SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(mark one)
[XX] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _________ to _________
********************************
Commission File No. 1-4235
AMP INCORPORATED
a Pennsylvania corporation
(Exact name of registrant as specified in charter,
and state of incorporation)
********************************
Employer Identification No. 23-0332575
Harrisburg, Pennsylvania 17105-3608
(Address of principal executive offices of registrant)
(717) 564-0100
(Registrant's telephone number, including area code)
********************************
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X]. NO [ ].
The number of shares of AMP Common Stock (without Par Value) outstanding at July
16, 1997 was 219,636,036.
Includes an Exhibit Index.
AMP Incorporated & Subsidiaries
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Consolidated Statements of Income for the three months and the six
months ended June 30, 1997 and 1996, the Consolidated Statements of Cash Flows
for the six months ended June 30, 1997 and 1996, and the Consolidated Balance
Sheets at June 30, 1997 and December 31, 1996, are presented below. See the
notes to these condensed consolidated financial statements at the end thereof.
AMP Incorporated & Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands,
except per share data)
For the Three Months
Ended June 30,
1997 1996
----------- -----------
Net Sales .................... $ 1,468,005 $ 1,365,487
Cost of Sales ................ 1,015,026 947,697
----------- -----------
Gross income ............. 452,979 417,790
Selling, General and
Administrative Expenses ..... 263,696 243,250
----------- -----------
Income from operations ... 189,283 174,540
Interest Expense ............. (8,964) (8,166)
Other Income (Deductions), net
(see Note 3) (21,366) 7,132
----------- -----------
Income before income taxes 158,953 173,506
Income Taxes ................. 51,660 57,885
----------- -----------
Net Income ................... $ 107,293 $ 115,621
=========== ===========
Per Share - Net income...... $.49 $.53
Cash dividends... $.26 $.25
Weighted average number of shares. 219,879,694 219,628,343
=========== ===========
AMP Incorporated & Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands,
except per share data)
For the Six Months
Ended June 30,
1997 1996
----------- -----------
Net Sales .................... $ 2,860,872 $ 2,728,462
Cost of Sales ................ 2,005,196 1,880,282
----------- -----------
Gross income ............. 855,676 848,180
Selling, General and
Administrative Expenses ..... 505,724 488,679
----------- -----------
Income from operations ... 349,952 359,501
Interest Expense ............. (17,062) (16,148)
Other Income (Deductions), net
(see Note 3) (23,823) 10,693
----------- -----------
Income before income taxes 309,067 354,046
Income Taxes ................. 100,446 121,977
----------- -----------
Net Income Before Cumulative
Effect of Accounting Changes $ 208,621 $ 232,069
Cumulative Effect of Accounting
Changes (see Note 2)......... 15,450 --
----------- -----------
Net Income ................... 224,071 232,069
=========== ===========
Per Share Data:
Net Income Before Cumulative
Effect of Accounting Changes $.95 $1.06
Cumulative Effect of Accounting
Changes (see Note 2)......... .07 --
Net income.................... $1.02 $1.06
Cash dividends................ $.52 $ .50
Weighted average number of shares. 219,893,648 219,138,549
=========== ===========
AMP Incorporated & Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Condensed and Unaudited)
(dollars in thousands)
For the Six Months
Ended June 30,
1997 1996
--------- ---------
Cash and Cash Equivalents at January 1 ...............$ 223,779 $ 212,538
Operating Activities:
Net Income ..................................... 224,071 232,069
Noncash adjustments -
Depreciation and amortization ............... 220,059 202,059
Cumulative effect of change in accounting
for inventory (see note 2)................ (22,889) --
Changes in operating assets and liabilities . (72,621) (128,304)
Other, net ..................................... 13,417 50,587
--------- ---------
Cash provided by operating activities ....... 362,037 356,411
========= =========
Investing Activities:
Additions to property, plant and equipment ..... (230,234) (293,754)
Purchase of subsidiary -
Net of cash and cash equivalents acquired.... -- (35,971)
Other, net ..................................... 27,603 (51,626)
--------- ---------
Cash used for investing activities .......... (202,631) (381,351)
--------- ---------
Financing Activities:
Changes in short-term debt ..................... 17,119 101,305
Additions to long-term debt .................... 35,355 4,179
Reductions of long-term debt ................... (35,221) (18,612)
Purchases of treasury stock .................... (981) (172)
Dividends paid ................................. (113,998) (109,224)
--------- ---------
Cash used for financing activities .......... (97,726) (22,524)
--------- ---------
Effect of Exchange Rate Changes on Cash .............. (1,411) 1,294
--------- ---------
Cash and Cash Equivalents at June 30 ................. 284,048 166,368
========= =========
Changes in Operating Assets and Liabilities:
Receivables .................................... (118,296) (89,629)
Inventories .................................... (28,814) (48,244)
Other current assets ........................... (10,223) (20,547)
Payables, trade and other ...................... (2,392) (11,819)
Accrued payrolls and benefits .................. 33,197 23,921
Other accrued liabilities ...................... 53,907 18,014
--------- ---------
(72,621) (128,304)
========= =========
Interest paid during the periods was approximately equal to amounts charged to
expense.
AMP Incorporated & Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Condensed)
(dollars in thousands)
June 30, December 31,
1997 1996
---------- ----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents ......... $ 284,048 $ 223,779
Securities available for sale ..... 21,325 27,971
Receivables ....................... 1,110,342 1,025,850
Inventories........................ 822,367 786,623
Other current assets .............. 299,064 291,957
---------- ----------
Total current assets .......... 2,537,146 2,356,180
---------- ----------
Property, Plant and Equipment ....... 4,723,152 4,690,819
Less - Accumulated depreciation ... 2,733,801 2,663,211
---------- ----------
Property, plant and equipment,
net .......................... 1,989,351 2,027,608
---------- ----------
Investments and Other Assets ........ 287,970 301,917
---------- ----------
TOTAL ASSETS ........................ $4,814,467 $4,685,705
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt ................... $ 428,474 $ 419,411
Payables, trade and other ......... 454,427 463,261
Accrued liabilities ............... 625,392 562,223
---------- ----------
Total current liabilities ....... 1,508,293 1,444,895
Long-Term Debt ...................... 185,567 181,599
Other Liabilities and
Deferred Credits .................. 269,255 269,313
---------- ----------
Total liabilities ............... 1,963,115 1,895,807
Shareholders' Equity ................ 2,851,352 2,789,898
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY ............................. $4,814,467 $4,685,705
========== ==========
AMP Incorporated & Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 1997, Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual report
and Form 10-K, and Form 10-Q as of and for the three months ended March 31,
1997.
The information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results for the
interim periods.
2. ACCOUNTING CHANGES
During the first quarter of 1997, the Company made two changes to the
accounting practices used to develop its inventory standard costs. The first
change was made to standardize globally the definition of capacity used to
determine volume assumptions for overhead rates. The new definition more
properly reflects the Company's objectives for plant and equipment utilization
and provides for consistent measurements of AMP facilities.
In an effort to provide increased focus on engineering efforts for both
product development and manufacturing cost reductions, the Company also changed
its inventory costing methodology to include manufacturing engineering costs in
the inventory standard costs. Previously, these costs were expensed in the
period incurred and included in the cost of sales line on the Consolidated
Statement of Income.
The net benefit of the preceding changes in accounting for inventory of
$15.5 million or $.07 per share was presented as a cumulative effect of
accounting changes on the Consolidated Statement of Income for the six months
ended June 30, 1997.
In February of 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share." This
statement changes the required methods used to calculate earnings per share
data, harmonizing U.S. GAAP requirements with that of International Accounting
Standards No. 33. The major change from the previous calculation is the
disclosure of basic EPS, which is computed by dividing reported earnings by the
weighted average common shares outstanding (without any adjustments for common
stock equivalents), versus the current primary EPS calculation required by the
superseded APB Opinion No. 15. Fully diluted EPS, now called diluted EPS, is
still required, with the average market price of common stock used to determine
common stock equivalents rather than the greater of the average market price or
period ending closing price.
3. IMT/CONNECTWARE LITIGATION
In the second quarter of 1997, the Company recorded a litigation reserve of
$17.7 million, pretax ($0.05 per share) in connection with the IMT/Connectware
arbitration decision of July 1, 1997. This decision is currently being appealed;
however, the Company's prudent accounting practices direct the establishment of
a reserve as of June 30, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net sales for the second quarter of 1997 were $1.468 billion, representing
an increase of 7.5% in U.S. dollars and 11.8% in local currencies from the
$1.365 billion in the corresponding quarter of the prior year. For the six
months ended June 30, 1997, net sales were $2.861 billion, representing an
increase of 4.8% in U.S. dollars and 9.1% in local currencies from the $2.728
billion for the six months ending June 30, 1996. Further strengthening of the
U.S. dollar in 1997 decreased worldwide net sales by $58 million for the quarter
and $116 million for the six months ending June 30, 1997.
Bookings for the second quarter were $1.501 billion, representing a 4.9%
increase over first quarter bookings of $1.431 billion. The Company's order
backlog stood at $1.04 billion at June 30, 1997, representing a $33 million, or
3.3% increase from March 31, 1997.
Among the Company's larger markets, net sales were strongest in the
computer and communications markets. Net sales growth was positive across most
of the Company's major market categories. The Company is encouraged by the
breadth of net sales growth. Net sales also increased across most of the
Company's products and all three of the Company's geographies.
For the quarter ending June 30, 1997, net sales in the Americas region
(including the United States), accounting for 50% of the worldwide total,
increased 9% over the comparable prior year period. U.S. net sales increased 8%,
while Canada and Mexico led the rest of the Americas with strong double digit
growth. For the six months ending June 30, 1997, net sales increased 7% over the
comparable prior year period. The Company continued to see solid growth in the
computer markets.
Despite underlying sluggish economies, for the quarter ending June 30,
1997, net sales in the European region, accounting for 30% of the worldwide
total, increased 11% in local currencies and 2% in U.S. dollars over the
comparable prior year period. Overall, European sales were strongest in the
communications sector. In Germany, growth was approximately 11% in local
currency, buoyed by automobile exports. Northern Europe and Spain continued
their pattern of strong growth. For the six months ending June 30, 1997, net
sales increased 6% in local currencies but decreased 3% in U.S. dollars over the
comparable prior year period, primarily due to slow sales growth in the first
quarter.
For the quarter ending June 30, 1997, net sales in the Asia/Pacific region,
accounting for 20% of the worldwide total, increased 21% in local currencies and
13% in U.S. dollars over the comparable prior year period. Strong double digit
growth was evident in the personal computer, automotive, communications, and
consumer electronics markets, four of the Company's largest Asia/Pacific market
industries. Japan grew approximately 10% in local currency, while the Company
posted extremely strong sales growth in Singapore, Hong Kong, and Korea. For the
six months ending June 30, 1997, net sales increased 19% in local currencies and
11% in U.S. dollars over the comparable prior year period.
Gross income increased slightly to 30.9% of net sales for the quarter
ending June 30, 1997, from 30.6% in the comparable prior year quarter.
Selling, general, and administrative expenses (S,G&A) for the quarter
ending June 30, 1997 of 18.0% of net sales represents a slight increase from
17.8% in the comparable prior year quarter. The increase in S,G&A expenses is
primarily related to investments in information systems and sales deployment.
Net income for the second quarter of 1997 was $107.3 million, or $0.49 per
share, representing a decrease from the second quarter of 1996 net income of
$115.6 million, or $0.53 per share. Adjusting for a one-time second quarter 1997
pretax charge of $17.7 million (see Note 3 to Financial Statements), second
quarter net income was $119.2 million, a 3.1% increase over the second quarter
of 1996. Earnings per share for the second quarter of 1997, excluding the
one-time charge, was $0.54, an increase of $0.01 over the $0.53 reported in
1996.
Capital expenditures for the second quarter of 1997 were $109 million,
representing a 31% decrease from the $158 million in the comparable prior year
quarter. The Company continues to focus on improving existing asset utilization
and productivity. Investment in research, development, and new product
engineering remained level with the prior year and consistent with the Company's
strategy of technological and product leadership. Capital expenditures for 1997
are expected to be $550 million, 7% less than the 1996 capital expenditures of
$592 million.
The Company's restructuring plans remain on schedule. Virtually all
restructuring actions are expected to be taken by the end of the third quarter.
The Company will see a loss of sales from restructuring but has plans in place
to continue sales growth improvement through continuing market penetration and
by benefitting from markets that are showing robust growth.
DIVIDEND ACTION
On July 23, 1997 the Board of Directors declared a regular quarterly
dividend of 26 cents per share, payable September 2, 1997 to shareholders of
record August 4, 1997. The current indicated annual rate of $1.04 per share is
up from $1.00 in 1996 and $0.92 in 1995, and would be the 44th consecutive
annual increase .
