44 Corporate Secretary and Associate
General Legal Counsel since 1993.
Mr. Henschel was Associate
General Legal Counsel from 1990
to 1993.
Joseph C. Overbaugh....... 49 Treasurer since 1993.
Mr. Overbaugh was Assistant
Treasurer from 1987 to 1993.
* Member of the Executive Committee of the Board of Directors.
PART II.
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITYHOLDER MATTERS
The Company's common stock, no par value, is listed on the New
York Stock Exchange and is traded on the New York, Boston,
Cincinnati, Midwest, Pacific and Philadelphia Exchanges under the
symbol "AMP". Options in the Company's common stock are traded
on the Chicago Exchange. As of March 10, 1995 there were
approximately 9,200 holders of record of the Company's common
stock. Over 80% of the outstanding shares of the Company's
common stock are held by over 500 institutions.
The following table sets forth the high and low sales prices for
the Company's common stock for each full quarterly period during
the calendar years ended December 31, 1993 and 1994, as reported
on the New York Stock Exchange Composite Tape. In 1995 the
Company effected a 2-for-1 stock split and all sales prices are
adjusted to reflect such stock split.
For the Year Stock Price Range
------------ -----------------
1993 - First Quarter 30 11/16 - 27 5/16
- Second Quarter 31 15/16 - 29 9/16
- Third Quarter 33 5/8 - 29 7/8
- Fourth Quarter 33 3/16 - 28 1/2
1994 - First Quarter 32 3/4 - 29 5/8
- Second Quarter 34 3/4 - 28 13/16
- Third Quarter 39 1/8 - 34 3/8
- Fourth Quarter 39 11/16 - 33 11/16
Annual dividends, which are paid on a quarterly basis, have
increased for 41 consecutive years. The compound annual growth
rate for the Company's annual dividends for the 5-year period
ended December 31, 1994 is approximately 7%. Annual dividends on
a per share basis, taking into account the 2-for-1 stock split in
1995, were $.80 in 1993 and $.84 in 1994. The quarterly dividend
increased to $.21 on March 1, 1994 and $.23 on March 1, 1995. If
the March 1, 1995 dividend rate continues through 1995, it will
result in the 42nd consecutive increase in annual dividends.
ITEM 6. SELECTED FINANCIAL DATA
Set forth below is certain selected consolidated financial data
for the Company and its subsidiaries covering the five calendar
year period ended December 31, 1994. This summary should be read
in conjunction with the Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Financial
Statements and Supplementary Data provided in Items 7 and 8,
respectively, of this Report on Form 10-K.
<TABLE>
AMP Incorporated and subsidiaries
Historical Data
<CAPTION>
(dollars in millions except per share data)
For the year 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net Sales $4,027.5 $3,450.6 $3,337.1 $3,095.0 $3,043.6
Gross Income 1,368.2 1,141.3 1,118.2 1,025.4 1,031.2
Selling, General and Administrative 721.4 616.6 584.9 555.6 543.4
Expenses
Income from Operations 646.8 524.7 533.3 469.8 487.8
Operating Margin(%) 16.1 15.2 16.0 15.2 16.0
Interest Expense (20.0) (19.5) (29.5) (41.6) (38.3)
Other Income(Deductions),Net (32.5) (19.3) (24.7) (4.6) 12.5
Income Before Income Taxes 594.3 485.9 479.1 423.6 462.0
% of sales 14.8 14.1 14.4 13.7 15.2
Income Taxes 224.9 189.3 188.8 163.9 174.9
Effective Tax Rate 37.8 39.0 39.4 38.7 37.9
Net Income 369.4 296.6 290.3 259.7 287.1
% of sales 9.2 8.6 8.7 8.4 9.4
Net Income Per Share(1) $1.76 $1.41 $1.38 $1.23 $1.35
Cash Dividends 176.2 167.8 160.4 152.4 144.7
Cash Dividends Per Share(1)(2) $0.84 $0.80 $0.76 $0.72 $0.68
Capital Expenditures 456.8 330.4 312.5 313.3 338.4
Depreciation and Amortization 299.7 282.2 288.0 255.2 217.7
Total Research, Development and
Engineering Expense $456.0 $406.0 $389.0 $368.0 $356.0
At December 31
Working Capital $1,000.5 $892.0 $768.7 $738.0 $665.2
Property, Plant and Equipment, Net 1,471.2 1,245.1 1,178.8 1,180.2 1,121.5
Total Assets 3,770.9 3,117.9 3,005.1 3,006.9 2,928.6
% Return on Assets(3) 10.7 9.7 9.7 8.8 10.5
Long-Term Debt 211.2 131.0 42.9 53.0 61.1
Total Debt 387.1 314.6 353.8 389.7 439.7
Shareholders' Equity 2,334.4 2,056.4 1,943.3 1,913.0 1,792.8
% Return on Equity(3) 16.8 14.8 15.1 14.0 16.8
Shareholders' Equity (Book Value) $11.14 $9.80 $9.26 $9.02 $8.46
Per Share
Backlog $625.0 $493.0 $506.0 $525.0 $514.0
Number of Employees 30,400 26,900 25,100 25,000 24,700
Floor Space (sq. ft. in millions) 10.8 10.1 9.5 9.2 9.2
Shares of Stock Outstanding 209.6 209.8 209.9 212.1 211.9
(millions) (1)
<FN>
<F1> Share data has been adjusted for the 3-for-1 stock split in 1984 and the 2-for-1 stock split in 1995.
<F2> On January 25, 1995, a regular quarterly dividend of $.23 per share was declared-an indicated annual
rate of $.92 per share.
<F3> Computed on average total assets and shareholders' equity each year.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information appearing under "Management's Discussion &
Analysis" on pages 28-32 of the Company's 1994 Annual Report to
shareholders is hereby incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and the related notes
thereto, together with the report thereon of Arthur Andersen LLP
dated February 17, 1995, appearing on pages 33-44 of the Annual
Report to shareholders for the year ended December 31, 1994 are
hereby incorporated by reference.
Financial Statement Schedules are filed under Item 14.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
For information with respect to the Executive Officers of the
Company, see "Executive Officers of the Registrant" at the end of
Part I of this Report. For information with respect to the
Directors of the Company, see "Election of Directors" on pages 2-
6 of the Proxy Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting, which are hereby incorporated by
reference.
ITEM 11. EXECUTIVE COMPENSATION
Pages 6-18 and page 24 of the Proxy Statement for the AMP
Incorporated 1995 Annual Shareholders' Meeting are hereby
incorporated by reference. These pages set forth information on:
i) compensation for directors, ii) a retirement plan for
directors, iii) Board of Directors committees and meetings, iv)
compensation for named executive officers, v) option/SAR grants
in 1994, vi) options/SAR exercises in 1994 and fiscal year-end
values, vii) executive officers' retirement benefits, viii)
termination of employment and change of control arrangements, and
ix) certain other relationships and related transactions.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
No person is known to own beneficially more than 5% of the common
stock of the Company as of March 10, 1995.
Pages 18-19 and the right hand column of pages 2-5 (entitled
"Shares of Common Stock (5)"), together with footnotes (5)
through (15) on pages 5-6, of the Proxy Statement for the AMP
Incorporated 1995 Annual Shareholders' Meeting are hereby
incorporated by reference as to security ownership of executive
officers and directors.
There are no arrangements known to the Company that may at a
subsequent date result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Footnotes (4) and (5) on page 7 and the section on page 24
entitled "Certain Relationships and Related Transactions" of the
Proxy Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting are hereby incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Documents Filed as a Part of the Form 10-K Report
1. Consolidated Statements of Income, Shareholders' Equity, and
Cash Flows, for the years ended December 31, 1992, 1993 and
1994; Consolidated Balance Sheets as of December 31, 1993
and 1994; the accompanying Notes to Consolidated Financial
Statements; and the Report of Independent Public Accountants
thereon, on pages 33-44 of the Annual Report to shareholders
for the year ended December 31, 1994, are hereby
incorporated by reference.
Statements of the Registrant - Separate financial statements
are omitted for AMP Incorporated since it is primarily an
operating company and all subsidiaries included in the
consolidated financial statements are wholly owned and their
restricted net assets are not material in relation to total
consolidated net assets at December 31, 1994.
2. Financial Statement Schedules:
Schedules Included:
II - Valuation and Qualifying Accounts and Reserves
Report of Company's independent public
accountants with respect to the Financial
Statement Schedules
Schedules Omitted: Schedules I, III, IV, and V are omitted
as not applicable because the required matter or conditions
are not present.
3. EXHIBITS:
Exhibit
Number Description
------- -------------
3.(i) - Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.(i).B of the
Report on Form 8-K filed on January 31, 1995)
3.(ii) - Bylaws of the Company
4.A - Shareholder Rights Plan adopted by the Company's Board
of Directors October 25, 1989
4.B - Amendment Rights Agreement between the Company and
Chemical Bank, as Rights Agent for the Shareholder
Rights Plan, dated September 4, 1992 (incorporated by
reference to Exhibit 4-b of the 10-K Report for the year
ended December 31, 1992)
4.C - Instruments defining the rights of holders of long-term
debt, including indentures. Upon request of the
Securities and Exchange Commission, the Company hereby
undertakes to furnish copies of the instruments with
respect to its long-term debt, none of which have
been registered or authorize securities in a total
amount that exceeds 10 percent of the total assets of
the Company and its subsidiaries on a consolidated basis
10.A* - AMP Incorporated Stock Option Plan for Outside Directors
(incorporated by reference to Exhibit 4.A of
Registration No. 33-54277 on Form S-8 as filed with the
Securities Exchange Commission on June 24, 1994)
10.B* - Executive Severance Agreements dated October 28, 1981,
October 27, 1983, and January 24, 1990 between the
Company and certain of the Company's Executive Officers
(also see the section entitled "Termination of
Employment and Change of Control Arrangements" on
Page 24 of the Proxy Statement for the AMP Incorporated
1995 Annual Shareholders' Meeting incorporated by
reference under Item 11, Part III of this Report). (The
1981 and 1983 Agreements are incorporated by reference
to Exhibit 10-b of the 10-K Report for the year ended
December 31, 1990, and the 1990 Agreement is
incorporated by reference to Exhibit 10.B of the 10-K
Report for the year ended December 31, 1993)
10.C*- AMP Incorporated Bonus Plan (Stock Plus Cash) (also see
footnote (1) on Pages 14-15 of the Proxy
Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting incorporated by reference under
Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 10c of the 10-K Report for the year
ended December 31, 1992)
10.D*- AMP Incorporated Pension Restoration Plan (January 1,
1994 Restatement), a supplemental employee retirement
plan (summarized on Page 17 of the Proxy Statement for
the AMP Incorporated 1995 Annual Shareholders' Meeting
incorporated by reference under Item 11, Part III of
this Report)
10.E*- Executive life insurance plan (incorporated by reference
to Exhibit 10-e of the 10-K Report for the year ended
December 31, 1990)
10.F*- Deferred Compensation Plan for Non-Employee Directors
10.G*- Retirement plan for outside directors (also see the
section entitled "Retirement" on Page 8 of the Proxy
Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting incorporated by reference under
Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 10g of the 10-K Report for the year
ended December 31, 1990)
10.H*- Consulting agreement between the Company and Mr. Walter
F. Raab, Director and former Chairman of the Board and
Chief Executive Officer, dated December 19, 1990
(incorporated by reference to Exhibit 10-h of the 10-K
Report for the year ended December 31, 1992)
10.I*- Amendment to the consulting agreement between the
Company and Mr. Walter F. Raab, dated December 21, 1992
(also see footnote (5) on Page 7 of the Proxy Statement
for the AMP Incorporated 1995 Annual Shareholders'
Meeting incorporated by reference under Item 13, Part
III of this Report). (Incorporated by reference to
Exhibit 10-i of the 10-K report for the year ended
December 31, 1992)
10.J*- Consulting agreement between the Company and Mr. Harold
A. McInnes, Director and former Chairman of the Board
and Chief Executive Officer, dated December 21, 1992
(also see footnote (4) on Page 7 of the Proxy Statement
for the AMP Incorporated 1995 Annual Shareholders'
Meeting incorporated by reference under Item 13,
Part III of this Report). (Incorporated by reference to
Exhibit 10-j of the 10-K Report for the year ended
December 31, 1992)
10.K*- Management Incentive Plan (also see column (d) of the
Summary Compensation Table on Page 10 of the Proxy
Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting incorporated by reference under
Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 10-i of the 10-K Report for the
year ended December 31, 1991)
10.L*- Director and officer indemnification agreements
(incorporated by reference to Exhibit 10-j of the 10-K
Report for the year ended December 31, 1991)
10.M*- AMP Incorporated 1993 Long-Term Equity Incentive Plan
(also see footnote (1) on Pages 13-14 of the Proxy
Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting incorporated by reference under
Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 4-a of Registration No. 33-65048 on
Form S-8 as filed with the Securities and Exchange
Commission on June 25, 1993)
10.N*- AMP Incorporated Stock Bonus Unit and Supplemental Cash
Bonus Agreement (incorporated by reference to Exhibit
10.B of the 10-Q Report for the Quarter ended September
30, 1993)
10.O*- AMP Incorporated Non-Qualified Stock Option Agreement
(incorporated by reference to Exhibit 10.C of the 10-Q
Report for the Quarter ended September 30, 1993)
10.P*- AMP Incorporated Incentive Stock Option Agreement
(incorporated by reference to Exhibit 10.D of the 10-Q
Report for the Quarter ended September 30, 1993)
10.Q*- Restricted stock agreement between the Company and Mr.
Dennis Horowitz, Vice President, Americas, dated as of
September 12, 1994
10.R*- Restricted stock agreement between the Company and Mr.
Robert Ripp, Vice President and Chief Financial Officer,
dated as of August 15, 1994
13 - Portions of the Annual Report to shareholders for the
year ended December 31, 1994 that are specifically
incorporated by reference into this Report
21 - List of Subsidiaries
23 - Consent of Independent Public Accountants
27 - Financial Data Schedule
----------------------
* A management contract or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to
the requirements of this 10-K Annual Report.
THE COMPANY WILL FURNISH ANY EXHIBIT LISTED ABOVE UPON REQUEST.
EXCEPT FOR THE ANNUAL REPORT TO SHAREHOLDERS, PAYMENT FOR THE
COST OF PROVIDING THE EXHIBIT MAY BE REQUIRED FOR VOLUMINOUS
EXHIBITS.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three
months ended December 31, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this annual report to be signed on its behalf by the undersigned,
thereunto duly authorized, as of the 27th day of March, 1995.
AMP Incorporated
/s/ Robert Ripp
By______________________________
Robert Ripp, Vice
President and Chief Financial
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this annual report has been signed by the following persons
on behalf of the registrant and in the capacities and as of the
dates indicated.
Signature Title Date
/s/ J. E. Marley
___________________ Chairman of the Board and a March 27, 1995
(J. E. Marley) Director
/s/ W. J. Hudson
___________________ Chief Executive Officer and March 27, 1995
(W. J. Hudson) President and a Director
/s/ Robert Ripp
___________________ Vice President and March 27, 1995
(R. Ripp) Chief Financial Officer
/s/ David C. Cornelius
___________________ Controller March 27, 1995
(D. C. Cornelius)
/s/ D. F. Baker
___________________ Director March 27, 1995
(D. F. Baker)
/s/ Ralph D. DeNunzio
___________________ Director March 27, 1995
(R. D. DeNunzio)
/s/ B. H. Franklin
___________________ Director March 27, 1995
(B. H. Franklin)
/s/ Joseph M. Hixon
___________________ Director March 27, 1995
(J. M. Hixon III)
/s/ H. A. McInnes
___________________ Director March 27, 1995
(H. A. McInnes)
/s/ John C. Morley
___________________ Director March 27, 1995
(J. C. Morley)
/s/ W. F. Raab
___________________ Director March 27, 1995
(W. F. Raab)
/s/ P. G. Schloemer
___________________ Director March 27, 1995
(P. G. Schloemer)
___________________ Director March 27, 1995
(T. Shiina)
AMP INCORPORATED & SUBSIDIARIES
<TABLE>
Schedule II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
Balance at Additions Deductions Balance at
Beginning Charged to from Translation End
Description of Year Expense Reserves<F1> Adjustments of Year
----------- ----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
RESERVE DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSET TO WHICH IT APPLIES:
Reserve for doubtful accounts--
Year ended December 31, 1994 $13,420,000 $8,982,000 $(2,915,000) $1,122,000 $20,609,000
Year ended December 31, 1993 $11,532,000 $5,544,000 $(3,045,000) $(611,000) $13,420,000
Year ended December 31, 1992 $10,822,000 $5,147,000 $(3,525,000) $(912,000) $11,532,000
__________
<FN>
<F1> Uncollectible accounts charged against the reserve, net of recoveries.
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To AMP Incorporated:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements
included in AMP Incorporated's annual report to shareholders,
incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 17, 1995. Our audits were made for
the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in Item 14-2 is the responsibility of
the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. This schedule
has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data
required to be set forth therein in relation to the basic
financial statements taken as a whole.
Philadelphia, PA
February 17, 1995 /s/ Arthur Andersen LLP
Arthur Andersen LLP
APPENDIX
10-K Report for Year Ended December 31 ,1994
1) Part III, Item 10, Directors and Executive Officers of the
Registrant. Page 2 of the Proxy Statement for the AMP
Incorporated 1994 Annual Shareholders' Meeting includes a
portrait photograph of Dexter F. Baker, a director and
nominee for director. Page 3 of said Proxy Statement
includes portrait photographs of the following directors and
nominees for director: Ralph D. DeNunzio, Barbara Hackman
Franklin, Joseph M. Hixon III, and William J. Hudson, Jr.
Page 4 of said Proxy Statement includes portrait photographs
of the following directors and nominees for director: James
E. Marley, Harold A. McInnes, John C. Morley, and Walter F.
Raab. Page 5 of said Proxy Statement includes portrait
photographs of the following directors and nominees for
director: Paul G. Schloemer, and Takeo Shiina.
EXHIBIT INDEX
Exhibit
Number Description
------- -------------
3.(i) - Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.(i).B of the
Report on Form 8-K filed on January 31, 1995)
3.(ii) - Bylaws of the Company
4.A - Shareholder Rights Plan adopted by the Company's Board
of Directors October 25, 1989
4.B - Amendment Rights Agreement between the Company and
Chemical Bank, as Rights Agent for the Shareholder
Rights Plan, dated September 4, 1992 (incorporated by
reference to Exhibit 4-b of the 10-K Report for the year
ended December 31, 1992)
4.C - Instruments defining the rights of holders of long-term
debt, including indentures. Upon request of the
Securities and Exchange Commission, the Company hereby
undertakes to furnish copies of the instruments with
respect to its long-term debt, none of which have
been registered or authorize securities in a total
amount that exceeds 10 percent of the total assets of
the Company and its subsidiaries on a consolidated basis
10.A* - AMP Incorporated Stock Option Plan for Outside Directors
(incorporated by reference to Exhibit 4.A of
Registration No. 33-54277 on Form S-8 as filed with the
Securities Exchange Commission on June 24, 1994)
10.B* - Executive Severance Agreements dated October 28, 1981,
October 27, 1983, and January 24, 1990 between the
Company and certain of the Company's Executive Officers
(also see the section entitled "Termination of
Employment and Change of Control Arrangements" on
Page 24 of the Proxy Statement for the AMP Incorporated
1995 Annual Shareholders' Meeting incorporated by
reference under Item 11, Part III of this Report). (The
1981 and 1983 Agreements are incorporated by reference
to Exhibit 10-b of the 10-K Report for the year ended
December 31, 1990, and the 1990 Agreement is
incorporated by reference to Exhibit 10.B of the 10-K
Report for the year ended December 31, 1993)
10.C*- AMP Incorporated Bonus Plan (Stock Plus Cash) (also see
footnote (1) on Pages 14-15 of the Proxy Statement for the
AMP Incorporated 1995 Annual Shareholders' Meeting
incorporated by reference under Item 11, Part III of this
Report). (Incorporated by reference to Exhibit 10c of the
10-K Report for the year ended December 31, 1992)
10.D*- AMP Incorporated Pension Restoration Plan (January 1,
1994 Restatement), a supplemental employee retirement
plan (summarized on Page 17 of the Proxy Statement for
the AMP Incorporated 1995 Annual Shareholders' Meeting
incorporated by reference under Item 11, Part III of
this Report)
10.E*- Executive life insurance plan (incorporated by reference
to Exhibit 10-e of the 10-K Report for the year ended
December 31, 1990)
10.F*- Deferred Compensation Plan for Non-Employee Directors
10.G*- Retirement plan for outside directors (also see the
section entitled "Retirement" on Page 8 of the Proxy
Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting incorporated by reference under
Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 10g of the 10-K Report for the year
ended December 31, 1990)
10.H*- Consulting agreement between the Company and Mr. Walter
F. Raab, Director and former Chairman of the Board and
Chief Executive Officer, dated December 19, 1990
(incorporated by reference to Exhibit 10-h of the 10-K
Report for the year ended December 31, 1992)
10.I*- Amendment to the consulting agreement between the
Company and Mr. Walter F. Raab, dated December 21, 1992
(also see footnote (5) on Page 7 of the Proxy Statement
for the AMP Incorporated 1995 Annual Shareholders'
Meeting incorporated by reference under Item 13, Part
III of this Report). (Incorporated by reference to
Exhibit 10-i of the 10-K report for the year ended
December 31, 1992)
10.J*- Consulting agreement between the Company and Mr. Harold
A. McInnes, Director and former Chairman of the Board
and Chief Executive Officer, dated December 21, 1992
(also see footnote (4) on Page 7 of the Proxy Statement
for the AMP Incorporated 1995 Annual Shareholders'
Meeting incorporated by reference under Item 13,
Part III of this Report). (Incorporated by reference to
Exhibit 10-j of the 10-K Report for the year ended
December 31, 1992)
10.K*- Management Incentive Plan (also see column (d) of the
Summary Compensation Table on Page 10 of the Proxy
Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting incorporated by reference under
Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 10-i of the 10-K Report for the
year ended December 31, 1991)
10.L*- Director and officer indemnification agreements
(incorporated by reference to Exhibit 10-j of the 10-K
Report for the year ended December 31, 1991)
10.M*- AMP Incorporated 1993 Long-Term Equity Incentive Plan
(also see footnote (1) on Pages 13-14 of the Proxy
Statement for the AMP Incorporated 1995 Annual
Shareholders' Meeting incorporated by reference under
Item 11, Part III of this Report). (Incorporated by
reference to Exhibit 4-a of Registration No. 33-65048 on
Form S-8 as filed with the Securities and Exchange
Commission on June 25, 1993)
10.N*- AMP Incorporated Stock Bonus Unit and Supplemental Cash
Bonus Agreement (incorporated by reference to Exhibit
10.B of the 10-Q Report for the Quarter ended September
30, 1993)
10.O*- AMP Incorporated Non-Qualified Stock Option Agreement
(incorporated by reference to Exhibit 10.C of the 10-Q
Report for the Quarter ended September 30, 1993)
10.P*- AMP Incorporated Incentive Stock Option Agreement
(incorporated by reference to Exhibit 10.D of the 10-Q
Report for the Quarter ended September 30, 1993)
10.Q*- Restricted stock agreement between the Company and Mr.
Dennis Horowitz, Vice President, Americas, dated as of
September 12, 1994
10.R*- Restricted stock agreement between the Company and Mr.
Robert Ripp, Vice President and Chief Financial Officer,
dated as of August 15, 1994
13 - Portions of the Annual Report to shareholders for the
year ended December 31, 1994 that are specifically
incorporated by reference into this Report
21 - List of Subsidiaries
23 - Consent of Independent Public Accountants
27 - Financial Data Schedule
EXHIBIT 3.(ii)
April 27, 1994
AMP INCORPORATED
BYLAWS
ARTICLE 1
SHAREHOLDERS
Section 1.1. PLACE OF HOLDING MEETINGS.
Meetings of shareholders of AMP Incorporated ("Corporation")
may be held at such place, within or without the Commonwealth of
Pennsylvania, as may be fixed by the Board of Directors
("Board"). Unless otherwise fixed by the Board, meetings of
shareholders shall be held at the registered office of the
Corporation in the Commonwealth of Pennsylvania.
Section 1.2. NOTICE OF SHAREHOLDERS' MEETINGS.
Except as otherwise provided by law or these bylaws, written
notice of the time, date, place and purpose or purposes of every
meeting of shareholders, including Annual Meetings, shall be
given not less than 5 days (or such longer period as may be
required by law) before the date of the meeting, either
personally or by first-class or express mail, postage prepaid, or
by telegram (with messenger service specified), telex or TWX
(with answerback received) or courier service, charges prepaid,
or by facsimile transmission or in such other manner as permitted
by law, to each shareholder of record entitled to vote at the
meeting. When given by mail, telegraph or courier service,
notice shall be deemed to have been given when deposited in the
United States mail in a postpaid envelope addressed to the
shareholder at such address as appears on the books of the
Corporation or when deposited with a telegraph office or courier
service for delivery to that person or, in the case of telex or
TWX, when dispatched.
Section 1.3. WAIVER.
Whenever written notice of a meeting is required to be
given, a waiver thereof in writing, signed by the person entitled
to the notice, whether before or after the meeting, shall be
deemed equivalent to the giving of the notice. Attendance of a
person at any meeting shall constitute a waiver of notice of the
meeting except where a person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully
called or convened.
Section 1.4. VOTING LIST.
The officer or agent having charge of the stock transfer
records of the Corporation shall make a complete list of the
shareholders entitled to vote at each shareholders' meeting or
any adjournment thereof or, in lieu of such a list the
Corporation may make the information therein available at the
shareholders' meeting by any other means. Such list shall (a) be
arranged alphabetically, with the address of and the number of
shares held by each shareholder; (b) be produced and kept open at
the time and place of the meeting; (c) be subject to the
inspection of any shareholder during the whole time of the
meeting; and (d) be prima facie evidence as to who are the
shareholders entitled to examine such list or to vote at such
meeting.
Section 1.5. ANNUAL MEETING OF SHAREHOLDERS.
1.5.1 Date and Time. The Annual Meeting of the
Shareholders, for the election of Directors and the transaction
of other business, if any, shall be held on the fourth Thursday
in April of each year (or on such other date as may be fixed by
the Board and stated in the notice of the meeting) at such hour
as shall be fixed by the Board and stated in the notice of the
meeting, at the place fixed in accordance with Section 1.1 of
this Article. Failure to hold such meeting at the designated
time or on the designated date or to elect some or all of the
members of the Board at such meeting or any adjournment thereof
shall not affect otherwise valid corporate acts or work a
forfeiture or dissolution of the Corporation.
1.5.2 Business to be Conducted. To be properly
brought before the Annual Meeting, business must be either (a)
specified in the notice of Annual Meeting (or any supplement
thereto) given by or at the direction of the Board, (b) otherwise
properly brought before the Annual Meeting by or at the direction
of the Board, or (c) otherwise properly brought before the Annual
Meeting by a shareholder. In addition to any other applicable
requirements, for business to be properly brought before an
Annual Meeting by a shareholder, the shareholder must have given
timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be
delivered to or mailed to and received at the principal executive
office of the Corporation not less than 30 days nor more than 60
days prior to the date in the then-current year which corresponds
to the date of the previous year's annual meeting; provided,
however, that if the Annual Meeting in the then-current year is
held more than 15 days before or after the date on which the
previous year's annual meeting was held, then a shareholder's
notice must be delivered to or mailed to and received at the
principal executive office of the Corporation not less than 30
days nor more than 60 days prior to the actual date of the Annual
Meeting in the then-current year unless fewer than 40 days'
notice or prior public disclosure of the date of the meeting is
given or made to shareholders, in which event notice by the
shareholder to be timely must be so received not later than the
close of business on the tenth day following the day on which
such notice of the date of the Annual Meeting was mailed or such
public disclosure was made, whichever first occurs. A
shareholder's notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the Annual
Meeting (i) a brief description of the business desired to be
brought before the Annual Meeting and the reasons for conducting
such business at the Annual Meeting, (ii) the name and record
address of the shareholder proposing such business, (iii) the
class and number of shares of the Corporation which are
beneficially owned by the shareholder, and (iv) any material
interest of the shareholder in such business. No business shall
be conducted at the Annual Meeting except in accordance with the
procedures set forth in this Section 1.5.2, provided, however,
that nothing in this Section 1.5.2 shall be deemed to preclude
discussion by any shareholder of any business properly brought
before the Annual Meeting. The Chairman of an Annual Meeting
shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be
transacted.
1.5.3 Nominations of Directors. Only persons who
are nominated in accordance with the following procedures shall
be eligible for election by the shareholders as directors.
Nominations of persons for election to the Board may be made by
the Board, at the direction of the Board by any nominating
committee or person(s) appointed by the Board, by the persons
named as proxies in the proxy card in the event an unexpected
vacancy arises in the original slate of nominees and the Board
neither designates a replacement nominee nor amends these Bylaws
to eliminate that office of director for which the vacancy arose,
or by any shareholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with the notice
procedures set forth in this Section 1.5.3. Such nominations,
other than those made by or at the direction of the Board or by
the persons named as proxies in the proxy card, shall be made
pursuant to timely notice in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed to and received by the Secretary at the
principal executive office of the Corporation with respect to (i)
an election to be held at an annual meeting of shareholders, at
least 60 days in advance of the date in the then-current year
which corresponds to the date of the previous year's annual
meeting; provided, however, that if the Annual Meeting in the
then-current year is held more than 15 days before or after the
date on which the previous year's annual meeting was held, then
such notice shall be delivered to or mailed to and received by
the Secretary at least 60 days in advance of the actual date of
the Annual Meeting in the then-current year, or (ii) an election
to be held at a special meeting of shareholders for the election
of directors, the close of business on the tenth day following
the day on which notice of the date of the meeting was mailed to
shareholders or public disclosure was made, whichever first
occurs. Such shareholder's notice to the Secretary shall set
forth (a) as to each person whom the shareholder proposes to
nominate for election or re-election as a director, (i) the name,
age, business address and residence address of the person, (ii)
the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the Corporation
which are beneficially owned by the person, (iv) a description of
all arrangements or understandings between the shareholder and
the person pursuant to which the nomination is proposed to be
made, and (v) any other information relating to the person that
is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (or any successor act
or regulation); and (b) as to the shareholder giving the notice,
(i) the name and record address of such shareholder, (ii) the
class and number of shares of capital stock of the Corporation
which are beneficially owned by such shareholder, and (iii) a
representation that the shareholder intends to appear in person
or by proxy at the meeting to nominate the person. The
Corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee
to serve as a director of the Corporation. No person shall be
eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedure, and if he should
so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 1.6. SPECIAL MEETINGS OF SHAREHOLDERS.
Special meetings of shareholders may be called at any time
by the Chairman of the Board, the Chief Executive Officer, or by
resolution of the Board of Directors.
Section 1.7. RECORD DATES.
1.7.1 Meetings and Other Purposes. In order that
the Corporation may determine the shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment
thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any consent, the Board may fix a
record date, which record date shall not be more than 90 days
before the date of such meeting, nor more than 90 days prior to
any such other action. If no record date is fixed, the record
date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of
business on the day next preceding the day on which notice is
given. The record date for any other purpose other than
shareholder action by written consent shall be at the close of
business on the day on which the Board adopts the resolution
relating thereto. The determination of shareholders of record
entitled to notice of or to vote at a meeting of shareholders
shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned
meeting.
1.7.2 Written Consents. In order that the
Corporation may determine the shareholders entitled to consent to
corporate action in writing without a meeting, the Board may fix
a record date. Any shareholder of record seeking to have the
shareholders authorize or take corporate action by written
consent shall, by written notice to the Secretary of the
Corporation, request the Board to fix a record date. The Board
shall promptly, but in all events within 10 days after the date
on which such a request is received, adopt a resolution fixing
the record date. If no record date has been fixed by the Board
within 10 days of the date on which such a request is received,
the record date for determining shareholders entitled to consent
to corporate action in writing without a meeting, when no prior
action by the Board is required by applicable law, shall be the
first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in the
Commonwealth of Pennsylvania, its principal place of business, or
an officer or agent of the Corporation having custody of the
books in which proceedings of shareholders' meetings are
recorded, to the attention of the Secretary of the Corporation.
Delivery shall be by hand or by certified or registered mail,
return receipt requested. If no record date has been fixed by
the Board and prior action by the Board is required by applicable
law, the record date for determining shareholders entitled to
consent to corporate action in writing without a meeting shall be
at the close of business on the date on which the Board adopts
the resolution taking such prior action.
1.7.3 Validation and Certification of Written
Consents. In the event of the delivery to the Corporation of a
written consent or consents purporting to authorize or take
corporate action and/or related revocations (each such written
consent and any revocation thereof is referred to in this Section
1.7.3 as a "Consent"), the Secretary of the Corporation shall
provide for the safekeeping of such Consents and shall as soon as
practicable thereafter conduct such reasonable investigation as
he deems necessary or appropriate for the purpose of ascertaining
the validity of such Consents and all matters incident thereto,
including without limitation whether the holders of shares having
the requisite voting power to authorize or take the action
specified in the Consents have given consent; provided, however,
that if the corporate action to which the Consents relate is the
removal or election of one or more members of the Board, the
Secretary of the Corporation shall designate an independent,
qualified inspector with respect to such Consents and such
inspector shall discharge the functions of the Secretary of the
Corporation under this Section 1.7.3. If after such
investigation the Secretary or the inspector (as the case may be)
shall determine that any action purportedly taken by such
Consents has been validly taken, that fact shall be certified on
the records of the Corporation kept for the purpose of recording
the proceedings of meetings of the shareholders and the Consents
shall be filed with such records. In conducting the
investigation required by this Section 1.7.3, the Secretary or
the inspector may, at the expense of the Corporation, retain to
assist them special legal counsel and any other necessary or
appropriate professional advisors, and such other personnel as
they may deem necessary or appropriate.
Section 1.8. QUORUM.
The presence in person or by proxy of the holders of shares
entitled to cast a majority of the votes that all shareholders
are entitled to cast on a particular matter to be acted upon at a
meeting shall constitute a quorum at such meeting for purposes of
acting on such matter. The shareholders present at a duly
organized meeting may continue to do business until adjournment
notwithstanding the withdrawal of enough shareholders to leave
less than a quorum. The determination of what constitutes a
quorum at a shareholders' meeting that has been previously
adjourned for lack of a quorum shall be made as provided under
Section 1756 of the Pennsylvania Business Corporation Law or any
successor provision thereto.
Section 1.9. ADJOURNMENT OF SHAREHOLDERS' MEETING.
When a meeting of shareholders is adjourned to another time,
date or place, it shall not be necessary to give any notice of
the adjourned meeting or of the business to be transacted at the
adjourned meeting, other than by announcement of the new time,
date or place at the meeting at which the adjournment is taken,
unless the Board fixes a new record date for the adjourned
meeting and provided that at the adjourned meeting only such
business is transacted as might have been transacted at the
original meeting. Any regular, special or Annual Meeting of the
shareholders, including one at which directors are to be elected,
may be adjourned for such period as the shareholders present in
person or by proxy, and entitled to vote, shall direct.
Section 1.10. VOTING.
(a) Except as otherwise provided herein or in the Articles
of Incorporation or by law, each outstanding share shall entitle
the holder to one vote on each matter submitted to a vote at a
meeting of shareholders.
(b) Whenever any action is to be taken by a vote of the
shareholders, it shall be authorized by a majority of the votes
cast at the meeting by holders of shares entitled to vote
thereon, unless a greater number or percentage of votes is
required by law or the Articles of Incorporation.
(c) Shares of the Corporation owned, directly or
indirectly, by it and controlled, directly or indirectly, by the
Board of Directors of this Corporation, as such, shall not be
voted at any meeting and shall not be counted in determining the
total number of outstanding shares for voting purposes at any
given time.
(d) Shares standing in the name of another corporation may
be voted by any officer or agent or by proxy appointed by any
officer or agent of such other corporation unless the Secretary
of the Corporation is furnished with a certified copy of a
resolution of the corporation's board of directors or of a
provision of its Articles or bylaws, designating another person
to vote, and then the shares shall be voted only by that
designated person.
(e) Shares standing in the name of a trustee or other
fiduciary, and shares held by an assignee for the benefit of
creditors or by a receiver, may be voted by the trustee,
fiduciary, assignee or receiver.
(f) Where shares are held jointly or as tenants in common
by two or more persons, as fiduciaries or otherwise, if only one
or more of such persons is present in person or by proxy, all of
the shares standing in the names of such persons shall be deemed
to be represented for the purpose of determining a quorum and the
Corporation shall accept as the vote of all the shares the vote
cast by him or a majority of them; and if such persons are
equally divided upon whether to vote the shares or upon the
manner of voting, the voting of the shares shall be divided
equally among them; provided, that if there has been filed with
the Secretary of the Corporation a copy, certified by an attorney
to be correct, of the relevant portions of the agreement under
which the shares are held, or the instrument by which the trust
or estate was created, or an Order of Court, the person or
persons specified as having such voting power in the latest
document so filed shall be entitled to vote the shares but only
in accordance therewith.
(g) A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been
transferred into the name of the pledgee or a nominee of the
pledgee.
(h) A shareholder may vote either in person or by proxy
executed in writing by the shareholder or his duly authorized
attorney in fact and filed with the Secretary of the Corporation.
Where two or more proxies of a shareholder are present, the
Corporation shall, unless otherwise expressly provided for in the
proxy, accept as the vote of all shares represented thereby the
vote cast by a majority of them and, if a majority of the proxies
cannot agree whether the shares represented shall be voted or
upon the manner of voting the shares, the voting of the shares
shall be divided equally among those persons. No proxy shall be
valid after three years from the date of its execution unless a
longer time is expressly provided therein. Unless coupled with
an interest, a proxy shall be revocable at will, but the
revocation shall not be effective until written notice thereof
has been given to the Secretary of the Corporation. A proxy
shall not be revoked by the death or incapacity of the maker but
shall continue in force, subject to the foregoing limitations,
unless before the vote is counted or the authority is exercised
written notice of such death or incapacity is given to the
Secretary of the Corporation.
(i) Except as otherwise provided by law or these bylaws,
any matter submitted to a vote of shareholders shall be by
ballot.
Section 1.11. ELECTION OF DIRECTORS.
Election of directors shall be by ballot. At such elections
every shareholder entitled to vote at such election shall have
the right to vote the number of shares held by him for as many
persons as there are directors to be elected, but he shall not
have the right to cumulate his votes.
Section 1.12. SELECTION OF JUDGES OF ELECTION.
(a) The Board may in advance of any shareholders' meeting
appoint one or three judges of election to act at the meeting or
any adjournment thereof. If judges of election are not so
appointed or shall fail to qualify, the person presiding at the
shareholders' meeting may, and upon the request of any
shareholder entitled to vote thereat shall, make such
appointment.
(b) In case any person appointed as judge fails to appear or
act, the vacancy may be filled by appointment made by the Board
in advance of the meeting or at the meeting by the person
presiding.
(c) No person shall be elected a director at a meeting at
which he has served as a judge.
Section 1.13. DUTIES OF JUDGES OF ELECTION.
The judges of election shall determine the number of shares
outstanding and the voting power of each, the shares represented
at the meeting, the existence of a quorum, and the validity and
effect of proxies, and shall receive votes or ballots, hear and
determine all challenges and questions arising in connection with
the right to vote, count and tabulate all votes or ballots,
determine the result, and do such acts as are proper to conduct
the election or vote with fairness to all shareholders. If there
are three judges, the act of a majority shall govern. On request
of the person presiding at the meeting or any shareholder, the
judge or judges shall make a report in writing of any challenge,
question or matter determined by him or them. Any report made by
him or them shall be prima facie evidence of the facts therein
stated, and such report shall be filed with the minutes of the
meeting.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1. BOARD QUALIFICATIONS.
The business and affairs of the Corporation shall be managed
under the direction of a Board of Directors ("Board"). Directors
shall be at least 18 years of age and need not be United States
citizens or residents of Pennsylvania or shareholders of the
Corporation.
Section 2.2. NUMBER.
The number of directors of the Corporation shall be at least
three, with the actual number of directors to be determined from
time to time by the Board.
Section 2.3. TERM OF DIRECTORS.
Each director shall hold office until the next succeeding
annual meeting of shareholders and until his successor shall have
been elected and qualified or until his earlier death,
resignation or removal. A director may resign by written notice
to the Corporation. The resignation shall be effective upon
receipt thereof by the Corporation or at such subsequent time as
shall be specified in the notice of resignation. A decrease in
the number of directors shall not have the effect of shortening
the term of any incumbent director.
Section 2.4. VACANCIES.
Vacancies in the Board, however caused, including vacancies
resulting from an increase in the number of directors, may be
filled by the affirmative vote of a majority of the remaining
directors even though less than a quorum of the Board, or by a
sole remaining director. When one or more directors shall resign
from the Board effective at a future date, the directors then in
office, including those who have so resigned, shall have power to
fill such vacancy or vacancies, the vote thereon to take effect
when such resignation or resignations shall become effective. A
director elected by the Board to fill any such directorship shall
serve for the balance of the unexpired term and until his
successor shall have been elected and qualified.
Section 2.5. REMOVAL OF DIRECTORS.
(a) A director of the Corporation may be removed only for
cause by the shareholders by the affirmative vote of the
shareholders entitled to cast at least a majority of the votes
which all shareholders would be entitled to cast at any annual
election of directors. The Board of Directors may be removed at
any time with or without cause by the unanimous vote or consent
of shareholders entitled to vote thereon.
(b) The Board by the affirmative vote of a majority of the
directors in office may remove a director if he or she be
declared of unsound mind by an order of court, or convicted of
felony, or for any other proper cause, or if, within 60 days
after notice of his or her election, he or she does not accept
such office either in writing or by attending a meeting of the
Board of Directors and fulfill such other requirements of
qualification as the bylaws may specify.
Section 2.6. QUORUM OF DIRECTORS AND COMMITTEES.
A majority of the directors in office, or of those directors
in office serving on any committee of the Board, shall constitute
a quorum for the transaction of business by the Board or by the
committee, respectively. The act of a majority present and
voting at a meeting at which a quorum is present shall be the act
of the Board or of the committee, unless the act of a greater
number is required by law or by the Articles of Incorporation.
Less than a quorum may adjourn.
Section 2.7. ACTION OF BOARD AND COMMITTEES WITHOUT A MEETING.
Any action required or permitted to be taken at a meeting of
the Board or any committee of the Board may be taken without a
meeting if, prior or subsequent to such action, all members of
the Board or of such committee, as the case may be, consent
thereto in writing and such written consents are filed with the
Secretary of the Corporation.
Section 2.8. EXECUTIVE COMMITTEE AND OTHER COMMITTEES.
(a) The Board, by resolution adopted by a majority of the
entire Board, may appoint from among its members an Executive
Committee and one or more other committees, each of which shall
have one or more members. The Board may fill any vacancy in any
committee; abolish any committee at its pleasure; and remove any
director from membership on any committee at any time, with or
without cause.
(b) No committee of the Board shall have authority to make,
alter or repeal any bylaw of the Corporation; create or fill
vacancies in the Board; submit to shareholders any action that
requires shareholders' approval; act on matters committed by the
bylaws or resolution of the Board to another committee of the
Board; or amend or repeal any resolution theretofore adopted by
the Board that by its terms is amendable or repealable only by
the Board.
(c) Subject to the foregoing, the Executive Committee
shall, during the intervals between meetings of the Board, have
and may exercise all of the powers and authority of the Board,
and any other committee of the Board shall have authority to the
extent provided in the resolution adopted by the Board.
(d) The Executive Committee of the Board shall consist of
at least three directors, including the Chairman of the Board,
the Chief Executive Officer if a director of the Corporation, and
such other number of directors as the Board may appoint.
(e) Actions taken at a meeting of any committee or by
written consent shall be reported to the Board at its next
regular meeting following such committee meeting.
(f) The Board may designate one or more directors as
alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee or for the
purposes of any written action by the committee.
Section 2.9. MEETINGS OF BOARD AND COMMITTEES.
(a) Regular meetings of the Board shall be held on the
fourth Wednesday of January, April, June, July, September, and
October at 8:30 o'clock, local time, in the morning at the
General Offices of the Corporation at Harrisburg, Pennsylvania,
or at such other time, date or place, within or without the
Commonwealth of Pennsylvania, as may be determined from time to
time by resolution of the Board at a duly convened meeting, or by
unanimous written consent of the Board. Upon such action being
taken by the Board, no further notice shall be required for the
regular meetings of the Board and any business that comes before
such meetings may be transacted.
(b) Special meetings of the Board may be called at any time
by the Chairman of the Board, the Chief Executive Officer, or by
any three directors, and may be held at any time, date and place,
within or without the Commonwealth of Pennsylvania, as the notice
of meeting shall provide. Notice of each special meeting shall
be given to each director in the manner provided for in these
bylaws.
(c) Regular meetings of any committee of the Board may be
established by resolution of the Board relating to the
authorization of the committee, or by resolution of the committee
itself, and, provided that the meetings are held at the General
Offices of the Corporation at Harrisburg, Pennsylvania or at such
other place, within or without the Commonwealth of Pennsylvania,
as may be designated in the authorizing resolution of the Board
or by resolution of the committee itself, no further notice shall
be required for such regular committee meetings or of any
business to come before the committee. Other meetings of any
committee of the Board may be called at any time by the Chairman
of Board, the Chief Executive Officer, the chairman of the
committee, any two members of the committee or as provided in the
resolution of the Board relating to the authorization of the
committee, and may be held at any time, date and place as the
notice of meeting shall provide. Notice of each special meeting
shall be given to each member of the committee in the manner
provided for in these bylaws.
(d) Any or all directors may participate in a meeting of
the Board or in a meeting of a committee of the Board by means of
a conference by telephone or any means of communication by which
all persons participating in the meeting are able to hear each
other. Such participation shall constitute presence in person
and a waiver of notice of the meeting by such participating
director or directors except where such director participates for
the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting
was not lawfully called or convened.
Section 2.10. NOTICE OF BOARD AND COMMITTEE MEETINGS.
When the giving of notice of any meeting of the Board or of
a committee of the Board is required, the following shall apply:
(a) the notice shall specify the time, date and place
of the meeting, but need not specify the business to be
transacted at, nor the purpose of, the meeting.
(b) notice may be given in writing (by mail, courier
service, telex, TWX with answerback received, facsimile
transmission, telegraph with messenger service specified, and the
like, postage or other charges prepaid) or orally to the director
in person, by telephone or by means of any other similar
communication equipment.
(c) notice shall be given to each director or member
of a committee at least 5 days before the date of the meeting
when given in writing by first class mail; at least 48 hours in
advance when given by express mail, courier service, or
telegraph; and at least 24 hours in advance when given in person
or by telephone or other similar communication equipment, telex,
TWX or facsimile transmission. When given by mail, telegraph or
courier service, notice shall be deemed to have been given when
deposited in the United States mail in a postpaid envelope
addressed to the director or when deposited with a telegraph
office or courier service for delivery to that director or, in
the case of telex or TWX, when dispatched.
(d) When a meeting is adjourned, notice of the
adjourned meeting need not be given if the time, date and place
are fixed at the meeting at which the adjournment is taken.
(e) notice of a meeting may be waived in writing by
any director before or after the meeting. Attendance of any
director at a meeting, except where such attendance is for the
express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting was not
lawfully called or convened, shall constitute a waiver of notice
by such director. Neither the business to be transacted at, nor
the purpose of, any meeting need be specified in the waiver of
notice of such meeting.
Section 2.11. COMPENSATION OF DIRECTORS.
Directors may receive such salary or other compensation for
their services as directors and as members of a committee of the
Board, and such fees and expenses of attendance at meetings of
the Board or committee, as the Board by resolution shall from
time to time determine. Nothing herein contained shall be
construed to preclude any director from serving the Corporation
in any other capacity as an officer, agent or otherwise and
receiving compensation therefor.
Section 2.12. INTEREST OF DIRECTORS.
No contract or other transaction between the Corporation and
one or more of its directors or between the Corporation and any
other corporation, firm or association of any type or kind in
which one or more of its directors are directors or are otherwise
interested, shall be void or voidable solely by reason of such
common directorship or interest, or solely because such director
or directors are present at or participate in the meeting of the
Board or a committee thereof which authorizes or approves the
contract or transaction, or solely because his or their votes are
counted for such purpose, if (a) the contract or other
transaction is fair as to this Corporation at the time it is
authorized, approved or ratified, or (b) the material facts as to
the common directorship or interest and as to the contract or
transaction are disclosed to or known by the Board or committee
and the Board or committee authorizes, approves or ratifies the
contract or transaction by affirmative vote of a majority of the
disinterested directors, even though the disinterested directors
be less than a quorum, or (c) the material facts as to the common
directorship or interest and as to the contract or transaction
are disclosed to or known by the shareholders and they authorize,
approve or ratify the contract or transaction in good faith.
Section 2.13. STANDARD OF CARE AND JUSTIFIABLE RELIANCE.
Directors and members of any committee of the Board shall
stand in a fiduciary relationship to the Corporation and shall
perform their duties in good faith, in a manner they reasonably
believe to be in the best interests of the Corporation, and with
such care, including reasonable inquiry, skill and diligence, as
a person of ordinary prudence would use under similar
circumstances. In performing their duties, directors and members
of any such committee shall be entitled to rely in good faith on
information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or
presented by any of the following:
(a) One or more officers or employees of the Corporation
whom the directors or members reasonably believe to be reliable
and competent in the matters presented.
(b) Counsel, public accountants or other persons as to
matters which the directors or members reasonably believe to be
within the professional or expert competence of such person.
(c) A committee of the Board upon which they do not serve,
duly designated in accordance with law, as to matters within its
designated authority, which committee the directors or members
reasonably believe to merit confidence.
Directors or members shall not be considered to be acting in
good faith if they have knowledge concerning the matter in
question that would cause their reliance to be unwarranted.
In discharging the duties of their respective positions, the
Board of Directors, committees of the Board, and individual
directors and members may, in considering the best interests of
the Corporation, consider to the extent they deem appropriate:
(1) the effects of any action upon any and all groups affected by
such action, including shareholders, employees, suppliers,
customers and creditors of the Corporation and upon communities
in which offices or other establishments of the Corporation are
located; (2) the short-term and long-term interests of the
Corporation, including benefits that may accrue to the
Corporation from its long-term plans and the possibility that
these interests may be best served by the continued independence
of the Corporation; (3) the resources, intent and conduct (past,
stated and potential) of any person seeking to acquire control of
the Corporation; and (4) all other pertinent factors. The
consideration of those factors shall not constitute a violation
of the standard of care provided above. The Board of Directors,
committees of the Board, and individual directors and members
shall not be required, in considering the best interests of the
Corporation or the effects of any action, to regard any corporate
interest or the interests of any particular group affected by
such action as a dominant or controlling interest or factor.
Absent breach of fiduciary duty, lack of good faith or self-
dealing, actions taken as a director or member of a committee of
the Board or any failure to take any action shall be presumed to
be in the best interest of the Corporation.
Nothing in this Section 2.13 shall be deemed to limit the
rights accorded to the Corporation and the Board of Directors
under Section 1715 of the Pennsylvania Business Corporation Law
or any successor provision thereto.
Section 2.14. PRESUMPTION OF ASSENT TO ACTION TAKEN.
A director who is present at a meeting of the Board or a
committee thereof of which he is a member at which action on any
corporate matter is taken shall be presumed to have concurred in
the action taken unless his dissent is entered in the minutes of
the meeting, or he files a written dissent with the secretary of
the meeting before adjournment or transmits a written dissent to
the Secretary of the Corporation immediately after adjournment.
ARTICLE III
OFFICERS
Section 3.1. ENUMERATION AND ELECTION OR APPOINTMENT OF OFFICERS.
Unless determined otherwise by the Board (which
determination shall include the failure to elect), the officers
of the Corporation shall be a Chairman of the Board, a Chief
Executive Officer and President, a Chief Financial Officer, one
or more corporate Vice Presidents, a Treasurer, a Controller, a
Secretary and such additional officers as the Board may from time
to time choose, all of whom shall be elected by the Board. Any
number of offices may be held by the same person, unless the
Articles of Incorporation, these Bylaws or the Business
Corporation Law of the Commonwealth of Pennsylvania otherwise
provide. The election of officers by the Board shall occur at
each April meeting of the Board or at such other date as an
individual may be first elected as an officer by the Board.
The Chairman of the Board or the Chief Executive Officer and
President may from time to time, within their respective areas of
responsibility as prescribed by the Board, appoint divisional
Vice Presidents and such other officers or assistant officers as
may be deemed necessary or advisable, who shall hold office for
such period and perform such duties and exercise such powers as
may be delegated to them by the office that appointed them and to
which they report. Any such appointed officer may be removed at
any time, with or without cause, by the Board or by the officer
to whom he/she reports.
Section 3.2. CHAIRMAN OF THE BOARD.
The Chairman of the Board shall preside at all meetings of
the shareholders and of the Board. In emergency circumstances
where the Chief Executive Officer and President cannot be reached
or in the event of the Chief Executive Officer and President's
incapacity to act, the Chairman of the Board shall perform the
duties of the Chief Executive Officer and President and, when so
acting, shall have all the powers of and be subject to all the
restrictions upon the Chief Executive Officer and President. The
Chairman of the Board shall perform such other duties and have
such other powers as the Board may from time to time prescribe.
Section 3.3. CHIEF EXECUTIVE OFFICER AND PRESIDENT.
The Chief Executive Officer and President shall be the chief
executive officer and president of the Corporation and shall have
such powers, duties and responsibilities as the Board may from
time to time prescribe. In emergency circumstances where the
Chairman of the Board cannot be reached or in the event of the
Chairman of the Board's incapacity to act, the Chief Executive
Officer and President shall preside at all meetings of the
shareholders and of the Board.
Section 3.4. CHIEF FINANCIAL OFFICER.
The Chief Financial Officer shall report to the Chief
Executive Officer and President and shall have such powers,
duties and responsibilities as shall from time to time be
prescribed by the Board or delegated to him/her by the Chief
Executive Officer and President.
Section 3.5. CORPORATE VICE PRESIDENTS.
The Corporate Vice Presidents shall report to either the
Chairman of the Board or the Chief Executive Officer and
President, as designated by the Board, and shall have such
powers, duties and responsibilities as shall from time to time be
prescribed by the Board or delegated to them by the officer to
whom each of them reports.
Section 3.6. TREASURER.
The Treasurer shall report to the Chief Financial Officer
and shall have such powers, duties and responsibilities as may
from time to time be prescribed by the Board or delegated to
him/her by the Chief Executive Officer and President or the Chief
Financial Officer.
Section 3.7. CONTROLLER.
The Controller shall report to the Chief Financial Officer
and shall have such powers, duties and responsibilities as may
from time to time be prescribed by the Board or delegated to
him/her by the Chief Executive Officer and President or the Chief
Financial Officer.
Section 3.8. SECRETARY.
The Secretary shall report to the Chairman of the Board and
shall have such powers, duties and responsibilities as may from
time to time be prescribed by the Board or delegated to him/her
by the Chairman of the Board.
Section 3.9. COMPENSATION.
The salaries of the Chairman of the Board and the Chief
Executive Officer and President shall be determined by the Board
based on recommendations made by the Compensation and Management
Development Committee (the "Committee") of the Board. These
officers in turn shall formulate the salary plan for the other
officers of the Corporation elected by the Board, with the review
and oversight of the Committee.
Section 3.10. TERM, REMOVAL, VACANCIES.
The elected officers of the Corporation shall hold office
for a term of one year and until their successors shall have been
elected and qualified, or otherwise until their death,
resignation, or removal. Any elected officer may resign at any
time by giving written notice of such resignation to the Board or
to the officer to whom they report. Unless otherwise specified
in such written notice, the resignation shall take effect upon
receipt and shall not require acceptance in order to be
effective. Any officer elected by the Board may be removed at
any time, with or without cause, by the affirmative vote of a
majority of the Board. The Board may permit any office of the
Corporation to remain unfilled, except as otherwise required by
law, or the Board may fill any vacancy in such office.
Section 3.11. STANDARD OF CARE.
An officer of this Corporation shall not be liable by reason
of having held such position in the Corporation if the officer
performs his or her duties as an officer in good faith, in a
manner such person reasonably believes to be in the best
interests of the Corporation and with such care, including
reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances.
ARTICLE IV
INDEMNIFICATION
Section 4.1. DIRECTORS' AND OFFICERS' RIGHT TO INDEMNIFICATION.
The Corporation, to the extent permitted by applicable law
and the provisions of this Article, shall indemnify any person
who is, was or becomes a director or officer of the Corporation
and who is, was or becomes a party or is threatened to be made a
party to any threatened, pending or completed investigation,
claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action, suit or
proceeding by or in the right of the Corporation to procure a
judgment in its favor) and whether formal or informal, and any
appeal therein in which such person may be involved (a
"Proceeding") by reason of the fact that such person is or was a
director, officer, employee or agent ( a "Representative") of the
Corporation, or a constituent corporation absorbed in a
consolidation or merger ("Constituent Corporation"), or is or was
serving at the request of the Corporation or a Constituent
Corporation as a Representative of another corporation,
partnership, joint venture, trust or other enterprise (including
without limitation, any employee benefit plan) (such other
corporation, partnership, joint venture, trust, or other
enterprise or employee benefit plan hereafter being referred to
as a "Covered Entity"), against all expenses (including
attorneys' fees and disbursements), judgments, fines, and amounts
paid in settlement actually and reasonably incurred by such
person in connection with such Proceeding. Any right of a
director or officer to indemnification shall be a contract right.
Section 4.2. DERIVATIVE PROCEEDINGS
The Corporation, to the extent permitted by applicable law
and the provisions of this Article, shall indemnify any person
who is, was or becomes a director or officer of the Corporation
and may indemnify any person (other than a director or officer of
the Corporation) who is, was or becomes an employee or agent of
the Corporation, when such director, officer, employee or agent
is, was or becomes a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding
by or in the right of the Corporation to procure a judgment in
its favor (a "Derivative Proceeding") by reason of the fact that
such person is or was a Representative of the Corporation or a
Constituent Corporation, or is or was serving at the request of
the Corporation or a Constituent Corporation as a Representative
of a Covered Entity, against all expenses (including attorneys'
fees and disbursements) actually and reasonably incurred by such
person in connection with the defense or settlement of such
Derivative Proceeding.