GENERAL
Headquartered in Harrisburg, PA, AMP has 45,000 employees in 50 countries
in Europe, Asia/Pacific and the Americas and serves customers in these
industries: automotive, aerospace, computer networking, power and utilities,
telecommunications, industrial, and consumer goods. AMP had sales of $5.47
billion in 1996.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR"
- --------------------------------------------------------
Statements in this Report on Form 10-Q that are not strictly historical
facts are "forward-looking" statements that should be considered as subject to
the many uncertainties that exist in the Company's operations and business
environment. These uncertainties, which include economic and currency
conditions, market demand and pricing, competitive and cost factors, and the
like, are set forth in the Company's Report on Form 10-K for the year ended
December 31, 1996 filed with the Securities and Exchange Commission on March 27,
1997.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 7, 1997, Connectware, Inc. ("Connectware"), a Delaware corporation
and wholly owned subsidiary of AMP Incorporated (the "Company"), announced in a
press release that it has filed an appeal with the Texas State Court to reverse
an adverse decision by the majority of a 3-person arbitration panel considering
certain claims filed by Connectware and IMT, Inc., ("IMT"), a Dallas-based
corporation, with regard to IMT's Kemma RPS computer monitor screens. The Kemma
product is a screen intended to reduce or eliminate magnetic emissions from
computer monitors. On July 1, 1997 the panel awarded IMT $17.7 million, and
Connectware's appeal was filed on July 3, 1997. The appeal claims that the
arbitration panel exceeded its powers by granting relief to IMT that was not
allowed by the contract between the parties or allowed by law. The Company's
prudent accounting practices have led to the establishment of a reserve as of
June 30, 1997, resulting in a $17.7 million charge against second quarter
earnings and an after-tax earnings-per-share impact of five cents.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits --
Exhibit
Number Description
------- -----------
3(ii) - Bylaws of the Company, as amended July 23, 1997
10.A - Employment agreement between the Company and Mr. Phillipe
Lemaitre dated February 19, 1997
10.B - Amendment to the AMP Incorporated Pension Restoration Plan
dated as of July 23, 1997
10.C - AMP Incorporated Supplemental Benefit Trust Agreement
entered into as of April 1, 1997 between the Company and
Dauphin Deposit Bank and Trust Company
10.D - AMP Incorporated Supplemental Executive Pension Plan dated
June 9, 1997
27 - Financial Data Schedule
(B) Reports on Form 8-K --
There were no reports on Form 8-K for the three months ended June
30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 13, 1997 AMP INCORPORATED
(Registrant)
By: /s/ Robert Ripp
----------------------------------
Robert Ripp
Vice President and
Chief Financial Officer
By: /s/ W. S. Urkiel
----------------------------------
William S. Urkiel
Controller
**
EXHIBIT INDEX
-------------
Exhibit
Number Description
------- -----------
3(ii) - Bylaws of the Company, as amended July 23, 1997
10.A - Employment agreement between the Company and Mr. Phillipe
Lemaitre dated February 19, 1997
10.B - Amendment to the AMP Incorporated Pension Restoration Plan
dated as of July 23, 1997
10.C - AMP Incorporated Supplemental Benefit Trust Agreement
entered into as of April 1, 1997 between the Company and
Dauphin Deposit Bank and Trust Company
10.D - AMP Incorporated Supplemental Executive Pension Plan dated
June 9, 1997
27 - Financial Data Schedule
EX-3(ii)
AMP Incorporated
Bylaw Amendments
July 22-23, 1997
During the meeting held on July 22-23, 1997 the Board of Directors of AMP
Incorporated, a Pennsylvania corporation with its principal offices located in
Harrisburg, Pennsylvania, acted to amend the Bylaws of AMP Incorporated in the
following respects:
Section 1.5.1 is amended by revising the first sentence thereof to provide:
"The Annual Meeting of Shareholders, for the election of Directors and the
transaction of other business, if any, shall be held on the fourth Wednesday 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."
- -------------------------------------------------
Section 1.5.2 is amended by deleting the third sentence in its entirety and
substituting the following provision in its place:
"To be timely, a shareholder's notice must be delivered to or mailed to and
received at the principal executive office of the Corporation at least 60 days
in advance of the date in the then-current year that corresponds to the date of
the previous year's annual meeting; provided, however, that if the 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 at the principal executive office of the
Corporation at least 60 days in advance of the actual date of the Annual Meeting
in the then-current year unless fewer than 70 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 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."
- -------------------------------------------------
Section 2.9 is amended by revising the first sentence thereof to provide:
"Regular meetings of the Board shall be held on the fourth Wednesday of January,
April, June, July, September and October at 8:00 o'clock, local time, in the
morning at the General Offices of the Corporation in 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."
- -------------------------------------------------
Section 4.7 is amended by deleting the words:
", upon determination by the Board of Directors or its duly authorized
committee,"
from the first sentence thereof and by deleting the last sentence of the
Section in its entirety.
- -------------------------------------------------
Section 5.1 is amended by revising the second sentence thereof to provide:
"The shares of the Corporation shall be represented either by book entries under
the Direct Registration System or 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, which
certificates may be sealed with the seal of the Corporation or a facsimile
thereof."
The following is a restatement of the Bylaws of AMP Incorporated in their
entirety, containing all amendments up to and including those approved by the
Board of Directors on July 22-23, 1997:
July 23, 1997
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 Wednesday
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 at least 60 days in advance of the date
in the then-current year that corresponds to the date of the
previous year's annual meeting; provided, however, that if the
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 at the principal executive office of the Corporation at
least 60 days in advance of the actual date of the Annual Meeting
in the then-current year unless fewer than 70 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 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 8:00 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 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.
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 either by book entries under the
Direct Registration System or 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, which certificates 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.
Doc #4819
February 19, 1997
Mr. Philippe Lemaitre
60 West Juniper Lane
Moreland Hills, OH 44022
Dear Mr. Lemaitre:
We are pleased to offer you the position of Vice President and Chief
Technology Officer of AMP Incorporated (the "Company"), a corporation formed
under the laws of Pennsylvania. As Vice President and Chief Technology Officer,
you will report directly to me, serve as a member of the Company's Global
Planning Committee, and have overall global responsibility for the Company's
technology and research and development functions. In addition, you will be
expected to assume such other duties and responsibilities as may be assigned to
you from time to time by me, the CEO or the Board of the Company.
Our offer includes the following terms and conditions:
1. The base annual salary will be $300,000, payable semi-monthly and less
all taxes, social security payments and other charges required to be deducted by
the Company. This compensation is subject to annual review and adjustment as
deemed appropriate by the CEO and me in consultation with the Compensation and
Management Development Committee of the Board; increases are dependent on your
performance and are not guaranteed. You will be reimbursed for reasonable and
legitimate business and travel expenses incurred in your performance on behalf
of the Company, in accordance with the Company's policies as established from
time to time.
2. There is no fixed term of employment and your employment with the
Company will be "at will" for an indefinite period of time. However, if your
employment with the company terminates at any time within the initial twelve
months following your start date for reasons other than your death or voluntary
resignation, the semi-monthly payments of your base annual salary will continue
for the period of your unemployment or for six months, whichever is shorter.
3. You will be designated a participant in the annual cash bonus plan for
officers, the Management Incentive Plan, and will be entitled to an initial cash
bonus distribution under this Plan in the first quarter of 1998 based on the
Company's performance in 1997. The amount of that distribution will be the
greater of the amount that would normally be paid to you under the terms of the
Plan based on your assigned level of participation (a 35% target bonus) or
$60,000.
4. The Company agrees to grant you effective on your start date a total of
17,500 nonqualified stock options issued under the Company's 1993 Long-Term
Equity Incentive Plan, which options will have an exercise price equal to the
fair market value of Company common stock on the grant date, will vest on the
third anniversary of grant, and will be exercisable thereafter during your
employment until the tenth anniversary of the grant date. In addition, in line
with the Company's grant practices with respect to your peer executive officers
you will be considered for grants of additional stock options and/or performance
restricted shares of Company common stock under the Company's 1993 Long Term
Equity Incentive Plan, commencing in July, 1997, at a level commensurate with
your salary.
5. You will be entitled to participate in such group benefit plans as may
be established from time to time with respect to the Company's employees of
similar position, which currently include but are not limited to health
insurance, short-term and long-term disability programs, travel accident
insurance, a tax-qualified pension plan, a nonqualified supplemental executive
pension plan, a tax-qualified 401(k) retirement savings plan, and a nonqualified
deferred compensation plan, but which are subject to change. You will begin to
accrue a fully vested pension benefit under the Company's pension formula based
upon your Company salary and annual cash bonus immediately upon hire, without
having to first serve an eligibility waiting period. To the extent that the
Company is constrained by law or by plan provision from providing the foregoing
pension benefits under the Company's tax-qualified pension plan, this pension
benefit will be provided under the Company's nonqualified supplemental executive
pension plan. Due to legal and plan constraints your participation in the
Company's tax-qualified 401(k) savings plan cannot commence until your first
anniversary of hire, but you will be eligible to participate in the Company's
nonqualified deferred compensation plan commencing on the April 1, July 1 or
October 1 next following your start date, and any Company matching contribution
you receive under that plan will be fully vested. In addition, management will
recommend to the Compensation and Management Development Committee of the
Company's Board of Directors that you be approved for enrollment as a
participant in the Company's supplemental pension plan for mid-career hired
executives, under which your Company-provided age 65 pension benefit (i) upon
completion of five years of Company service would be no less than 15% of your
high three consecutive years average salary plus annual cash bonus, (ii) upon
completion of six years of Company service would be no less than 18% of such
average, (iii) upon completion of seven years of Company service would be no
less than 21% of such average, (iv) upon completion of eight years of Company
service would be no less than 24% of such average, (v) upon completion of nine
years of Company service would be no less than 27% of such average, and (vi)
upon and after completion of ten years of service would be no less than 30% of
such average.
6. Effective January 1, 1998, you will be afforded the benefit of life
insurance coverage under the Company's split dollar life insurance plan for
executives; prior to that date you will be covered under the Company's group
term life insurance plan.
7. You will be offered the opportunity to receive financial and estate
planning counseling under the terms of the program that the Company has
developed with The AYCO Corporation.
8. You will be entitled to 3 weeks of vacation per calendar year.
9. The Company expects you to relocate to the Harrisburg, Pennsylvania area
within a reasonable period of time. You will be reimbursed the reasonable cost
of moving, including the usual and customary costs associated with the sale of
your home in Ohio and the purchase of a new home, temporary living expenses in
Harrisburg for you and your family for a reasonable period of time (not to
exceed 30 days), and the costs of the move of your household goods from Ohio,
all on the basis of those reimbursements being grossed up as necessary to avoid
incremental federal and state income tax to you and in accordance with the
Company's current relocation policies. These costs must be processed by December
31, 1997. In addition, the services of PHH Relocation Services are, at your
option, available to assist with the sale of your Ohio house. The PHH Relocation
Services must be requested through the Human Resources Department by July 31,
1997 to ensure that the process is completed by December 31, 1997.
10. You agree to devote your full business time and best efforts to the
faithful performance of your duties and responsibilities as assigned by me, the
CEO or the Board of the Company, to the exclusion of any other employment,
affiliation, activity or investment that would interfere with, compete with or
constitute a conflict of interest with your efforts devoted on behalf of the
Company.
11. In consideration of the compensation and benefits extended to you in
this officer of employment, you agree to sign the standard Company limited
non-competition, intellectual property and confidentiality agreements (copies
enclosed) that apply during your employment with the Company and for the period
of time after termination of employment that is indicated in each respective
agreement. These obligations shall survive termination or expiration of your
employment with the Company.
12. This offer is contingent on you satisfactorily meeting the Company's
pre-employment physical requirements and upon a negative pre-employment drug
screening test, which must be conducted within 48 hours of your receipt of an
employment officer that you accept. Concerning the Company's physical
requirements, the enclosed Employee Health Questionnaire should be completed by
you and forwarded to us in the pre- addressed envelope as soon as possible upon
your acceptance of the offer. Concerning the drug screening test, facilities in
Ohio authorized to conduct the screening test are listed in the enclosed
paperwork. Please call the facility of your choice to set up an appointment
within the prescribed 48-hour period, and take with you to the testing facility
the enclosed related drug screening paperwork. The cost of this drug screening
will automatically be billed to AMP by the facility.
13. This offer of employment is personal to you and may not be assigned or
transferred to any third party. These terms of employment are binding on the
Company and its affiliates and subsidiaries and are assignable only in
connection with the transfer of a substantial portion of the assets of the
Company, without your prior consent.
The terms of this offer of employment may not be changed or waived except
in a writing duly executed by both you and an authorized representative of the
Company.
Soon after our receipt of your acceptance of this offer, you will be
contacted by mail by our Human Resources Department to initiate our benefit
enrollment process and to otherwise inform you about our employment sign-in
process (covering matters such as proof of identity, documentation of your
eligibility to work in the U.S., and the standard intellectual property and
confidentiality agreements referred to above).
If the foregoing is acceptable to you, please indicate your acceptance by
signing a copy of this letter on the line provided below and returning it to me.
We would like for you to begin your employment as soon as reasonably practical,
but in any event on or before April 1, 1997. If you have any questions or need
clarification on our offer, please let me know.
Very truly yours,
AMP Incorporated
/s/ J. E. Marley
By:______________________________
James E. Marley
Chairman of the Board
Accepted and agreed, intending to be legally bound hereby.
/s/ Philippe Lemaitre
- ---------------------------------
Philippe Lemaitre
Enclosures
THIRD AMENDMENT
to the
AMP INCORPORATED
PENSION RESTORATION PLAN
The AMP Incorporated Pension Restoration Plan (the "Plan"), as amended and
restated in its entirety effective January 1, 1995, and thereafter amended on
two occasions is hereby further amended effective as of April 23, 1997 to add
new Sections 9.2 and 9.3, as follows:
9.2. Notwithstanding the foregoing, upon a Change of Control of AMP
Incorporated, all rights of all then active Employees who have accrued a benefit
under the Plan shall be fully vested.