Indemnification shall not be made in a Derivative Proceeding
in which the person has been adjudged to be liable to the
Corporation unless and only to the extent that a court of
competent jurisdiction determines upon application that the
person is fairly and reasonably entitled to indemnity for the
expenses that such court deems proper.
Section 4.3. INDEMNIFICATION OF EMPLOYEES AND AGENTS.
Notwithstanding any other provision or provisions of this
Article, the Corporation, to the extent permitted by applicable
law, may indemnify any person, other than a director or officer
of the Corporation, who is, was or becomes an employee or agent
of the Corporation and who is, was or becomes a party or is
threatened to be made a party to any threatened, pending or
completed Proceeding by reason of the fact that such person is or
was a Representative of the Corporation or a Constituent
Corporation, or is or was serving at the request of the
Corporation or a Constituent Corporation as a Representative of a
Covered Entity, against all expenses (including attorneys' fees
and disbursements), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such Proceeding.
Section 4.4. SCOPE OF COVERAGE.
The entitlement to indemnification provided in this Article
shall not be exclusive of any other rights to which an Indemnitee
may otherwise be entitled, and the provisions of this Article
shall inure to the benefit of the heirs and legal representatives
of any Indemnitee (as hereinafter defined in Section 4.13 of this
Article) under this Article and shall be applicable to
Proceedings and Derivative Proceedings commenced or continuing
after the adoption of this Article, whether arising from acts or
omissions occurring before or after such adoption.
Notwithstanding any other provision or provisions of this
Article, to the extent that a Representative of the Corporation
or a Constituent Corporation, or a Representative who is or was
serving at the request of the Corporation or a Constituent
Corporation as a Representative of a Covered Entity, has been
successful on the merits or otherwise in defense of any
Proceeding or Derivative Proceeding or in defense of any claim,
issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) actually
and reasonably incurred by said person in connection therewith.
Section 4.5. INSURANCE, CONTRACTS AND SUPPLEMENTARY COVERAGE.
The Board of Directors or its duly authorized committee
shall have the power to (a) authorize the Corporation to purchase
and maintain, at the Corporation's expense, insurance on behalf
of the Corporation, its subsidiaries and affiliates (the
"Corporate Entities") and any person who is or was a
Representative of the Corporation or a Constituent Corporation,
or is or was serving at the request of the Corporation or a
Constituent Corporation as a Representative of a Covered Entity,
against any liability asserted against such person or incurred by
such person in any such capacity, or arising out of said person's
status as such, whether or not the Corporation would have the
power to indemnify such person against that liability under the
provisions of applicable law, (b) enter into contracts with any
Representative of the Corporate Entities or a Constituent
Corporation, and any person serving as a Representative of a
Covered Entity at the request of the Corporation or a Constituent
Corporation, in furtherance of the provisions of this Article,
and (c) give other indemnification to the extent not prohibited
by applicable law.
Section 4.6. PROCEDURE FOR OBTAINING INDEMNIFICATION.
4.6.1 To obtain indemnification under this Article, an
Indemnitee shall submit to the General Legal Counsel of the
Corporation a written request, including such documentation or
information as is reasonably available to the Indemnitee or
reasonably necessary to determine whether and to what extent the
Indemnitee is entitled to indemnification (the "Supporting
Documentation"). The determination of the Indemnitee's
entitlement to indemnification shall be made not later than 60
days after receipt by the Corporation of the written request for
indemnification together with the Supporting Documentation. The
Secretary of the Corporation shall, promptly upon receipt of
notice from the General Legal Counsel of such a request for
indemnification, advise the Board of Directors or its duly
authorized committee in writing that the Indemnitee has requested
indemnification.
4.6.2 The Indemnitee's entitlement to indemnification
under this Article shall be determined in one of the following
ways: (i) by a majority vote of the Disinterested Directors (as
hereinafter defined in Section 4.13 of this Article), if they
constitute a quorum of the Board of Directors; (ii) by a written
opinion of Independent Counsel (as hereinafter defined in Section
4.13 of this Article) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even
if obtainable, a majority of such Disinterested Directors so
directs; or (iii) by the shareholders of the Corporation (but
only if a majority of the Disinterested Directors, if they
constitute a quorum of the Board of Directors, presents the issue
of entitlement to indemnification to the shareholders for their
determination).
4.6.3 In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 4.6.2 of this Article, a majority of such Disinterested
Directors or, if the Disinterested Directors do not constitute a
quorum of the Board of Directors, a majority of the Board of
Directors shall select the Independent Counsel, but only an
Independent Counsel to which the Indemnitee does not reasonably
object; provided, however, that if a Change in Control (as
hereinafter defined in Section 4.13 of this Article) shall have
occurred, the Indemnitee shall select such Independent Counsel to
which a majority of the Disinterested Directors or, if the
Disinterested Directors do not constitute a quorum of the Board
of Directors, a majority of the Board of Directors does not
reasonably object.
Section 4.7. ADVANCEMENT OF EXPENSES.
All reasonable expenses (including attorneys' fees and
disbursements) incurred by or on behalf of an Indemnitee in
connection with any Proceeding or Derivative Proceeding shall,
upon determination by the Board of Directors or its duly
authorized committee, be advanced to the Indemnitee by the
Corporation within 20 days after the receipt by the Corporation
of a written statement or statements from the Indemnitee
requesting such advance or advances from time to time prior to
final disposition of such Proceeding or Derivative Proceeding.
Such statement or statements shall reasonably identify, describe
and document the legal expenses actually and reasonably incurred
by the Indemnitee and, if required by law at the time of such
advance, shall include or be accompanied by an undertaking by or
on behalf of the Indemnitee to repay the amount advanced if
ultimately it should be determined that the Indemnitee is not
entitled to be indemnified against such expenses. Such expenses
incurred by Indemnitee may be paid as provided above upon such
terms and conditions, if any, as the Board of Directors or its
duly authorized committee shall determine to be appropriate. The
financial ability of the Indemnitee to make repayment shall not
be a prerequisite to the making of an advance.
Section 4.8. LIMITATIONS ON INDEMNIFICATION.
Notwithstanding any other provision of this Article, an
Indemnitee shall not be entitled to indemnification or to the
advancement of expenses under this Article if and to the extent
(a) the Indemnitee did not act in good faith and in a manner the
Indemnitee reasonably believed to be in, or not opposed to, the
best interests of the Corporation and, with respect to any
criminal proceeding, had reasonable cause to believe his or her
conduct was unlawful, or (b) the Corporation, pursuant to Section
4.5(b) of this Article or otherwise, enters into a contract with
Indemnitee which establishes reasonable limitations or conditions
on the indemnification of or advancement of expenses to
Indemnitee and such limitations or conditions preclude
indemnification or advancement of expenses under the
circumstances at hand, or (c) payment to the Indemnitee under the
indemnification or advancement of expenses would result in double
payment to the Indemnitee, or (d) a court having jurisdiction in
the matter shall, by final decision, determine that such
indemnification or advancement of expenses is unlawful.
Section 4.9. EFFECT OF CERTAIN PROCEEDINGS.
The termination of any Proceeding described in Sections 4.1
and 4.3 of this Article or of any claim, issue or matter therein,
by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself,
adversely affect the right of the Indemnitee to indemnification
or create a presumption that the Indemnitee did not act in good
faith and in a manner which the Indemnitee reasonably believed to
be in or not opposed to the best interests of the Corporation or,
with respect to a criminal proceeding, that the Indemnitee had
reasonable cause to believe that such conduct was unlawful.
Section 4.10. PAYMENT OF INDEMNIFICATION.
If a determination shall have been made pursuant to Section
4.6 of this Article that the Indemnitee is entitled to
indemnification, the Corporation shall be obligated to pay the
amounts constituting such indemnification within 5 days after
such determination has been made and shall be conclusively bound
by such determination unless (i) the Indemnitee misrepresented or
failed to disclose a material fact in making the request for
indemnification or in the Supporting Documentation, or (ii) such
indemnification is prohibited by law.
Section 4.11. ENFORCEMENT OF RIGHTS BY INDEMNITEE.
In the event that the Indemnitee seeks to enforce any rights
of mandatory indemnification that may be available to the
Indemnitee under applicable law, or to enforce rights under or to
recover damages for breach of this Article, the Indemnitee shall
be entitled to recover from the Corporation, and shall be
indemnified by the Corporation against, any expenses actually and
reasonably incurred by the Indemnitee if the Indemnitee prevails
in any such proceeding. If it shall be determined that the
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses
incurred by the Indemnitee in connection with enforcing rights
under this Article or under applicable law shall be prorated
accordingly.
Section 4.12. EFFECT OF PARTIAL INVALIDITY.
If any provision of this Article shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, (1)
such provision shall be invalid, illegal or unenforceable only to
the extent of such prohibition and the validity, legality and
enforceability of the remaining provisions of this Article shall
not in any way be affected or impaired thereby, and (2) to the
fullest extent possible, the remaining provisions of this Article
shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
Section 4.13. DEFINITIONS.
For purposes of this Article IV:
(i) "Change in Control" means:
(a) the acquisition of beneficial ownership (other
than from the Corporation) by any person, entity or "group"
within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act"), excluding,
for this purpose, the Corporation or its subsidiaries, or any
employee benefit plan of the Corporation or its subsidiaries that
acquires beneficial ownership of voting securities of the
Corporation (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
Corporation's then outstanding voting securities entitled to vote
generally in the election of directors; or
(b) a change in the persons constituting the Board of
Directors 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 of
Directors; provided that any person becoming a director in a
subsequent year whose election, or nomination for election, by
the Corporation'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 Corporation, 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 Corporation of
a reorganization, merger or consolidation, in each case with
respect to which persons who were the shareholders of the
Corporation 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, merger or consolidated corporation's
then outstanding voting securities; or
(d) a liquidation or dissolution of the Corporation or
the sale of all or substantially all of the assets of the
Corporation.
(ii) "Disinterested Director" means a director of the
Corporation who is not or was not a party to, or otherwise
involved in, the Proceeding or Derivative Proceeding in respect
of which indemnification is sought by the Indemnitee.
(iii) "Indemnitee" means any director or officer of the
Corporation entitled to indemnification as provided in Section
4.1 of this Article and any employee or agent of the Corporation
who may become entitled to indemnification as provided in Section
4.3.
(iv) "Independent Counsel" means a law firm, or member of a
law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past 5 years has been, retained
to represent: (A) the Corporation or the Indemnitee in any matter
material to either such party, or (B) any other party to the
Proceeding or Derivative Proceeding giving rise to a claim for
indemnification under this Article. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional
conduct then prevailing under the law of the Commonwealth of
Pennsylvania, would have a conflict of interest in representing
either the Corporation or the Indemnitee in an action to
determine the Indemnitee's rights under this Article.
ARTICLE V
SHARE CERTIFICATES, TRANSFER, LOSS, ETC.
Section 5.1. CERTIFICATES.
(a) Except as otherwise permitted by the Pennsylvania
Business Corporation Law, no share certificate shall be issued
for any share until such share is fully paid. The shares of the
Corporation shall be represented by certificates signed by, or in
the name of the Corporation by, the Chairman of the Board, the
Chief Executive Officer or a Vice President, and by the Treasurer
or the Secretary of the Corporation and may be sealed with the
seal of the Corporation or a facsimile thereof. If the
certificate is countersigned by a transfer agent or registrar,
who is not an officer or employee of the Corporation, any and all
other signatures may be facsimiles. In case any officer,
transfer agent or registrar who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased
to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or
registrar at the date of its issue.
(b) Each certificate shall state upon the face thereof (i)
that the Corporation is organized under the laws of Pennsylvania;
(ii) the name of the person to whom issued; and (iii) the number
and class of shares, and the designation of the series, if any,
which such certificate represents.
Section 5.2. TRANSFER OF SHARES.
Shares of the Corporation shall be transferable in
accordance with the provisions of Chapter 8 of the Uniform
Commercial Code as adopted in Pennsylvania (13 Pa. C.S.A. 8101
et seq.) as amended from time to time, except as otherwise
provided in the Pennsylvania Business Corporation Law.
Section 5.3. LOSS OR DESTRUCTION OF CERTIFICATES.
(a) Where a certificate for shares has been lost, actually
or apparently destroyed, or wrongfully taken and the owner
thereof fails to so notify the Corporation or the transfer agent
within a reasonable time after he has notice of that fact and the
transfer agent or the Corporation registers a transfer of the
shares before receiving such a notification, the owner shall be
precluded from asserting against the Corporation any claim for
registering the transfer of such shares or any claim to a new
certificate.
(b) Subject to the foregoing, where the owner of shares
claims that the certificate representing such shares has been
lost, actually or apparently destroyed or wrongfully taken, the
Corporation shall issue a new certificate in place of the
original certificate if the registered owner thereof, or his
legal representative, requests the issue of a new certificate
before the Corporation has notice that the certificate has been
acquired by a bona fide purchaser; makes proof in affidavit form,
satisfactory to the Secretary of the Corporation and to its
transfer agent, of his ownership of the shares represented by the
certificate and that the certificate has been lost, actually or
apparently destroyed or wrongfully taken; files an indemnity bond
for an open or unspecified amount or if authorized in a specific
case by the Corporation, for such fixed amount as the Chairman of
the Board, the Chief Executive Officer or the Secretary of the
Corporation may specify, in such form and with such surety as may
be approved by the transfer agent and the Secretary of the
Corporation, indemnifying the Corporation and the transfer agent
and registrar of the Corporation against all loss, cost and
damage which may arise from issuance of a new certificate in
place of the original certificate; and satisfies any other
reasonable requirements imposed by the Corporation or transfer
agent. In case of the surrender of the original certificate, in
lieu of which a new certificate has been issued, or the surrender
of such new certificate, for cancellation, the bond of indemnity
given as a condition of the issuance of such new certificate may
be surrendered.
Section 5.4. HOLDERS OF RECORD.
The Corporation shall be entitled to treat the person in
whose name any share or shares of the Corporation stand on the
books of the Corporation as the absolute owner and holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it has actual or
other notice thereof, save as expressly provided by the laws of
the Commonwealth of Pennsylvania.
ARTICLE VI
CORPORATE FUNDS AND CONTRACTS
Section 6.1. DEPOSIT AND WITHDRAWAL OF CORPORATE FUNDS.
The Board by resolution, or one or more officers or
employees of the Corporation authorized by a resolution of the
Board, may from time to time designate a bank or banks in which
the funds of the Corporation shall be deposited and designate the
person or persons authorized to withdraw in the name of the
Corporation the funds so deposited.
Section 6.2. CONTRACTS.
All contracts, deeds and other instruments required to be
made or executed for or on behalf of the Corporation shall be
executed in the name of the Corporation by the Chairman of the
Board, the Chief Executive Officer and President, or such other
person or persons as may be authorized from time to time by the
Chairman of the Board or the Chief Executive Officer and
President within their respective areas of responsibility as
prescribed by the Board, or by resolution of the Board.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. CORPORATE SEAL.
The Corporate Seal shall be circular in form and shall
contain the name of the Corporation and the word "PENNSYLVANIA".
The seal or a facsimile thereof may be impressed, printed,
affixed, reproduced or other use made thereof by the Secretary or
Assistant Secretary or any other officer authorized by the Board.
Section 7.2. DELEGATION OF AUTHORITY TO COMMITTEES.
Any provision of these bylaws granting authority to the
Board shall not be construed as indicating that such authority
may not be delegated by the Board to a committee to the extent
authorized by the Pennsylvania Business Corporation Law, or any
successor statute thereto, and these bylaws.
Section 7.3. FISCAL YEAR.
The fiscal year of the Corporation shall begin on the first
day of January and end on the thirty-first day of December of
each year.
ARTICLE VIII
ELIMINATION OF DIRECTORS' MONETARY LIABILITY
A director of this Corporation shall not be personally
liable for monetary damages as such for any action taken, or any
failure to take any action, unless:
(a) the director has breached or failed to perform the
duties of his or her office under Subchapter B of Chapter 17 of
the Pennsylvania Business Corporation Law in good faith, in a
manner he or she reasonably believes to be in the best interests
of the Corporation, and with such care, including reasonable
inquiry, skill and diligence, as a person of ordinary prudence
would use under similar circumstances; and
(b) the breach or failure to perform constitutes self-
dealing, willful misconduct or recklessness. Provided, however,
that this bylaw shall not apply to:
(i) the responsibility or liability of a director
pursuant to any criminal statute; or
(ii) the liability of a director for the payment of
taxes pursuant to local, state or federal law.
ARTICLE IX
AMENDMENTS
Section 9.1. AMENDMENTS.
Any one or more of the foregoing bylaws and, except as
herein otherwise provided, any other bylaws made by the Board or
by shareholders may be altered or repealed by the Board. The
shareholders or the Board may adopt new bylaws except that the
Board may not adopt, alter or repeal bylaws that the Pennsylvania
Business Corporation law, or any successor statute thereto,
specifies may be adopted only by shareholders, and the Board may
not alter or repeal any bylaw adopted by shareholders which
prescribes that such bylaw shall not be altered or repealed by
the Board.
EXHIBIT 4.A
____________________________________________________________
AMP INCORPORATED
and
MANUFACTURERS HANOVER TRUST COMPANY
Rights Agent
_________________________
Rights Agreement
Dated as of October 25, 1989
____________________________________________________________
Table of Contents
Section Page
1 Certain Definitions 2
2 Appointment of Rights Agent 7
3 Issue of Rights Certificates 7
4 Form of Rights Certificates 11
5 Countersignature and Registration 13
6 Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates 15
7 Exercise of Rights; Purchase Price; Expiration
Date of Rights 17
8 Cancellation and Destruction of Rights Certificates 22
9 Reservation and Availability of Capital Stock 23
10 Common Stock Record Date 27
11 Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights 28
12 Certificate of Adjusted Purchase Price or Number
of Shares 50
13 Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 50
i
14 Fractional Rights and Fractional Shares 58
15 Rights of Action 60
16 Agreement of Rights Holders 61
17 Rights Certificate Holder Not Deemed a Shareholder 63
18 Concerning the Rights Agent 64
19 Merger or Consolidation or Change of Name of
Rights Agent 65
20 Duties of Rights Agent 67
21 Change of Rights Agent 72
22 Issuance of New Rights Certificates 74
23 Redemption and Termination 76
24 Notice of Certain Events 78
25 Notices 81
26 Supplements and Amendments 82
27 Successors 83
28 Determinations and Actions by the Board of
Directors, etc. 84
29 Benefits of this Agreement 85
30 Severability 85
31 Governing Law 87
32 Counterparts 87
33 Descriptive Headings 87
ii
Section
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
iii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 25, 1989 (the
"Agreement"), between AMP Incorporated, a Pennsylvania
corporation
(the "Company"), and Manufacturers Hanover Trust Company, a New
York corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on October 25, 1989 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for
each share of common stock, no par value (the "Common Stock") of
the Company outstanding at the close of business on November 6,
1989 (the "Record Date"), and has authorized the issuance of one
Right for each share of Common Stock of the Company issued
between the Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date, each
Right initially representing the right to purchase one share of
Common Stock upon the terms and subject to the conditions
hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any
Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan) that constitutes an "Interested Shareholder" as
defined in Section 2553 of the Pennsylvania Business Corporation
Law of 1988 (the "Pennsylvania BCL") other than as a result of a
Qualifying Offer; provided, however, that (i) an "Acquiring
Person" shall not include any Person who becomes an Acquiring
Person solely as a result of a reduction in the number of shares
of Common Stock outstanding due to the repurchase of shares of
Common Stock by the Company, unless and until such Person shall
purchase or otherwise become the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock other than pursuant to a
Qualifying Offer and (ii) for purposes of determining whether
such Person is an "Acquiring Person" a Person engaged in business
as an underwriter of securities shall not be
2
deemed to be the "Beneficial Owner" of, or to "beneficially own",
any securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the expiration
of forty days after the date of such acquisition.
(b) "Affiliate" and "Associate" shall have
the respective meanings ascribed to such terms in Section 2552 of
the Pennsylvania BCL;
(c) A Person shall be deemed the
"Beneficial Owner" of, and shall be deemed to "beneficially own,"
any securities if such Person constitutes with respect to such
securities a "Beneficial Owner" as defined in Section 2552 of the
Pennsylvania BCL; provided, however, that for purposes of this
Agreement, a Person engaged in business as an underwriter of
securities shall not be deemed to be the "Beneficial Owner" of,
or to "beneficially own", any securities acquired through such
Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of
such acquisition.
3
(d) "Business Day" shall mean any day
other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or obligated
by law or executive order to close.
(e) "Close of Business" on any given date
shall mean 5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., New York City time, on the next succeeding Business
Day.
(f) "Common Stock" shall mean the common
stock, no par value of the Company, certificates therefor bearing
endorsement representing a proportionate beneficial interest in
common stock, par value $1.00 per share, of Pamcor, Inc., held in
trust pursuant to an Agreement among the Company, Pamcor, Inc.
and Bankers Trust Company, as Trustee, dated as of November 1,
1956 and amended as of April 23, 1970 and as of April 23, 1981,
except that "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock of such
Person with the greatest voting power, or the equity securities
or other equity interest having power to control or direct the
management, of such Person.
4
(g) "Continuing Director" shall mean (i)
any member of the Board of Directors of the Company, while such
Person is a member of the Board, who is not an Acquiring Person,
or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the date of
this Agreement, or (ii) any Person who subsequently becomes a
member of the Board, while such Person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or Associate of
an Acquiring Person, or a representative of an Acquiring Person
or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board is recommended
or approved by a majority of the Continuing Directors.
(h) "Person" shall mean any individual,
firm, corporation, partnership or other entity.
(i) "Qualifying Offer" shall mean an
acquisition of shares of Common Stock pursuant to a tender offer
or an exchange offer for all outstanding shares of Common Stock
at a price and on terms determined by at least a majority of the
members of the Board of Directors who are not officers of the
Company and who are not representatives, nominees, Affiliates or
Associates
5
of any Person making such offer, after receiving advice from one
or more investment banking firms, to be (a) fair to shareholders
(taking into account all factors which such members of the Board
deem relevant including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on
an orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
shareholders.
(j) "Section 11(a)(ii) Event" shall mean
any event described in Section 11(a)(ii) hereof.
(k) "Section 13 Event" shall mean any
event described in clauses (x), (y) or (z) of Section 13(a)
hereof.
(l) `Stock Acquisition Date" shall mean
the first date of public announcement (which, for purposes of
this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement
(the "Exchange Act")) by the Company or an Acquiring Person that
an Acquiring Person has become such.
6
(m) "Subsidiary" shall mean, with
reference to any Person, any corporation of which an amount of
voting securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such
Person.
(n) "Triggering Event" shall mean a
Section 11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of
business on the tenth Business Day after the Stock Acquisition
Date (or, if the tenth Business Day after the Stock Acquisition
Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth Business
Day (or such later date as the Board shall determine) after the
date that a tender or exchange offer by any Person (other than
the
7
Company, any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be an Acquiring Person
(the earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the
holders of the Common Stock (which Certificates for Common Stock
shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the
records of the Company, one or more right certifi-
8
cates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. As of
and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) As promptly as practicable following
the Record Date, the Company will send a copy of a Summary of
Rights, in substantially the form attached hereto as Exhibit B
(the "Summary of Rights "), by first-class, postage prepaid mail,
to each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for
the Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of
the Common Stock shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or
the Expiration Date (as such term is defined in Section 7
hereof), the transfer of any certificates representing shares of
Common Stock in respect of which Rights have been issued shall
also consti-
9
tute the transfer of the Rights associated with such shares of
Common Stock.
(c) Rights shall be issued in respect of
all shares of Common Stock which are issued (whether originally
issued or from the Company's treasury) after the Record Date but
prior to the earlier of the Distribution Date or the Expiration
Date (as defined in Section 7(a)) or, in certain circumstances as
provided in Section 22 hereof, after the Distribution Date.
Certificates representing such shares of Common Stock shall also
be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Rights Agreement between AMP Incorporated (the "Company")
and Manufacturers Hanover Trust Company (the "Rights Agent")
dates as of October 25, 1989 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of
the Rights Agent. Under certain circumstances as set forth
in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. The Rights Agent will mail to the holder
of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly after
receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person
10
or by any subsequent holder, may become null and
void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii)
the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms
of election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set
forth in Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights
may
11
from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof
to purchase such number of shares of Common Stock as shall be set
forth therein as the price set forth therein (such exercise price
per share of Common Stock, the "Purchase Price"), but the amount
and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant
to Section 3(a) or Section 22 hereof that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any
12
Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or became
an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the Board,
its Vice Chairman, its President or any Corporate Vice President,
either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the
Company, ei-
13
ther manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate as
provided above, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its principal
office or offices designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books
for registration and transfer of the
14
Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each
of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates.
(a) Subject to the provisions of Section
4(b), Section 7(e) and Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to
the close of business on the Distribution Date, and at or prior
to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like
number of shares of Common Stock (or, following a Triggering
Event, other securities, cash or other assets, as the case may
be) as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certifi-
15
cates to be transferred, split up, combined or exchanged at the
principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall, subject to the Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
16
(b) Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to
the Company and upon written instruction of the Company to the
Rights Agent, the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor
to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability
set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent
17
designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number of
shares of Common Stock (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights
are then exercisable, at to which such surrendered Rights are
then exercisable, at or prior to the earlier of (i) the close of
business on November 6, 1999 (the "Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the earlier of (i) and (ii) being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each share of
Common Stock pursuant to the exercise of a Right shall initially
be $175, and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase
Price per share of Common Stock (or other securities, cash or
other assets, as the case may be) to be purchased as set forth
below and an amount equal to any applicable transfer tax, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i)(A) requisition from any transfer Agent of the
18
shares of Common Stock (or make available, if the Rights Agent is
the transfer agent for such shares) certificates for the total
number of shares of Common Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Common Stock issuable upon
exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of shares of Common Stock as are to be
purchased (in which case certificates for the shares of Common
Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv)
after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The
pay-
19
ment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made in cash or
by certified bank check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue
other securities of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities,
cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the Rights
evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by
the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first occurrence of
a Section 11(a)(ii) Event, any Rights beneficially owned by (i)
an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of
20
an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has a primary
purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and no holder of
such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its
failure to make any de-
21
terminations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect
to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Company or any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
22
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Rights Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates, and in
such case shall deliver a certificate of destruction thereof to
the Company.
Section 9. Reservation and Availability of Capital
Stock.
(a) The Company covenants and agrees that
it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock (and, following
the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock and/or other
securities held in its treasury), the number of shares of Common
Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) that, as provided in this
Agreement including Section 11(a)(iii) hereof, will be sufficient
to permit the exercise in full of all outstanding Rights.
23
(b) So long as the shares of Common Stock
(and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from
and after the Distribution Date, all shares reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts
to (i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which
the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with Section 11(a)
hereof, a registration statement under the Securities Act of 1933
(the "Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable
after such filing, and (ii) cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such Common Stock
or
24
other securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of
this Section (9c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of
the Rights until such time as a registration statement has been
declared effective. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained and until a
registration statement has been declared effective.
25
(d) The Company covenants and agrees that
it will take all such action as may be necessary to ensure that
all shares of Common Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered
upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(e) The Company further covenants and
agrees that it will pay when due and payable any and all federal
and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Rights Certificates
and of any certificates for shares of Common Stock (or Common
Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of shares of Common
Stock (or Common Stock and/or other securities, as the case may
be) in respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights surrendered
for exercise or to issue or deliv-
26
er any certificates for shares of Common Stock (or Common Stock
and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Common Stock Record Date. Each person in
whose name any certificate for a number of shares of Common Stock
(or Common Stock and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of
Common Stock (or Common Stock and/or other securities, as the
case may be) represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Purchase
Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date
upon which the Common Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the
27
record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Stock
(or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a shareholder of the
Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares issuable upon exercise of each Right
and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company
shall at any time after the date of this Agreement
(A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding
Common Stock, (C) combine
28
the outstanding Common Stock into a smaller number of
shares, or (D) issue any shares of its capital Stock
in a reclassification of the Common Stock (including
any such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section
7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares
of capital Stock issuable on such date, shall be
proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of
capital stock, which, if such Right had been
exercised immediately prior to such date and at a
time when the Common Stock transfer books of the
Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of
such dividend, subdivision, combina-
29
tion or reclassification; provided, however, that if
the record date for any such dividend, subdivision,
combination or reclassification shall occur prior to
the Distribution Date, the Company shall make an
appropriate adjustment to the Purchase Price (taking
into account any additional Rights which may be
issued as a result of such dividend, subdivision,
combination or reclassification), in lieu of
adjusting (as described above) the number of shares
of Common Stock (or other capital stock, as the case
may be) issuable upon exercise of the Rights. If an
event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
30
(ii) In the event any Person (other
than an employee benefit plan of the Company or any
Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any
such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring
Person, other than pursuant to a transaction set
forth in Section 13(a) hereof or a Qualifying Offer
(such an event being referred to herein as "a Section
11(a)(ii) Event"), then promptly following the
occurrence of a Section 11(a)(ii) Event, proper
provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e)
hereof) shall thereafter have the right to receive,
upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement,
such number of shares of Common Stock of the Company
as shall equal the result obtained by (x) multiplying
the thencurrent Purchase Price by the then number of
shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which,
31
following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section
11(d) hereof) per share of Common Stock on the date of
such first occurrence (such number of shares, the
"Adjustment Shares").