9.3. For the purposes of this Section 9, a "Change of Control" of AMP
Incorporated shall mean:
(a) any Person (as defined below) is or becomes the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), directly or indirectly, of securities of AMP Incorporated
("AMP"), not including in the securities beneficially owned by such Person any
securities acquired directly from AMP or its affiliates, representing 30% or
more of either the then outstanding shares of common stock of the Corporation or
the combined voting power of the Corporation's then outstanding securities; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of AMP) whose appointment or election by the Board
or nomination for election by AMP's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination for
election was previously so approved; or
(c) there is consummated a merger or consolidation of AMP with any
other corporation or the issuance of voting securities of AMP in connection with
a merger or consolidation of AMP (or any direct or indirect subsidiary of AMP)
pursuant to applicable stock exchange requirements, other than (A) a merger or
consolidation that would result in the voting securities of AMP outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least 50% (effective on and after
July 23, 1997, at least 66-2/3%) of the combined voting power of the voting
securities of AMP, or such surviving entity or any parent thereof, outstanding
immediately after such merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of AMP (or similar transaction) in
which no Person is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of AMP (not
including in the securities beneficially owned by such Person any securities
acquired directly from AMP or its affiliates)representing 30% or more of either
the then outstanding shares of common stock of AMP or the combined voting power
of AMP's then outstanding securities; or
(d) the stockholders of AMP approve a plan of complete liquidation or
dissolution of AMP or there is consummated an agreement for the sale or
disposition by AMP of all or substantially all of AMP's assets, other than a
sale or disposition by AMP of all or substantially all of AMP's assets to an
entity, at least 70% of the combined voting power of the voting securities of
which are owned by Persons in substantially the same proportions as their
ownership of AMP immediately prior to such sale.
(e) For the purpose of this Section, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include:
(i) AMP or any of its subsidiaries;
(ii) a trustee or other fiduciary holding securities under an
employee benefit plan of AMP or any of its subsidiaries;
(iii) an underwriter temporarily holding securities pursuant to
an offering of such securities; or
(iv) a corporation owned, directly or indirectly, by the
stockholders of AMP in substantially the same proportions as their ownership of
stock of AMP.
Executed this 6th day of August, 1997.
AMP Incorporated
By: /s/ J. E. Marley
----------------------------
Title: Chairman of the Board
----------------------------
AMP INCORPORATED
SUPPLEMENTAL BENEFIT TRUST AGREEMENT
THIS TRUST AGREEMENT is made and entered into as
of April 1, 1997 by and between AMP Incorporated, a
corporation organized and existing under the laws of the
Commonwealth of Pennsylvania ("AMP") and Dauphin Deposit
Bank and Trust Company, a banking association organized and
existing under the laws of the Commonwealth of Pennsylvania
(the "Trustee").
WITNESSETH:
WHEREAS, AMP and certain of its direct
and indirect subsidiaries (collectively, with AMP, the
"Company") have established certain supplemental retirement
and life insurance plans, deferred compensation plans and
severance arrangements, listed on Exhibit A attached hereto
as of the date hereof or, thereafter, added as designated by
the President and Chief Executive Officer of AMP (the
"CEO") (hereinafter referred to collectively as the "Plan"
or the "Plans" as applicable);
WHEREAS, each Plan provides for the Company to pay
all benefits from its general revenues and assets;
WHEREAS, the Company wishes to establish separate
individual trusts (individually, a "Trust" and collectively,
the "Trusts") for certain designated Participants, as
defined below, in the Plan, though, prior to a Change of
Control, as defined in Section 16.3 hereof, any such Trust
may not necessarily hold sufficient assets to satisfy all of
the benefits to be provided under the Plan;
WHEREAS, the Company also wishes to establish a
Trust fund to provide a source for payment of any fees,
including legal fees, incurred by the Trustee in the
administration of the Trusts or by Participants in enforcing
their rights hereunder (the "Fee Trust") and a Trust fund to
provide a source of payment of any benefits under a Plan to
the extent that the assets of an individual Trust
established for a Participant are insufficient to provide
all benefits due (the "Shortfall Trust");
WHEREAS, the Company wishes to contribute to the
Trusts assets or a letter of credit, or both, either on the
date hereof or thereafter as determined by the CEO, that
shall be held therein, to serve as a source of funds to
assist it in meeting its liabilities under the Plans,
subject to the claims of Company's creditors in the event of
Company's Insolvency, as defined below, until paid to Plan
Participants and their beneficiaries in such manner and at
such times as specified hereunder or in the Plans;
WHEREAS, contributions to the Trusts shall be held
by the Trustee and invested, reinvested and distributed in
accordance with the provisions of this Trust Agreement;
WHEREAS, each Trust established by this Trust
Agreement is intended to be a "grantor trust" with the
result that the corpus and income of the Trusts are treated
as assets and income of the Company pursuant to Sections 671
through 679 of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, the Company and the Trustee,
intending to be legally bound, declare and agree as follows:
ARTICLE I
ESTABLISHMENT
1.1 AMP hereby establishes with the Trustee a
separate, and subject to Section 16.2 hereof, irrevocable
Trust on behalf of each Participant in the Plan designated
by CEO and listed on Exhibit B hereto or added thereafter as
designated by the CEO (the "Participant"). AMP also hereby
establishes with the Trustee the Shortfall Trust and the Fee
Trust. Each separate Trust so established shall be governed
by the terms of this Trust Agreement. Each Trust is
intended to be exempt from substantially all of the
provisions of ERISA by reason of the provisions of Sections
201(2), 301(a)(3) and 401(a)(1) thereof, as applicable, and
AMP shall immediately notify the Trustee should such exempt
status change for any reason.
1.2 Each Trust may consist of such sums of money,
other property acceptable to the Trustee or a letter of
credit against which the Trustee may obtain funds to be
credited to the Trusts as of the date hereof and as from
time to time shall be paid or delivered to the Trustee by
AMP immediately following the date hereof or from time to
time in the future, as determined by the CEO. The Fee Trust
and the Shortfall Trust shall be irrevocable and each other
Trust, subject to the provisions of Section 16.2 hereof,
shall be irrevocable for the Participant for which it is
established. Except as provided in Sections 4.2 and 16.2
hereof, the Company shall have no right to direct the Trus
tee to return or divert any Trust assets before the payment
of all benefits under the Plan to the Participant. All such
money and other property, all investments and reinvestment
made therewith or proceeds thereof and all earnings and
profits (less losses) thereon, less all payments and charges
as authorized herein, for each of the Trusts are hereinafter
collectively referred to as the "Trust Fund." The Trust
Fund shall be held by the Trustee and shall be dealt with in
accordance with the provisions of this Trust Agreement as a
single trust fund for purposes of investing the assets of
each Trust but the Company (or its designee) shall maintain,
or cause to be maintained records sufficient to determine
the interest of each Trust in the Trust Fund.
1.3 AMP may contribute such sums of money or property
to the Trust Fund, or a letter of credit against which the
Trustee may obtain funds, from time to time, as the CEO
determines appropriate in his sole discretion. Participants
and their beneficiaries shall have no preferred claim on, or
any beneficial ownership interest in, any assets of the
Trust Fund. Any rights created under the Plans and this
Trust Agreement shall be mere unsecured contractual rights
of Participants and their beneficiaries against the Company.
Any assets held by the Fund will be subject to the claims of
AMP's general creditors under federal and state law in the
event of Insolvency, as defined in Section 4.2 herein.
ARTICLE II
TRUSTEE ACCEPTANCE
2.1 The Trustee accepts each Trust established under
this Trust Agreement on the terms and subject to the
provisions set forth herein, and it agrees to discharge and
perform fully and faithfully all of the duties and
obligations imposed upon it under this Trust Agreement.
ARTICLE III
PLANS AS PART OF TRUST AGREEMENT
3.1 The Plans are expressly incorporated herein and
made a part hereof with the same force and effect as if
fully set forth at length. Copies of each of the Plans
shall be attached hereto as Exhibit C on or before any
amounts are contributed hereunder by AMP to provide funding
with respect to that Plan. All terms defined in the Plans
shall have the same meanings when used herein unless
expressly provided to the contrary herein. The Company will
promptly deliver to the Trustee copies of all amendments and
exhibits to the Plans and copies of any additional plans to
be covered by this Agreement after the date first above
written.
3.2 The terms of the Plans shall govern the amount,
form and timing of benefit payments under the Plans to which
a Participant is entitled but the Trustee shall not be
responsible for enforcing the terms of any Plan.
3.3 Subject to the provisions of Section 12.3 hereof,
the incorporation of the Plans into this Trust Agreement
shall not cause the Plans to become irrevocable under the
provisions of Section 1.2 of this Trust Agreement.
3.4 The Trustee shall have no right or obligations
with respect to any of the provisions of the Plans relating
to the funding of benefits or the funding of the Fee Trust
or the Shortfall Trust except to draw upon any letter of
credit contributed to the Trust Fund when funds are needed
to pay benefits under a Trust and there are insufficient
other assets in the Trust and in the Shortfall Trust to make
the payment(s) due.
ARTICLE IV
TRUST FUND
4.1 It is intended that each Trust constitute a
grantor trust under Code Sections 671 through 679, with the
assets of the Trust Fund being treated as assets of AMP for
purposes of Federal, state and local income tax laws. The
creation of the Trust Fund shall not cause any of the Plans
to be treated as funded plans for purposes of Title I of
ERISA.
4.2. The assets of each Trust shall at all times be
subject to the claims of the general creditors of AMP under
Federal and state law. The Trustee shall suspend payments
to each Participant from the Trust Fund if the Trustee
receives timely written notification from AMP's Board of
Directors (the "Board") and its CEO that AMP is (a)
Insolvent or (b) subject as a debtor to a pending proceeding
under the Federal Bankruptcy Code. It shall be the duty of
the Board and its CEO to provide the Trustee with timely
written notification of such events. For purposes of this
Article IV, the term "insolvent" means the inability of the
Company to pay its debts when they mature. Under any such
circumstance, the Trustee shall suspend payments from the
Trust Fund to the Participants and shall pay the assets held
in the Trust Fund only as a court of competent jurisdiction
shall direct to satisfy claims of general creditors of AMP.
It is intended that the rights of the general creditors of
AMP to enforce the provisions of this Article in the event
of AMP's Insolvency be enforceable with respect to the Trust
Fund at the time of Insolvency under both Federal and state
law. It is also intended that no provision of this Trust
Agreement shall in any way affect the Participants' rights
as general creditors of AMP.
4.3 If a person claiming to be a creditor of AMP
alleges in writing to the Trustee that AMP has become
Insolvent, the Trustee shall determine whether AMP is
Insolvent and, pending such determination, in accordance
with Section 4.4, the Trustee shall discontinue payment of
benefits to Participants or beneficiaries.
4.4 Unless the Trustee has actual knowledge of AMP's
Insolvency, or has received notice from AMP or a person
claiming to be a creditor alleging that AMP is Insolvent,
the Trustee shall have no duty to inquire whether AMP is
Insolvent. The Trustee may in all events rely on such
evidence concerning AMP's Insolvency as may be furnished to
the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning AMP's
Insolvency.
4.5 The Trustee shall resume the payment of benefits
to the Participants or beneficiaries in accordance with
Article VII of this Trust Agreement only after the Trustee
has determined that AMP is not Insolvent (or is no longer
Insolvent) based on such evidence as the Trustee determines
to be sufficient for such purpose such as a report from
AMP's independent auditors or certification to the Trustee
from AMP's Chief Financial Officer, if AMP is not subject to
a bankruptcy proceeding, or if AMP is subject to a
bankruptcy proceeding, an order from a court of competent
jurisdiction.
4.6 Provided that there are sufficient assets, if the
Trustee discontinues the payment of benefits from the Trust
Fund pursuant to this Article and subsequently resumes such
payments, the first payment following such discontinuance
shall include the aggregate amount of all payments due to
the Participants or beneficiaries under the terms of the
Plans for the period of such discontinuance, less the
aggregate amount of any payments made to the Participants or
beneficiaries by AMP in lieu of the payments provided for
hereunder during any such period of discontinuance.
ARTICLE V
INVESTMENTS
5.1 If a Plan provides for the designation of invest
ments by AMP in accordance with instructions of each
Participant, the investment powers of the Trustee shall be
governed by this Section 5.1. The Trustee shall invest and
reinvest the principal and income of the Trust Fund and keep
the Trust Fund invested, without distinction between
principal and income, only in those investment vehicles that
have been selected by AMP as being consistent with the
investments specifically designated by each Participant
pursuant to the applicable provisions of the Plan; provided,
however, that any such designation shall be solely for the
purpose of determining the amount to be paid to the
Participant under the Plan and shall in no way alter the
characterization of the assets of Trust Fund as assets of
AMP in accordance with Section 4.1 hereof.
5.2 (a) If a Plan does not provide for the designation
of investments by the Participants, or following a Change of
Control if no such directions have been given, the
investment powers of the Trustee shall be governed by this
Section 5.2. The Trustee shall invest and reinvest the
principal and income of the Trust Fund as directed by AMP in
writing, which directions may be changed from time to time;
provided, however, that any such directions from AMP may not
be changed on or after a Change of Control of AMP, as
defined in Article XVI hereof. In the absence of direction,
the Trustee shall invest and reinvest the principal and
income of the Trust Fund as it shall determine in its sole
discretion subject to the overall objective of the Trust
Fund which is the preservation of capital. In such event,
the Trustee shall keep the Trust Fund invested, without
distinction between principal and income, in any property,
whether real, personal or mixed, and wherever situated and
whether or not productive of income, including without
limitation capital, common and preferred stocks, and
personal, corporate and governmental or other obligations,
whether secured or unsecured, and including any collective
part interest therein; mortgages, leaseholds, fees and other
interests in realty; oil, gas or mineral properties and
rights, royalties, payments or other interests in such
properties; contracts, choses in action, trust and
participation certificates or other evidences of ownership,
part ownership or part interest; all without being limited
or restricted to investments of a character authorized for
trustees or other fiduciaries under any present or future
laws and, except as otherwise required by Federal law
without regard to the proportion any such property may bear
to the entire amount of the Trust Fund.
(b) Specifically, but not by way of limitation,
the Trustee is authorized and empowered to invest all or any
part of the Trust Fund in any common or collective trust
fund or pooled investment fund presently or hereafter
maintained by the Trustee as the same may be amended from
time to time; and the declaration of trust establishing such
common or collective fund is hereby made a part hereof as if
set forth at length herein, the assets of the fund invested
in said common or collective trusts shall be held and
administered by the Trustee strictly in accordance with the
terms of the instrument, and the combining of assets of the
Trust Fund with assets of other trusts in such common or
collective trust fund is specifically authorized hereby.
(c) The Trustee in its discretion may keep such
portion of the Trust Fund in cash or cash balances or hold
all or any portion of the Trust Fund in savings accounts,
certificates of deposit, and other types of time or demand
deposits with any financial institution or quasi-financial
institution, either domestic or foreign (including any such
institution operated or maintained by the Trustee in its
corporate capacity) as the Trustee may from time to time
determine to be in the best interests of the Trust Fund.
5.3 If any portion of the Trust Fund is invested in a
life insurance policy on the life of the Participant, the
owner of the policy shall be the Trustee.
ARTICLE VI
ADDITIONAL POWERS AND DUTIES OF THE TRUSTEE
6.1 The Trustee shall have the following additional
powers and authority with respect to all property
constituting part of the Trust Fund:
(a) To sell, exchange, convey or transfer any such
property at public or private sale for cash or on credit and
grant options for the purchase or exchange thereof;
provided, however, that in no event may the Trustee invest
in securities (including stock or rights to acquire stock)
or obligations issued by AMP, other than a de minimis amount
held in common investment vehicles in which the Trustee
invests. No person dealing with the Trustee shall be bound
to see to the application of the purchase money or other
property delivered to the Trustee or to inquire into the
validity, expedience or propriety of any such sale or other
disposition.
(b) To participate in any plan of reorganization, con
solidation, merger, combination, liquidation or other
similar plan relating to any such property, and to consent
to or oppose any such plan or any action thereunder, or any
contract, lease, mortgage, purchase, sale or other action by
any corporation or other entity.
(c) To deposit any such property with any protective,
reorganization or similar committee; to delegate
discretionary power to any such committee; and to pay part
of the expenses and compensation of any such committee and
any assessments levied with respect to any property so
deposited.
(d) To exercise any conversion privilege or
subscription right available in connection with any such
property; to oppose or to consent to the reorganization,
consolidation, merger or readjustment of the finances of any
corporation, company or association, or to the sale,
mortgage, pledge or lease of the property of any
corporation, company or association any of the securities of
which may at any time be held in the Fund and to do any act
with reference thereto, including the exercise of options,
the making of agreements or subscriptions and the payment of
expenses, assessments or subscriptions, which may be deemed
necessary or advisable in connection therewith, and to hold
and retain any securities or other property which it may so
acquire.
(e) To commence or defend suits or legal proceedings
and to represent the Trusts and the Trust Fund in all suits
or legal proceedings; to settle, compromise or submit to
arbitration any claims, debts or damages due or owing to or
from the Trust Fund; and to pay all reasonable expenses
arising from any such action from the Fee Trust if not paid
by AMP, or, to the extent that the Fee Trust is
insufficient, on a pro rata basis from the other Trusts.
(f) To exercise, personally or by general or limited
power of attorney, any right, including the right to vote,
appurtenant to any securities or other such property.
(g) If AMP consents, to borrow money from any lender
in such amounts and upon such terms and conditions as shall
be deemed advisable or proper to carry out the purposes of
the Trusts and to pledge any securities or other property
for the repayment of any such loan; provided, however, that
in the event that AMP contributes a letter of credit to the
Trust Fund to be used as a source of funds, no further
authorization shall be needed from AMP for the Trustee to
draw funds against that letter of credit for the purpose of
making payments due under this Trust Agreement to the extent
that the assets of a Trust or the Shortfall Trust are
insufficient to make the payment(s) due.
(h) To engage any legal counsel, including inside
counsel, reasonably satisfactory to AMP, or any other
suitable accounting, clerical or other agents, reasonably
satisfactory to AMP, to consult with such counsel or agents
with respect to the construction of this Trust Agreement,
the duties of the Trustee hereunder, the transactions contem
plated by this Trust Agreement or any act which the Trustee
proposes to take or omit, to rely upon the advice of such
counsel or agents, and to pay the reasonable fees, expenses
and compensation from the Fee Trust if not paid by AMP, or,
to the extent that the Fee Trust is insufficient, on a pro
rata basis from the other Trusts.
(i) To register any securities held by it in its own
name or in the name of any custodian of such property or of
its nominee, including the nominee of any system for the
central handling of securities, with or without the addition
of words indicating that such securities are held in a
fiduciary capacity, to deposit or arrange for the deposit of
any such securities with such a system and to hold any secu
rities in bearer form; provided, that the books and records
of the Trustee shall show that all such investments are part
of the Trust Fund.
(j) To make, execute and deliver, as the Trustee, any
and all deeds, leases, notes, bonds, guarantees, mortgages,
conveyances, contracts, waivers, releases or other
instruments in writing necessary or proper for the
accomplishment of any of the foregoing powers.
(k) To do all other acts although not specifically
mentioned herein, as the Trustee may deem necessary to carry
out any of the foregoing powers and the purposes of this
Trust Agreement.
ARTICLE VII
PAYMENTS BY THE TRUSTEE
7.1 If a Participant or beneficiary does not receive a
payment(s) to which he believes he has become entitled under
the Plan, he shall notify the Trustee in writing of such
entitlement.
7.2 The Trustee shall make payments to a Participant
or beneficiary in accordance with written instructions given
at the time of payment or in advance of such payment,
consistent with the terms of the Plan, to the Trustee from
the CEO as to the manner and timing of payments hereunder
and the Trustee shall have no responsibility to determine
the amount of such payments. The instructions in effect on
the date of this Trust Agreement shall be attached hereto as
Exhibit D, as the same may be changed from time to time
prior to a Change of Control. No Company may change such
instructions on or after notification or knowledge of a
Change of Control of AMP with respect to benefits accrued to
date, as defined in Article XVI hereof.
7.3 If the CEO has not provided instructions to the
Trustee, as set forth in Section 7.1 hereof, by the time a
payment is due, or payments are due to commence, under the
Plan, the Trustee shall determine, within 30 days of its
receipt of a notice from the Participant (or beneficiary),
whether the terms of the Plan dictate that the Participant
or beneficiary is entitled to a payment. If the Trustee
determines that a payment is required, the Trustee shall
make the payment (or commence payments) to the Participant
or beneficiary within such 30 day period. The Trustee shall
provide AMP with written confirmation of the fact that it
determined a payment(s) is due and amount of such payment(s)
after it is made. The Trustee's decision shall be final and
binding and the Participant or beneficiary shall be notified
of the decision in writing. The notice shall include
specific reasons for the decision, including specific
references to the pertinent Plan provisions on which the
decision is based, and shall be written in a manner
calculated to be understood by the Participant or
beneficiary. Nothing in this Trust Agreement shall be
deemed to limit the rights of a Participant (or beneficiary)
under any of the Plans, including the right to contest the
denial of benefit payment(s) and, following a Change of
Control, to have all reasonable legal fees and expenses
incurred in contesting a denial paid from the Fee Trust, or,
to the extent that the Fee Trust is insufficient, on a pro
rata basis from the other Trusts.
7.4 The Trustee shall deduct from each payment any Fed
eral withholding taxes or charges which the Trustee is
required to deduct under applicable laws.
7.5 The insufficiency of assets in a Trust Fund shall
not relieve AMP of its obligations or liabilities to make
benefit payments otherwise due to a Participant or
beneficiary under the terms of the Plans.
7.6 If any portion of the Trust Fund has been invested
in a life insurance or annuity contract, the Trustee shall
be precluded from paying any benefits it has received
pursuant to that contract to AMP unless the Participant
and/or his beneficiary have received all benefit payments
due and payable under the terms of the Plan.
7.7 AMP may make payment of benefits directly to
Participants or their beneficiaries as they become due under
the terms of the Plans. AMP shall notify the Trustee of its
decision to make payment of benefits directly prior to the
time amounts are payable to Participants or their
beneficiaries. In addition, if the principal of the Trust
Fund is not sufficient to make payments of benefits in
accordance with the terms of the Plans, the Trustee shall
use assets of the Shortfall Trust to make payments due but
if not sufficient, AMP shall make the balance of each such
payment as it falls due. The Trustee shall notify AMP where
principal and earnings of the Trust and the Shortfall Trust
are not sufficient.
ARTICLE VIII
TAXES, EXPENSES AND COMPENSATION
8.1 AMP shall from time to time pay taxes of any and
all kinds which are lawfully levied or assessed upon or
become payable in respect of the Trust Fund, the income or
any property forming a part thereof, or any security
transaction pertaining thereto. To the extent that any
taxes lawfully levied or assessed upon the Trust Fund are
not paid by AMP, the Trustee shall pay such taxes out of the
Fee Trust, or, to the extent that the Fee Trust is
insufficient, on a pro rata basis from the Trusts. The
Trustee shall at the expense and direction of AMP contest
the validity of such taxes in any manner deemed appropriate
by AMP or its counsel or AMP may itself contest the validity
of any such taxes.
8.2 Any other reasonable expenses incurred by the Trus
tee in the performance of its duties under this Trust
Agreement, including but not limited to reasonable legal
fees and consulting fees, shall be charged against and paid
from the Fee Trust to the extent that AMP does not pay such
expenses, or, to the extent that the Fee Trust is
insufficient, on a pro rata basis from the other Trusts.
8.3 AMP shall pay the Trustee such reasonable
compensation for its services as may be agreed upon in
writing from time to time by AMP and the Trustee. Such
compensation shall be paid directly by AMP. In the event
such compensation is not paid by AMP or any Company, it
shall be charged against the Fee Trust, or, to the extent
that the Fee Trust is insufficient, on a pro rata basis from
the other Trusts.
ARTICLE IX
ADMINISTRATION AND RECORDS
9.1 The Trustee shall keep or cause to be kept
accurate and detailed accounts of any investments, receipts,
disbursements and other transactions hereunder, and all
accounts, books and records relating thereto shall be open
to inspection and audit at all reasonable times by any
person designated by a Company. All such accounts, books
and records shall be preserved (in original form, or on
microfilm, magnetic tape or any other similar process) for
such period as the Trustee may determine, but in any event
at least 7 years. Thereafter, the Trustee may destroy such
accounts, books and records unless AMP specifies otherwise
in writing prior to the end of such period, but will make a
good faith effort to first notify AMP in writing of its
intention to do so and transfer to AMP any of such accounts,
books and records requested.
9.2 Within 60 days after the close of each calendar
year, and within 60 days after the removal or resignation of
the Trustee or of the termination of the Trust Agreement,
the Trustee shall file with AMP (and provide a copy thereof
to the Participants, upon a written request) a written
accounting setting forth all investments, receipts,
disbursements and other transactions effected by it during
the preceding calendar year and, if applicable, during the
current calendar year to the date of such removal,
resignation or termination, including a description of all
investments and securities purchased and sold with the cost
or net proceeds of such purchases or sales and showing all
cash, securities and other property held at the end of such
calendar year or other period and the fair market value
thereof.
9.3 Nothing contained in this Trust Agreement shall be
construed as depriving the Trustee or a Company of the right
to have a judicial settlement of the Trustee's accounts, and
upon any proceeding for a judicial settlement of the
Trustee's accounts or for instructions, the only necessary
party thereto in addition to the Trustee shall be AMP.
9.4 In the event of the removal or resignation of the
Trustee, the Trustee shall deliver to the successor trustee
all records which shall be required by the successor trustee
to enable it to carry out the provisions of this Trust
Agreement.
9.5 In addition to any returns required of the Trustee
by law, such as income tax reporting, the Trustee shall
prepare and file such tax reports and other returns as the
Company and the Trustee may from time to time agree upon in
writing.
ARTICLE X
REMOVAL OR RESIGNATION OF THE TRUSTEE
AND DESIGNATION OF SUCCESSOR TRUSTEE
10.1 AMP may remove the Trustee with or without cause,
upon at least 60 days' notice in writing to the Trustee;
provided, however, that following a Change of Control of
AMP, as defined in Article XVI hereof, the Trustee may be
removed only for cause.
10.2 The Trustee may resign at any time upon at least
60 days' notice in writing to AMP.
10.3 In the event of such removal or resignation, the
Trustee shall duly file with AMP a written accounting, at
least 60 days in advance, as provided in Section 9.2 hereof
for the period since the last previous annual accounting,
listing the investments of the Trust and any uninvested cash
balance thereof, and setting forth all receipts,
disbursements, distributions and other transactions
respecting the Trust Fund not included in any previous
accounting, and if written objections to such accounting are
not filed as provided in Section 9.2 hereof, the Trustee
shall to the maximum extent permitted by applicable law be
forever released and discharged from all liability and
accountability with respect to the propriety of its acts and
transactions shown in such accounting.
10.4 Within 60 days after any such notice of removal or
resignation of the Trustee, AMP shall designate a successor
trustee qualified to act here under, which shall in any
event be a major financial institution located in the United
States with assets of at least $5.0 billion. In no event
may AMP, an affiliate of AMP or of any Participant serve as
the successor trustee. Each such successor trustee, during
such period as it shall act as such, shall be bound by all
of the provisions hereof as well as any instructions
provided by the CEO or AMP pursuant to the provisions
hereof, shall have the powers and duties herein conferred
upon an individual trustee, and the word "Trustee" wherever
used herein, except where the context otherwise requires,
shall be deemed to include any successor trustee.
10.5 Upon designation of a successor trustee and
delivery to the resigned or removed Trustee of written accep
tance by the successor trustee of such designation, such
resigned or removed trustee shall promptly assign, transfer,
deliver and pay over to such successor trustee, in conform
ity with the requirements of applicable law, the funds and
properties in its control or possession then constituting
the Fund. If, by the resignation or removal date, AMP has
not notified the Trustee in writing as to whom the assets
and cash are to be transferred and delivered, the Trustee
may bring an appropriate action or proceeding for leave to
deposit the assets and cash in a court of competent
jurisdiction. The Trustee shall be reimbursed by the Fee
Trust for all costs and expenses of the action or proceeding
including, without limitation, reasonable attorneys' fees
and disbursements if not paid directly by AMP or a Company
or, to the extent that the Fee Trust is insufficient, on a
pro rata basis from the other Trusts.