(iii) In the event that the number of
shares of Common Stock which is authorized by the
Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient to
permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this
Section 11(a), the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess,
the "Spread"), and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate
provision to substitute for the Adjustment Shares,
upon the exercise of a Right and payment of the
applicable Purchase
32
Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Stock or other equity securities of
the Company (including, without limitation, shares or
units of shares of preferred Stock, which the Board of
Directors of the Company has deemed to have
essentially the same value or economic rights as
shares of Common Stock (such shares of preferred stock
being referred to as "Common Stock Equivalents")), (4)
debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an
aggregate value equal to the Current Value (less the
amount of any reduction in the Purchase Price), where
such aggregate value has been determined by the Board
based upon the advice of a nationally recognized
investment banking firm selected by the Board of
Directors of the Company; provided, however, that if
the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption
33
pursuant to Section 23(a) expires (the later of (x)
and (y) being referred to herein as the "`Section
11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company
shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the
Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek shareholder
approval for the authorization of such additional
shares (such thirty (30) day period, as it may be
extended, is herein called the "Substitution Period").
To the extent that the Board of Directors of the
Company determines that some action need be taken
pursuant
34
to the first and/or second sentences of this Section
11(a)(iii), the Company (1) shall provide, subject to
Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (2) may
suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek
such shareholder approval for such authorization of
additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue
a public announcement stating that the exercisability
of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension
is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the
Current Market Price (as determined pursuant to Section
11(d) hereof) per share of the Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any
Common Stock Equivalent shall be deemed to
35
equal the Current Market Price per share of the
Common Stock on such date.
(b) In case following the Stock
Acquisition Date the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants
to all holders of Common Stock entitling them to subscribe for or
purchase (for a period expiring within forty-five (45) calendar
days after such record date) Common Stock (or shares having the
same rights, privileges and preferences as the Common Stock
("Equivalent Common Stock")) or securities convertible into
Common Stock or Equivalent Common Stock at a price per share of
Common Stock or per share of Equivalent Common Stock (or having a
conversion price per share, if a security convertible into Common
Stock or Equivalent Common Stock) less than the Current Market
Price (as determined pursuant to Section 11(d) hereof) per share
of Common Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering
price of the total
36
number of shares of Common Stock and/or Equivalent Common Stock
so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at
such Current Market Price, and the denominator of which shall be
the number of shares of Common Stock outstanding on such record
date, plus the number of additional shares of Common Stock and/or
Equivalent Common Stock to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares
of Common Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted
to be
37
the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case following the Stock
Acquisition Date the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in stock other than Common Stock)
or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be the current market
price (as determined pursuant to Section 11(d) hereof) per share
of Common Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets
or evidences of indebtedness so to be
38
distributed or of such subscription rights or warrants applicable
to a share of Common Stock and the denominator of which shall be
such current market price (as determined pursuant to Section
11(d) hereof) per share of Common Stock. Such adjustments shall
be made successively whenever such a record date is fixed, and in
the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) For the purpose of any computation
hereunder, other than computations made pursuant to Section
11(a)(iii) hereof, the Current Market Price per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii)
hereof, the Current Market Price per share of Common Stock on any
date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market
Price per share of the Common Stock is deter-
39
mined during a period following the announcement by the issuer of
such Common Stock of (A) a dividend or distribution on such
Common Stock payable in shares of such Common Stock or securities
convertible into shares of such Common Stock (other than the
Rights), or (B) any subdivision, combination or reclassification
of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or Ten (10) Trading Day period
as set forth above, after the ex-dividend date for such
subdivision, combination or reclassification, then, and in each
such case, the Current Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing price for
each day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities
40
exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system
then in use, or, if on any such date the shares of Common Stock
are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the
Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of
such shares on such date as determined in good faith by the Board
of Directors of the Company shall be used. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or,
if the shares of Common Stock are not listed and admitted to
trading on any national securities exchange, a Business Day. If
the Common Stock is not publicly held or not so listed or traded,
Current Market Price per
41
share shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock
or other share, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such
adjustment, or (ii) the Expiration Date.
42
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder
of any Right thereafter exercised shall become entitled to
receive any shares of capital Stock other than Common Stock,
thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k), and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Common
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of shares of Common Stock purchasable
from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
43
(h) Unless the Company shall have
exercised its election as provided in Section 11(i), upon each
adjustment of the Purchase Price as a result of the calculations
made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number shares of Common Stock (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the
number of shares covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the
product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust the number
of Rights, in lieu of any adjustment in the number of shares of
Common Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Common
Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that
44
number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price
in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number
of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender
thereof, if
45
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of shares of Common
Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share and the number of shares
which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would
cause an adjustment reducing the Purchase Price below the then
stated value, if any, of the shares of Common Stock issuable upon
exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and nonassessable
46
such number of shares of Common Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record
date the number of shares of Common Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise
over and above the number of shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
or securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to make
such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that, in their good
47
faith judgment, the Board of Directors of the Company as shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Common Stock, (ii) issuance wholly for cash of
any shares of Common Stock at less than the current market price,
(iii) issuance, wholly for cash, of shares of Common Stock or
securities which by their terms are convertible into or
exchangeable for shares of Common Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its
Common Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that
except as permitted by Section 13(d) it shall not, at any time
after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), (ii) merge with or
into any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer),
in one transaction, or a series of related transactions, assets,
cash flow or earning power aggregating more than 50% of the
assets, cash flow or earning power of the
48
Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), if (x) at the time of or immediately
after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the shareholder of the Person
who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) The Company covenants and agrees that,
after the Distribution Date, it will not, except as permitted by
Section 13(d), Section 23 or Section 26 hereof, take (or permit
any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
49
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Section 11 and Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent, and with each transfer agent
for the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate in
accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger of Sale or Transfer of
Assets, Cash Flow or Earning Power.
(a) In the event that, following the Stock
Acquisition Date directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Compa-
50
ny, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection
with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for
stock or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related
transactions, assets, cash flow or earning power aggregating more
than 50% of the assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be
made so that: (i) each holder of a Rights, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, non-assessable and
freely tradable shares of Common Stock of the Principal Party (as
such term is hereinafter
51
defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by
the number of shares of Common Stock for which a Right is
exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying
the number of such shares for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such
first occurrence), and dividing that product (which, following
the first occurrence of a Section 13 Event, shall be referred to
as the "Purchase Price" for each Right and for all purposes of
this Agreement) by (2) 50% of the Current Market Price
(determined pursuant to Section 11(d) hereof) per share of the
Common Stock of such Principal Party on the date of consummation
of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provi-
52
sions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event; (iv)
such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of
its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section
13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the
Company are converted in such merger or
consolidation, and if no securities are so issued,
the Person that is the other party to such merger of
consolidation; and
53
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion
of the assets, cash flow or earning power transferred
pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock
of such Person is not at such time and has not been continuously
over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which
is and has been so registered "Principal Party" shall refer to
such other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market
value.
(c) The Company shall not consummate any
such consolidation, merger, sale or transfer unless the Principal
Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance
to permit the exercise in
54
full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale
of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will
(i) prepare and file a registration statement
under the Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on
an appropriate form, and will use its best efforts to
cause such registration statement to (A) become
effective as soon as practicable after such filing
and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the
Expiration Date; and
(ii) will deliver to holders of the Rights
historical financial statements for the Principal
Party and each of its Affiliates which comply in all
respects with the require-
55
ments for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the Rights
which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a). If, for
any reason, the Rights cannot be exercised for Common Stock of
the Company or such Principal Party, then a holder of Rights will
have the right to exchange his Rights for cash from the Company
or such Principal Party in an amount equal to the number of
shares of such Common Stock he would otherwise be entitled to
purchase times 50% of the then Current Market Price, as
determined pursuant to Section 11(d)(i) hereof, of such stock of
such Principal Party or the Company. If, for any reason,
including, without limitation, if such Principal Party is an
individual, private partnership or private company, the foregoing
formulation cannot be applied to determine the cash amount into
which the Rights are exchangeable, then the Board of Directors of
the Company, based upon the advice from one or more investment
banking firms, shall deter-
56
mine such amount reasonably and with utmost good faith to the
holders of Rights. Any such determination shall be binding and
final.
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be applicable to
a transaction described in subparagraphs (x) and (y) of Section
13(a) if (i) such transactions is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a
Qualifying Offer (or a wholly owned subsidiary of any such Person
or Persons), (ii) the price per share of Common Stock offered in
such transaction is not less than the price per share of Common
Stock paid to all holders of shares of Common Stock whose shares
were purchased pursuant to such Qualifying Offer and (iii) the
form of consideration being offered to the remaining holders of
shares of Common Stock pursuant to such transaction is the same
as the form of consideration paid pursuant to such Qualifying
Offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
57
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to
issue fractions of Rights, or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed
58
on the principal national securities exchange on which the Rights
are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use,
or if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to
issue fractions of shares upon exercise of the Rights or to
distribute certificates which evidence fractional shares. In
lieu of fractional shares, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Common
Stock. For purposes of this Section 14(b), the current market
value of one
59
share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to Section 11(d) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the
acceptance of the Rights expressly waives his right to receive
any fractional Rights or any fractional shares upon exercise of a
Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock);
and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding
against, the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without listing the foregoing or any remedies
available
60
to the holders of Rights, it is specifically acknowledge that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relieve
against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder
of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the transfer
of Common Stock;
(b) after the Distribution Date, the
Rights Certificates are transferable only on the registry books
of the Rights Agent if surrendered at the principal office or
offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
61
(c) subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem and treat
the person in whose name a Rights Certificates (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other
Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or oth-
62
erwise restraining performance of such obligation; provided,
however, the Company must use its best efforts, in their
reasonable discretion, to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificates Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the shares of Common Stock or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in Section 24 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
63
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and disbursements
and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in
the premises.
(b) The Rights Agent shall be protected
and shall incur no liability for or in respect of any action
taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice,
direction, consent,
64
certificate, statement, or other paper or document reasonably
believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person
or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Cer-
65
tificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any
successor Rights Agent any countersign such Rights Certificates
either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
66
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established
by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, any
Corporate Vice President, the Treasur-
67
er, or the Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or recitals
contained in this Agreement, the Summary of Rights or in the
Rights Certificates or be required to verify the same (except as
to its countersignature on such Rights Certificates), but all
such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under
any responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any
68
Rights Certificates; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or Section
13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after
actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further
and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
69
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the
Board, the Vice Chairman of the Board, the President, any
Corporate Vice President, the Secretary, or the Treasurer of the
Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
70
(i) The Rights Agent may execute and
exercise any of the Rights or powers hereby vested in it or
perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting
from any such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of its rights if there
shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or
form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent
71
shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company, and to the transfer agent of the
Common Stock, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent for any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to the
transfer agent of the Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by firstclass
mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing
of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such
72
notice, submit his Rights Certificate for inspection by the
Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or buy such a court, shall be a
corporation organized and doing business under the laws of the
United States or of the Commonwealth of Pennsylvania or the State
of New York (or of any other state of the United States so long
as such corporation is authorized to do business as a banking
institution in the Commonwealth of Pennsylvania or the State of
New York), in good standing, having a principal office in the
Commonwealth of Pennsylvania or the State of New York, which is
authorized under such laws to exercise corporate trust powers and
is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $100,000,000.
After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
here-
73
under, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock, and mail a notice
thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number of kind or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date
and prior to the redemption
74
or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or
upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
75
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of (i) the
close of business on the tenth Business Day following the Stock
Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the close of business on the
tenth Business Day following the Record Date), or (ii) the Final
Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as
such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to
as the "Redemption Price"); provided, however, if the Board of
Directors of the Company authorizes redemption of the Rights in
either of the circumstances set forth in clauses (i) and (ii)
below, then there must be Continuing Directors then in office and
such authorization shall require the concurrence of a majority of
such Continuing Directors: (i) such authorization occurs on or
after the time a Person becomes an Acquiring Person, or (ii) such
authorization occurs on or after the date of a change (resulting
from a proxy or consent solicitation) in a majority of the
directors in
76
office at the commencement of such solicitation if any Person who
is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of
Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take,
or may consider taking, any action which would result in such
Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (base don the
Current Market Price as defined in Section 11(d) hereof, of the
Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors of the
Company.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the redemption of the
Rights becoming effective, evidence of which shall have been
filed with the Rights Agent and without any further action and
without any notice, the right to exer-
77
cise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price
for each Right so held. Promptly after the action of the Board
of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to
all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent
for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be
made.
Section 24. Notice of Certain Events.
(a) In case the company shall propose, at
any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Common Stock or
to make any other distribution to the holders of Common Stock
(other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the
holders of Common Stock rights or warrants to subscribe for or to
purchase any
78
additional shares of Common Stock or shares of stock of any class
or any other securities, rights or options, or (iii) to effect
any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Common Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related
transactions, of more than 50% of the assets, earning power or
cash flow of the Company and its subsidiaries (taken as a whole)
to any other Person or Person (other than the Company and/or any
of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolida-
79
tion, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein
by the holders of the shares of Common Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20)
days prior to the record date for determining holders of the
shares of Common Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days prior to
the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common
Stock whichever shall be the earlier.
(b) In case any of the events set forth in
Section 11(a)(ii) hereof shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to each
holder of a Rights Certificates, to the extent feasible and in
accordance with Section 25 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof.
80
Section 25. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
AMP Incorporated
470 Friendship Road
Harrisburg, PA 17111
Attention: General Legal Counsel
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
Manufacturers Hanover Trust Company
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) shall
be sufficiently
81
given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the
Distribution Date the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder (which lengthening or shortening,
following the first occurrence of an event set forth in clauses
(i) and (ii) of the first proviso to Section 23(a) hereof, shall
be effective only if there are Continuing Directors and shall
require the concurrence of a majority of such Continuing
Directors) or (iv) to change or supplement the provisions
hereunder in any manner which the company may deem neces-
82
sary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an
Acquiring Person); provided, this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of
this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable,
or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights. Upon the delivery
of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident
with the interests of the holders of Common Stock.
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
83
Section 28. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding
at any particular time, including for purposes of determining the
particular percentage of such outstaying shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in
accordance with Section 2553 of the Pennsylvania BCL. The Board
of Directors of the Company except as otherwise specifically
provided for herein, with, where specifically provided for
herein, the concurrence of the Continuing Directors shall have
the exclusive power and authority to administer this Agreement
and exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions
of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or
to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing)
which are done or made by the
84
Board of Directors of the Company (with, where specifically
provided for herein, the concurrence of the Continuing Directors)
in conformity with Section 1721 of the BCL, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject
the Board of Directors of the Company or the Continuing Directors
to any liability to the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 30. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this
85
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the
Board of Directors of the Company determines in its good faith
judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on
the tenth Business Day following the date of such determination
by the Board of Directors. Without limiting the foregoing, if
any provision requiring that a determination be made by less than
the entire Board (or at a time or with the concurrence of a group
of directors consisting of less than the entire Board) is held by
a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, such determination shall then be
made by the entire Board of Directors in accordance with
applicable law and the Company's Articles of Incorporation and
Bylaws.
86
Section 31. Governing Law. This Agreement, each Right
and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 33. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
87
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
Attest:
AMP Incorporated
By /s/ Charles W. Goonrey By /s/ W. F. Raab
----------------------- ----------------------------
Name: Charles W. Goonrey Name: W. F. Raab
Title: Assistant Secretary Title: Chairman of the Board
and Chief Executive
Officer
Attest:
MANUFACTURERS HANOVER TRUST
COMPANY
By /s/ Michael A. Nespoli By /s/ Anthony J. Annucci
--------------------------- ---------------------------
Name: Michael A. Nespoli Name: Anthony J. Annucci
Title: Assistant Vice Title: Vice President
President
88
Exhibit A
[Form of Rights Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER NOVEMBER 6, 1999 OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
AMP INCORPORATED
This certifies that , or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the
________________________
* The portion of the legend in brackets shall be inserted
only if applicable and shall replace the preceding
sentence.
1
owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of October 25, 1989 (the "Rights
Agreement"), between AMP Incorporated, a Pennsylvania corporation
(the "Company"), and Manufacturers Hanover Trust Company, a New
York corporation (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 P.M. (New York City time) on
November 6, 1999 at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent,
one share of Common Stock, no par value (the "Common Stock") of
the Company, at a purchase price of $______ per share (the
"Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by
this Rights Certificate (and the number of shares of Common Stock
which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number
and Purchase Price as of October 25, 1989, based on the Common
Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Af-
2
filiate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a
transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price
and the number and kind of shares of Common Stock or other
securities, which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of
3
the Rights Agent, the Company and the holders of the Rights
Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement. Copies
of the Rights Agreement are on file at the above-mentioned office
of the Rights Agent and are also available upon written request
to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices
of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase
a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption
4
price of $.01 per Right at any time prior to the earlier of the
close of business on (i) the tenth business day following the
Stock Acquisition Date (as such time period may be extended
pursuant to the Rights Agreement), and (ii) the Final Expiration
Date. Under certain circumstances, the decision to redeem shall
require the concurrence of a majority of the Continuing Directors
as such term is defined in the Rights Agreement.
No fractional shares of Common Stock will be issued upon
the exercise of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of shares of Common Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, to receive notice of
meetings or other actions affecting
5
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Rights Certificate shall have
been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of ____________________ ___, 1989
ATTEST:
AMP INCORPORATED
______________________ By: ____________________________
Secretary Title:
Countersigned:
MANUFACTURERS HANOVER TRUST COMPANY
By: _________________________
Authorized Signature
6
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED _____________________________________________
hereby sells, assigns and transfers unto _______________________
________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _____________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with
full power of substation.
Date: _____________________, 19___
__________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _________________, 19___ __________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: AMP Incorporated:
The undersigned hereby irrevocably elects to exercise
________ Rights represented by this Rights Certificate to
purchase the shares of Common Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
Please insert social security or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
________________________________________________________________
Dated: ___________________, 19___
________________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _____________, 19___ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On October 25, 1989, the Board of Directors of AMP
Incorporated (the "Company") declared a dividend distribution of
one Right for each outstanding share of Common Stock, no par
value (the "Common Stock"), of the Company to shareholders of
record at the close of business on November 6, 1989. Each Right
entitles the registered holder to purchase from the Company one
share of Common Stock at a Purchase Price of $175 per share,
subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Manufacturers Hanover Trust Company, as
Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights
will separate from the Common Stock and a Distribution Date will
occur upon the earlier of (i) 10 business days following a public
announcement that a person (an "Acquiring Person") has become an
"interested shareholder" a defined in Section 2553 of the
Pennsylvania Business Corporation Law (i.e. has acquired, or
obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding shares of Common Stock), except pursuant
to a Qualifying Offer, as defined below (such public announcement
date being referred to below as the "Stock Acquisition Date") and
(ii) 10 business days (or such later date as the Board shall
determine) following the commencement of a tender offer or
exchange offer that would result in a person becoming an
Acquiring Person. Until the Distribution Date, (i) the Rights
will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates,
(ii) new Common Stock certificates issued after November 6, 1989
will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on November 6, 1999,
unless earlier redeemed by the Company as described below. Shares
of Common Stock issuable upon exercise of the Rights shall
represent a proportional beneficial interest in the shares of
common stock of Pamcor, Inc. held in trust pursuant to an
Agreement among AMP Incorporated, Pamcor, Inc. and Bankers Trust
Company dated as of November 1, 1956 and amended as of April 23,
1970 and as of April 23, 1981.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent
the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that a person becomes an Acquiring Person
except pursuant to an offer for all outstanding shares of Common
Stock which the independent directors (excluding officers of the
Company) determine, after receiving advice from one or more
investment banking firms, to be fair to and otherwise in the best
interests of the Company and its shareholders (a "Qualifying
Offer"), each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the
Right. However, the Rights will not be exercisable following the
occurrence of any such event until such time as the Rights are no
longer redeemable by the Company as set forth below.
Notwithstanding any of the foregoing, following the occurrence of
any such event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person (or certain related
parties) will be null and void.
For example, at an exercise price of $175 per Rights, each
Right not owned by an Acquiring Person (or by certain related
parties) following an event set forth in the preceding paragraph
would entitle its holder to pur-
2
chase $350 worth of Common Stock (or other consideration, as
noted above) for $175. Assuming that the Common Stock had a per
share value of $45 at such time, the holder of each valid Right
would be entitled to purchase 7.77 shares of Common Stock for
$175.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which a merger which
follows a Qualifying Offer and satisfies certain other
requirements), (ii) the Company is acquired in a merger or other
business combination transaction in which the Company is the
surviving corporation but all or part of the Common Stock is
changed into or exchanged for Securities of the other person or
other property, or (iii) 50% or more of the Company's assets,
cashflow or earning power is sold or transferred, each holder of
a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right. The events
set forth in this paragraph and in the second preceding paragraph
are referred to as the "Triggering Events."
The Purchase Price payable, and the number of shares of
Common Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Common
Stock, (ii) if holders of the Common Stock are granted certain
rights or warrants to subscribe for Common Stock or convertible
securities at less than the current market price of the Common
Stock, or (iii) upon the distribution to holders of the Common
Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional shares will be
issued and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Common Stock on the last trading
date prior to the date of exercise.
3
At any time until ten business days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (payable in cash,
Common Stock or other consideration deemed appropriate by the
Board of Directors). Under certain circumstances set forth in
the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors.
Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the $.01
redemption price.
The term "Continuing Directors" means any member of the
Board of Directors of the Company who was a member of the Board
prior to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person, or an affiliate or associate of
an Acquiring Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the
acquiring company as set forth above.
Any of the provisions of the Rights Agreement may be
amended in any respect by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board
(in certain circumstances, with the concurrence of the Continuing
Directors) in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten
or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not
redeemable.
4
A copy of the Rights Agreement is being filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Rights Agent.
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
AMP INCORPORATED EXHIBIT 10.D
PENSION RESTORATION PLAN
(January 1, 1994 Restatement)
SECTION 1
INTRODUCTION
1.1 Intent of Plan
The intention of the AMP Incorporated Pension Restoration
Plan (the "Plan") is to provide a supplemental pension benefit
to designated Retirees whose benefit under the AMP
Incorporated Pension Plan is reduced or restricted by reason
of the maximum annual limitations on benefits imposed by
Section 415 of the Internal Revenue Code of 1986, as amended
(the "Code"), by reason of the limitation imposed by Section
401(a)(17) of the Code (hereinafter collectively referred to
as the "Code Limitations"), or by reason of having a
substantial portion of annual compensation payable in the form
of an annual cash bonus.
SECTION 2
EFFECTIVE DATE
2.1 The Plan, which was originally effective as of January 1,
1983, and thereafter amended on three occasions, is hereby
amended and restated in its entirety effective as of January
1, 1994.
SECTION 3
DEFINITIONS
3.1 Administrator means that person responsible for the
administration of the Plan as set forth in Section 10 hereof.
3.2 Company means AMP Incorporated and any subsidiary or
affiliate thereof that has adopted the Pension Plan.
3.3 Employee means any person listed on appendix A who is
regularly employed by the Company. It also includes any such
person while on an authorized leave of absence granted by the
Company.
3.4 Retiree means any retired Employee listed on Appendix A,
a joint annuitant of such Retiree or a beneficiary of such
Retiree who is entitled to receive benefits under this Plan.
3.5 Retirement Date means the date of actual retirement of a
Retiree, which may be his normal, early or postponed
Retirement Date under the provisions of the Pension Plan, and
which is ordinarily the first day of the month next following
the Retiree's last day worked.
3.6 Pension Plan means the AMP Incorporated Pension Plan.
3.7 Years of Service means the years or parts thereof of an
Employee's actual period of employment with the Company, as
further defined and limited in the Pension Plan, plus any
additional credit granted to the Employee for Plan purposes by
written employment agreement.
SECTION 4
COSTS OF PLAN
4.1 All costs of this Plan, including the administration
thereof, shall be borne by the Company and no contributions to
this Plan shall be required from Employees.
SECTION 5
ELIGIBILITY FOR AND COMMENCEMENT OF BENEFITS
5.1 For periods of time prior to December 31, 1993, each
member of the Pension Plan whose Pension Plan benefit is
reduced or restricted as a result of the Code Limitations
shall automatically be eligible for the benefits provided by
this Plan. For periods of time after December 31, 1993, an
Employee shall be eligible for the benefits provided by this
Plan only if the Employee is listed on Appendix A hereto by
name, and no benefit under the Plan shall accrue to an
Employee prior to the Employee's eligibility effective date
specified in Appendix A. Payment of the benefits provided by
this Plan shall ordinarily commence concurrently with the
commencement of Pension Plan benefits on the Retiree's
Retirement Date without the necessity of filing an application
under this Plan for such benefits, with the exception that in
the event the benefits provided under the Plan are pre-funded
by the Company a portion of the pre-tax value of the benefits
may be provided to an Employee during the pre-retirement
funding period either by means of the payment of taxes due on
such benefits or by means of a distribution of fund earnings.
SECTION 6
AMOUNT AND PAYMENT OF BENEFIT
6.1 Effective for Retirement Dates that occur on or after
January 1, 1994, a Retiree's monthly accrued benefit under
this Plan shall have a value on a pre-tax basis that is equal
to the difference between A and B, where A is the monthly
accrued benefit the Retiree would have been entitled to
receive under the provisions of the Pension Plan (a)
disregarding any reductions or restrictions on such benefit as
a result of the Code Limitations, (b) including in any annual
compensation or three-year average compensation determination
with respect to the Retirement Date both annual rates of base
earnings and annual cash bonus plan payments attributable to
each applicable year (without regard to whether a portion of
such base earnings or cash bonus amounts have been deferred
under the terms of the AMP Incorporated Deferred Compensation
Plan or under any AMP-sponsored plan complying with the
provisions of Sections 401(k) or 125 of the Code) and (c)
augmenting a Retiree's credited years of service with any
additional credit years of service granted to the Retiree for
Plan purposes by written employment agreement, and B is the
monthly accrued benefit actually payable to the Retiree under
the Pension Plan. In the case that a portion of the pre-tax
value of the benefit provided under this Plan has been paid to
the Retiree during a pre-retirement funding period by means of
the payment of taxes due on such benefit, a distribution of
earnings from a funding arrangement related to the Plan, or
otherwise, the benefit payable under the Plan at or after the
Retirement Date shall be adjusted, as appropriate, to reflect
such pre-retirement payments. At the Company's option,
payments of monthly benefits under the Plan may be secured by
pre-funding the benefit under a trust arrangement, by deposit
of a letter of credit with a trustee, by the purchase of an
executive compensation indemnity policy, or by the purchase by
the Company of a paid-up annuity naming the Retiree as the
annuitant with provisions for optional forms of benefits;
provided that the Retiree may elect to receive, in lieu of
such an annuity, a lump sum distribution equal to the then
present value of such annuity. If and to the extent that the
Plan is subject to the provisions of Section 205 of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), because of a funding arrangement or otherwise, no
payment shall be made under the Plan to a married Employee or
Retiree in a form other than a qualified joint and survivor
annuity, as defined in Section 205 of ERISA, unless the spouse
of the Employee or Retiree consents in writing to the form of
payment.
SECTION 7
FORM OF BENEFIT
7.1 If an Employee who becomes eligible to receive benefits
under this Plan has elected an optional form of benefit under
the Pension Plan, any benefits to be paid under this Plan will
be paid in the same optional form as the benefit paid by the
Pension Plan and the Employee's designations as to joint
annuitant(s) and beneficiary(ies) made under the Pension Plan
will apply under this Plan, with the exception that the
Retiree (with written spousal consent if and to the extent
that ERISA is applicable to the Plan) may elect payment of his
Plan benefit in a single lump sum distribution, provided such
election is made at least three months prior to and in the
calendar year prior to the Retirement Date. The mortality and
interest rate assumptions used to convert a Plan benefit into
a single lump sum amount shall be as reflected in Appendix B.
SECTION 8
DEATH BENEFITS
8.1 Death Before Retirement
A death or survivor benefit shall be payable under this
Plan in the event of death before retirement only if a
survivor benefit is payable under the provisions of the
Pension Plan. In such event, the amount of the monthly
benefit payable under this Plan to the surviving
beneficiary(ies) entitled to benefits under the Pension Plan
will again be the difference between A and B, where A is the
amount of survivor benefit that would be determined under the
Pension Plan (a) disregarding the Code Limitations, (b)
including annual cash bonus plan payments as well as base
earnings rates in annual compensation determinations, and (c)
including any additional credited years of service granted by
agreement, and B is the survivor benefit actually payable
under the Pension Plan. All survivor benefits under this Plan
will cease or reduce at the same time and in the same manner
as survivor benefits are terminated or reduced under the
provisions of the Pension Plan
8.2 Death After Retirement
A death or survivor benefit shall be payable under this
Plan in the event of death after retirement only if the
Retiree has elected and is receiving his Plan benefit in the
form of a joint and survivor annuity or certain and continuous
annuity and such form of payment, by its terms, calls for
continuing benefit payments after the Retiree's death.