ARTICLE XI
ENFORCEMENT OF TRUST AGREEMENT
11.1 AMP shall have the right to enforce any provisions
of this Trust Agreement. In any action or proceedings
affecting the Fund the only necessary parties shall be AMP
and the Trustee and, except as provided in Section 12.1
hereof or as otherwise required by applicable law, no other
person shall be entitled to any notice or service of proc
ess. Any judgment entered in such an action or proceeding
shall be binding and conclusive on all persons having or
claiming to have any interest in the Fund.
ARTICLE XII
AMENDMENTS
12.1 Subject to the provisions of Section 12.3 hereof,
AMP may, from time to time, amend or modify, in whole or in
part, any or all of the provisions of this Trust Agreement,
except to make it revocable or to increase the duties of the
Trustee without its written consent. The Trustee and the
Participant under each Trust shall receive written notice of
any such amendment including any amendment under Section
12.3 hereof.
12.2 AMP and the Trustee shall execute such supplements
to, or amendments of, this Trust Agreement as shall be
necessary to give effect to any such amendment or
modification.
12.3 Notwithstanding anything herein to the contrary,
to the extent that the terms hereof are inconsistent with
the terms of any Plan, the latter shall control as if the
terms hereof had been amended accordingly; and, further,
upon a Change of Control of AMP, as defined in Article XVI
hereof, each Company shall be precluded from amending (i)
this Agreement, (ii) any of the Plans with respect to any
benefit (including any form of benefit or benefit determina
tion) of the Participant that had accrued on or prior to the
Change of Control of AMP or is funded pursuant to the provis
ions of Article XVI hereof but has not been completely dis
tributed to the Participants or beneficiaries, or (iii) any
of the Plans with respect to any benefit other than
described in clause (ii) above for a period of three (3)
years following the Change of Control of AMP, unless, in any
such event, the Participant or beneficiary, as applicable,
consents, in writing, to such amendment. Upon a Change of
Control of AMP, as defined in Article XVI hereof, this Sec
tion 12.3 shall be deemed to supersede any provision of any
such Plan which permits amendments of such Plan inconsistent
with the terms hereof and this Section 12.3 shall constitute
an amendment to such Plan.
ARTICLE XIII
TERMINATION OF TRUST
13.1 Except as provided in Sections 4.2 or 16.2 hereof,
no part of the corpus or income of the Trust Fund shall be
paid to a Company or be used for any purpose other than for
the exclusive purpose of providing benefits to the
Participants or beneficiaries prior to the satisfaction of
all liabilities under the Plans; provided, however, that
nothing in this Article shall be deemed to limit or
otherwise prevent the payment from the Trust Fund of
expenses, taxes, and other charges as provided in Article
VIII hereof or the return of surplus as provided in this
Article. The Trust Agreement may be prospectively
discontinued by written instrument of AMP at any time, but
each Trust may not be liquidated until the payment of all
amounts accrued for the Participant (or beneficiary) under
the terms of the Plans as of the date of such termination
whether or not then due or unless the Trust holds less than
$2500. In no event shall the termination of the Trust
accelerate the payment of a Participant's benefit under a
Plan.
13.2 Upon the liquidation of the Fund or any individual
Trust after all payments required by Section 13.1 have been
made to the Participant(s) (or beneficiary(ies)), any and
all funds remaining in the Trust shall be paid to AMP and
the Trustee shall promptly take such action as shall be
necessary to transfer such assets to the Company or to add
to the Shortfall Trust or Fee Trust, as directed by the CEO.
ARTICLE XIV
NON-ALIENATION
14.1 Except to the extent otherwise required by law,
(i) no amount payable to or in respect of the Participant at
any time under the Trust Fund and no interest that the
Participant has in the Trust Fund shall be subject in any
manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind, and any attempt to so alienate,
sell, transfer, assign, pledge, attach, charge or otherwise
encumber any such amount, whether presently or thereafter
payable, shall be void; and (ii) the Trust Fund shall in no
manner be liable for or subject to the debts or liabilities
of the Participant.
14.2 No provision of this Trust Agreement shall be
interpreted as conferring upon the Participant any rights in
any Trust Fund established hereunder other than those of a
general creditor of AMP.
ARTICLE XV
COMMUNICATIONS
15.1 Communications to the Company shall be addressed
to it at AMP Corporation, c/o Chief Executive Officer, P.O.
Box 3608, Harrisburg, PA 17105-3608, with a copy to the
General Counsel; provided, however, that upon the Company's
written request, such communications shall be sent to such
other address as the Company may specify.
15.2 Communications to the Trustee shall be addressed
to it at 213 Market Street, Harrisburg, PA 17101; provided,
however, that upon the Trustee's written request, such com
munications shall be sent to such other address as the
Trustee may specify.
15.3 No communication shall be binding on the Trustee
until it is received by the Trustee, and no communication
shall be binding on a Company until it is received by the
AMP.
15.4 Any action of AMP or the CEO (or his authorized
representative) pursuant to this Trust Agreement, including
all orders, requests, directions, instructions, approvals
and objections of AMP to the Trustee, shall be in writing
signed on behalf of AMP by any duly authorized officer of
AMP or by the CEO or the CEO's delegate. The Trustee may
rely on, and will be fully protected with respect to any
such action taken or omitted in good faith in reliance on,
any information, order, request, direction, instruction,
approval, objection and list delivered to the Trustee by AMP
consistent with the terms of this Trust Agreement.
15.5 AMP may designate individuals or committees to act
on its behalf for purposes of some or all of the provisions
of this Trust Agreement; provided, however, that no such
individuals or committee members may be Participants. Such
individuals or committees and their respective authorities
and powers under this Agreement shall be designated by AMP
in writing to the Trustee. Their authority shall continue
until revoked in writing by AMP and received by the
Trustee. The Trustee shall incur no liability for failure
to act on such individuals' or committees' instructions
without written designation from AMP.
ARTICLE XVI
CHANGE OF CONTROL
16.1 Upon a Change of Control of AMP, the CEO or his
authorized representative, shall notify the Trustee and
shall immediately cause to be remitted to the Trustee as a
contribution to the applicable Trust Fund established or to
be established hereunder for the benefit of each Participant
in the Plans the amount, if any, accrued for the Participant
(including any interest or earnings due on such accrual) for
the current year or for any prior year to the extent not
theretofore already contributed as well as an amount to the
Fee Trust estimated to be sufficient to pay all fees and
expenses that may thereafter become due; provided, however,
that in the CEO's sole discretion all or a portion of the
amounts due to be contributed to the Trust Fund may be
represented by a standby, irrevocable letter of credit
against which the Trustee may draw sufficient funds in order
that, with the amounts contributed in cash or other
property, the Trustee will be able to make the payment(s)
due. Such contribution shall also include any life insurance
policy(ies) purchased by a Company to be used in assisting
AMP to provide benefits under any of the Plans and AMP shall
cause the ownership of such policy(ies) to be transferred to
the Trustee in its capacity as trustee under this Trust
Agreement as well as an amount sufficient such that at any
time thereafter, each Trust will have sufficient funds, on a
current basis, to provide the benefit due, or which may
become due based on the facts then extant, to the
Participant (or his designated beneficiary) under the Plan
in any of the benefit forms permitted under the Plan. The
CEO shall be obligated to continue to cause additional
contributions (or increases to the amount that may be drawn
against the letter of credit) to be made as may be necessary
from time to time to insure that at all times each
applicable Trust contains sufficient funds, on a current
basis, to provide the entire benefit due to the Participant
(or his designated beneficiary) under the Plan. The Trustee
shall be under no duty to determine the sufficiency, or to
enforce the making, of such contributions.
16.2 In the event that the CEO determines that, for
purposes of this Trust Agreement, a Change of Control of AMP
is imminent, the CEO shall notify the Trustee and shall
cause AMP to make the payments to the Trustee specified in
Section 16.1. If a Change of Control of AMP shall not have
occurred within ninety (90) days of the contributions made
pursuant to this Section 16.2 and AMP's Board of Directors
adopts a resolution to the effect that, for purposes of this
Trust Agreement, a Change of Control of AMP is not imminent,
any amounts added to an applicable Trust pursuant to this
Section 16.2, together with any earnings thereon, shall be
paid by the Trustee to AMP.
16.3 A "Change of Control of AMP" shall mean:
(a) any Person (as defined below) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, of securities of AMP (not
including in the securities beneficially owned by such
Person any securities acquired directly from AMP or its
affiliates) representing 30% or more of either the then
outstanding shares of common stock of the Corporation or the
combined voting power of the Corporation's then outstanding
securities; or
(b) the following individuals cease for any
reason to constitute a majority of the number of directors
then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a
director whose initial assumption of office is in connection
with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the
election of directors of AMP) whose appointment or election
by the Board or nomination for election by AMP's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election
or nomination for election was previously so approved; or
(c) there is consummated a merger or
consolidation of AMP with any other corporation or the
issuance of voting securities of AMP in connection with a
merger or consolidation of AMP (or any direct or indirect
subsidiary of AMP) pursuant to applicable stock exchange
requirements, other than (A) a merger or consolidation that
would result in the voting securities of AMP outstanding
immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
any parent thereof) at least 50% of the combined voting
power of the voting securities of AMP, or such surviving
entity or any parent thereof, outstanding immediately after
such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of
AMP (or similar transaction) in which no Person is or
becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of
AMP (not including in the securities beneficially owned by
such Person any securities acquired directly from AMP or its
affiliates)representing 30% or more of either the then
outstanding shares of common stock of AMP or the combined
voting power of AMP's then outstanding securities; or
(d) the stockholders of AMP approve a plan of
complete liquidation or dissolution of AMP or there is
consummated an agreement for the sale or disposition by AMP
of all or substantially all of AMP's assets, other than a
sale or disposition by AMP of all or substantially all of
AMP's assets to an entity, at least 70% of the combined
voting power of the voting securities of which are owned by
Persons in substantially the same proportions as their
ownership of AMP immediately prior to such sale.
(e) Person - For the purpose of this Agreement,
"Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include:
(i) AMP or any of its subsidiaries;
(ii) a trustee or other fiduciary holding
securities under an employee benefit plan of AMP or any of
its subsidiaries;
(iii) an underwriter temporarily holding
securities pursuant to an offering of such securities; or
(iv) a corporation owned, directly or indirectly,
by the stockholders of AMP in substantially the same
proportions as their ownership of stock of AMP.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
17.1 This Trust Agreement shall be governed by and con
strued in accordance with the laws of the Commonwealth of
Pennsylvania applicable to contracts made and to be
performed therein, exclusive of any conflict of laws
provision. It shall be binding upon and inure to the
benefit of each Company and the Trustee and their respective
successors and assigns.
17.2 All titles and Article headings herein have been
inserted for convenience of reference only and shall in no
way modify, restrict or affect the meaning or interpretation
of any of the terms or provisions of this Trust Agreement.
17.3 This Trust Agreement is intended as a complete and
exclusive statement of the agreement of the parties hereto,
and supersedes all previous agreements or understandings
among them.
17.4 The term "Trustee" shall include any successor
trustee. If a Trustee or custodian hereunder is a bank or
trust company, any corporation resulting from any merger,
consolidation or conversion to which such bank or trust
company may be a party, or any corporation otherwise
succeeding generally to all or substantially all of the
assets or business of such bank or trust company, shall be
the successor to it as Trustee hereunder without the
execution of any instrument or any further action on the
part of any party hereto or the Participant hereunder;
provided, however, that, except as provided in the preceding
clause, any successor to the original Trustee must be a
Replacement Trustee.
17.5 If any provision of this Trust Agreement shall be
invalid and unenforceable, the remaining provisions hereof
shall continue to be effective.
17.6 Any reference hereunder to the Participant shall
expressly be deemed to include, where relevant, a
beneficiary of such Participant duly designated under the
terms of the Plans. The Participant shall cease to have
such status once any and all amounts due him under the Plans
have been satisfied.
17.7 Whenever used herein, and to the extent
appropriate, the masculine, feminine or neuter gender shall
include the other two genders, the singular shall include
the plural and the plural shall include the singular.
17.8 This Trust Agreement may be executed in any number
of counterparts, each of which shall be deemed to be the
original, and said counterparts shall constitute but one and
the same instrument.
17.9 Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable
process.
ARTICLE XVIII
DEFINITIONS
18.1 "AMP" shall mean AMP Incorporated, a corporation
organized and existing under the laws of the Commonwealth of
Pennsylvania.
18.2 "Board" shall mean AMP's Board of Directors.
18.3 "CEO" shall mean the Chief Executive Officer of
AMP.
18.4 "Code" shall mean the Internal Revenue Code of
1986, as amended.
18.5 "Company" shall mean AMP together with its each
direct and indirect affiliated company that shall adopt
the Trust Agreement with the permission of the Board.
18.6 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
18.7 "Fee Trust" shall mean a separate Trust to provide
a source for payment of any fees, including legal fees,
incurred by the Trustee in the administration of the Trusts
or by participants in enforcing their rights under the Trust
Agreement.
18.8 "Insolvent" shall mean (i) the inability of AMP to
pay its debts when they mature or (ii) AMP is subject as a
debtor to a pending proceeding under the Federal Bankruptcy
Code.
18.9 "Participant" shall mean each participant in the
Plans designated by the Company and listed on Exhibit B
hereto or added hereafter by the CEO.
18.10 "Plans" shall mean certain employment,
retirement and welfare benefit agreements and plans adopted
by AMP and listed on Exhibit A attached hereto as of the
date hereof or, thereafter, added as designated by the CEO.
18.11 "Shortfall Trust" shall mean a separate Trust
to provide a source of payment of any benefits under a Plan
to the extent that the assets of an individual Trust
established for a Participant are insufficient to provide
all benefits due.
18.12 "Trust" shall mean each separate irrevocable
trust fund created by AMP and the Trustee under the Trust
Agreement with respect to designated participants in the
Plans.
18.13 "Trust Agreement" shall mean the master trust
agreement with the Trustee, originally effective as of April
1, 1997, adopted for the purpose of providing a funding
source for the Plans.
18.14 "Trustee" shall mean Dauphin Deposit Bank and
Trust Company, a banking association organized and existing
under the laws of the Commonwealth of Pennsylvania, and any
successor thereto.
18.15 "Trust Fund" shall mean collectively all
money and other property, all investments and reinvestment
made therewith or proceeds thereof and all earnings and
profits (less losses) thereon, less all payments and charges
as authorized herein, for each of the Trusts.
IN WITNESS WHEREOF, this Trust Agreement has been
duly executed by the parties hereto as of the day and year first
above written.
AMP INCORPORATED
/s/ D. F. Henschel By: /s/ W. J. Hudson
- ---------------------------- ---------------------
Secretary (Seal)
Attest: DAUPHIN DEPOSIT BANK AND TRUST COMPANY
(as Trustee)
/s/ Bernard V. Kelly, Jr. By: /s/ Rob F. Becker
- ------------------------------ ----------------------
Asst. Secretary (Seal) Vice President
EXHIBIT A
LIST OF PARTICIPATING PLANS
Plan Name Tab
- --------- ---
AMP Incorporated Pension Restoration Plan, originally effective 1
January 1, 1983, amended and restated effective January 1,
1995
AMP Incorporated Supplemental Executive Pension Plan, effective 2
January 1, 1997
AMP Incorporated Deferred Compensation Plan, effective January 3
1, 1995; The Whitaker Corporation Deferred Compensation
Plan, effective January 1, 1995
AMP Incorporated Split-Dollar Life Insurance Agreements 4
AMP Incorporated Retirement Plan for Outside Directors 5
AMP Incorporated Deferred Stock Accumulation Plan for 6
Outside Directors
AMP Incorporated Deferred Compensation Plan for 7
Non-Employee Directors
Executive Severance Agreements 8
EXHIBIT B
FOR A LISTING OF COVERED PARTICIPANTS, SEE EXHIBITS B, D, F, H, I, J, K, AND L
THAT ARE ATTACHED TO THE TRUSTEE LETTER OF INSTRUCTION, EXHIBIT D HERETO.
EXHIBIT C
Copies of the Plans: these Plans either are filed as other
Item 601(b)(10) Material Contracts under Regulation S-K
or are otherwise available upon request by contacting
the Corporate Secretary of AMP Incorporated
EXHIBIT D
May 2, 1997
Certified Mail
Return Receipt Requested
Ms. Robin Becker
Assistant Vice President
Employee Benefits
Dauphin Deposit Bank and Trust Company
213 Market Street
Harrisburg, PA 17101
Dear Ms. Becker:
Section 3.2 of the AMP Incorporated Supplemental Benefit Trust Agreement
(the "Agreement") between AMP Incorporated ("AMP") and Dauphin Deposit Bank and
Trust Company ("Dauphin Deposit") provides that the amount, form and timing of'
benefits and other payments to the Participants (or their beneficiaries) under
certain employment, retirement and welfare benefit plans and other agreements
maintained, or entered into, by AMP (the "Plans") for whom individual trusts
have been established are to be governed by the terms of the applicable Plans
(for which the trusts are designed to serve as the funding vehicles) in which
those individuals are or were Participants. A list of the applicable Plans is
attached hereto as Exhibit A. Further, Section 3.4 of the Agreement provides
that Dauphin Deposit shall draw upon any letter of credit contributed to the
Trust Fund under the Agreement if funds are needed to pay benefits to a
Participant (or beneficiary) and there are insufficient assets in the Trust
created to pay the Participant's benefit and in the Shortfall Trust to make the
payment(s) due.
Section 7.2 of the Agreement provides that Dauphin Deposit, in its capacity
as the trustee of the individual trusts, is required to make payments, or
provide benefits, to the Participants (or their beneficiaries) in accordance
with a letter of instructions to be furnished by AMP. The purpose of this letter
is to serve as the appropriate instructions and, specifically, to provide
Dauphin Deposit with (a) lists of the Participants in each of the applicable
Plans for whom individual trusts have been established (including, where
appropriate, the forms of the benefit payments to which the individuals are
entitled), (b) summaries of the operative provisions of each of the applicable
Plans relating to the timing of benefit payments, (c) the procedures to be
followed by Dauphin Deposit in making payments from the individual trusts and
(d) where appropriate, the names and addresses of the individuals to be
contacted by Dauphin Deposit to ascertain the amount of the benefit to be
distributed or payments to be made to the Participants.
Please note that, pursuant to Section 7.7 of the Agreement and prior to a
Change of Control, AMP may make payment of benefits directly to participants or
their beneficiaries as they become due under the terms of the Plans if AMP has
determined to do so. Therefore, AMP will be entitled to reimbursement from the
trusts in the amount paid to the Participants, and you are authorized to pay AMP
appropriate amounts upon presentation of a certification as to the sums paid to
each Participant. However, in the event that any Participant or beneficiary does
not receive amounts from AMP to which he or she claims entitlement under the
Plans within 60 days of when such payment is otherwise due, such Participant and
you are expressly authorized to follow the procedures outlined in this letter.
1. AMP Incorporated Pension Restoration Plan.
(a) Participants. A list of the Participants in this Plan for whom
individual trusts have been established (and the forms of their respective
benefit payments) is attached hereto as Exhibit B.
(b) Timing of Distribution. The Plan provides that a Participant's benefit
shall ordinarily commence concurrently with the commencement of benefits
under the AMP Incorporated Pension Plan (the "Pension Plan") on the
Participant's retirement date without the necessity of filing an
application under the Plan for such benefits. A copy of the relevant
provisions of the Pension Plan are attached as Exhibit C. The Pension Plan
provides that a Participant's benefit payments generally commence on the
first day of the month following the receipt of a completed application by
a Participant who is then eligible to receive a benefit.
(c) Form of Distribution. Plan benefits will be paid in the form that is
elected under the Pension Plan, and the Participant's designations as to
joint annuitants and beneficiaries made under the Pension Plan will apply
under the Plan. The normal form of benefit under the Pension Plan for a
single participant is a single life annuity and for a married participant
is a 50% joint and survivor annuity. The optional forms of benefit
available under the Pension Plan are: (a) 100% joint and survivor annuity,
(b) 75% joint and survivor annuity, (c) 50% joint and survivor annuity, (d)
25% joint and survivor annuity, (e) 5-year period certain annuity, (f)
10-year period certain annuity, (g) 15-year period certain annuity, or (h)
Social Security adjustment annuity, under which payments shall be adjusted
so that payments prior to Social Security entitlement will approximately
equal the combined Plan and Social Security payments after Social Security
entitlement. As an alternative to the forms of benefit available under the
Pension Plan, a Participant may elect to receive benefits under the Plan in
the form of a single lump sum distribution, which election must be made at
least three months prior to and in the calendar year prior to the
Participant's Retirement Date.
(d) Death Benefits. If a married Participant dies before retirement, his
spouse will receive a survivor annuity benefit calculated in accordance
with the terms of the Pension Plan. The Plan does not provide a survivor
benefit for single participants. If a Participant dies after retirement,
his spouse will receive survivor benefits only if the Participant had
elected to receive his Plan benefit in the form of a joint and survivor
annuity or period certain annuity, and such form of payment, by its terms,
calls for continuing benefit payments after the Participant's death.
(e) Change of Control. Upon a Change of Control of AMP, as defined below,
all Participants shall be fully vested in the benefit due under the Plan
and AMP shall make, or cause to be made, any additional contributions of
funds as are required so that the amount of funds shall equal at least the
total present value of the Participants' benefits under the Plan as of the
first day of the month immediately preceding the Change of Control. If a
Participant believes he is entitled to a benefit payment and has not
received it directly from AMP, he must submit to Dauphin Deposit (i)
written notification of his termination of employment by reason of the
circumstances described above and (ii) a written request for payment of the
benefit. This documentation must be submitted directly to the
representative of Dauphin Deposit designated from time to time (the
"Dauphin Representative"). Within 7 days of its receipt of the required
documentation from the Participant, Dauphin Deposit shall verify the
Participant's retirement or termination of service by sending a request for
verification to the Corporate Secretary at AMP (or his successor). The
request for verification must be sent by registered mail and must include a
request for a written response within 7 days of receipt. When Dauphin
Deposit receives a written verification of the Participant's termination of
service or if no such verification is received, Dauphin Deposit is
authorized and directed to make benefit payments on behalf of AMP without
further demand being made to AMP by the Participant.
(f) Contact. Dauphin Deposit is instructed to contact the Corporate
Secretary at AMP Incorporated, P.O. Box 3608, Mailstop 176-48, Harrisburg,
PA 17105-3608, (717) 592-4205, to determine the amount payable.
2. AMP Incorporated Supplemental Executive Pension Plan.
(a) Participants. A list of the Participants in this Plan for whom
individual trusts have been established (and the forms of their respective
benefit payments) is attached hereto as Exhibit D.
(b) Timing of Distribution. The Plan provides that a Participant's benefit
shall ordinarily commence concurrently with the commencement of benefits
under the AMP Incorporated Pension Plan (the "Pension Plan") on the
Participant's retirement date without the necessity of filing an
application under the Plan for such benefits. A copy of the relevant
provisions of the Pension Plan are attached as Exhibit E. The Pension Plan
provides that a Participant's benefit payments generally commence on the
first day of the month following the receipt of a completed application by
a Participant who is then eligible to receive a benefit.
(c) Form of Distribution. Plan benefits will be paid in the form that is
elected under the Pension Plan, and the Participant's designations as to
joint annuitants and beneficiaries made under the Pension Plan will apply
under the Plan. The normal form of benefit under the Pension Plan for a
single participant is a single life annuity and for a married participant
is a 50% joint and survivor annuity. The optional forms of benefit
available under the Pension Plan are: (a) 100% joint and survivor annuity,
(b) 75% joint and survivor annuity, (c) 50% joint and survivor annuity, (d)
25% joint and survivor annuity, (e) 5-year period certain annuity, (f)
10-year period certain annuity, (g) 15-year period certain annuity, or (h)
Social Security adjustment annuity, under which payments shall be adjusted
so that payments prior to Social Security entitlement will approximately
equal the combined Plan and Social Security payments after Social Security
entitlement. As an alternative to the forms of benefit available under the
Pension Plan, a Participant may elect to receive benefits under the Plan in
the form of a single lump sum distribution, which election must be made at
least three months prior to and in the calendar year prior to the
Participant's Retirement Date.
(d) Death Benefits. If a married Participant dies before retirement, his
spouse will receive a survivor annuity benefit calculated in accordance
with the terms of the Pension Plan. The Plan does not provide a survivor
benefit for single participants. If a Participant dies after retirement,
his spouse will receive survivor benefits only if the Participant had
elected to receive his Plan benefit in the form of a joint and survivor
annuity or period certain annuity, and such form of payment, by its terms,
calls for continuing benefit payments after the Participant's death.
(e) Change of Control. Upon a Change of Control of AMP, as defined below,
all Participants shall be fully vested in the benefit due under the Plan
and AMP shall make, or cause to be made, any additional contributions of
funds as are required so that the amount of funds shall equal at least the
total present value of the Participants' benefits under the Plan as of the
first day of the month immediately preceding the Change of Control. If a
Participant believes he is entitled to a benefit payment and has not
received it directly from AMP, he must submit to Dauphin Deposit (i)
written notification of his termination of employment by reason of the
circumstances described above and (ii) a written request for payment of the
benefit. This documentation must be submitted directly to the
representative of Dauphin Deposit designated from time to time (the
"Dauphin Representative"). Within 7 days of its receipt of the required
documentation from the Participant, Dauphin Deposit shall verify the
Participant's retirement or termination of service by sending a request for
verification to the Corporate Secretary at AMP (or his successor). The
request for verification must be sent by registered mail and must include a
request for a written response within 7 days of receipt. When Dauphin
Deposit receives a written verification of the Participant's termination of
service or if no such verification is received, Dauphin Deposit is
authorized and directed to make benefit payments on behalf of AMP without
further demand being made to AMP by the Participant.
(f) Contact. Dauphin Deposit is instructed to contact the Corporate
Secretary at AMP Incorporated, P.O. Box 3608, Mailstop 176-48, Harrisburg,
PA 17105-3608, (717) 592-4205, to determine the amount payable.
3. AMP Incorporated Deferred Compensation Plan and The Whitaker Corporation
Deferred Corporation Deferred Compensation Plan.
(a) Participants. A list of the Participants in these Plans for whom
individual trusts have been established (and the forms of their respective
benefit payments) is attached hereto as Exhibit F.
(b) Timing of Distribution. A Participant's benefit shall commence within
60 days following receipt of written notice by a Plan's administrative
committee (the "Committee") that the Participant has retired, died, or
become disabled. Upon termination of employment for reasons other than
retirement, disability or death, payments will begin twelve months after
the termination date. In the event that the Plan's committee, under written
request by the Participant, determines that the Participant has suffered an
unforeseeable financial emergency, the Participant shall receive, as soon
as practicable following the determination, a lump sum distribution of the
amount needed to meet the emergency. In addition, an active Participant may
elect at any time a lump sum hardship distribution of his entire account
balance (subject to certain penalties that would apply) upon written
request to the Committee, which shall be paid within 45 days following
receipt of the notice by the Committee.