SECTION 9
SEPARATION FROM EMPLOYMENT
9.1 Upon an Employee's separation from Company employment
prior to being credited with five (5) Years of Service with
the Company, the Employee's rights to any benefits under this
Plan will cease. Furthermore, except in the case and to the
extent that the Plan is subject to the requirements of Section
203 of ERISA (either because of the implementation of a Plan
funding arrangement or otherwise), all rights of an Employee
to any benefits under this Plan will cease upon separation
from Company employment prior to the Employee's Retirement
Date. Notwithstanding the foregoing, however, (a) any Plan
survivor benefit described in Section 8.1 of the Plan shall be
payable to the survivor of a deceased Employee without regard
to whether the Employee had been credited with five (5) or
more Years of Service or attained his Retirement Date, and (b)
this Section shall not serve in derogation of any vested
rights an Employee may have in assets specifically allocated
to the Employee pursuant to any non-terminable trust
established by the Company to fund Plan benefits.
SECTION 10
ADMINISTRATION
10.1 Administrator
The Administrator of the Pension Plan shall act as the
Administrator of this Plan.
10.2 Interpretation of Provisions
The Administrator shall have the full and absolute
discretionary power and authority to administer the Plan,
interpret the provision of the Plan, and decide questions
arising in its administration. The decisions and
interpretations of the Administrator shall be final and
binding on the Company, its Employees and all other persons.
10.3 Records of Administration
The Administrator shall keep records reflecting the
administration of this Plan which shall be subject to audit by
the Company.
10.4 Denial of Claim
In accordance with the claim procedure requirements of
ERISA, the Administrator shall, inter alia, provide adequate
notice in writing to any Employee or beneficiary whose claim
for benefit under this Plan has been denied, setting forth the
specific reasons for such denial. The Employee or beneficiary
will be given an opportunity for a full and fair review by the
Administrator of the decision denying the claim. The Employee
or beneficiary shall be given 30 days from the date of the
notice denying any such claim within which to request such
review.
10.5 Liability of the Administrator
The Administrator shall not be liable for any action
taken in good faith or for the exercise of any power grant to
the Administrator, except to the extent that such liability is
imposed by law as a result of a breach by the Administrator of
his fiduciary responsibilities.
SECTION 11
FACILITY OF PAYMENT AND LAPSE OF BENEFITS
11.1 Provision for Incapacity
If the Administrator deems any person entitled to receive
any payment under the provisions of this Plan incapable of
receiving or disbursing the same by reason of minority,
illness or infirmity, mental incompetency, or incapacity of
any kind, the Administrator may, in his sole discretion, take
any one or more of the following actions: he may apply such
payment directly for the health, support and maintenance of
such person; he may reimburse any person for any such support
theretofore supplied to the person entitled to receive any
such payment; or he may pay such payment to any other person
selected by him to disburse such payment for the health,
support and maintenance of the person entitled thereto,
including, without limitation to any relative who has
undertaken, wholly or partially, the expense of such person's
comfort, care and maintenance, or any institution in whose
care or custody the person entitled to the payment may be.
The Administrator may, in his sole discretion, deposit any
payment due to a minor to the minor's credit in any savings or
commercial bank of the Administrator's choice.
11.2 Payments or Deposits
Payments or deposits made pursuant to any provision of
this Section 11 shall be a complete discharge, to the extent
thereof, of all liability under the provisions of this Plan,
or otherwise, of the Administrator, the Company and this Plan,
and the receipt by the person or persons receiving any such
payment distribution or deposit shall be a complete
acquittance therefore and there shall be no liability to see
to the application of any payments, distributions or deposits
so made.
SECTION 12
GENERAL PROVISIONS
12.1 Excess Benefit Plan
This Plan, to the extent that it is designed to provide a
benefit not payable under the Pension Plan because of the
restrictions of Section 415 of the Code, is intended to
constitute an "excess benefit plan" under the present
provisions of Section 3 (36), Subtitle A of Title I of ERISA.
12.2 Frequency and Duration of Payments
Except in the case where an Employee has elected payment
in the form of a single lump sum distribution, all benefits
under this Plan shall be paid in monthly installments at the
beginning of the month to which the payment applies and shall
cease with the month of the retired Employee's death unless
continued to a beneficiary or joint annuitant in accordance
with other provisions of this Plan.
12.3 Payments and Benefits Not Assignable
Payments to and benefits under this Plan are not
assignable or subject to anticipation or alienation since they
are primarily for the support and maintenance of the Employees
and their joint annuitants or beneficiaries. Furthermore,
such payments shall not be subject to attachment, seizure, or
levy by creditors or through legal process against the
Company, the Administrator, any trustee or other funding
agent, or any Employee, Retiree, or survivor.
12.4 No Right of Employment
The provisions of this Plan shall not give an Employee
the right to be retained in the service of the Company.
12.5 Adjustments
At the request of the Company, the Administrator may,
with respect to a Retiree, adjust such Retiree's benefit under
this Plan or make such other adjustments with respect to such
Retiree as are required to correct administrative errors or
provide benefits in a manner consistent with the intent and
purpose of this Plan.
SECTION 13
AMENDMENTS AND DISCONTINUANCE
13.1 Amendment of Plan
This Plan may be amended by action of the Board of
Directors of the Company if, as amended, it continues to be
for the exclusive benefit of Employees.
13.2 Termination
The Company intends to continue this Plan indefinitely
but reserves the right to terminate it at any time by action
of the Board of Directors of the Company.
13.3 Effect of Amendment or Termination
No amendment or termination of this Plan may adversely
affect the benefit payable to any Retiree receiving benefits
under the Plan prior to the effective date of the amendment or
termination, or to any Employee who, as of such date, was
eligible to retire with an immediate allowance under the
Pension Plan, or as to any Employee who has prior to such
amendment or termination accrued a benefit payable hereunder.
EXECUTED at Harrisburg, Pennsylvania this ____
day of December, 1994.
AMP Incorporated
By:_____________________
Its: ___________________
And:____________________
Its: ___________________
APPENDIX A
The following are Employees for purposes of the Plan on and
after the indicated effective date
Name
SSAN
Effective Date
W. J. Hudson
###-##-####
01/01/89
J. E. Marley
###-##-####
01/01/89
B. Savidge
###-##-####
01/01/89
T. Dalrymple
###-##-####
12/31/93
J. Gurski
###-##-####
12/31/93
J. Gorjat
###-##-####
05/01/93
J. Hassan
###-##-####
10/01/93
P. Guarneschelli
###-##-####
12/31/93
R. Gassner
###-##-####
12/31/93
H. Cole
###-##-####
12/31/93
H. Timmins
###-##-####
12/31/93
A. Kastel
###-##-####
12/31/93
K. Drysdale
###-##-####
12/31/93
R. Seall
###-##-####
12/31/93
C. Goonrey
###-##-####
12/31/93
P. Workinger
###-##-####
12/31/93
J. Maher
###-##-####
12/31/93
R. Knerr
###-##-####
12/31/93
J. Seitchik
###-##-####
12/31/93
R. Ripp
###-##-####
08/15/94
D. Horowitz
###-##-####
09/12/94
APPENDIX B
TO
AMP INCORPORATED
PENSION RESTORATION PLAN
Interest Rate: the average immediate annuity rate used by the
Pension Benefit Guaranty Corporation to value immediate
annuities as such rate was in effect as of the first day of
the 12-months preceding the Retirement Date in question.
Mortality Table: the UP-1984 Mortality Table
3
[TEST]
EXHIBIT 10.F
AMP INCORPORATED
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
AMP Incorporated (the "Corporation") hereby adopts this
Deferred Compensation Plan for Non-Employee Directors (the
"Plan") pursuant to which eligible members of its Board of
Directors may elect to defer receipt of all or any portion of the
compensation payable for services rendered to the Corporation as
a Director.
1. Eligible Directors. The Directors of the
Corporation eligible to make the elections set forth in this Plan
shall be those Directors who are not actively employed officers
or employees of the Corporation or of any of its subsidiaries or
affiliates (hereinafter referred to individually as a "Non-
Employee Director" and collectively as the "Non-Employee
Directors").
2. Deferrable Compensation. A Non-Employee Director
may elect to defer receipt of all, any part or none of the
aggregate compensation payable by the Corporation for services
rendered as a Director, including the annual base retainer and
attendance fees for board and committee meetings (in the
aggregate, the "Director's Fees").
3. Election to Defer. A Non-Employee Director who
desires to defer receipt of a portion of his or her Director's
Fees in any calendar year shall so notify the Corporation's
Secretary in writing on or before December 31 of the prior
calendar year, specifying on a form supplied by the Secretary the
dollar amount or percentage of the Director's Fees to be
deferred, the deferral period, the form of payment, and an
investment direction. In the case of a newly-elected Non-
Employee Director, he or she shall be eligible to defer payment
of future Director's Fees by filing the notice described in the
previous sentence with the Secretary of the Corporation at any
time within 30 days of the date of initial election to the Board
of Directors. The elections made pursuant to this Paragraph
shall be irrevocable and shall apply to each calendar year
thereafter until the Non-Employee Director, on or before any
December 31, notifies the Secretary in writing that different
elections shall apply to the following calendar years, which
elections shall likewise continue in effect until similarly
changed.
4. Non-Deferred Compensation. Any Director's Fees
not deferred under this Plan shall be paid in accordance with
normal Corporation policy.
5. Deferred Compensation Accounts and Investment
Directions.
(a) Accounts: At the time a Non-Employee
Director makes an election to defer the receipt of compensation
pursuant to Paragraph 3 above, he or she shall indicate as an
investment direction the amount of the deferral to be credited to
an Interest-Bearing Account and the amount to be credited to an
AMP Stock Account.
(i) Interest-Bearing Account: To the extent
a Non-Employee Director elects investment in an Interest-Bearing
Account, on the business day the Director's Fees would have been
paid absent the deferral election the Corporation shall credit an
Interest-Bearing Account established in his or her name with the
amount of the deferred Director's Fees so invested.
(ii) AMP Stock Account: To the extent a Non-
Employee Director elects investment in an AMP Stock Account, on
the business day the Director's Fees would have been paid absent
the deferral election the Corporation shall credit an AMP Stock
Account established in his or her name with that number of units
(including fractions) obtained by dividing the amount of the
deferred Director's Fees so invested by the Fair Market Value of
the Corporation's common stock (with the units thus calculated
hereinafter referred to as "Stock Equivalents"). For purposes of
the Plan, Fair Market Value of a share of the Corporation's
common stock on any date shall be equal to the mean between the
high and low prices at which such shares were traded on the New
York Stock Exchange ("NYSE") on such date, or, if no sales were
quoted on such date, on the most recent preceding date on which
sales were quoted. In the event of any change in the common
stock of the Corporation by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-
up, combination or exchange of shares, or a rights offering to
purchase common stock at a price substantially below fair market
value, or of any similar change affecting the common stock, the
value and attributes of each Stock Equivalent shall be
appropriately adjusted consistent with such change to the same
extent as if such Stock Equivalents were issued and outstanding
shares of common stock of the Corporation.
(b) Earnings: The Corporation shall credit
earnings to the accounts as follows:
(i) Interest-Bearing Account: As of the
last day of each calendar month, the Corporation shall credit as
earnings to each Interest-Bearing Account established on behalf
of a Non-Employee Director an amount equal to a percentage of the
average daily balance in such Interest-Bearing Account during
such calendar month. Such percentage shall be equal to one
twelfth (1/12) of 120% of the Long-Term Applicable Federal Rate
as in effect on the first day of the calendar quarter that
includes such month.
(ii) AMP Stock Account: As of each quarterly
dividend payment date, the Corporation shall credit as earnings
to each AMP Stock Account an amount equal to the cash dividends
payable on such date with respect to that number of shares of its
common stock equal to the number of Stock Equivalents credited to
the AMP Stock Account on the relevant dividend record date. The
amount so credited shall then be converted into Stock Equivalents
in the manner described earlier using the dividend payment date
as the valuation date.
6. Deferral Period. At the time a Non-Employee
Director makes an election to defer the receipt of compensation
pursuant to Paragraph 3 above, he or she shall indicate the
deferral period applicable to such deferred compensation by
specifying the year (the "Payment Year") in which the deferred
amounts are to be paid in a lump sum or in which payment of the
deferred amounts is to be commenced in installments, provided
however that in no event shall such year of payment or
commencement of payment be later than the year following the year
in which the Non-Employee Director will attain age 72.
7. Form of Payment of Deferred Compensation: The
aggregate balance in a Non-Employee Director's Interest-Bearing
Account and AMP Stock Account shall be determined on the first
business day of the Payment Year. The balance in the Non-
Employee Director's Interest-Bearing Account shall be the dollar
amount credited to such account as of
the first business day of the Payment Year. The balance in the
Non-Employee Director's AMP Stock Account shall be the dollar
amount determined by multiplying the Stock Equivalents credited
to such account on the first business day of the Payment Year by
the Fair Market Value of a share of common stock of the
Corporation on such date. The aggregate balance as thus
determined shall be paid to him or her in cash either in a lump
sum within 30 days following the first business day of the
Payment Year or in up to ten annual installments commencing with
the Payment Year as specified in the election to defer made
pursuant to Paragraph 3 above. If an election to receive
installment payments is made, the Non-Employee Director shall
receive the balance in the account(s) in the specified number of
annual installments, the first within 30 days following the first
business day of the Payment Year and the others within 30 days
following the first business day of each subsequent year in the
installment payment period. The base amount of each such
installment payment shall be equal to the aggregate balance in
the Non-Employee Director's accounts as of the first business day
of the Payment Year divided by the number of years in the
installment payment period. Pending distribution in the second
through final years of the installment payment period, the base
amount of each annual installment shall be deemed to be invested
in part in an Interest-Bearing Account and in part in an AMP
Stock Account, in the same proportion as deferred amounts under
the Plan were invested on the first business day of the Payment
Year, and increased by earnings accordingly.
8. Change in Control.
(a) In the event of a "Change in Control" of the
Corporation followed by a Non-Employee Director's cessation of
service to the Corporation, all amounts credited to the
account(s) of the Non-Employee Director under the Plan shall be
immediately due and payable to the Non-Employee Director in a
single lump sum notwithstanding the deferral period and form of
payment specified pursuant to Paragraph 3 above.
(b) The term "Change in Control" shall mean:
(i) the acquisition of beneficial ownership
(other than from the Corporation) by any person, entity or
"group," within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act"), excluding, for this purpose, the Corporation or its
subsidiaries, or any employee benefit plan or the Corporation or
its subsidiaries that acquires beneficial ownership of voting
securities of the Corporation (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 Corporation's then outstanding voting securities
entitled to vote generally in the election of Directors; or
(ii) a change in the persons constituting the
Board of Directors as it exists 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
of Directors; provided that any person becoming a Director in a
subsequent year whose election, or nomination for election, by
the Corporation'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 Corporation, 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
(iii) approval by the stockholders of the
Corporation of a reorganization, merger or consolidation, in each
case with respect to which persons who were the stockholders of
the Corporation 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 Directors of the reorganized, merged or
consolidated corporation's then outstanding voting securities, or
a liquidation substantially all of the assets of the Corporation.
9. Designation of Beneficiary. If a Non-Employee
Director dies prior to receiving the entire balance of his
account(s) under the Plan, any balance remaining in his or her
account(s) shall be paid in a lump sum as soon as practicable to
the Non-Employee Director's designated beneficiary or, if the Non-
Employee Director has not designated a beneficiary in writing to
the Corporation's Secretary, to his or her estate. Any
designation of beneficiary may be revoked or modified at any time
by the Non-Employee Director.
10. Unsecured Obligation of Company. The
Corporation's obligations to establish and maintain accounts for
each eligible electing Non-Employee Director and to make payments
of deferred compensation to him or her under this Plan shall be
general unsecured obligations of the Corporation, and the Non-
Employee Director with accounts under the Plan shall at all times
be general unsecured creditors of the Corporation. The
Corporation shall be under no obligation to establish any
separate fund, purchase any annuity contract, or in any other way
make special provision or specifically earmark any funds for the
payment of any amounts called for under this Plan, nor shall this
Plan or any actions taken under or pursuant to this Plan be
construed to create a trust of any kind, or a fiduciary
relationship between the Corporation and any eligible Non-
Employee Director, his designated beneficiary, executors or
administrators, or any other person or entity. It is the
intention of the Corporation that at all times the Plan be
unfunded for income tax purposes and for purposes of Title I of
the Employee Retirement Income Security Act of 1974, as amended.
If the Corporation chooses to establish a fund or make any other
arrangement to provide for the payment of any amounts called for
under this Plan, such fund or arrangement shall conform to the
terms of the model trust described in Revenue Procedure 92-64
(1992-33 IRB 16).
11. Withholding of Taxes. The rights of a Non-
Employee Director to payments under this Plan shall be subject to
the Corporation's obligations at any time to withhold income or
other taxes from such payments.
12. Assignability. No portion of a Non-Employee
Director's account under the Plan is subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by creditors of the Non-
Employee Director.
13. Amendments and Termination. This Plan may be
amended or terminated at any time by the Board of Directors. No
amendment or termination shall affect a Non-Employee Director's
accounts existing on the date such amendment or termination
occurs, nor shall it affect any election previously made under
the Plan as to Director's Fees for the calendar year in which the
amendment or termination occurs.
14. Governing Law. The Plan shall be construed in
accordance with and governed by the laws of Pennsylvania.
15. Effective Date. The Plan shall be effective
January 1, 1994, and shall apply with respect to Director's Fees
payable by the Corporation on or after such date.
To evidence the adoption of the Plan, the
Corporation has caused its authorized officers to execute this
Plan document this _________ day of __________, 1993.
AMP Incorporated
Attest:_______________________ By:_____________________________
Its:____________________________
Enclosure I
AMP Incorporated
Deferred Compensation Plan for Non-Employee Directors
Specifications
I. Eligibility to Participate
A. All Directors not actively employed by AMP
Incorporated are eligible.
B. New Non-Employee Directors are eligible
immediately.
II. Compensation Eligible for Deferral
A. All or any portion of the base retainer and meeting
fees can be deferred.
B. The Director can specify a percent or a dollar
amount to be deferred.
III. Deferral Period
A. The Director will specify the future year in which
payment is to be made or commenced.
B. However, payment must be made or commenced no later
than the year following the Director's attainment of
age 72.
IV. Available Payment Methods
A. The Director can elect a lump sum or annual
installments.
B. If annual installments are elected, the maximum
number of years of installment payment is ten.
V. Investment Options
A. There will be two investment options, and the
Director will be able to allocate deferred amounts
to either or both options.
B. One option will be an interest-bearing account in
which deferred amounts will be credited monthly with
interest based on 120% of the Long Term Applicable
Federal Rate, adjusted quarterly.
C. The second option will be a phantom AMP stock
account in which phantom dividends will be
reinvested in further phantom stock units.
VI. Revocability of Elections
A. Elections made under the Plan will continue from
year to year until or unless changed by filing a new
election form; elections made on the new form will
apply to compensation earned in future years.
B. With respect to already deferred amounts, the
deferral period, the payment method, and the
investment direction cannot be changed.
VII. Contingencies
A. In the event of death, all deferred amounts plus
earnings are paid as soon as practicable to the
Director's beneficiary in a lump sum.
B. In the event of a change in control and subsequent
cessation of service at AMP, all deferred amounts
plus earnings are paid as soon as practicable in a
lump sum.
Enclosure II
Moody's Aaa Long Industrial Bond Yields
vs. 120% of Applicable Federal Long Term Rate
I II III IV
YEAR MONTH MOODY'S Aaa LONG AFR 120% LONG AFR III - I
---------------------------------------------------------------------
1990 JANUARY 8.9 8.02 9.66 .76
FEBRUARY 9.09 8.12 9.78 .69
MARCH 9.26 8.59 10.34 1.08
APRIL 9.32 8.75 10.54 1.22
MAY 9.34 8.74 10.53 1.19
JUNE 9.12 9.09 10.95 1.83
JULY 9.12 8.73 10.52 1.40
AUGUST 9.28 8.67 10.45 1.17
SEPTEMBER 9.39 8.74 10.53 1.14
OCTOBER 9.39 9.12 10.99 1.60
NOVEMBER 9.16 9.13 11.01 1.85
DECEMBER 8.92 8.87 10.69 1.77
1991 JANUARY 8.92 8.44 10.17 1.25
FEBRUARY 8.73 8.36 10.07 1.34
MARCH 8.82 8.21 9.89 1.07
APRIL 8.77 8.24 9.94 1.17
MAY 8.78 8.35 10.06 1.28
JUNE 8.90 8.30 10.00 1.10
JULY 8.89 8.43 10.16 1.27
AUGUST 8.69 8.58 10.33 1.64
SEPTEMBER 8.56 8.41 10.13 1.57
OCTOBER 8.52 8.09 9.75 1.23
NOVEMBER 8.44 7.84 9.44 1.00
DECEMBER 8.23 7.88 9.50 1.27
1992 JANUARY 8.18 7.72 9.31 1.13
FEBRUARY 8.27 7.33 8.83 .56
MARCH 8.30 7.61 9.16 .86
APRIL 8.29 7.83 9.43 1.14
MAY 8.24 7.87 9.47 1.23
JUNE 8.17 7.89 9.51 1.34
JULY 8.01 7.73 9.32 1.31
AUGUST 7.86 7.55 9.09 1.23
SEPTEMBER 7.80 7.21 8.68 .88
OCTOBER 7.92 7.03 8.46 .54
NOVEMBER 8.08 7.00 8.43 .35
DECEMBER 7.94 7.34 8.84 .90
<PAGE>
I II III IV
YEAR MONTH MOODY'S Aaa LONG AFR 120% LONG AFR III - I
---------------------------------------------------------------------
1993 JANUARY 7.87 7.30 8.78 .91
FEBRUARY 7.66 7.16 8.63 .97
MARCH 7.52 6.95 8.37 .85
APRIL 7.42 6.52 7.85 .43
MAY 7.41 6.53 7.87 .46
JUNE 7.28 6.47 7.79 .51
JULY 7.09 6.61 7.95 .86
AUGUST 6.74 6.36 7.65 .91
SEPTEMBER 6.55 6.28 7.56 1.01
OCTOBER 6.56 5.84 7.03 .47
NOVEMBER 6.80 5.84 7.03 .23
DECEMBER 6.80 6.06 7.29 .49
1994 JANUARY 6.80 6.30 7.58 .78
FEBRUARY 6.96 6.33 7.62 .66
MARCH 7.36 6.35 7.64 .28
APRIL 7.76 6.75 8.13 .37
MAY 7.87 7.16 8.63 .76
JUNE 8.08 7.52 9.06 .98
JULY 8.01 7.46 8.99 .98
AUGUST 8.00 7.67 9.24 1.24
SEPTEMBER 8.27 7.63 9.19 .92
OCTOBER 8.48 7.69 9.27 .79
NOVEMBER 8.01 9.65
Enclosure III
AMP INCORPORATED DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Deferral Election Form
I, the undersigned Director, elect to participate in the AMP
Incorporated Deferred Compensation Plan for Non-Employee
Directors and to defer payment of all or a portion of my
Director's Fees to be earned for services performed in calendar
years commencing following the date of this election. This
election shall remain in effect from year to year unless and
until modified or revoked in writing by me in accordance with the
Plan. It is my understanding that any such modification or
revocation shall be applicable only with respect to Director's
Fees earned subsequent to the effective date of the modification
or revocation.
a: Amount of Director's Fees to be Deferred (complete (a)
or (b)):
(a) ________% of Director's Fees Per Year
(b) $________ of Director's Fees Per Year, with such
dollar amount to be withheld from payments
otherwise due to me as follows:
__ withhold all payments due to me
from the first day of the year
until the indicated dollar total
has been withheld
__ withhold in twelve equal monthly
installments
__ other
____________________________________
b: Year When Deferred Amounts are to be Paid or Payments
Begun:
________ (Enter a year no later than the calendar year
following your attainment of age 72)
c: Method of Payment (check and complete (a) or (b)):
(a) ________ Lump sum
(b) ________ Annual installments over ______ years
(designate no more than ten)
d. Investment of Deferred Amounts (Enter a whole percentage
from 0% to 100% in each blank, with the two percentages
totaling to 100%):
________% Interest-Bearing Account
________% AMP Stock Account
It is understood that each of the foregoing elections is
irrevocable as to Director's Fees earned during the period that
the election is in effect. It is further understood that any
amounts deferred by operation of this election form may not be
withdrawn by me until the date elected above or in other than the
method elected above, and that the right to receive these amounts
may not be transferred or assigned by me in any fashion.
Finally, it is understood that all rights and entitlements to
receive any deferred amounts are further subject to the terms and
conditions of the aforementioned AMP Incorporated Deferred
Compensation Plan for Non-Employee Directors, as in effect on the
date of this election.
__________________________ ____________________________________
Date Print Name of Director
________________________________________
Signature of Director
Return original copy to: Secretary, AMP Incorporated, M.S.
176-41, P.O. Box 3608, Harrisburg, PA 17105-3608. Retain a copy
for your files.
DESIGNATION OF BENEFICIARY OTHER THAN ESTATE
Payments under the AMP Incorporated Deferred Compensation Plan
for Non-Employee Directors shall be made after my death to the
following beneficiary(ies), rather than to my estate:
_________________________________________________________________
It is my understanding that this designation is revocable and
will be superseded by any subsequently dated designation of
beneficiary relating to the Plan that I place on file with the
Company.
__________________________ _____________________________________
Date Signature of Director
This form should be returned to the Secretary, AMP Incorporated,
M.S. 176-41, P.O. Box 3608, Harrisburg, PA 17105-3608.
EXHIBIT 10.Q
RESTRICTED STOCK AGREEMENT
AGREEMENT dated this 12th day of September, 1994, by and between
AMP Incorporated, a Pennsylvania corporation with its principal
offices located in Harrisburg, Pennsylvania ("AMP") and Dennis
J. Horowitz, of Palm Beach Gardens, Florida ("Horowitz").
WHEREAS, AMP has extended a written offer of employment to
Horowitz dated August 8, 1994 and Horowitz has accepted the
terms of said offer, with Horowitz's employment by AMP agreed to
commence on September 12, 1994;
WHEREAS, one of the terms of Horowitz's employment by AMP is
AMP's agreement to grant Horowitz 12,000 shares of unregistered,
restricted common stock of AMP as of the start date of
Horowitz's employment with AMP; and
WHEREAS, both AMP and Horowitz desire to set forth in writing
the nature of the above described grant of restricted stock and
its contractual limitations.
NOW THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Grant
1.1. AMP hereby grants to Horowitz 12,000 shares of common
stock of AMP, subject to the restrictions set forth
under Sections 2 and 3 hereof (the "Shares"). The
Shares distributed to Horowitz hereunder will be issued
shares reacquired on the open market by and held in the
treasury of AMP. No Shares distributed pursuant to
this Agreement will have been registered under the
Securities Act of 1933, as amended (the "Securities
Act"). The Shares include the 12,000 shares granted
hereunder, as adjusted in the event of any subsequent
stock dividend, dividend reinvestment,
recapitalization, merger, consolidation, split-up,
combination, exchange of shares or similar event.
2. Restrictions
2.1. The Shares are subject to the following restrictions:
a. 5100 of the Shares shall vest effective September
12, 1994, and thereafter may be resold by Horowitz
to any party and at any time provided that all
such sales are in compliance with the rules and
<PAGE>
regulations of the Securities and Exchange
Commission governing the sale or other transfer of
such unregistered restricted stock by affiliates.
b. Horowitz's ownership of the remaining 6900 Shares
shall vest over a period of five (5) years, with
20% of the grant (1380 Shares) vesting on each
successive September 12th following the
commencement of Horowitz's employment with AMP on
September 12, 1994. In the event of Horowitz's
death within this 5-year vesting period, all of
the Shares remaining unvested at such time shall
immediately vest to the estate of Horowitz.
c. Any Shares not vested as of the date of Horowitz's
termination of employment with AMP shall be
forfeited and promptly returned to AMP without
further consideration. For purposes of this
Agreement, "termination of employment" means
the termination of employment by AMP or by a
subsidiary of AMP, but not the transfer of
employment from AMP to a subsidiary or vice
versa, or from one subsidiary of AMP to another
such subsidiary. For purposes of this Agreement
"termination of employment" also shall not mean
Horowitz's death or disability and, if AMP so
determines in its sole discretion, employment
shall not be considered as terminated if Horowitz
continues to perform services for AMP 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 Horowitz during such period(s) 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 business that is engaged in the
manufacture, sale or other disposition of a
product or products that are in competition to
a product or products of AMP or its subsidiaries,
partnerships or joint ventures.
d. Except as provided hereafter, none of the 6900
Shares that do not vest immediately upon the
commencement of Horowitz's employment with AMP
effective September 12, 1994 may be transferred by
Horowitz prior to his death or termination of
employment with AMP, as such termination of
employment is defined in Subsections 2.1(c) and
10.1(a) of this Agreement. "Transferred" means any
change of ownership of a Share, including without
limitation being sold, assigned, exchanged, gifted
or granted; it does not, however, include a mere
temporary change in possession such as a loan,
pledge or hypothecation, which under the terms of
this Agreement may occur with respect to the 6900
Shares during the period of Horowitz's employment
with AMP.
These 6900 Shares may be transferred by Horowitz
during the term of his employment with AMP only if
and to the extent that after such transfer(s) is
(are) completed, Horowitz continues to hold
sufficient shares of AMP common stock, derivative
securities or other interests in
Page 2
AMP securities to fully satisfy any AMP stock
ownership guidelines then applicable to an
executive officer of his level, in accordance with
the terms of such guidelines.
Notwithstanding the foregoing, the terms of the
restriction set forth in this Subsection 2.1(d)
shall not continue to apply to Horowitz in the
event of his disability.
3. Compliance with SEC Regulations
3.1. Separate and apart from the restrictions contained in
Section 2 hereof, the Federal securities laws and the
rules and regulations thereunder impose certain
restrictions on the resale, reoffer or other
disposition of shares of AMP common stock that are
unregistered under the Securities Act and/or are
held by persons who are "affiliates" of AMP, as that
term is defined in Rule 405 promulgated under the
Securities Act. In view of the fact that the grant of
Shares under this Agreement consists of unregistered
AMP common stock and, further, because Horowitz is or
may become an "affiliate" of AMP, an effective
registration statement must be filed under the
Securities Act covering the resale or reoffer of the
Shares, or he must comply with the requirements of Rule
144 under the Securities Act before he can publicly
sell or reoffer the Shares, or he must otherwise rely
on one of the other exemptions from registration
that may be available. None of the provisions of this
Agreement shall relieve Horowitz of his obligations to
comply with applicable Federal and state securities
laws in connection with the Shares and transactions
related to the Shares.
4. Stock Repurchase
4.1. On March 13, 1995, a date that is six (6) months after
the grant of the Shares to Horowitz, Horowitz agrees to
offer for sale to AMP and AMP agrees to repurchase from
Horowitz a minimum of 1705 Shares at the closing price
of the AMP common stock on March 13, 1995 as reflected
on the New York Stock Exchange Composite Tape. On that
date Horowitz must offer for sale to AMP at least 1705
Shares but may offer up to a total of 5100 Shares, and
AMP agrees to repurchase whatever number of shares
between 1705 and 5100 that Horowitz so offers. To the
extent that the total 5100 shares are not offered by
Horowitz for sale to AMP on March 13, 1995, the balance
of such Shares may thereafter from time to time be
offered by Horowitz for sale to AMP during the term of
this Agreement provided that each such offering
represents either a minimum of 1000 Shares or the then
existing entire balance of the 5100 Shares. These
repurchases of Shares after March 13, 1995 shall be at
the closing price of the AMP common stock on the dates
of such repurchases and shall be subject to any tax
withholding, above and beyond that described in
Subsection 4.2 below, that may apply to said
repurchases.
Page 3
4.2. Inasmuch as 5100 Shares under this Agreement will
become fully taxable to Horowitz on March 13, 1995, AMP
will withhold from the proceeds of the stock repurchase
identified in Subsection 4.1 above sufficient funds to
meet the tax withholding obligations of AMP with
respect to the 5100 Shares. The balance of the
proceeds remaining after such tax withholding
obligations have been satisfied, if any, shall be
promptly remitted to Horowitz.
5. Tax Withholding
5.1. AMP may deduct from any payment to be made to Horowitz
any amount that Federal, state, local or foreign tax
laws requires to be withheld with respect to the 6900
Shares upon the vesting of, or the lapse of
restrictions on, all or any part of such Shares. As
additional methods of accomplishing such withholding,
Horowitz may elect to have AMP withhold from the
6900 Shares, or he may surrender previously acquired
shares of AMP common stock, in a number of whole shares
up to but not exceeding that number that has a then-
current fair market value sufficient to cover the
amount of taxes required to be withheld at such time.
6. Legends
6.1. The certificate evidencing the 6900 Shares described in
Subsection 2.1(b) above shall bear three legends in the
following forms:
a. "The securities represented by this certificate
have not been registered under the Securities Act
of 1933, as amended (the "Act"), or under the
securities laws of any state. These shares may
not be sold, offered for sale, transferred,
pledged or hypothecated in the absence of an
effective registration statement for the shares
under the Act and applicable state securities
laws, or an opinion of counsel and other
assurances satisfactory to AMP Incorporated, prior
to the transaction, that registration is not
required under the Act or under the securities
laws of any state."
b. "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."
c. "The shares represented by this certificate are
subject to, and may not be transferred except in
compliance with, a Restricted Stock Agreement
dated September 12, 1994 between AMP Incorporated
and Dennis J. Horowitz. A copy of that Agreement
is available without cost from AMP Incorporated,
Harrisburg, Pennsylvania."
Page 4
6.2. The certificate evidencing the 5100 Shares described in
Subsection 2.1(a) above shall bear the two legends set
forth in Subsections 6.1(a) and 6.1(b) above.
6.3. In order to facilitate any sale or other disposition of
the Shares by Horowitz to persons entitled to take the
Shares free and clear of the restrictions of this
Agreement, AMP agrees to promptly issue, in exchange
for legended certificates for the Shares, unlegended
certificates upon written request therefor from
Horowitz. Any such request shall contain a
representation in reasonable detail that the Shares
represented by such legended certificates are being
transferred in conformance with the terms of this
Agreement.
7. Waiver of Section 83(b) Election
7.1. Horowitz acknowledges his knowing waiver of his right
under Section 83(b) of the Internal Revenue Code of
1986, as amended, to elect to have the Shares treated
as taxable income for the calendar year 1994, the year
in which the Shares were received by Horowitz, which
tax would have been based on the fair market valuation
of the Shares as of the date of the grant of the Shares
to Horowitz.
8. Dividends
8.1. Cash dividends paid on the Shares shall, at the
election of Horowitz, either be paid directly to
Horowitz or be automatically reinvested in additional
shares of AMP common stock under AMP's Enhanced
Dividend Reinvestment Plan. Any such additional
shares, together with any stock dividends paid on the
Shares, shall not be subject to the terms, conditions
and restrictions set forth in this Agreement and shall
be acquired by Horowitz notwithstanding that the
Shares with respect to which such dividend was paid
may have been forfeited under the terms of this
Agreement prior to the payment date for such dividend.
9. Stock Power
9.1. Upon the request of AMP from time to time, Horowitz
agrees to execute and deliver to AMP one or more stock
powers in such form as may be specified by the
Corporate Secretary of AMP, authorizing the transfer of
the Shares to AMP.
10. Term
10.1. This Agreement shall terminate on the first to
occur of the following:
Page 5
a. termination of Horowitz's employment with AMP, as
defined in Subsection 2.1(c) above and whether by
reason of retirement, resignation or involuntary
termination;
b. Horowitz's death;
c. any merger, consolidation, sale of assets or
reorganization in which AMP is not the surviving
entity; or
d. the date on which the common stock of AMP is no
longer listed for trading on any securities
exchange.
10.2. In the event of the termination of this Agreement for
the reasons set forth in Subsections 10.1(c) and (d)
above, then AMP agrees to thereafter pay Horowitz the
amount of money representing the number of Shares
remaining unvested at the time of such termination,
valued at the last closing price of the AMP common
stock on the New York Stock Exchange Composite Tape
prior to the termination. This payment shall be made
in equal installments on each of the remaining
September 12th vesting dates provided for in Subsection
2.1(c) of this Agreement.
11. Governing Law
11.1. This Agreement shall be governed by and construed in
all respects in accordance with the laws of the
Commonwealth of Pennsylvania and applicable Federal
law.
12. Severability
12.1. In the event any one or more of the provisions, or
portions thereof, contained or referenced in this
Agreement shall for any reason be or be deemed to be
invalid, illegal or unenforceable, such provision shall
be construed or deemed amended to conform to applicable
laws, or if it cannot be so construed or deemed amended
without materially altering the intent of the
Agreement, such provision shall be stricken and the
remaining provisions shall continue in full force and
effect and be construed as if such provision, to the
extent it is invalid, illegal or unenforceable, had
never been contained herein.
13. Non-Waiver
13.1. The failure of any party to enforce the provisions
hereof or to exercise the rights granted hereunder, or
the Agreement of the parties to waive enforcement
Page 6
thereof, at any time or for any period of time shall
not constitute or be construed to be a waiver of any
other failure or breach of such provisions or rights,
or any other provision of this Agreement, or of the
right of such party thereafter to enforce each and
every such provision or right, nor shall such failure
or agreement be deemed to be an amendment to this
Agreement. Each waiver under this Agreement shall be
express and in writing.
14. Notices
14.1. Any notice or demand hereunder or under statute, to be
effective, must be in writing and delivered personally
or sent to telegram, facsimile, express carrier or
other delivery that provides a written confirmation, or
by certified or registered mail, postage or other
expenses prepaid, to:
AMP at: Corporate Secretary
AMP Incorporated
P.O. Box 3608
M/S 176-48
Harrisburg, PA 17105
Horowitz Dennis J. Horowitz
at: AMP Incorporated
P.O. Box 3608
M/S 176-40
Harrisburg, PA 17105
The above addresses may be changed at any time by
giving prompt written notice as provided above.
15. Successors
15.1. This Agreement shall be binding on the heirs,
executors, administrators and successors of the parties
hereto.
16. Counterparts
16.1. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original
but all of which together shall constitute but one and
the same Agreement.
Page 7
17. Entire Agreement
17.1. This Agreement represents the entire understanding and
agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior
agreements and understandings either written or oral.
This Agreement may be modified or amended only by an
instrument in writing duly executed by Horowitz and an
authorized representative of AMP.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
AMP INCORPORATED
By:______________________________ By:_________________________
Chief Executive Officer Dennis J. Horowitz
and President
Page 8
EXHIBIT 10.R
RESTRICTED STOCK AGREEMENT
AGREEMENT dated this 15th day of August, 1994, by and between
AMP Incorporated, a Pennsylvania corporation with its principal
offices located in Harrisburg, Pennsylvania ("AMP") and Robert
M. Ripp, of Bedford, New York ("Ripp").
WHEREAS, AMP has extended a written offer of employment to Ripp
dated July 26, 1994 and Ripp has accepted the terms of said
offer, with Ripp's employment by AMP agreed to commence on
August 15, 1994;
WHEREAS, one of the terms of Ripp's employment by AMP is AMP's
agreement to grant Ripp 12,000 shares of unregistered,
restricted common stock of AMP as of the start date of Ripp's
employment with AMP; and
WHEREAS, both AMP and Ripp desire to set forth in writing the
nature of the above described grant of restricted stock and its
contractual limitations.
NOW THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Grant.
1.1. AMP hereby grants to Ripp 12,000 shares of common stock
of AMP, subject to the restrictions set forth under
Sections 2 and 3 hereof (the "Shares"). The Shares
distributed to Ripp hereunder will be issued shares
reacquired on the open market by and held in the
treasury of AMP. No Shares distributed pursuant
to this Agreement will have been registered under the
Securities Act of 1933, as amended (the "Securities
Act"). The Shares include the 12,000 shares granted
hereunder, as adjusted in the event of any subsequent
stock dividend, dividend reinvestment,
recapitalization, merger, consolidation, split-up,
combination, exchange of shares or similar event.
<PAGE>
2. Restrictions.
2.1. The Shares are subject to the following restrictions:
a. Ripp's ownership of the Shares shall vest, subject
to the condition set forth in Subsection 2.1(d)
below, on the date of Ripp's termination of
employment with AMP in the following amounts:
None of the grant if said termination occurs
before August 15, 1995, 20% of the grant (2,400
shares) if said termination occurs after August
14, 1995 but before August 15, 1996, 40% of the
grant (4,800 shares) if said termination occurs
after August 14, 1996 but before August 15, 1997,
60% of the grant (7,200 shares) if said
termination occurs after August 14, 1997 but
before August 15, 1998, 80% of the grant (9,600
shares) if said termination occurs after August
14, 1998 but before August 15, 1999, and the
entire amount of the grant (12,000 shares) if said
termination occurs after August 14, 1999.
However, in the event of Ripp's death prior to
August 15, 1999, all of the Shares shall
immediately vest to the estate of Ripp.
b. Any Shares not conditionally vested as of the date
of Ripp's termination of employment with AMP shall
be forfeited and promptly returned to AMP without
further consideration. For purposes of this
Agreement, termination of employment means the
termination of employment by AMP or by a
subsidiary of AMP, but not the transfer of
employment from AMP to a subsidiary or vice
versa, or from one subsidiary of AMP to another
such subsidiary.
For purposes of this Agreement "termination of
employment" also shall not mean Ripp's death or
disability and, if AMP so determines in its sole
discretion, employment shall not be considered as
terminated if Ripp continues to perform services
for AMP 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 Ripp 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 business that is engaged in the
manufacture, sale or other disposition of a
product or products that are in competition to a
product or products of AMP or its subsidiaries,
partnerships or joint ventures.
c. Except as provided hereafter, no Shares may be
transferred by Ripp prior to termination of Ripp's
employment with AMP, as such
Page 2
termination of employment is defined in Subsection
2.1 (b) above. "Transferred" means any change of
ownership of a Share, including without limitation
being sold, assigned, exchanged, gifted or
granted; it does not, however, include a mere
temporary change in possession such as a loan,
pledge or hypothecation, which under the terms of
this Agreement may occur with respect to the
Shares during the period of Ripp's employment with
AMP. This restriction will not continue to
apply to Ripp in the event of his disability.
d. Any Shares shall be forfeited and promptly
returned to AMP without further consideration if,
within one (1) year following Ripp's termination
of employment with AMP Ripp, whether full time or
part time, engages in or performs any services as
an employee, independent contractor, consultant,
advisor or otherwise for a business that is
engaged in the manufacture, sale or other
disposition of a product or products that are in
competition to a product or products of AMP or its
subsidiaries, partnerships or joint ventures.
3. Compliance with SEC Regulations.
3.1. Separate and apart from the restrictions contained in
Section 2 hereof, the Federal securities laws and the
rules and regulations thereunder impose certain
restrictions on the resale, reoffer or other
disposition of shares of AMP common stock that are
unregistered under the Securities Act and/or are
held by persons who are "affiliates" of AMP, as that
term is defined in Rule 405 promulgated under the
Securities Act. In view of the fact that the grant of
Shares under this Agreement consists of unregistered
AMP common stock and, further, because Ripp is or may
become an "affiliate" of AMP, an effective registration
statement must be filed under the Securities Act
covering the resale or reoffer of the Shares, or he
must comply with the requirements of Rule 144 under the
Securities Act before he can publicly sell or reoffer
the Shares, or he must otherwise rely on one of the
other exemptions from registration that may be
available. None of the provisions of this Agreement
shall relieve Ripp of his obligations to comply with
applicable Federal and state securities laws in
connection with the Shares and transactions related to
the Shares.
Page 3
4. Legends.
4.1. Each certificate evidencing the Shares shall bear three
legends in the following forms:
a. "The securities represented by this certificate
have not been registered under the Securities Act
of 1933, as amended (the "Act"), or under the
securities laws of any state. These shares may
not be sold, offered for sale, transferred,
pledged or hypothecated in the absence of an
effective registration statement for the shares
under the Act and applicable state securities
laws, or an opinion of counsel and other
assurances satisfactory to AMP Incorporated, prior
to the transaction, that registration is not
required under the Act or under the securities
laws of any state."
b. "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."
c. "The shares represented by this certificate are
subject to, and may not be transferred except in
compliance with, a Restricted Stock Agreement
dated August 15, 1994 between AMP Incorporated and
Robert M. Ripp. These shares are subject to
forfeiture in the event of a breach of the terms
and conditions of said Restricted Stock Agreement.
A copy of that Agreement is available without cost
from AMP Incorporated, Harrisburg, Pennsylvania."
4.2. In order to facilitate any sale or other disposition of
the Shares by Ripp to persons entitled to take the
Shares free and clear of the restrictions of this
Agreement, AMP agrees to promptly issue, in exchange
for legended certificates for the Shares, unlegended
certificates upon written request therefor from Ripp.
Any such request shall contain a representation in
reasonable detail that the Shares represented by such
legended certificates are being transferred in
conformance with the terms of this Agreement.
5. Tax Withholding.
5.1. AMP may deduct from any payment to be made to Ripp any
amount that Federal, state, local or foreign tax laws
requires to be withheld with respect to the Shares upon
the vesting of, or the lapse of restrictions on, all or
any part of the Shares. As additional methods of
accomplishing
Page 4
such withholding, Ripp may elect to have AMP withhold
from the Shares, or he may surrender previously
acquired shares of common stock, in a number of whole
shares up to but not exceeding that number that has a
then-current fair market value sufficient to cover the
amount of taxes required to be withheld at such time.
6. Waiver of Section 83(b) Election.
6.1. Ripp acknowledges his knowing waiver of his right under
Section 83(b) of the Internal Revenue Code of 1986, as
amended, to elect to have the Shares treated as taxable
income for the calendar year 1994, the year in which
the Shares were received by Ripp, which tax would have
been based on the fair market valuation of the Shares
as of the date of the grant of the Shares to Ripp.
7. Term.
7.1. This Agreement shall terminate on the first to occur of
the following:
a. one year following termination of Ripp's
employment with AMP, as defined in Subsection
2.1 (b) above and whether by reason of retirement,
resignation or involuntary termination;
b. Ripp's death;
c. any merger, consolidation, sale of assets or
reorganization in which AMP is not the surviving
entity; or
d. the date on which the common stock of AMP is no
longer listed for trading on any securities
exchange.
7.2. In the event of the termination of this Agreement for
the reasons set forth in Subsections 7.1(c) and (d)
above, then AMP agrees to thereafter pay Ripp the
amount of money representing the number of Shares
remaining unvested at the time of such termination,
valued at the last closing price of the AMP common
stock on the New York Stock Exchange Composite Tape
prior to the termination. This payment shall be made
in equal installments on each of the remaining August
15th anniversary dates
Page 5
that mark the vesting of additional Shares as described
in Subsection 2.1(a) of this Agreement.
8. Dividends.
8.1. Cash dividends paid on the Shares shall, at the
election of Ripp, either be paid directly to Ripp or be
automatically reinvested in additional shares of AMP
common stock under AMP's Enhanced Dividend Reinvestment
Plan. Any such additional shares, together with any
stock dividends paid on the Shares, shall not be
subject to the terms, conditions and restrictions
set forth in this Agreement and shall be acquired by
Ripp notwithstanding that the Shares with respect to
which such dividend was paid may have been forfeited
under the terms of this Agreement prior to the payment
date for such dividend.
9. Stock Power.
9.1. Upon the request of AMP from time to time, Ripp agrees
to execute and deliver to AMP one or more stock powers
in such form as may be specified by the Corporate
Secretary of AMP, authorizing the transfer of the
Shares to AMP.
10. Governing Law.
10.1. This Agreement shall be governed by and construed in
all respects in accordance with the laws of the
Commonwealth of Pennsylvania and applicable Federal
law.
11. Severability.
11.1. In the event any one or more of the provisions, or
portions thereof, contained or referenced in this
Agreement shall for any reason be or be deemed to be
invalid, illegal or unenforceable, such provision shall
be construed or deemed amended to conform to applicable
laws, or if it cannot be so construed or deemed amended
without materially altering the intent of the
Agreement, such provision shall be stricken and the
remaining provisions shall continue in full force and
effect and be
Page 6
construed as if such provision, to the extent it is
invalid, illegal or unenforceable, had never been
contained herein.
12. Non-Waiver.
12.1. The failure of any party to enforce the provisions
hereof or to exercise the rights granted hereunder, or
the Agreement of the parties to waive enforcement
thereof, at any time or for any period of time shall
not constitute or be construed to be a waiver of any
other failure or breach of such provisions or rights,
or any other provision of this Agreement, or of the
right of such party thereafter to enforce each and
every such provision or right, nor shall such failure
or agreement be deemed to be an amendment to this
Agreement. Each waiver under this Agreement shall be
express and in writing.
13. Notices.
13.1. Any notice or demand hereunder or under statute, to be
effective, must be in writing and delivered personally
or sent to telegram, facsimile, express carrier or
other delivery that provides a written confirmation, or
by certified or registered mail, postage or other
expenses prepaid, to:
AMP at: Corporate Secretary
AMP Incorporated
P.O. Box 3608
M/S 176-48
Harrisburg, PA 17105
Ripp Robert M. Ripp
at: AMP Incorporated
P.O. Box 3608
M/S 176-40
Harrisburg, PA 17105
The above addresses may be changed at any time by
giving prompt written notice as provided above.
Page 7
14. Successors.
14.1. This Agreement shall be binding on the heirs,
executors, administrators and successors of the parties
hereto.
15. Counterparts.
15.1. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original
but all of which together shall constitute but one and
the same Agreement.
16. Entire Agreement.
16.1. This Agreement represents the entire understanding and
agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior
agreements and understandings either written or oral.
This Agreement may be modified or amended only by an
instrument in writing duly executed by Ripp and an
authorized representative of AMP.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
AMP INCORPORATED
By:____________________________ By:__________________________
Chief Executive Officer Robert M. Ripp
and President
Page 8
EX-13
-----
AMP INCORPORATED ANNUAL REPORT 1994
to the extent specifically incorporated by
reference into the Annual Report on Form 10-K
for the year ended December 31, 1994
(financial section)
Financial
Table of Contents
26 Historical Data
28 Management's Discussion & Analysis
33 Consolidated Statements of Income
33 Consolidated Statements of Shareholders' Equity
34 Consolidated Balance Sheets
35 Consolidated Statements of Cash Flows
36 Notes to Consolidated Financial Statements
44 Statement of Management Responsibility
44 Report of Independent Public Accountants
28
AMP Incorporated and subsidiaries
MANAGEMENT'S Results of Operations - 1994 Compared with 1993
DISCUSSION & Sales for the year reached $4.03 billion, increasing 17%
ANALYSIS over 1993's $3.45 billion. Improving economic conditions
in Europe and Japan contributed to broad-based sales growth
throughout the world. In the U.S., the Company increased
sales in every major market category it serves. Changes in
exchange rates increased sales by $62 million as the U.S.
dollar weakened throughout the year against the Japanese
yen and in the second half against the currencies of Western
Europe.
Net income increased 25% in 1994 to $1.76 per share
from $1.41 per share in 1993 (restated for 2-for-1 stock
split in 1995). Exchange rate movements that increased
sales in 1994 added a few cents per share to net income.
Average shares outstanding were slightly lower during 1994
as a result of the Company's share repurchase plan.
During 1994, the Company improved its return on equity
to 16.8% from 14.8% in 1993 while also improving its return
on assets to 10.7% from 9.7% in 1993.
Operating margin improved from 15.2% of sales in 1993
to 16.1% in 1994. The Company realized productivity gains
and improved utilization of manufacturing capacity.
Aggressive cost reduction programs and product
stratification strategies helped offset the negative margin
impact of new business startups and modest price erosion.
Sales/ marketing, General and Administrative Expenses were
17.9% of sales in both 1994 and 1993. Compared year-to-
year, SG&A increased 17%, a growth rate similar to the
sales increase. In the short run, SG&A spending is not
directly linked to the sales level; therefore, current
quarter to previous quarter or current quarter to same
quarter last year comparisons may or may not be valid. In
1994, the Company invested in future-oriented SG&A
infrastructure and new business startups. In 1994,
depreciation expense amounted to $271 million, up from $262
million in 1993. The increase primarily resulted from
higher capital spending in the U.S. for buildings,
machinery and equipment. Depreciation is expected to
increase again in 1995 as the Company continues to create
additional capacity to supply future volume expectations
throughout the world.
Pretax income improved to 14.8% of sales in 1994 from
14.1% in the previous year. The year-to-year pretax
dollars increased 22% to $594 million. Interest expense
was $20 million, unchanged from 1993. Other Deductions,
net , which is a combination of numerous unrelated
nonoperating items of both income and expense, increased
$13.2 million in 1994 to $32.5 million. Major changes were
non-recurring investment portfolio gains in 1993, write-
down of the carrying value of two of the Company's minority
interest investments and continued accelerated amortization
of certain intangible assets related to acquisitions. The
income tax rate on pretax income declined from 39.0% in
1993 to 37.8% in 1994 reflecting changes in the geographic
mix of taxable income.
Total expenditures on the functions of research,
development and engineering reached $456 million in 1994,
up 12% from 1993's $406 million. During the past ten
years, the Company has expended just under 12% of its sales
revenues on RD&E. Of the $456 million expended this year,
$265 million qualifies for the creation and application
of new and improved products and processes as defined by
Statement of Financial Accounting Standards No. 2,
"Accounting for Research and Development Costs." One
indication of the effectiveness of the RD&E focus on new
product development is that the Company's new product sales
continue to increase as a percentage of total sales.
Another indication is the number of new patents granted to
the Company each year. Once again in 1994, the Company is
among the leaders in the number of new U.S. patents issued.
Significant sales growth over 1993 occurred in each of
the four geographic segments, with pretax income margin
improvement resulting in all but the U.S. segment. In 1994,
the Company believes the worldwide connector industry grew
at an annual rate of 8%. During the same period, the
Company increased sales 17%, more than double the industry
growth rate and above the Company's objective of growing
1.5 times the industry growth rate.
U.S. segment sales to trade customers increased 15% in
1994 to $1.71 billion. The strongest growth was in the
automotive, communications equipment and industrial
/commercial equipment markets, and the interconnections
systems businesses. Sales increased every quarter in the
U.S. in 1994 as the domestic economy continued to perform
well. U.S. sales were 42% of the worldwide total, down
from 43% in 1993. Pretax income increased to $301 million
from $282 million a year ago; however, the margin was down
about 1% to sales. Principal reasons for the decrease were
lower margins in the new business startups, future-oriented
SG&A infrastructure expenses and increases in Other
Deductions, net, as noted earlier.
European segment sales to trade customers increased 16%
in local currencies and 17% in U.S. dollars as economic
recovery continued throughout the year. Sales growth was
broad-based and was strongest in the automotive,
computer/business equipment, telecommunications and
industrial machinery markets. From a country standpoint,
France, Great Britain, Italy and Spain were the leaders.
European sales in 1994
AMP Incorporated and subsidiaries 29
MANAGEMENT'S were 31% of the worldwide total, unchanged from 1993.
DISCUSSION & European pretax income increased 42% as a result of cost
ANALYSIS reductions and improvements in manufacturing capacity
continued utilization and productivity over 1993 which was impacted
by difficult economic conditions.
Asia/Pacific segment sales to trade customers grew 11%
in local currencies and 18% in U.S. dollars. Economic
growth outside of Japan continued to be strong as markets
expanded and outsourcing of manufacturing from Japan
increased. The Company experienced improving business
conditions within Japan in 1994 as the recovery continued
to slowly gather strength. Sales in Japan were up 3% in
1994 in local currency after being down 5% in 1993.
Strongest market growth in the region was in consumer
electronics, computers and communication equipment.
Asia/Pacific pretax income increased 49% in 1994 with cost
reduction efforts and increased production requirements
contributing to the improvement. The recent earthquake in
Japan did not affect the Company's facilities or operations
directly.
The Americas segment sales to trade customers increased
29% to $213 million in 1994 with good growth in Brazil,
Canada and Mexico. Pretax income increased to almost $22
million from $2 million in 1993. This substantial growth
improved pretax margins in excess of 8% of sales.
Increased sales volume in the region and a more stable
economy and currency in Brazil during the second half of
the year significantly contributed to the improvement. The
recent devaluation of the Mexican Peso did not have a
material effect on reported results.
The Company expects 1995 to be a year of continued good
growth throughout the world, but with the possibility of
slower growth in the U.S. in the second half of the year.
Economic recovery is broad-based and current forecasts for
virtually every market in which the Company participates
expect additional growth for the year. The Company is well
positioned to take full advantage of the opportunities
resulting from a strong global economy. Increased capital
and technical spending have broadened and improved its
capabilities and expanded the available marketplace. In
addition, geographic expansion in terms of both
manufacturing and/or marketing activities continues in Asia,
Eastern Europe, South Africa and the Middle East.
In recent years, approximately 60% of the Company's
trade customer sales have originated outside the U.S.
Therefore, fluctuations in the exchange value of the U.S.
dollar have an impact on sales and earnings.
Results of Operations - 1993 Compared with 1992
Sales for the year were $3.45 billion, up 3% from
1992's $3.34 billion. The overall effect of exchange rates
reduced sales by $73 million as weakening of the U.S.
dollar against the Japanese yen was more than offset by the
strengthening of the dollar against European currencies.
Recessionary conditions in Europe and Japan impacted sales
growth again in 1993, as was the case in 1992.
Net income per share increased from $1.38 in 1992 to
$1.41 in 1993. Exchange rate movements that adversely
affected sales in 1993 reduced net income by approximately
4 cents per share. Average shares outstanding changed little
during the year as stock repurchases were not significant.
The decline in operating margin from 16.0% of sales in
1992 to 15.2% in 1993 was strongly influenced by the
recessionary conditions that existed in Europe and Japan
throughout the year. The Company experienced modest price
erosion on commodity products for the computer market.
Selling, General and Administrative Expenses were 17.9% of
sales, up slightly from 1992's 17.5%. Depreciation and
amortization expense amounted to $282 million in 1993, down
slightly from $288 million in the previous year.
The year-to-year pretax income margin decline, 14.4% of
sales in 1992 to 14.1% in 1993, was less than the decrease
in operating margin due to reduced interest expense and
lower deductions in Other Deductions, net. Interest
expense decreased $9.9 million through a combination of
lower interest rates
SALES DOLLAR
USE
(percent)
1994 1993 1992 1991 1990
43.8% Materials, services 42.4% 42.5% 43.7% 44.1%
33.0% Wages, benefits 34.2% 33.0% 32.5% 31.6%
7.4% Depreciation/amortization 8.2% 8.6% 8.2% 7.2%
6.1% Taxes 6.0% 6.3% 5.8% 6.3%
4.8% Reinvested 3.7% 3.9% 3.6% 4.7%
4.4% Dividends 4.9% 4.8% 4.9% 4.8%
.5% Interest expense .6% .9% 1.3% 1.3%
Key Ratios 1994 1993
Current Ratio
(Current Asset (divided by)
Current Liabilities) 1.99 to 1 2.19 to 1
Long-Term Debt as a
percentage of Shareholders'
Equity 9.0% 6.4%
Total Debt
as a percentage of
Shareholders' Equity 16.6% 15.3%
30
AMP Incorporated and subsidiaries
MANAGEMENT'S and reduced outstanding debt. Other Deductions, net,
DISCUSSION & provided a deduction in 1993 that was lower by $5.5
ANALYSIS million than in 1992. Gains on sales from the investment
continued portfolio, including the November 1993 sale of a portion
of the Company's holdings in the stock of BroadBand
Technologies, Inc., more than offset larger translation
losses in Brazil, whose economy is defined as highly
inflationary under accounting rules.