(c) Form of Distribution. The benefits will be paid (as elected by the
Participant) in either (a) annual payments of a fixed amount over a period
of up to ten years, or (b) a lump sum. With regard to benefits paid on
account of disability or death, the Committee, in its sole discretion, may
direct that benefits be paid in a lump sum regardless of the form elected.
(d) Death and Disability Benefits. Upon the death or disability of the
Participant, the balance of the Participant's vested account shall be paid
to the Participant's beneficiary or the disabled Participant
(e) Change of Control. Upon a Change of Control of AMP, as defined below,
AMP shall make, or cause to be made, any additional contributions of funds
as are required so that the amount of funds shall equal at least the total
value of the Participants' accounts under each Plan as of the first day of
the month immediately preceding the Change of Control. If a Participant
believes he is entitled to a benefit payment and has not received it
directly from AMP, he must submit to Dauphin Deposit (i) written
notification of his termination of employment by reason of the
circumstances described above and (ii) a written request for payment of the
benefit. This documentation must be submitted directly to the
representative of Dauphin Deposit designated from time to time (the
"Dauphin Representative"). Within 7 days of its receipt of the required
documentation from the Participant, Dauphin Deposit shall verify the
Participant's termination of service by sending a request for verification
to the Corporate Secretary at AMP (or his successor). The request for
verification must be sent by registered mail and must include a request for
a written response within 7 days of receipt. When Dauphin Deposit receives
a written verification of the Participant's termination of service or if no
such verification is received, Dauphin Deposit is authorized and directed
to make benefit payments on behalf of AMP without further demand being made
to AMP by the Participant.
(f) Contact. Dauphin Deposit is instructed to contact Garry Warren at The
Todd Organization, located at 313 6th Avenue, Suite 500, Pittsburgh, PA,
15222, (412) 281- 5472, to determine the amount payable in accordance with
its engagement letter, a copy of which is attached as Exhibit G. In
addition, Garry Warren is instructed to submit its bill for services
directly to Dauphin Deposit.
4. AMP Incorporated Split-Dollar Life Insurance Agreements.
(a) Participants. A list of the Participants who have AMP Incorporated
Split-Dollar Life Insurance Agreements ("Agreements") and for whom
individual trusts have been established is attached hereto as Exhibit H.
(b) Timing of Distribution. Upon the death of a Participant, the
Participant's beneficiary shall receive the death benefit portion under the
Plan.
(c) Form of Distribution. The benefits will be paid in the form of a
lump sum.
(d) Change of Control. Upon a Change of Control of AMP, as defined below,
AMP shall contribute to the individual trusts an amount sufficient to pay
all insurance policy premiums that will become due under the Agreements
until the later of (i) the policy anniversary date next following the
Employee's 65th birthday, or (ii) the expiration of 15 policy years from
the date of the Agreement, unless the parties mutually consent to continue
the Agreement further at that time. Upon the death of a Participant covered
by an Agreement during this time period, the Participant's beneficiary
shall receive the death benefit in a lump sum in accordance with the terms
of the Agreement and AMP shall receive the remaining death benefit.
(e) Contact. Dauphin Deposit is instructed to contact Garry Warren at The
Todd Organization, located at 313 6th Avenue, Suite 500, Pittsburgh, PA,
15222, (412) 281- 5472, to determine the amount payable in accordance with
its engagement letter, a copy of which is attached as Exhibit G. In
addition, Garry Warren is instructed to submit its bill for services
directly to Dauphin Deposit.
5. AMP Incorporated Retirement Plan for Outside Directors.
(a) Participants. A list of the Participants in this Plan for whom
individual trusts have been established (and the forms of their respective
benefit payments) is attached hereto as Exhibit I.
(b) Timing of Distribution. Benefits payments shall commence on the first
day of the month following the first full month after the Participant (i)
retires with five or more years of service at or after the end of the
calendar year in which he attains age 72, or (ii) becomes disabled, as
defined in the Plan, with five or more years of service. A Participant who
terminates service for a reason other than disability between ages 65 and
72 and is credited with at least 10 years of service may be eligible for
reduced early retirement benefits at the discretion of the Board of
Directors.
(c) Form of Distribution. Benefits generally will be paid in quarterly
installments. After the first payment is made as described in Paragraph
(b), quarterly installments shall be made on each subsequent January 1,
April 1, July 1 and October 1, until the Participant's death. At the sole
discretion of the Board of Directors, a Participant may be given the option
to receive his benefits in the form of a lump sum.
(d) Death Benefits. There are no death benefits under the Plan.
(e) Change of Control. Upon a Change of Control of AMP, as defined below,
all active Participants will become fully vested and benefits shall be
payable on the date a Participant ceases service to AMP. If a Participant
believes he is entitled to a benefit payment and has not received it
directly from AMP, he must submit to Dauphin Deposit (i) written
notification of his termination of Board service and (ii) a written request
for payment of the benefit. This documentation must be submitted directly
to the representative of Dauphin Deposit designated from time to time (the
"Dauphin Representative"). Within 7 days of its receipt of the required
documentation from the Participant, Dauphin Deposit shall verify the
Participant's termination of Board service by sending a request for
verification to the Corporate Secretary at AMP (or his successor). The
request for verification must be sent by registered mail and must include a
request for a written response within 7 days of receipt. When Dauphin
Deposit receives a written verification of the Participant's termination of
Board service or if no such verification is received, Dauphin Deposit is
authorized and directed to make benefit payments on behalf of AMP without
further demand being made to AMP by the Participant.
(f) Contact. Dauphin Deposit is instructed to contact the Corporate
Secretary at AMP Incorporated, P.O. Box 3608, Mailstop 176-48, Harrisburg,
PA 17105-3608, (717) 592-4205, to determine the amount payable.
6. AMP Incorporated Deferred Stock Accumulation Plan for Outside Directors.
(a) Participants. A list of the Participants in this Plan for whom
individual trusts have been established (and the forms of their respective
benefit payments) is attached hereto as Exhibit J.
(b) Timing and Form of Distribution. Benefits shall be payable (or begin to
be paid) in cash to a Participant within thirty days of his termination of
Board service. Benefits shall be paid either in a single lump sum or in up
to ten annual installments, as elected by the Participant in writing upon
becoming a Plan Participant or as subsequently changed (if prior to a year
and a day before termination of Board service). If the ten annual
installment form of benefit is elected, subsequent payments shall be made
in each succeeding January until completed.
(c) Death Benefits. If a Participant dies before receiving his or her
entire account under the Plan, any balance remaining shall be paid in a
lump sum as soon as practicable to the Participant's designated
beneficiary, or if no beneficiary is designated, then the Participant's
estate.
(d) Change of Control. Upon a Change of Control of AMP, as defined below,
followed by a Participant's cessation of service to AMP, the entire balance
of the Participant's Deferred Stock Accumulation Account shall be
immediately due and payable to the Participant in a single lump sum. If a
Participant believes he is entitled to a benefit payment and has not
received it directly from AMP, he must submit to Dauphin Deposit (i)
written notification of his termination of Board service and (ii) a written
request for payment of the benefit. This documentation must be submitted
directly to the representative of Dauphin Deposit designated from time to
time (the "Dauphin Representative"). Within 7 days of its receipt of the
required documentation from the Participant, Dauphin Deposit shall verify
the Participant's termination of Board service by sending a request for
verification to the Corporate Secretary at AMP (or his successor). The
request for verification must be sent by registered mail and must include a
request for a written response within 7 days of receipt. When Dauphin
Deposit receives a written verification of the Participant's termination of
Board service or if no such verification is received, Dauphin Deposit is
authorized and directed to make benefit payments on behalf of AMP without
further demand being made to AMP by the Participant.
(e) Contact. Dauphin Deposit is instructed to contact the Corporate
Secretary at AMP Incorporated, P.O. Box 3608, Mailstop 176-48, Harrisburg,
PA 17105-3608, (717) 592-4205, to determine the amount payable.
7. AMP Incorporated Deferred Compensation Plan for Non-Employee Directors.
(a) Participants. A list of the Participants in this Plan for whom
individual trusts have been established (and the forms of their respective
benefit payments) is attached hereto as Exhibit K.
(b) Timing and Form of Distribution. Benefits shall be payable (or begin to
be paid) to a Participant in the deferral year elected by the Participant,
which shall in no event be later than the year in which the Participant
attains age 73. Benefits shall become payable within 30 days following the
first business day of the payment year, and shall be paid either in a
single lump sum or in up to ten annual installments, as elected by the
Participant in writing with regard to each year's deferral amount. If the
annual installment form of benefit is elected, subsequent payments shall be
made within 30 days following the first business day of each successive
year until completed.
(c) Death Benefits. If a Participant dies before receiving his or her
entire account under the Plan, any balance remaining shall be paid in a
lump sum as soon as practicable to the Participant's designated
beneficiary, or if no beneficiary is designated, then the Participant's
estate.
(d) Change of Control. Upon a Change of Control of AMP, as defined below,
followed by a Participant's cessation of service to AMP, the entire balance
of the Participant's account under the Plan shall be immediately due and
payable to the Participant in a single lump sum. If a Participant believes
he is entitled to a benefit payment and has not received it directly from
AMP, he must submit to Dauphin Deposit (i) written notification of his
termination of Board service and (ii) a written request for payment of the
benefit. This documentation must be submitted directly to the
representative of Dauphin Deposit designated from time to time (the
"Dauphin Representative"). Within 7 days of its receipt of the required
documentation from the Participant, Dauphin Deposit shall verify the
Participant's termination of Board service by sending a request for
verification to the Corporate Secretary at AMP (or his successor). The
request for verification must be sent by registered mail and must include a
request for a written response within 7 days of receipt. When Dauphin
Deposit receives a written verification of the Participant's termination of
Board service or if no such verification is received, Dauphin Deposit is
authorized and directed to make benefit payments on behalf of AMP without
further demand being made to AMP by the Participant.
(e) Contact. Dauphin Deposit is instructed to contact the Corporate
Secretary at AMP Incorporated, P.O. Box 3608, Mailstop 176-48, Harrisburg,
PA 17105-3608, (717) 592-4205, to determine the amount payable.
8. Executive Severance Agreements.
(a) Participants. A list of the Participants with Agreement for whom
individual trusts have been established is attached hereto as Exhibit L.
(b) Timing and Form of Distributions Upon Change of Control.
(i) Severance Payments. Severance payments shall be payable in a
lump sum in the event that any time within two years after a Change of
Control of AMP, as defined below, the Participant's employment with
AMP is terminated for any reason, other than death, disability, for
"Cause," as determined by a three-quarters vote of the Board of
Directors in accordance with the terms of the Executive Severance
Agreement, or as terminated by the Participant for "Good Reason," as
defined under the Executive Severance Agreement.
(ii) Other Compensation Payable upon Change of Control. Upon a
Change of Control of AMP, all outstanding Stock Bonus Units awarded to
the Participant under the Bonus Plan, the 1993 Long- Term Equity
Incentive Plan, or any successor plan thereto with respect to which a
Stock and Supplemental Cash Bonus has not been previously computed and
distributed to the Participant, including any 1993 Plan awards granted
to the Participant subsequent to the date of any Change of Control of
AMP that is prior to the Participant's termination, will be computed
and distributed to the Participant in cash. In addition, the
Participant shall receive benefits under the 1993 Plan or any
successor plan thereto in the appropriate number of shares of common
stock of AMP or an amount in cash equal to the fair market value of
such shares. All unvested restricted shares, if any, granted to the
Participant under the Restricted Stock Agreement with AMP shall be
paid in cash in equal installments on the date designated in the
Agreement for the vesting of restricted shares granted thereunder.
(iii) Other Compensation Payable upon Change of Control and
Termination of Employment. In the event of a Change of Control of AMP
followed by a termination of employment (for any reason, other than
death, disability, for "Cause," as determined by a three-quarters vote
of the Board of Directors in accordance with the terms of the
Executive Severance Agreement, or as terminated by the Participant for
"Good Reason," as defined under the Executive Severance Agreement)
within two years of the Change of Control of AMP, an additional
pension benefit (in addition to that under the pension payable under
the Pension Plan and the Pension Restoration Plan in effect
immediately prior to the change in control) shall by payable to the
Participant in accordance with the form and timing provisions of
Pension Plan and the Pension Restoration Plan, including the election,
at the time of the Participant's retirement date, of a joint annuity
option.
(iv) Benefits Payable upon Pending Change of Control. The lump
sum benefits described in Subparagraph (i) will be paid during a
"Pending Change of Control," as defined in the Severance Agreement, if
the Participant's employment (A) is terminated by AMP for any reason,
other than death, disability or Cause, or (B) is terminated by the
Participant for Good Reason, and either (A) a Change of Control of AMP
occurs within one year of the last event constituting a Pending Change
of Control, or (B) the Participant reasonably demonstrates that his or
her termination of employment either occurred at the request of a
third party whose actions gave rise to the Pending Change of Control
or otherwise occurred in connection with or in anticipation of a
Change of Control of AMP. In addition, under the circumstances
described in this Subparagraph (iv), the Participant will receive the
additional compensation and benefits described in Subparagraphs (ii)
and (iii) above, except that with respect to the supplemental pension
benefits paid under Subparagraph (iii), the Participant shall not be
required to terminate employment in accordance with the requirements
described in Subparagraph (iii) in order to receive benefits. In
addition, upon a Pending Change of Control, AMP shall contribute to
the trusts an amount that is sufficient to pay scheduled annual
premiums for the period extending until the later of the policy
anniversary date following the Participant's 65th birthday or the 15th
anniversary of the policy. If the Change of Control of AMP does not
occur within the twelve-month period following the most recent Pending
Change of Control, Dauphin Deposit, upon written request of AMP, shall
return to AMP the assets contributed on account of such Pending Change
of Control.