The income tax rate on pretax income decreased from
39.4% in 1992 to 39.0% in 1993. Effective tax planning
offset the 2 1/2 cents per share reduction resulting from
the increase in the U.S. corporate income tax rate
retroactive to the beginning of the year. The Company
adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," in the first quarter of
1993. Adoption resulted in additional income tax expense
in the Asia/Pacific segment and reduced income tax expense
in the European segment. In the aggregate, adoption of
SFAS No. 109 did not materially affect net income.
The Company continued to expend nearly 12% of its sales
revenues on the functions of research, development and
engineering. Of this expenditure, $258 million qualifies
for the creation and application of new and improved
products and processes in conformance with the requirements
of SFAS No. 2, "Accounting for Research and Development
Costs."
U.S. segment sales to trade customers benefited from
broad-based sales growth, with the strongest growth in
automotive and networking/premise wiring. U.S. sales in
1993 were $1.49 billion, up 10% from 1992's $1.36 billion.
Pretax income increased 10% to $281.9 million and reflected
a margin to sales of 15.7%, similar to 1992's 15.9%. U.S.
segment sales growth in 1993 was not significantly
influenced by acquisitions during the current year.
European segment sales to trade customers were up 1% in
local currencies in 1993 despite difficult economic
conditions throughout the region. However, due to the
strengthening of the U.S. dollar, European sales were down
10% in U.S. dollars. Sales growth in Europe was strongest
in the computer and networking/premise wiring markets. The
introduction of new products, together with the increasing
electronic content, enabled sales to the automotive market
to decline less than the reduction in unit production
during the year. Reflecting price erosion and excess
manufacturing capacity, European pretax margins declined
from 12.2% in 1992 to 11.5% in 1993.
Asia/Pacific segment sales to trade customers grew 2%
in local currencies and 11% in U.S. dollars in 1993. Sales
in Japan were down modestly in local currency due to the
recession; however, favorable exchange rate effects
resulted in increased sales in Japan in U.S. dollars.
Sales growth outside of Japan was very strong and broad-
based. Asia/Pacific pretax margins declined .4% to 9.4%
in 1993 as a result of Japan experiencing lower local
currency sales and because of modest price erosion in this
highly competitive, fast-growing market.
The Americas segment sales to trade customers increased
15% in 1993 with strong growth in Argentina and Brazil.
However, the ongoing exchange rate deterioration of the
Brazilian cruzeiro against the U.S. dollar resulted in
large translation losses. As a result, the 1993 pretax
profit margin for the segment was only 1%, down from 3% in
1992 when the currency situation was much the same.
Price and Cost Trends
Continuing a trend since 1990, labor and service cost
increases were moderate in 1994. However, the trend of
stable-to-declining raw materials prices reversed abruptly,
particularly in industrial metals. Profit margin
improvement has been largely dependent upon cost reductions
and productivity improvements since there have been few
opportunities for increasing sales prices. In the
aggregate, sales prices have declined, with an estimated
rate of erosion continuing at the 2-3% annual rate
prevalent since 1990. Wage rate increases were moderate
and continue to closely parallel industry, regional and
national averages in the countries in which the Company
operates. Performance-based compensation increased more
significantly in 1994, reflecting strong improvement in
business unit results and earnings per share.
Copper and gold prices are important elements of the
Company's manufacturing cost. On average, copper prices
were 26% higher in 1994 than in 1993 ($1.07/lb. versus
85 cents/lb.) and had risen to $1.40/lb. at year-end 1994.
The increase in gold prices was a much less dramatic 7%
($384/troy oz. versus $360). Prices of zinc increased by
less than 4% in 1994. Plastic raw materials prices rose
significantly in 1994, as prices of key ingredients such as
antimony, methanol, benzene and glass all increased.
However, the impact of many of these increases on the
Company was somewhat mitigated by its size advantage and
volume purchasing capability. The Company's ability to
manage commodity price increases is largely dependent on
more efficient material usage. The use of protective
hedging is a small component of overall cost containment
strategy. The Company believes the availability of the
materials and labor skills it requires will remain adequate
during 1995.
Annually the Company reviews the key economic
assumptions that contribute to the determination of net
periodic pension cost. Selection of a 7.00% year-end 1993
settlement or discount rate for the U.S.
AMP Incorporated and subsidiaries 31
MANAGEMENT'S pension plan was largely responsible for U.S. net periodic
DISCUSSION & pension cost increasing to $13.2 million in 1994 from $5.8
ANALYSIS million in 1993. Based on movement during 1994 in long-
continued term interest rates related to fixed income investments
receiving one of the two highest ratings given by a
recognized rating agency, the Company increased the year-
end discount rate assumption for its U.S. plan from 7.00%
in 1993 to 8.50% in 1994.
The Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits" on January 1, 1994.
This standard requires that liabilities be recognized for
benefits such as Workers' Compensation Insurance, severance
pay and health care continuation provided to former
employees during the period after employment but before the
normal retirement age. Adoption did not significantly
impact 1994 earnings because the Company had accounted for
these costs using the accrual method prior to 1994.
Also on January 1, 1994, the Company adopted SFAS No.
115, "Accounting For Certain Investments in Debt and Equity
Securities." The Company's securities covered by this
standard are adjusted to current market value at the end of
each accounting period. Market value gains and losses are
charged to earnings if the Company's objective is to
generate profits on short-term differences in price.
Otherwise, such differences are accumulated in a separate
component of Shareholders' Equity. The standard was
adopted prospectively and, given the Company's current
investment strategies, had no impact on 1994 earnings.
Liquidity
Cash and equivalents and Securities available for sale
increased by $8 million to $395 million at December 31,
1994. The adoption of SFAS No. 115 in 1994 requires the
Company to adjust the Securities available for sale to
market value at the end of each accounting period. The
adjustment increased Securities available for sale by $37
million at December 31, 1994.
Total debt increased by $72 million, primarily due to a
private placement borrowing in the first quarter of 1994 of
six billion Japanese yen with bullet repayment in 20 years.
Since year-end 1992, the Company has shifted $168 million
of its borrowings from short to long-term. Most of this
shift was in Japan to lock in after-tax borrowing costs,
which are lower than in any other country in which the
Company operates.
Although Accounts Receivable and Inventory both
increased at a greater rate than year-to-year sales, days
sales outstanding and inventory turns were virtually
unchanged after adjusting for currency effects and the
inclusion of ARA Industrie and SIMEL S.A. as acquisitions
late in the fourth quarter.
The Company's current ratio declined to 1.99 at year-
end 1994 from 2.19 the previous year. Total debt at year-
end 1994 was equal to 16.6% of Shareholders' Equity, up
from 15.3% at year-end 1993. Long-term debt as a percent
of equity increased from 6.4% to 9.0%.
In 1995, internal cash flows and existing credit
facilities should be sufficient to finance working capital
needs, dividends and expansion. Should increased external
financing become necessary or desirable, the Company's low
debt-to-equity ratio affords it considerable leverage. The
Company maintains bank lines of credit and could also issue
commercial paper which, when used in the past, has carried
the highest possible credit rating.
The Company repurchased 336,200 shares of stock in
1994. Over 11 million shares have been repurchased since a
repurchase plan was announced in 1988. Additional
repurchases will be made, depending upon current market
conditions and the absence of a higher priority for the use
of cash resources.
Interest expense held steady at approximately $20
million while interest income increased by nearly $2
million to $17.5 million in 1994.
Capital Expenditures
Spurred by strong recovering business conditions in
each region, capital expenditures were a record $457
million in 1994, up from $330 million in 1993 and $312
million in 1992. Net utilized floor space increased by
700,000 square feet to 10.8 million at year-end 1994.
Approximately 15% of this space was leased. Over 75% of
worldwide expenditures continue to be for machinery and
equipment. The increase in floor space and machinery and
equipment was the result of increased production to support
higher sales and insourcing work from outside vendors in
order to lower cost and improve delivery.
Given the current business outlook, capital
expenditures are expected to be in the $500-$550 million
range in 1995. Major projects include a large engineering
facility in the Harrisburg area, an integrated
manufacturing facility in Lickdale, Pennsylvania for the
Consumer Products Business Unit, a panel assembly plant in
Ireland and a distribution center in Japan. Planning
continues on a second plant in China to broaden our
capabilities in that huge, fast-growing market.
Environmental Matters
The Company has a corporate-wide program for managing
current and emerging environmental issues. In recent years
these issues have been increasingly driven by customer
requirements, government regulations and other external
factors in addition to the strict internal standards that
the Company has
32
AMP Incorporated and subsidiaries
MANAGEMENT'S adopted. Accordingly, the Company has expanded its focus
DISCUSSION & to cover industry initiatives such as the upcoming ISO
ANALYSIS 14000 (environment) standard and other global standards,
continued including certain regulatory requirements in individual
countries that have application to the Company's operations
globally. The Company believes that it is well-positioned
to respond to all known and anticipated regulatory and
customer-driven environmental requirements worldwide.
The Company's environmental program includes a
centralized Environmental Programs Department that, in the
interest of safeguarding the environment and minimizing the
Company's risks, proactively promotes sound environmental
practices throughout the Company's worldwide operations.
This department conducts regulatory compliance audits and
environmental assessments of new and existing properties,
and provides engineering support to operations staff to
minimize wastes and other regulatory impacts. Additional
corporate-level initiatives include the training of
business unit and plant staff, management of the Company's
recycling programs, and maintenance of a mainframe-based
computer database. The Company has an Environmental Legal
Department that handles legal and regulatory matters and
provides counsel in the area of environmental compliance
generally. The Company's environmental program also
involves coordinators who are assigned to each business
unit and provide support to operations staff in meeting
legal, regulatory and corporate environmental requirements.
The Company took several steps in 1994 to ensure global
applicability of its environmental program, consistent with
corporate goals. Regional environmental managers were
appointed for Asia/Pacific and Europe; existing
environmental procedures were revised and expanded to
conform to international standards for environmental
management systems; a global environmental training program
was launched; and all operations worldwide are now required
to develop environmental strategic plans. These measures
are intended to establish a uniform global environmental
management system that ensures all self-imposed and
statutorily mandated environmental responsibilities are
met, thereby minimizing financial and other risks.
Audits and assessments conducted in 1994 under this
corporate-wide environmental compliance program identified
various matters that required follow-up action by
facilities and business units. The costs associated with
implementing both this program and the "baseline" program
described below, and in addressing audit assessment
findings, are not expected to have a material effect on the
Company's financial results, liquidity, or capital
expenditures.
Under a proactive property management program initiated
by the Company in 1993, "baseline" environmental studies
are conducted of existing manufacturing facilities. Each
year four manufacturing facilities in the U.S. and four
such facilities outside the U.S. will undergo these studies
until full assessments have been conducted at all existing
manufacturing facilities worldwide. Five such studies were
completed through 1994 and no material problems have been
found.
Potential liabilities for investigative and remedial
costs are known to exist at several sites, including four
National Priorities List (NPL) sites in the U.S. under the
EPA Superfund program. At one Company-owned site, which is
also subject to a Corrective Action Order under the
Resource Conservation and Recovery Act, the Company has
spent approximately $1.7 million since 1984. Future costs
are expected to be $150,000-$200,000 annually for at least
the next five years. At three other sites the Company,
together with other parties, is alleged to be substantially
liable as a "generator" of wastes sent to former commercial
disposal or recycling facilities. Expenditures to date to
resolve the potential liabilities at these three sites have
not exceeded $500,000, and are not expected to exceed $7
million in the aggregate.
The Company is also involved in four other hazardous
site cleanup actions in the U.S. where it is considered a
minor contributor. Costs incurred for these sites were
minimal in 1994. The Company's participation in the
cleanup activities at two sites reported in prior years was
terminated during 1994 at no cost to the Company. Several
additional sites where the Company may be a minor
contributor are in the investigative stage and liability
and cost assessments have not been made.
In addition, the Company has been working voluntarily
on investigation and remediation at 16 of its own current
or former facilities in the U.S. The Company has spent
approximately $13.5 million on these sites since 1984.
Future costs are expected to be $1-2 million annually for
the next several years. Several of these sites are believed
to have been impacted by third parties and the Company is
taking appropriate legal action. All cleanups are conducted
in coordination with governmental agencies having jurisdiction
over those activities, as appropriate. Claims have been made
by private citizens at three of these sites, but the claims
have either been resolved or are not material to the Company
based on current information.
The accounting policy of the Company with respect to
environmental costs in general is described in Footnote No.
1 to the Consolidated Financial Statements.
AMP Incorporated and subsidiaries 33
<TABLE>
<CAPTION>
CONSOLIDATED
STATEMENTS OF
INCOME
Year Ended December 31,
----------------------------------------
(dollars in thousands except 1994 1993 1992
per share data) ------------ ----------- -----------
<S> <C> <C> <C>
Net Sales $4,027,471 $3,450,586 $3,337,145
Cost of Sales 2,659,290 2,309,256 2,218,898
___________ __________ __________
Gross income 1,368,181 1,141,330 1,118,247
Selling, General and 721,364 616,568 584,913
Administrative Expenses ___________ __________ __________
Income from operations 646,817 524,762 533,334
Interest Expense (19,994) (19,549) (29,489)
Other Deductions, net (32,535) (19,277) (24,737)
___________ __________ __________
Income before income taxes 594,288 485,936 479,108
Income Taxes 224,890 189,280 188,770
___________ __________ __________
Net Income $ 369,398 $ 296,656 $ 290,338
=========== ========== ==========
Net Income Per Share $1.76 $1.41 $1.38
=========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Net
Cumulative Unrealized
CONSOLIDATED (in thousands) Common Other Translation Investment Retained Treasury Stock
STATEMENTS OF Stock Capital Adjustments Gains Earnings Shares Amount
SHAREHOLDERS'
EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992 $ 12,480 $ 80,033 $ 120,713 $ -- $ 1,872,697 12,572 $ 172,880
Net income 290,338
Cash dividends - 76 cents per share (160,417)
Purchases of treasury stock 2,332 65,773
Distributions of treasury stock
under Bonus Plans 1,233 (123) (2,665)
Translation adjustments (37,807)
_________ _________ ____________ _________ ____________ _________ _________
Balance at December 31, 1992 12,480 81,266 82,906 -- 2,002,618 14,781 235,988
Net income 296,656
Cash dividends - 80 cents per share (167,838)
Purchases of treasury stock 135 3,771
Distributions of treasury stock
under Bonus Plans 134 (88) (2,431)
Translation adjustments (14,539)
-------- ------- --------- --------- ------------ --------- ---------
Balance at December 31, 1993 12,480 81,400 68,367 -- 2,131,436 14,828 237,328
Net income 369,398
Cash dividends - 84 cents per share (176,177)
Change in year-end for Asia/Pacific
and Americas subsidiaries 5,034
Purchases of treasury stock 336 10,800
Distributions of treasury stock
under Bonus Plans 979 (160) (4,697)
Translation adjustments 63,344
Net unrealized investment gains 21,585
-------- -------- ----------- -------- ----------- ------ ---------
Balance at December 31, 1994 $ 12,480 $ 82,379 $ 131,711 $ 21,585 $ 2,329,691 15,004 $ 243,431
======== ======== =========== ======== =========== ====== =========
</TABLE>
34
AMP Incorporated and subsidiaries
<TABLE>
<CAPTION>
CONSOLIDATED December 31,
BALANCE ASSETS 1994 1993
SHEETS ______ ___________ ____________
<S> <C> <C>
(dollars in thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 239,937 $ 257,678
Securities available for sale 155,458 129,817
Receivables 838,389 625,180
Inventories 581,126 459,302
Deferred income taxes 115,098 88,483
Other current assets 81,815 83,898
___________ ___________
Total current assets 2,011,823 1,644,358
___________ ___________
PROPERTY, PLANT AND EQUIPMENT 3,451,442 2,954,936
Less - Accumulated depreciation 1,980,249 1,709,811
___________ ___________
Property, plant and equipment,
net 1,471,193 1,245,125
___________ ___________
INVESTMENTS AND OTHER ASSETS 287,898 228,436
___________ ___________
TOTAL ASSETS $3,770,914 $3,117,919
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
____________________________________
CURRENT LIABILITIES:
Short-term debt $ 175,820 $ 183,625
Payables, trade and other 388,979 236,697
Accrued payrolls and employee benefits 139,781 115,461
Accrued income taxes 233,086 164,154
Other accrued liabilities 73,682 52,426
___________ ___________
Total current liabilities 1,011,348 752,363
Long-Term Debt 211,244 130,982
Deferred Income Taxes 48,921 53,719
Other Liabilities 164,986 124,500
__________ __________
Total liabilities 1,436,499 1,061,564
__________ __________
Shareholders' Equity:
Common stock, without par value-
Authorized 700,000,000 shares,
issued 224,640,000 shares 12,480 12,480
Other capital 82,379 81,400
Cumulative translation adjustments 131,711 68,367
Net unrealized investment gains 21,585 --
Retained earnings 2,329,691 2,131,436
Treasury stock, at cost (243,431) (237,328)
_________ _________
Total shareholders' equity 2,334,415 2,056,355
_________ _________
Total Liabilities and Shareholders' Equity $3,770,914 $3,117,919
========== ==========
</TABLE>
AMP Incorporated and subsidiaries 35
<TABLE>
<CAPTION>
CONSOLIDATED Year Ended December 31,
STATEMENTS OF (dollars in thousands) _______________________________________
CASH FLOWS
1994 1993* 1992*
___________ ___________ ___________
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS at January 1 $ 257,678 $ 370,753 $ 370,829
___________ ___________ ___________
OPERATING ACTIVITIES:
Net income 369,398 296,656 290,338
Noncash adjustments-
Depreciation and amortization 299,736 282,217 288,001
Deferred income taxes (42,580) (21,155) (2,423)
Increase to other liabilities 17,334 18,554 29,081
Other, net 40,646 21,523 32,510
Changes in operating assets and liabilities
net of effects of acquisitions of businesses (4,508) (65,061) (2,869)
Change in year-end for Asia/Pacific
and Americas subsidiaries (4,568) -- --
___________ ___________ ___________
Cash provided by operating activities 675,458 532,734 634,638
___________ ___________ ___________
Investing Activities:
Additions to property, plant and equipment (456,845) (330,405) (312,463)
(Increase) decrease in securities
available for sale 24,323 (41,593) (27,057)
Acquisitions of businesses, less cash acquired (56,377) (16,230) (10,582)
Increase in investments (47,619) (37,059) (21,297)
Other, net (3,813) 13,698 (2,343)
___________ ___________ ___________
Cash used for investing activities (540,331) (411,589) (373,742)
___________ ___________ ___________
Financing Activities:
Changes in short-term debt (37,034) (138,839) (21,657)
Proceeds from long-term debt 71,343 107,265 4,808
Repayments of long-term debt (12,594) (22,341) (13,430)
Purchases of treasury stock (10,800) (3,771) (65,773)
Dividends paid (176,177) (167,838) (160,417)
___________ ___________ ___________
Cash used for financing activities (165,262) (225,524) (256,469)
___________ ___________ ___________
Effect of Exchange Rate Changes On Cash 12,394 (8,696) (4,503)
___________ ___________ ___________
Cash and Cash Equivalents at December 31 $ 239,937 $ 257,678 $ 370,753
========== =========== ===========
Changes in Operating Assets and Liabilities:
Receivables $ (120,604) $ (51,971) $ 6,447
Inventories (67,234) (24,367) (4,985)
Other current assets 5,115 (14,672) (10)
Payables, trade and other 66,050 (9,126) (6,968)
Accrued payrolls and employee benefits 32,482 14,487 (8,770)
Other accrued liabilities 79,683 20,588 11,417
___________ ___________ ___________
$ (4,508) $ (65,061) $ (2,869)
============ =========== ===========
</TABLE>
*Certain amounts have been reclassified to conform to the format adopted in
1994.
36
AMP Incorporated and subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------------------
1 Principles of Consolidation -- The consolidated financial
SUMMARY OF statements include the accounts of the Company and its
ACCOUNTING wholly owned subsidiaries. Investments representing
PRINCIPLES ownership of 20% to 50% in affiliates and joint ventures
are accounted for using the equity method.
The Company's Asia/Pacific and Americas subsidiaries changed
their fiscal year-ends from November 30 to December 31 in 1994.
In accordance with guidelines of the Securities and Exchange
Commission, only twelve months of income and expense were
included in the Consolidated Statement of Income. Results of
operations for the additional month were credited directly to
retained earnings. Cash flow activity for this same period has
been reflected as a single line item in the operating activities
section of the Consolidated Statements of Cash Flows.
Cash and Cash Equivalents--Cash and cash equivalents are
comprised of cash in banks, time deposits, repurchase agreements
and investments with original maturities of 91 days or less on
their acquisition date.
Investments--On January 1, 1994, the Company adopted
Statement of Financial Accounting Standards No. 115, "Accounting
For Certain Investments in Debt and Equity Securities" ("SFAS No.
115"). This standard requires that certain debt and equity
securities be adjusted to market value at the end of each
accounting period. Unrealized market value gains and losses are
charged to earnings if the securities are traded for short-term
profit. Otherwise, such unrealized gains and losses are charged
or credited to a separate component of shareholders' equity.
SFAS No. 115 was adopted prospectively, and had no impact on
earnings. Prior to the adoption of this statement, such
securities were carried at the lower of cost or market value.
Management determines the proper classifications of
investments in obligations with fixed maturities and marketable
equity securities at the time of purchase and reevaluates such
designations as of each balance sheet date. At December 31,
1994, all securities covered by SFAS No. 115 were designated as
available for sale. Accordingly, these securities are stated at
fair value, with unrealized gains and losses reported in a
separate component of shareholders' equity. Realized gains and
losses on sales of investments, as determined on a specific
identification basis, are included in the Consolidated Statements
of Income.
Inventories--Inventories, consisting of material, labor and
overhead, are stated at the lower of first-in, first-out ("FIFO")
cost or market.
Property, Plant and Equipment and Depreciation--Property,
plant and equipment is stated at cost, adjusted to current
exchange rates where applicable. Depreciation is computed by
applying principally the straight-line method to individual
items. Depreciation rate ranges are substantially as follows:
Buildings............................. 5%
Leasehold improvements................ Life of lease
Machinery and equipment............... 7-1/2% to 33-1/3%
Machines and tools with customers..... 20% to 33-1/3%
Where different depreciation methods or lives are used for
tax purposes, deferred income taxes are recorded.
Maintenance and repairs are charged to expense as incurred.
Major repairs and improvements are capitalized and depreciated at
applicable straight-line rates.
The cost and accumulated depreciation of items of plant and
equipment retired or otherwise disposed of are removed from the
related accounts, and any residual values are charged or credited
to operating income.
Goodwill--The excess of cost over the fair value of assets
acquired is amortized over periods not exceeding 15 years. In
assessing the recoverability of goodwill, impairment is measured
against the emergence and success of competing technologies.
When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the
related business's undiscounted net income over the remaining
life of the goodwill to assess recoverability.
Environmental Costs--Environmental expenditures which relate
to current operations are capitalized or charged to expense as
incurred. Future remedial expenses are accrued when their
outcome appears probable and their potential liability can be
reasonably estimated.
Per Share Data--The weighted average number of shares
outstanding used to compute net income per share was 209,736,506
in 1994, 209,796,245 in 1993 and 210,992,183 in 1992. The effect
of shares issuable under stock options is not significant.
AMP Incorporated and subsidiaries 37
---------------------------------------------------------------------------
2 On January 25, 1995, the Board of Directors authorized a
STOCK SPLIT two-for-one stock split to be distributed on or about March
1, 1995, to shareholders of record on February 6, 1995. In
addition, authorized shares were increased from 350,000,000
to 700,000,000. All references in the financial statements
to number of shares, per share amounts and market prices of
the Company's common stock have been retroactively restated
to reflect the increased number of common shares outstanding.
---------------------------------------------------------------------------
3 Net income from international operations was $195,303,000
INTERNATIONAL in 1994, $117,898,000 in 1993 and $127,768,000 in 1992.
OPERATIONS
Availability of remittances to the parent company is
subject to exchange controls and other restrictions of the
various countries.
Foreign currency transaction gains and losses, after
adjustment for income taxes to the extent appropriate,
decreased net income by $4,452,000 (2 cents per share)
in 1994, $2,665,000 (1 cent per share) in 1993 and $1,507,000
(1 cent per share) in 1992.
---------------------------------------------------------------------------
4 Securities available for sale at December 31, 1994, are
SECURITIES summarized as follows:
AVAILABLE
FOR SALE
Gross Gross
Unrealized Unrealized
Holding Holding Market
(dollars in thousands) Cost Gains Losses Value
U. S. Government Securities--
Maturing in 1 year or less....... $ 1,987 $ -- $ -- $ 1,987
Maturing between 1 and 5 years... 54,724 -- 1,777 52,947
State and Municipal Securities--
Maturing in 1 year or less...... 19,090 -- 1 19,089
Maturing between 1 and 5 years.. 8,475 -- 199 8,276
Commercial Paper.................. 12,358 -- 329 12,029
Common Stock...................... 21,595 39,535 -- 61,130
-------- -------- -------- --------
$118,229 $ 39,535 $ 2,306 $155,458
======== ======== ======== ========
Differences between cost and market of $37,229,000 (less
deferred taxes of $15,644,000) were credited to a separate
component of shareholders' equity called "Net Unrealized
Investment Gains."
Proceeds from sales of securities available for sale were
approximately $249,098,000 in 1994. Gross gains and gross
losses on such sales were not significant.
At December 31, 1994, approximately $42,000,000 of securities
available for sale with original maturities of 91 days or less
were included in cash and cash equivalents. The market values
of these securities approximate cost.
---------------------------------------------------------------------------
5 At December 31, inventories were comprised of the
INVENTORIES following:
(dollars in thousands) 1994 1993
Finished goods and work in process........... $ 335,028 $ 255,472
Purchased and manufactured parts............. 180,561 153,643
Raw materials................................ 65,537 50,187
---------- ----------
$ 581,126 $ 459,302
========== ==========
---------------------------------------------------------------------------
6 The Company has only limited involvement with derivative
FINANCIAL financial instruments and does not use them for trading
INSTRUMENTS purposes. They are used to manage well-defined
commodity price and foreign currency risks.
Commodities swap agreements are utilized to hedge anticipated
purchases of certain metals used in the Company's manufacturing
operations. Under these swap agreements, payments are made or
received based on the differential between a specified price and
the actual price of the metals. These contracts generally cover
a one-year period and are accounted for as hedges, with all
gains and losses recognized in cost of sales when the
commodities are consumed. At December 31, 1994, commodity
contracts involving notional amounts of $52,000,000 were
outstanding. These notional amounts do not represent amounts
exchanged by the parties; rather, they are used as the basis to
calculate the amounts due under the agreements.
From time to time the Company utilizes forward foreign currency
exchange contracts to minimize the impact of currency movements,
principally on intercompany royalties and dividends denominated
38
AMP Incorporated and subsidiaries
6 in Japanese yen and German marks. The terms of these contracts
FINANCIAL are generally less than one year and they also are hedges of
INSTRUMENTS anticipated transactions. Gains and losses related to these
continued agreements are recorded when the related transaction occurs.
The purpose of the Company's hedging is to protect it from the
risk that the eventual U.S. dollar inflows resulting from the
intercompany payments will be adversely affected by changes in
exchange rates. In addition, U.S. dollar denominated debt of
the Company's Mexican subsidiary was protected from currency
movements using forward currency contracts. The terms of these
contracts coincide with the principal payments, which are all
due in 1995. Gains on these contracts will be recorded in
income as the principal payments are made. At December 31,
1994, the Company had forward contracts in place covering 6.6
billion yen, 36 million marks, and 28 million pesos.
On March 11, 1994, the Company entered into a foreign currency
swap with a AAA-rated counterparty to hedge a portion of its net
investment in its Japanese subsidiary and to lock-in a
beneficial net interest differential. Under terms of the
agreement, the Company will swap 15.9 billion yen for U.S. $150
million in ten years based on the exchange rate on the day the
contract became effective. In addition, the contract provides
for the Company to make semi-annual interest payments of 4.61%
on the 15.9 billion yen, while receiving semi-annual interest
payments of 6.71% on the U.S. $150 million. The Company has the
unilateral right to unwind the swap early. Due to the fact that
this contract is an effective hedge of an investment in a
foreign entity, any gain or loss on the contract is recorded
directly to cumulative translation adjustments.
While it is not the Company's intention to terminate any of the
above financial instruments, the fair values were estimated by
obtaining quotes from brokers which represented the amounts that
the Company would receive or pay if the agreements were
terminated on December 31, 1994. These fair values indicated
that termination of the commodities swap agreements, forward
foreign exchange contracts and foreign currency swap agreement
would have resulted in a $23 million gain, $3.9 million gain and
$21.3 million loss, respectively. Due to the volatility of
currency exchange rates and commodity prices, these results
which were estimated at December 31, 1994, may or may not be
realized.
---------------------------------------------------------------------------
7 At December 31, property, plant and equipment was comprised
PROPERTY, of the following:
PLANT AND
EQUIPMENT
(dollars in thousands) 1994 1993
Land......................................... $ 62,695 $ 54,931
Buildings and leasehold improvements......... 708,008 600,062
Machinery and equipment...................... 2,327,910 1,961,683
Machines and tools with customers............ 352,829 338,260
---------- ----------
$3,451,442 $2,954,936
========== ==========
---------------------------------------------------------------------------
8 At December 31, debt was comprised of the following:
DEBT
1994 1993
Due Due
Long Within Long Within
(dollars in thousands) Term One Year Term One Year
International bank loans, 5.3% weighted
interest rate (1993--5.5%), repayable
in varying amounts through 2013........$202,744 $ 15,666 $130,551 $ 20,321
Mortgages and other indebtedness, 6.2%
weighted interest rate (1993--8.7%),
repayable through 1998................. 8,500 9,159 431 819
International overdrafts and demand loans,
6.5% weighted interest rate
(1993--5.7%)........................... -- 150,995 -- 162,485
-------- -------- -------- --------
$211,244 $175,820 $130,982 $183,625
======== ======== ======== ========
The payment schedule of debt due after one year is as follows:
$26,597,000 in 1996, $15,941,000 in 1997, $41,880,000 in 1998,
$11,827,000 in 1999 and $114,999,000 in 2000 and beyond.
The majority of the Company's domestic bank credit lines are
on a fee basis of 1/8% per year. The Company did not borrow
against the lines during 1994. Under informal agreements, the
Company maintains compensating balances for certain of its
international operations. These balances averaged $2,320,000
during 1994.
At December 31, 1994, the fair values of the Company's short-
term and long-term debt were not significantly different from
the respective carrying values.
---------------------------------------------------------------------------
9 The Company capitalizes interest costs associated with the
INTEREST construction of certain assets. These costs are not
significant. Interest paid during the periods was
approximately equal to amounts charged to expense.
Interest income for the year ended December 31 was
$17,534,000 in 1994, $15,677,000 in 1993 and $17,703,000
in 1992.
---------------------------------------------------------------------------
10 Research and development expenditures for the creation and
R & D application of new and improved products and processes were
$265,000,000 in 1994, $258,000,000 in 1993 and $272,000,000
in 1992.
---------------------------------------------------------------------------
11 The Company leases certain buildings and transportation and
LEASES other equipment. Capital leases are not significant.
Total rental expense under operating leases was $59,464,000
in 1994, $55,906,000 in 1993 and $52,261,000 in 1992.
Minimum rental commitments at December 31, 1994, under leases
with initial terms in excess of one year were:
1995--$34,283,000 1996--$22,515,000 1997-- $13,826,000
1998--$ 9,378,000 1999--$ 5,275,000 2000 and beyond--$18,584,000
---------------------------------------------------------------------------
12 Employee Retirement Plans-- The Company has defined benefit
EMPLOYEE pension plans for substantially all U.S. employees. Pension
RETIREMENT benefits are based on years of service and earnings near
PLANS AND retirement. Assets of the plans are comprised principally of
RETIREE equity securities and fixed income investments. The U.S. plan
MEDICAL includes a provision to increase benefit obligations in the
BENEFITS income investments. The U.S. plan includes a provision to
event of a change in control of the Company, as defined. It
is the Company's policy to fund at least the minimum amounts
required by Federal law and regulation. During 1992, the
Company settled a portion of its retirement benefit
obligation to certain retirees through the purchase of
annuity contracts.
Certain international subsidiaries also have pension plans.
In most cases, the plans are defined benefit in nature. Assets
of the plans are comprised of insurance contracts and equity
securities--or book reserves are maintained. Benefit formulas
are similar to those used by the U.S. plans. It is the policy
of these subsidiaries to fund at least the minimum amounts
required by local law and regulation.
Employee Savings and Thrift Plan-- U.S. employees may
participate in the defined contribution 401(k) plan which has
been established as a supplemental retirement program. Under
this program the Company contributes 60 cents for each dollar
contributed by an employee up to 4% of an employee's base
pay. At December 31, 1994 approximately 12,500 employees
were participating in the program out of the 16,100 who were
eligible.
Retiree Medical Benefits-- In addition to providing pension
and 401(k) benefits, the Company also provides health care
coverage continuation for qualifying U.S. retirees from date
of retirement to age 65.
On January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" ("SFAS No.
106"). SFAS No. 106 requires that the Company accrue the cost
of benefits which may become payable to employees, over their
related service periods. Prior to adoption of SFAS No. 106,
the Company established liabilities sufficient to cover all
future benefits payable to qualifying employees who had retired
and not attained age 65. SFAS No. 106 was adopted on a
prospective basis and its impact on 1993 earnings was not
significant.
Postemployment Benefits-- On January 1, 1994, the Company
adopted Statement of Financial Accounting Standards No. 112,
"Employers' Accounting For Postemployment Benefits" ("SFAS No
112"). SFAS No. 112 requires use of the accrual method for
benefits such as salary continuation, severance pay and
health care continuation provided during the period after
employment and before normal retirement age. Adoption of
SFAS No. 112 did not have a significant impact on 1994
earnings as the most significant benefit provided by the
Company (Workers' Compensation Insurance) had been previously
accounted for using the accrual method.
Components of net periodic pension cost for the year ended
December 31 were:
<TABLE>
<CAPTION>
(dollars in thousands) U. S. Plans International Plans
1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits
earned during the period.......... $ 22,206 $ 17,690 $ 16,575 $ 13,980 $ 12,988 $ 11,544
Interest cost on projected
benefit obligation................ 38,355 34,813 33,049 12,765 13,293 12,864
Actual return on plan assets........ 8,213 (69,507) (27,299) (10,126) (15,457) (13,700)
Net amortization and deferral....... (55,549) 22,759 (14,313) (3,308) 3,339 1,990
--------- --------- --------- --------- --------- ---------
Net periodic pension cost........... $ 13,225 $ 5,755 $ 8,012 $ 13,311 $ 14,163 $ 12,698
========= ========= ========= ========= ========= =========
</TABLE>
40
AMP Incorporated and subsidiaries
---------------------------------------------------------------------------
12 The funded status of these plans at December 31 was:
EMPLOYEE
RETIREMENT PLANS
AND RETIREE
MEDICAL BENEFITS
continued
<TABLE>
<CAPTION>
U. S. Plans International Plans
(dollars in thousands) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Plan assets at fair value............. $ 501,305 $ 523,972 $ 237,778 $ 201,697
========= ========= ========= =========
Actuarial present value of
benefit obligations:
Vested benefits................... $ 353,306 $ 384,946 $ 173,070 $ 145,490
Nonvested benefits................ 43,351 50,467 29,391 25,393
--------- --------- --------- ---------
Accumulated benefit obligation........ 396,657 435,413 202,461 170,883
Additional benefits based on
projected future salary increases... 109,791 110,606 26,990 21,113
--------- --------- --------- ---------
Projected benefit obligation.......... $ 506,448 $ 546,019 $ 229,451 $ 191,996
========= ========= ========= =========
Plan assets greater (less) than
projected benefit obligation........ $ ( 5,143) $ (22,047) $ 8,327 $ 9,701
========== ========== ========= =========
Accrued liability at year-end......... $ (67,019) $ (54,264) $ (11,601) $ (12,440)
Unrecognized net gain............... 57,197 28,277 33,261 34,921
Unrecognized prior service cost..... (11,018) (12,792) (88) (99)
Unrecognized transition amount,
net of amortization............... 15,697 16,732 (13,245) (12,681)
---------- ---------- ---------- ----------
Plan assets greater (less) than
projected benefit obligation........ $ ( 5,143) $ (22,047) $ 8,327 $ 9,701
========== ========== ========== ==========
</TABLE>
Key economic assumptions used in these determinations were:
U. S. Plans International Plans
1994 1993 1994 1993
Settlement rate--
January 1.............................. 7.00% 8.25% 6.25% 7.25%
December 31............................ 8.50% 7.00% 5.75% 6.25%
Rate of increase in compensation levels.. 4.00% 4.50% 4.00% 4.25%
Expected long-term rate of return........ 9.50% 9.50% 6.25% 6.50%
Components of net periodic retiree medical cost for the year ended
December 31 were:
(dollars in thousands) 1994 1993
Service cost - benefits
earned during the period..................... $ 2,417 $ 1,957
Interest cost on accumulated
postretirement benefit obligation............ 2,266 2,245
Net amortization and deferral.................. 1,071 1,071
-------- ---------
Net periodic postretirement benefit............ $ 5,754 $ 5,273
======== =========
The funded status of these retiree medical plans at December 31 was:
(dollars in thousands) 1994 1993
Plan assets at fair value.......................... $ -- $ --
========= =========
Actuarial present value of
benefit obligations:
Retirees....................................... $ 11,261 $ 11,712
Employees eligible to retire................... 4,378 4,546
Employees not eligible to retire............... 14,551 15,132
--------- ---------
Accumulated postretirement benefit obligation...... $ 30,190 $ 31,390
========= =========
Plan assets greater (less) than accumulated
postretirement benefit obligation................ $ (30,190) $ (31,390)
========= =========
Accrued liability at year-end...................... $ (12,116) $ (8,733)
Unrecognized net gain (loss)..................... 1,203 (2,309)
Unrecognized transition amount,
net of amortization............................ (19,277) (20,348)
--------- ---------
Plan assets greater (less) than accumulated
postretirement benefit obligation................ $ (30,190) $ (31,390)
========= =========
AMP Incorporated and subsidiaries 41
---------------------------------------------------------------------------
12 For disclosure purposes, the transition asset associated
EMPLOYEE with the retiree medical benefits has been netted against the
RETIREMENT related accrued liability.
PLANS
AND RETIREE Retiree medical benefits expense was computed using a
MEDICAL medical cost trend rate of 12% graded to 5.5% in year 2002
BENEFITS and later. For each increase of 1% in the medical cost
continued trend rate the benefit obligation would increased approximately
$1,500,000 and annual expense would increase approximately
$375,000. The settlement rate used to compute the obligation
was 7.00% at January 1, 1994 and 8.50% at December 31, 1994.
Expenses for these plans for the year ended December 31 were:
(dollars in thousands) 1994 1993 1992
Pension..................... $ 26,536 $ 19,918 $ 20,710
Savings and Thrift.......... 9,741 8,903 8,245
Retiree Medical Benefits.... 5,754 5,273 1,999
---------------------------------------------------------------------------
13 In April 1993, the shareholders approved the 1993 Long-Term
BONUS PLANS Equity Incentive Plan (the "Plan"). The Plan provides that
Stock Bonus Units ("SARs"), Incentive Stock Options ("ISOs")
and/or Non-Qualified Stock Options ("NQSOs") may be issued to
key employees. Awards of up to 10,000,000 shares of the
Company's Common Stock may be made under the Plan.
Stock Options-- The Board of Directors determines the terms
and conditions applicable to each Stock Option award. The
option price per share of Common Stock will not be less than
100% of the fair value of the stock on the award date.
Options expire no later than ten years from date of grant
and may not be exercised earlier than twelve months from
such date. At December 31, 1994, 1,420,200 options were
outstanding at option prices ranging from $30.25 to $38.50
per share and none are exercisable until July 27, 1996.
Stock Bonus Units-- Stock Bonus Units may be granted to
participants with or without a Supplemental Cash Bonus, at
the discretion of the Board of Directors. The designated
value of each Stock Bonus unit may not be less than 95% of
the average fair value of the stock over the 10 days
preceding the award date. Awards are computed by multiplying
vested Bonus Units by the excess of the market price of the
Company's Common Stock over the designated value of the Stock
Bonus Unit.
Approximately 214,000 shares would be distributed in the
years 1995 through 2000 for Stock Bonus Units granted before
and outstanding at December 31, 1994, based on the market price
at that date.
Cash (or Stock) Plan-- Key employees, designated by the Board
of Directors, participate in the Cash (or Stock) Plan.
Compensation under the plan is related to the achievement of
specified performance objectives. Payments are made in cash
or in shares of the Company's Common Stock, at the election
of the participant.
Charges to income before income taxes for current and future
distributions under the aforementioned Plans totaled
$17,998,000 in 1994, $12,194,000 in 1993 and $12,534,000 in
1992.
---------------------------------------------------------------------------
14 On October 25, 1989, the Board of Directors adopted a
SHAREHOLDER Shareholder rights Plan and declared a dividend of one
RIGHTS PLAN Common Stock Purchase Right (a "Right") for each
outstanding share of Common Stock. Such Rights only become
exercisable, or transferable apart from the Common Stock, ten
business days after a person or group (an "Acquiring Person")
acquires beneficial ownership of, or commences a tender or
exchange offer for, 20% or more of the Company's Common Stock.
Each Right then may be exercised to acquire one share of the
Company's Common Stock at an exercise price of $87.50, subject
to adjustment. Thereafter, upon the occurrence of certain
events (for example, if the Company is the surviving
corporation of a merger with an Acquiring Person), the Rights
entitle holders other than the Acquiring Person to acquire
Common Stock having a value of twice the exercise price or the
Rights. Alternatively, upon the occurrence of certain other
events (for example, if the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation), the Rights would entitle
holders other than the Acquiring Person to acquire Common Stock
of the Acquiring Person having a value twice the exercise price
of the Rights.
The Rights may be redeemed by the Company at a redemption
price of 1/2 cent per Right at any time until the tenth
business day following public announcement that a 20% position
has been acquired or ten business days after commencement of a
tender or exchange offer. The Rights will expire on November
6, 1999.
42
AMP Incorporated and subsidiaries
---------------------------------------------------------------------------
15 On January 1, 1993, the Company adopted Statement of
INCOME TAXES Financial Accounting Standards No. 109, "Accounting For
Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires that
the Company change its method of accounting for income taxes
from the deferred method to the liability method. The
liability method attempts to recognize the future tax
consequences of temporary differences between the book and
tax bases of assets and liabilities. SFAS No. 109 was
adopted prospectively, and its impact on 1993 earnings was
not significant.
Provisions are made for estimated U.S. and foreign income
taxes, less available tax credits and deductions, which may be
incurred on the remittance of the Company's share of
subsidiaries' undistributed earnings not deemed to be
indefinitely invested. Taxes have not been provided on
international subsidiaries' earnings of approximately $250
million at December 31, 1994, which are deemed indefinitely
reinvested.
Components of income tax expense for the year ended December 31
were:
(dollars in thousands) 1994 1993 1992
U.S. Federal:
Taxes currently payable.................... $131,451 $103,656 $ 75,946
Deferred taxes............................. (35,781) (14,414) 271
Foreign:
Taxes currently payable.................... 118,375 85,549 94,417
Deferred taxes............................. (3,155) (2,166) (2,115)
Other:
Taxes currently payable..................... 17,644 21,230 20,830
Deferred taxes.............................. (3,644) (4,575) (579)
-------- -------- --------
$224,890 $189,280 $188,770
======== ======== ========
At December 31, gross deferred tax assets and liabilities were:
(dollars in thousands) 1994 1993
Gross deferred tax assets:
Inventories................................ $ 82,229 $ 70,588
Pensions................................... 22,357 19,586
Bonus plans................................ 12,601 8,009
Medical benefits........................... 10,402 3,416
Other...................................... 40,422 24,693
---------- ----------
$ 168,011 $ 126,292
========== ==========
Gross deferred tax liabilities:
Depreciation............................... $ 51,038 $ 55,756
Undistributed earnings of subsidiaries..... 21,600 21,940
Unrealized investment gains 15,644 --
Other...................................... 13,552 13,832
---------- ----------
$ 101,834 $ 91,528
========== ==========
At December 31, 1994 and 1993 there were no valuation reserves
for deferred tax assets.
The Company's effective tax rate varied from the U.S. Federal
income tax rate for the following reasons:
1994 1993 1992
U.S. Federal income tax rate.................... 35.0% 35.0% 34.0%
State income taxes, net of federal tax benefit.. 2.3 2.6 2.8
Foreign income taxes............................ 1.5 2.7 3.5
Other items not individually significant........ (1.0) (1.3) (0.9)
----- ----- -----
Effective tax rate.............................. 37.8% 39.0% 39.4%
===== ===== =====
Income before income taxes, after allocation of eliminations, is as follows:
(dollars in thousands) 1994 1993 1992
United States operations........................ $289,401 $284,769 $258,790
International operations........................ 304,887 201,167 220,318
-------- -------- --------
Worldwide income before income taxes............ $594,288 $485,936 $479,108
======== ======== ========
Income tax payments were $190,470,000 in 1994, $174,073,000 in 1993 and
$162,105,000 in 1992.
AMP Incorporated and subsidiaries 43
---------------------------------------------------------------------------
16
SUMMARIZED
QUARTERLY
FINANCIAL
DATA (UNAUDITED)
(dollars in thousands For the 3 Months Ended
except per share data)
March 31 June 30 September 30 December 31
1994
Net sales................ $906,123 $1,003,985 $1,019,963 $1,097,400
Gross income............. 302,156 344,482 347,063 374,480
Net income............... 79,550 95,824 93,166 100,858
Net income per share..... 38 cents 46 cents 44 cents 48 cents
1993
Net sales................ $837,956 $882,737 $857,439 $872,454
Gross income............. 278,146 296,830 286,636 279,718
Net income............... 72,523 75,738 77,402 70,993
Net income per share..... 35 cents 36 cents 37 cents 33 cents
---------------------------------------------------------------------------
17 The Company's business is concentrated almost entirely in one
BUSINESS product area--electrical and electronic connection,
SEGMENTS switching and programming devices--which are sold throughout
many diverse markets. It is not possible, therefore, to
divide the Company's business into meaningful industry segments.
However, the Company's operations are worldwide and can be
grouped into several geographic segments. Operations outside
the United States are conducted through wholly owned subsidiary
companies that function within assigned, principally national,
markets. The subsidiaries manufacture locally where required by
market conditions and/or customer demands, and where permitted
by economies of scale. Most are also self-financed. However,
while they operate fairly autonomously, there are substantial
intersegment and intrasegment sales.
Pertinent financial data by major geographic segments for
1994, 1993 and 1992 are:
<TABLE>
<CAPTION>
Sales to Inter-
(dollars in Trade segment Total Pretax Net Total
thousands) Customers Sales Sales Income Income Assets
<S> <C> <C> <C> <C> <C> <C>
United States:
1994........... $1,708,283 $ 358,787 $2,067,070 $301,102 $182,116 $2,236,417
1993........... 1,490,798 306,448 1,797,246 281,888 179,360 1,963,136
1992........... 1,357,936 258,768 1,616,704 256,962 161,471 1,759,348
Europe:
1994........... $1,232,604 $ 48,269 $1,280,873 $178,632 $119,930 $ 901,508
1993........... 1,053,125 34,706 1,087,831 125,360 81,914 655,813
1992........... 1,164,634 29,808 1,194,442 145,553 87,637 702,748
Asia/Pacific:
1994........... $ 873,535 $ 73,706 $ 947,241 $109,958 $ 62,890 $ 897,462
1993........... 741,187 44,767 785,954 73,681 35,313 755,840
1992........... 670,324 39,026 709,350 69,410 39,041 671,318
Americas:
1994........... $ 213,049 $ 15,301 $ 228,350 $ 21,797 $ 12,483 $ 107,874
1993........... 165,476 9,206 174,682 2,126 671 87,152
1992........... 144,251 12,816 157,067 5,355 1,090 79,517
Eliminations:
1994........... -- $(496,063) $ (496,063) $(17,201) $ (8,021) $ (372,347)
1993........... -- (395,127) (395,127) 2,881 (602) (344,022)
1992........... -- (340,418) (340,418) 1,828 1,099 (207,802)
Total:
1994........... $4,027,471 -- $4,027,471 $594,288 $369,398 $3,770,914
1993........... 3,450,586 -- 3,450,586 485,936 296,656 3,117,919
1992........... 3,337,145 -- 3,337,145 479,108 290,338 3,005,129
</TABLE>
Transfers between geographic segments are generally priced at
"large quantity customer prices less a discount" for items not
requiring further manufacture and at "cost plus a percentage"
for items subject to further processing.
Included in the assets of the United States segment are short-
term investments at December 31: 1994--$222,880,000; 1993--
$306,118,000 and 1992--$389,298,000; which generated interest
income of approximately $10,562,000, $11,101,000 and
$13,449,000, respectively.
44 AMP Incorporated and subsidiaries
STATEMENT OF The financial statements and other financial information
MANAGEMENT contained in this Annual Report are the responsibility of
RESPONSIBILITY management. They have been prepared in accordance with
generally accepted accounting principles applied on a
materially consistent basis and are deemed to present fairly
the consolidated financial position of AMP Incorporated and
subsidiaires, and the consolidated results of their operations.
Where necessary, management has made informed judgments and
estimates of the outcome of events and transactions, with due
consideration given to materiality.
As a means of fulfilling its responsibility for the integrity
of financial information included in this Annual Report,
management relies on the Company's system of internal controls.
This system has been established to ensure, within reasonable
limits, that assets are safeguarded, that transactions
are properly recorded and executed in accordance with
management's authorization and that the accounting records
provide a solid foundation from which to prepare the financial
statements. It is recognized that no system of internal controls
can detect and prevent all errors and irregularities. Management
believes that the established system provides an acceptable
balance between benefits to be gained and their related costs.
It has always been the policy and practice of the Company to
conduct its affairs ethically and in a socially responsible
manner. Employee awareness of these objectives is achieved
through regular and continuing key written policy statements.
Management maintains a systematic program to ensure compliance
with these policies.
As part of their audit of the financial statements, the
Company's independent public accountants review and assess the
effectiveness of slected internal accounting controls to
establish a basis for reliance thereon in determining the
nature, timing and extent of audit tests to be applied. In
addition, the Company maintains a staff of internal auditors
who work with the independent public accountants to ensure
adequate auditing coverage of the Company and who conduct
operational audits of their own design. Management emphasizes
the need for constructive recommendations as part of the
auditing process and implements a high proportion of their
suggestions.
The Audit Committee of the Board of Directors meets with the
independent public accountants, internal auditors and management
periodically to review their respective activities and the
discharge of each of their responsibilities. Both the independent
public accountants and the internal auditors have free access to
the Audit Committee, with or without management, to discuss the
scope of their audits and the adequacy of the system of internal
controls.
REPORT OF To the Shareholders and Board of Directors of AMP Incorporated:
INDEPENDENT
PUBLIC We have audited the accompanying consolidated balance sheets of
ACCOUNTANTS AMP INCORPORATED (a Pennsylvania Corporation) and subsidiaries
as of December 31, 1994 and 1993, and the related consolidated
statements of income, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of AMP Incorporated and subsidiaries as of
December 31, 1994 and 1993, and the consolidated results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
Philadelphia, PA
February 17, 1995 Arthur Andersen LLP
EXHIBIT 21
SUBSIDIARIES AND BRANCHES OF AMP INCORPORATED
(all wholly owned and included in consolidated results)
ACSYS Incorporated
Burlington, Massachusetts
(Delaware, U.S.A.)
AMP Cable Assembly Systems, Inc.
Wilmington, Delaware
AMP Floor Wiring Systems, Inc.
Wilmington, Delaware
AMP Investments, Inc.
Wilmington, Delaware
AMP Packaging Systems, Inc.
Round Rock, Texas
(Delaware, U.S.A.)
Carroll Touch, Inc.
Round Rock, Texas
(Illinois, U.S.A.)
Connectware, Inc.
Richardson, Texas
(Delaware, U.S.A.)
Kaptron, Inc.
Palo Alto, California
Microwave Signal, Inc.
Clarksburg, Maryland
(Delaware, U.S.A.)
Precision Interconnect Corporation
Portland, Oregon
(Delaware, U.S.A.)
Raylan Corporation
Palo Alto, California
(Delaware, U.S.A.)
The Whitaker Corporation
Wilmington, Delaware
AMP of Canada, Ltd.
Toronto, Canada
(Delaware, U.S.A.)
AMP S. A. Argentina C.I.Y.F.
Buenos Aires, Argentina
AMP do Brasil Ltda.
Sao Paulo, Brazil
AMP de Mexico, S.A.
Mexico City, D.F. Mexico
AMP Osterreich Handelsgesellschaft m.b.H.
Vienna, Austria
AMP Belgium
Brussels, Belgium
(Branch of AMP-Holland B.V.)
AMP Czech s.r.o.
Brno, Czech Republic
AMP Danmark
Viby, Denmark
(Branch of AMP-Holland B.V.)
AMP Finland Oy
Helsinki, Finland
AMP de France S.A.
Paris, France
AMP SIMEL S.A.
Gevrey-Chambertin, France
AMP Export SARL
Pontoise, France
AMP Deutschland G.m.b.H.
Frankfurt, Germany
Jitex Elektrovertr. G.m.b.H.
Wuppertal, Germany
AMP of Great Britain Limited
London, England
SIMEL (UK) Limited
Chencester, Glos., England
AMP Hungary Manufacturing Co. Ltd.
Esztergom, Hungary
AMP Hungary Trading Co. Ltd.
Budapest, Hungary
AMP Ireland Limited
Dublin, Ireland
AMP Italia S.p.A.
Collegno, Italy
AMP Italia Products S.p.A.
San Salvo, Italy
AMP-Holland B.V.
's-Hertogenbosch, The Netherlands
AMP Norge A/S
Oslo, Norway
AMP Polska Sp.z.o.o.
Poznan, Poland
AMP Portugal, Lda.
Lisbon, Portugal
AMP Slovenia Trading and Manufacturing Ltd.
Ljubljana, Slovenia
AMP Espanola, S.A.
Barcelona, Spain
SIMEL Iberica, S.A.
Vizcaya, Spain
AMP Svenska AB
Stockholm, Sweden
AMP (Schweiz) A.G.
Steinach, Switzerland
Decolletage S.A. St.-Maurice
St.-Maurice, Switzerland
Australian AMP Pty. Ltd.
Sydney, Australia
AMP Products Pacific Ltd.
Hong Kong
AMP India Private Limited
Bangalore, India
AMP Tools (India) Pvt. Ltd.
Cochin, India
AMP (Japan), Ltd.
Tokyo, Japan
AMP Technology Japan Ltd.
Tokyo, Japan
Carroll Touch International, Ltd.
Tokyo, Japan
(Delaware, U.S.A.)
Businessland Japan Company, Ltd.
Tokyo, Japan
AMP Korea Limited
Seoul, South Korea
AMP Manufacturing Korea, Ltd.
Seoul, South Korea
AMP Products (Malaysia) Sdn. Bhd.
Kuala Lumpur, Malaysia
New Zealand AMP Ltd.
Auckland, New Zealand
AMP Philippines, Inc.
Manila, Philippines
AMP Singapore Pte. Ltd.
Singapore
AMP Manufacturing Singapore Pte., Ltd.
Singapore
AMP Taiwan B.V.
Taipei, Taiwan
(The Netherlands)
AMP Manufacturing Taiwan, Ltd.
Taipei, Taiwan
AMP (Thailand) Limited
Bangkok, Thailand
AMP Elektrik-Elektronik Baglanti Sistemleri
Ticaret Limited Sirketi
Istanbul, Turkey
JOINT VENTURES
AMP-AKZO Company
Greenville, South Carolina
(New York, U.S.A. general partnership)
AMP-AKZO Corporation
Newark, Delaware
AMP Shanghai Ltd.
Shanghai, Peoples Republic of China
Building Technology Associates
Wilmington, Delaware
AMP-AKZO LinLam vof
Arnhem, The Netherlands
(Dutch vof partnership)
Note: Subsidiaries and joint ventures are incorporated in the
country/state of location except where indicated otherwise.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To AMP Incorporated:
As independent public accountants, we hereby consent to the
incorporation of our report dated February 17, 1995 incorporated
by reference in this 10-K, into the Company's previously
filed Form S-8 Registration Statements, Registration Nos. 33-
22676, 33-55318, 33-65048 and 33-54277.
/s/ Arthur Andersen LLP
------------------------
Arthur Andersen LLP
Philadelphia, PA
March 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS
CONTAINED IN THE COMPANY'S 1994
ANNUAL REPORT TO SHAREHOLDERS
AND IS QUALIFIED BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 239,937
<SECURITIES> 155,458
<RECEIVABLES> 838,389
<ALLOWANCES> 0
<INVENTORY> 581,126
<CURRENT-ASSETS> 2,011,823
<PP&E> 3,451,442
<DEPRECIATION> 1,980,249
<TOTAL-ASSETS> 3,770,914
<CURRENT-LIABILITIES> 1,011,348
<BONDS> 0
<COMMON> 12,480
0
0
<OTHER-SE> 2,321,935
<TOTAL-LIABILITY-AND-EQUITY> 3,770,914
<SALES> 4,027,471
<TOTAL-REVENUES> 4,027,471
<CGS> 2,659,290
<TOTAL-COSTS> 2,659,290
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,994
<INCOME-PRETAX> 594,288
<INCOME-TAX> 224,890
<INCOME-CONTINUING> 369,398
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 369,398
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.76
</TABLE>