(d) Payment of Benefits. If a Participant believes he is entitled to a
benefit payment and has not received it directly from AMP, he must submit
to Dauphin Deposit (i) written notification of the basis on which the
Participant believes he is eligible for benefits and (ii) a written request
for payment of the benefits. This documentation must be submitted directly
to the representative of Dauphin Deposit designated from time to time (the
"Dauphin Representative"). Within 10 days of its receipt of the required
documentation from the Participant, Dauphin Deposit shall verify the
Participant's eligibility for benefits by sending a request for
verification to the Corporate Secretary at AMP (or his successor). The
request for verification must be sent by registered mail and must include a
request for a written response within 7 days of receipt. When Dauphin
Deposit receives a written verification of the Participant's eligibility
for benefits or if no such verification is received, Dauphin Deposit is
authorized and directed to make benefit payments on behalf of AMP without
further demand being made to AMP by the Participant.
(e) Contact. Dauphin Deposit is instructed to contact the Corporate
Secretary at AMP Incorporated, P.O. Box 3608, Mailstop 176-48, Harrisburg,
PA 17105-3608, (717) 592-4205, to determine the amount payable.
9. Claims Procedure.
All claims for benefits shall be resolved in accordance with Section 503 of
the Employee Retirement Income Security Act of 1974, as amended; provided,
however, that if any claim is not resolved to the satisfaction of any
Participant (or his beneficiary), nothing contained herein or the Agreement
shall prevent a Participant (or his beneficiary) from having the dispute
with AMP resolved by a court of competent jurisdiction.
10. Consultants.
Dauphin Deposit is hereby authorized and directed to engage the consultant
listed herein who has agreed to provide the determinations (and other
services) required herein pursuant to their individual engagement letters
which are attached hereto. As is provided in the appropriate sections of
this letter, all fee requests submitted on behalf of the consultant
described above shall be paid from the separate account that has been
established specifically for the purpose of satisfying those claims for
fees. Notwithstanding the foregoing, if any consultant or accountant is
unable or unwilling to perform the duties required hereunder, Dauphin
Deposit is hereby authorized and directed, in its sole discretion, to
engage other comparable consultants or accountants and to pay their
reasonable fees from the separate account.
11. Withholding of Taxes.
Dauphin Deposit is hereby authorized and directed to withhold all federal
taxes in accordance with IRS Form 2678 or any successor form, a copy of
which is attached hereto as Exhibit M, from the payments made to the
Participants under the Plans.
12. Due Authorization and No Modification.
Attached hereto as Exhibit N is a Secretary's Certificate evidencing the
due adoption of resolutions by the Board of Directors of AMP authorizing me
to take whatever action I deem appropriate to implement the Plans, which I
have accomplished by this letter. Please note that these instructions may
not be superseded or modified in any way after a Change of Control of AMP,
as defined below, in any way unless each Participant who might be affected
by any change agrees to the modifications in writing.
13. Change of Control.
"Change of Control of AMP" shall be defined in accordance with Section 16.3
of the Agreement.
If you have any questions or comments regarding the information or
instructions set forth in this letter, please contact either Robert Lichtenstein
of Morgan, Lewis & Bockius at 215-963-5726 or Harris Booker at AMP at
717-592-3044.
Sincerely,
/s/ W. J. Hudson
W. J. Hudson
President and Chief
Executive Officer
AMP Incorporated
Agreed to:
/s/ Robin F. Becker
- -------------------------
Vice President
- -------------------------
[Title]
LIST OF EXHIBITS
EXHIBIT A
LIST OF PARTICIPATING PLANS (REFERENCE EXHIBIT A
TO THE AMP INCORPORATED SUPPLEMENTAL BENEFIT TRUST PLAN)
EXHIBIT B
LIST OF PARTICIPANTS IN THE
AMP INCORPORATED PENSION RESTORATION PLAN
EXHIBIT C
EXCERPTS FROM THE AMP INCORPORATED PENSION RESTORATION PLAN
EXHIBIT D
LIST OF PARTICIPANTS IN THE AMP INCORPORATED
SUPPLEMENTAL EXECUTIVE PENSION PLAN
EXHIBIT E
EXCERPTS FROM THE AMP INCORPORATED SUPPLEMENTAL EXECUTIVE PENSION PLAN
EXHIBIT F
LIST OF PARTICIPANTS IN THE AMP INCORPORATED DEFERRED COMPENSATION PLAN
AND THE WHITAKER CORPORATION DEFERRED COMPENSATION PLAN
EXHIBIT G
ENGAGEMENT LETTER WITH THE TODD ORGANIZATION TO ADVISE THE TRUSTEE
ON DEFERRED COMPENSATION PLAN LIABILITIES
EXHIBIT H
LIST OF PARTICIPANTS IN THE
AMP INCORPORATED SPLIT-DOLLAR LIFE INSURANCE PLAN
EXHIBIT I
LIST OF PARTICIPANTS IN THE AMP INCORPORATED RETIREMENT PLAN
FOR OUTSIDE DIRECTORS
EXHIBIT J
LIST OF PARTICIPANTS IN THE AMP INCORPORATED DEFERRED STOCK
ACCUMULATION PLAN FOR OUTSIDE DIRECTORS
EXHIBIT K
LIST OF PARTICIPANTS IN THE AMP INCORPORATED DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
EXHIBIT L
LIST OF PARTICIPANTS WITH SEVERANCE AGREEMENT
EXHIBIT M
IRS FORM 2678
EXHIBIT N
CERTIFIED BOARD RESOLUTION AUTHORIZING CREATION OF THE TRUST
AMP INCORPORATED
SUPPLEMENTAL EXECUTIVE PENSION PLAN
(January 1, 1997)
SECTION 1
INTRODUCTION
1.1. Intent of Plan
The intention of the AMP Incorporated Supplemental Executive Pension Plan
(the "Plan") is to provide a supplemental pension benefit to designated Retirees
whose benefit under the AMP Incorporated Pension Plan and the Pension
Restoration Plan are not deemed sufficient by the Company's Board of Directors
because they joined the Company's employ in the middle of their career and they
will be unable to accrue a level of benefits that the Board deems sufficient
based on competitive data available to it.
SECTION 2
EFFECTIVE DATE
2.1. The Plan is effective as of January 1, 1997.
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. Code means the Internal Revenue Code of 1986, as amended.
3.3. Company means AMP Incorporated and any subsidiary or affiliate
thereof that has adopted this Plan.
3.4. Employee means any person who is regularly employed by the
Company in an executive capacity and who the Company's Compensation and
Management Development Committee selects as being eligible for a benefit under
this Plan. Employees so eligible for a benefit shall be listed on Appendix A
from time to time. "Employee" also includes any such individual while on an
authorized leave of absence granted by the Company.
3.5. Pensionable Earnings means an Employee's highest three
consecutive calendar years' average earnings, where the earnings amount for a
given calendar year is the sum of the Employee's annual earnings rate in effect
on the last day of that year and the annual cash bonus earned with respect to
that year under the Company's Management Incentive Plan (or its replacement
plan). For this purpose, only complete calendar years prior to the Retiree's
Retirement Date shall be taken into account and any deferrals of annual earnings
or bonus amounts under a plan maintained by the Company pursuant to Code Section
401(k) or 125 or under a non-qualified deferred compensation arrangement shall
be disregarded.
3.6. Pension Plan means the AMP Incorporated Pension Plan.
3.7. Pension Restoration Plan means the AMP Incorporated Pension
Restoration Plan.
3.8. 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.
3.9. 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.
3.10. 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 born 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 after December 31, 1996, 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 and Pension
Restoration Plan benefits on the Retiree's Retirement Date without the necessity
of filing an application under this Plan for such benefits; provided, however,
that in the event that commencement occurs prior to age 60, the benefits
provided by this Plan shall be reduced by .5% per month for each month that
commencement occurs prior to age 60, but there shall be no reduction for
benefits that commence on or after the Retiree attains age 60.
SECTION 6
AMOUNT AND PAYMENT OF BENEFIT
6.1. Effective for Retirement Dates that occur after January 1, 1997,
a Retiree's annual accrued benefit under this Plan, payable as a single life
annuity, shall have a value on a pre-tax basis that is equal to the difference
between (A) and (B), where (A) is the percentage of the Employee's Pensionable
Earnings, but disregarding any reductions or restrictions on such earnings as a
result of a limitation imposed by the Code, specified by the Compensation and
Management Development Committee, and listed on Appendix A opposite the
Employee's name and (B) is the annual accrued benefit actually payable to the
Retiree under the Pension Plan and the Pension Restoration Plan as a single life
annuity. Plan benefits, although computed as an annual amount, shall be payable
in monthly installments.
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 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. In converting the Plan benefit to an optional form, the same actuarial
equivalence factors in use under the Pension Plan shall be used. 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, provided that the Employee has completed at least
five Years of Service and a survivor benefit is payable under the provisions of
the Pension Plan. In such event, the amount of the annual benefit payable under
this Plan to the surviving spouse entitled to benefits under the Pension Plan
will be the difference between (A) and (B), where (A) is 50% of the percentage
of the Employee's Pensionable Earnings listed on Appendix A opposite the
Employee's name, and (B) is the survivor benefit actually payable under the
Pension Plan and the Pension Restoration 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 Years of Service with the Company, the Employee's
rights to any benefits under this Plan will cease. If the Employee has completed
at least five Years of Service with the Company at the time of separation from
employment, the Employee's rights will be as follows:
Years of Service Percentage Vested
At least 5 50%
At least 6 60%
At least 7 70%
At least 8 80%
At least 9 90%
10 or more 100%
9.2. Notwithstanding the foregoing, 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; provided however, that, upon a Change
of Control of AMP Incorporated, all rights of all Employees who have accrued a
benefit under the Plan shall be fully vested.
9.3. For the purposes of this Section 9, a "Change of Control" of AMP
Incorporated shall mean:
(a) any Person (as defined below) is or becomes the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), directly or indirectly, of securities of AMP
Incorporated ("AMP"), not including in the securities beneficially owned by
such Person any securities acquired directly from AMP or its affiliates,
representing 30% or more of either the then outstanding shares of common
stock of the Corporation or the combined voting power of the Corporation's
then outstanding securities; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of AMP) whose
appointment or election by the Board or nomination for election by AMP's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date hereof
or whose appointment, election or nomination for election was previously so
approved; or
(c) there is consummated a merger or consolidation of AMP with any
other corporation or the issuance of voting securities of AMP in connection
with a merger or consolidation of AMP (or any direct or indirect subsidiary
of AMP) pursuant to applicable stock exchange requirements, other than (A)
a merger or consolidation that would result in the voting securities of AMP
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at least
50% of the combined voting power of the voting securities of AMP, or such
surviving entity or any parent thereof, outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation effected to
implement a recapitalization of AMP (or similar transaction) in which no
Person is or becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of AMP (not
including in the securities beneficially owned by such Person any
securities acquired directly from AMP or its affiliates)representing 30% or
more of either the then outstanding shares of common stock of AMP or the
combined voting power of AMP's then outstanding securities; or
(d) the stockholders of AMP approve a plan of complete liquidation or
dissolution of AMP or there is consummated an agreement for the sale or
disposition by AMP of all or substantially all of AMP's assets, other than
a sale or disposition by AMP of all or substantially all of AMP's assets to
an entity, at least 70% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of AMP immediately prior to such sale.
(e) For the purpose of this Section, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include:
(i) AMP or any of its subsidiaries;
(ii) a trustee or other fiduciary holding securities under an
employee benefit plan of AMP or any of its subsidiaries;
(iii)an underwriter temporarily holding securities pursuant to
an offering of such securities; or
(iv) a corporation owned, directly or indirectly, by the
stockholders of AMP in substantially the same proportions as their
ownership of stock of AMP
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
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
Administrators choice.
11.2. Payments or Deposits
Payments or deposits made pursuant to any provision of this Section 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. 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.
12.2. 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.
12.3. 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.
12.4. 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.
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 vested
benefit payable hereunder.
EXECUTED at Harrisburg, Pennsylvania this 9th day of June, 1997.
AMP Incorporated
By: /s/ J. E. Marley
Its: Chairman of the Board
And: /s/ D. F. Henschel
Its: Corporate Secretary
APPENDIX A
The following are Employees for purposes of the Plan on and after the indicated
effective date:
Eligibility
Name SSAN Percentage Effective Date
---- ---- ---------- --------------
Hassan, Javad ###-##-#### 40% 04/22/97
Lemaitre, Philippe ###-##-#### 30% 04/22/97
Ripp, Robert ###-##-#### 30% 04/22/97
APPENDIX B
TO
AMP INCORPORATED
PENSION RESTORATION PLAN
Interest Rate: the average for the 12-months preceding
the Retirement Date in question of the interest rate
payable on 30-year US Treasury bills of constant
maturity.
Mortality Table: 1983 Group Annuity Mortality table using
50-50 blended male/female life
expectancies at each age.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS
CONTAINED IN THE COMPANY'S 1997
SECOND QUARTER 10Q AND IS
QUALIFIED BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 284,048
<SECURITIES> 21,325
<RECEIVABLES> 1,110,342
<ALLOWANCES> 0
<INVENTORY> 822,367
<CURRENT-ASSETS> 2,537,146
<PP&E> 4,723,152
<DEPRECIATION> 2,733,801
<TOTAL-ASSETS> 4,814,467
<CURRENT-LIABILITIES> 1,508,293
<BONDS> 0
<COMMON> 81,333
0
0
<OTHER-SE> 2,770,019
<TOTAL-LIABILITY-AND-EQUITY> 4,814,467
<SALES> 2,860,872
<TOTAL-REVENUES> 2,860,872
<CGS> 2,005,196
<TOTAL-COSTS> 2,005,196
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,062
<INCOME-PRETAX> 309,067
<INCOME-TAX> 100,446
<INCOME-CONTINUING> 208,621
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 15,450
<NET-INCOME> 224,071
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
